“Unless we deal with this debt crisis, we risk becoming once again the sick man of Europe”. This was David Cameron in 2009, addressing the Conservatives in Cheltenham on how best to deal with the wake of the 2008 global financial crash. More specifically, this was the beginning of the age of austerity in the Conservative party mindset – the treatment of our nation as a failing business that demanded sweeping cuts across the public sector. Cut to the beginning of 2018, and it was announced that Austerity had finally reached its targets of debt reduction – a full 2 years later than the brutalist model of spending reduction was supposed to. But how successful has Austerity really been for the United Kingdom and its future?
With the aim of reducing the national debt to a level that investment could begin again without compounding trillions in national debt, Austerity has been ‘successful’ – it has finally succeeded in its core promise to reduce the budget deficit significantly. Indeed, according to UKPublicSpending.co.uk’s estimations, the current budget deficit between 2010 and 2017 has fallen from £99.74 billion to only £14.04 billion. Though this is a considerable reduction in national debt, there are two key issues that prove the truly devastating impact of Austerity on the United Kingdom – the impact on the economic prosperity of the people, and the precedent set by both former and future conservative action surrounding the national economy.
To take national debt reduction as evidence that austerity has worked for Britain is almost laughably reductionist. Rather, austerity has led to significant economic hardship, regional economic disparity and a fall in opportunity for many. This is not to argue that societal hardship in times of economic uncertainty is surprising; rather, the extent of such hardship was widespread, brutal and largely unnecessary. Take women in the national economy, for example. Due to austerity and the severe public spending cuts, female workers in the public sector have been most harshly impacted by this policy of financial subtraction. Due to cuts in tax credits, sweeping redundancies across largely female dominated sectors, and the growth of the casual job market as the only route back into employment, it is estimated that women have been 15% worse off as a result of austerity – equivalent to just over £70 billion lost in potential wealth. Similarly, massive cuts to the welfare system have severely impacted the lowest earners in our society – with a 2016 WBG assessment estimating that the lowest 10% of households will be 21% worse off as a result of austerity. Austerity has had a similar regional effect, with massive cuts to budgets outside of the regional south leading to a disparity in unemployment. According to the Office for National Statistics, unemployment in the North East reached 5.8% in 2017; compared with 3.3% in the South East. It is no complex conclusion, therefore, that the effects of austerity have been not only significant, but wide ranging and unequal.
But it is the failure of the neoliberal consensus that makes austerity not only brutal, but unnecessary. It must be conceded that the wake of the 2008 financial crash demanded a somewhat revolutionary economic response. In a world with families being kicked out onto the streets, Multinational banks closing and national economies such as Greece almost collapsing under the weight of their debt, to maintain the economic status quo would have achieved little else but gradual and unavoidable economic collapse. But to claim, as the Conservatives did, that Austerity was the only solution is not a problem of debt but of failed foresight. The problem itself relates to the consensus of privatisation and state reduction that has prevailed since the 1980’s. The need for economic revolution after the brutal conditions of the 1970’s, coupled with a political desire to appeal to the electorate, led to a shift in economic models; away from taxation, and towards venture capital and debt. This allowed of economic growth based on lending, debt and speculation, whilst pacifying voters by protecting their ‘hard earned money’ from the evils of taxation. At the same time, the growth in faith that the private sector facilitated economic revolution led to mass privatisation, the shrinking of the state and the sale of numerous sources of government revenue, external to taxation. How, then, does a state fund itself whilst maintaining this ethos of low taxation and sale of its own revenue streams? Any attempt to increase spending through taxation, after the prosperity of the 1980’s, would have been little else but the proverbial bullet-in-your-own-foot; thus, the money must be borrowed or gained from the sale of government assets.
This is where the problem of failed foresight emerges. Austerity was not inevitable, had the neoliberal consensus recognised that privatisation, low taxation and increasing focus on debt was the recipe for economic crisis on an unprecedented scale. Austerity is the product of ignorance to the inherent fluctuations of capitalism; an ignorance that removed any state capability for self-investment, any capability to reinvigorate the economy and consumer confidence, and any ability to enact any alternative to brutal cuts that affected millions. Not only did the population face severe cuts, it also faced negative real wage growth. The UK achieved the 2nd worst economic performance in Europe between 2007 and 2015, only Greece managed worse. The nation sank to the bottom of the OCED wage growth index in 2018.
Perhaps more troubling than this, the rhetoric surrounding austerity removed the decision from the political sphere. The Conservative government made it appear as an unavoidable evil that we, the people of Britain, would just have to grit our teeth and bear the severity of. It is important, now more than ever, to challenge the ideas around austerity as a ‘success’ and those who seek to remove debate and democracy from political decisions. If light is not continually shed on how brutal, unequal and unsuccessful austerity has been for the current and future state of Britain, then we leave ourselves prone to this kind of unnecessary rhetoric again; perhaps even as a cover for more inherently unequal policy.