In politics, crisis can often be used as a pretext for the (often less than scrupulous) imposition of an ideology, that has nothing to do with the crisis it pretends to address.
I remember first being aware of this phenomenon while on the University of Edinburgh Court. At the time, the University Court was working through the consequences of suddenly finding itself £5.98 million in debt, and to that end had employed KPMG Peat Marwick McLintock (now KPMG) as management consultants to tell them what to do. In due course, the report arrived: I was informed by another client who had used them, that 85% of the report was merely standard KPMG Peat Marwick McLintock statements, and nothing whatsoever bespoke for the University of Edinburgh – flannel and padding, for the princely sum of more than £70K, if I remember correctly. However, as the University of Edinburgh specific areas started to appear in the report, it became clear that the management consultants were coming up with some slightly bizarre proposals, that would not be expected from a straightforward management analysis – for example, their recommendations regarding the Chair of the University Court. Traditionally, this job was done by the Rector of the University – a position elected by the staff and students, and a means of democratically bringing their influence firmly to the highest level of an organisation that they were the most heavily invested in. The university executives had grumbled for a long time about this – that it was not ‘one of their own’, overseeing things the way that they liked them to be. At the time, the Rector was Runrig’s Donnie Munro – surprisingly effective as chair. And yet, within the management consultant report, amongst other slightly unusual suggestions (bringing accounting procedures of the university as a whole up to the standard of its own Students’ Association was one of the more obvious ones), was one concerning the removal of the Rector as Chair of Court. In the broader context of the report, one could see other, long-term aspirations of the university executives coming to the fore as well – this was not just a management consultancy report, this was a longstanding wishlist.
By and large, it seemed that the university executives had told the management consultants what they wanted to hear back – and then they could appropriately distance themselves from it being their decision to take such inherently distasteful actions – especially when it came to the area of job cuts. In other words, they had their plausible deniability: ‘wasn’t me, mister – big man did it and ran away’. I sat around that huge table, and watched these respected men and women meekly bob their heads in agreement to whatever the management consultants said – and if any queries were raised, the response was standard: ‘The management consultants have indicated this to us, and we must do it, otherwise we would look to be sending the wrong signals to the outside world for not fully complying in the present crisis.’ In short, the crisis was used as a pretext for another, preexisting, agenda.
The most recent example of this technique that most of us will remember, was the curtailment of civil liberties that followed the September 11th attack on the World Trade Center. Those were policies that had been advocated for a long time by some of the more authoritarian elements of government, but their proposals had up until then been met with a stony rebuff…until the World Trade Center provided just the opportunity for their ideological agenda to become policy. Remember how close we came to having identity cards? That one has been knocking around for a long time…waiting for just such a chance to be dusted off and presented as a snake-oil panacea for whatever-security-problem-you-have-got.
And so to Austerity.
Traditionally, the Conservatives were always regarded as the party who could be trusted with the economy. I suppose that I must be getting older – the Prime Minister and the Chancellor look like eager rosy-cheeked schoolboys….are they really where the trust of the country (the UK, that is) is placed? Confidently, to do a responsible job, in the heart of this banking crisis?
The Chancellor’s avowed central policy – on which he wanted the government to be judged – was to entirely eliminate the structural deficit within this parliament. So, how is that going? In 2010 Osborne said the deficit would stand at £40 billion by the end of this year. It does not. The last 3 years have seen deficits of £120 billion, £100 billion and £108 billion. The Autumn Statement revealed that it is already at £91.3 billion for this year, and likely to break the £100 billion mark again by the end of the year, with the second smallest annual deficit reduction (£6.3 billion, half what the Chancellor predicted as recently as March) since 2009-2010.
Despite this, the cuts have been real – and are continuing. Since the Coalition came to power, 600,000 public sector jobs have been lost. As part of the Autumn Statement, the public sector pay freeze has been extended. Welfare is to receive a 1 billion pound greater cut than was forecast. There will be a 2 year freeze in working-age benefits and universal credit. Immigrants – in what is most surely a sop to UKIP rather than for any economic benefit whatsoever – will lose their benefits after 6 weeks if there is “no prospect of work” – however one defines that.
There has been a slump in real wages – down 10% on 2008, having fallen every year for 6 years, producing the longest sustained decline since records began in 1856. Yesterday’s employment figures provided some small crumbs of comfort, but only in terms of Scotland performing slightly better than the UK as a whole. Although employment fell slightly to 2,605,000, the jobless total was down by 11,000 between August and October; the Scottish unemployment rate is now at 5.6% (lower than the UK’s 6%); female employment increased by 21,000; Jobseeker’s Allowance claimants fell by 2,100 from October to November; youth unemployment in Scotland fell by 26% to its lowest level (72,000) for 5 years. The jobs that are being created are low wage/zero hours, so are failing to restore the economy: 400,000 Scots are earning less than the living wage with 120,000 on zero hours contracts. In addition, cuts or freezes on benefits such as Work Allowance (a tax credit for people in work who receive benefits) make it even more difficult for them to cope, meaning that the working poor have even less ability to pay basic bills, never mind support the ailing economy. The widespread cuts to benefits and pay freezes are part of an overall picture of a falling income for individuals, which means lower spending, and reduced tax receipts. The only tax receipts that are increasing now are those from stamp duty – hence the accusations that Osborne’s pseudo-recovery is in fact reliant on creating a vulnerable new housing bubble.
In order to pay for what little economy there is, an increasing sector of the population is now reliant on unsecured lending, rising at a billion pounds a month, with 6 million in the UK now borrowing just to get through to payday.
For the Scottish dimension, StepChange’s new report ‘Scotland in the Red’ notes that the average payday loan debt of Scots was £1,438 (£129 more than the UK figure). Scots also have the largest level of Council Tax arrears, with £1,534 (almost double the UK’s figure of £798). Actually, for those hitherto unconvinced, there is a real argument that the council tax freeze is essential at this time – food in people’s mouths are surely a higher priority than improving council services: let the roads decay, to the point that those whose spending has thus far been unaffected, are inconvenienced – because until then, it simply will not be a priority for them. File under ‘Other People’s Problems’.
To reduce the deficit and curb borrowing, Osborne needs to save over £100 billion a year, so proposed cuts of £25 billion (£15 billion of which are heading to Scotland) are, as one observer pithily put it, akin to placing a band-aid on an amputated limb. But if the cuts are not having the desired effect…then why continue with them?
The recession struck hard in the UK because it was already a debt-ridden economy – and highly vulnerable, thanks to the high-risk concentration of the economy in the financial services industry, a policy firstly pursued with such vigor by Margaret Thatcher, then perilously augmented under New Labour’s Blair and Brown. But for the current government, the recession has been an ideological opportunity – first and foremost – for the Conservatives, and the Liberal Democrats have done little to rein that in. Their opposition to the principles of the welfare state (now chillingly echoed with even more zeal by their opposition counterparts) has been what has driven their policies of axing it (and, similarly, expanding Labour’s privatization of the NHS, pioneered by Andy Burnham). In pursuing this ideological dogma, they have now destroyed the tax base of the country, pushing more of the population to the financial margins and rendering it incapable of driving the economic recovery.
Nicola Sturgeon is not advocating an end to Austerity because ‘it is nice to be nice’, or part of some socialist utopian vision: Austerity is not working, and is further undermining the economy for an ideological aim without addressing the problem that it purports to be solving. Austerity is about reimagining a future UK as a welfare-less, public health service-free zone – it is about the antithesis of Clement Attlee’s government (voted the greatest British Prime Minister of the 20th Century), under the stealthy cover of a recession caused by inept and unregulated international banking practices.
Ideology has made fools of this Conservative-led Government – to the extent that it has made a mockery of their former long-established credentials of fiscal prudency. Trust the economy with the Conservatives….really? When they can become so fixated by ideology over and above actual economics, that they cripple the country? With financial wizards like these, why would you ever think they could be trusted with the office Xmas Club Fund, never mind the UK economy?
“Far from being ‘all in this together’, the living standards of the most vulnerable – the old, sick and disabled, the poor – have been continuously eroded under good times and bad, through growth and recession. With Westminster parties at best threatening merely to freeze these inequities, they offer no hope for any reversal of Britain’s divisive and world-leading levels of inequality. Each promises the remaining half of austerity cuts will be implemented regardless of the impacts on the poor and social security payments reduced further in real terms.” (Mike Danson, professor of enterprise policy at Heriot Watt University)