Britain Conservatives Economics Labour

Has Austerity Finally Ended?

Abandoning fiscal responsibility in the hope of electoral gain is clear sign of weakness.

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John Scotting

Naked Politics Co-Editor

Theresa May’s now-infamous conference speech claim that “Austerity is coming to an end” hung like an albatross around Philip Hammond’s neck as he delivered his final budget before we pretend to leave the EU.

Talk of “giveaways” – as if using extorted money to distort markets for political gain should somehow be seen as benevolence – rang through the halls of Westminster. Most notably, the ramping up of NHS funding to an extra £530-million-a-week over the next five years, which might be of real benefit if our archaic state-monopoly system were to be reformed at the same time, but because the Tories are scared of ‘Save our NHS’ placards, the demands for more cash will no doubt continue unabated.

At the same time, an increase in income tax thresholds will see 32 million people retaining marginally more of their own earnings.

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John McDonnell, the Shadow Chancellor and self-confessed-Marxist, had to bury his visceral objection to property rights when acknowledging that low-income families will be better off. But Jeremy Corbyn was quick to remind him that some evil rich people might also benefit. So, it didn’t take long before the typically bombastic chorus of “still not enough” was emanating from the opposition benches.

So, what’s going on? Weren’t we supposed to have seen the fabled punishment budget by now? Europhiles were absolutely certain that a vote to Leave the EU would lead to soaring unemployment and economic collapse in the immediate aftermath of the vote. When that didn’t come, nor did the punishment. But, surely, given the turmoil of the agonising transition process that was expected by both Brexiteers and Remainers alike, we ought to be preparing for the end of days by now. Yet here we are, speculating over whether all this positivity is evidence that the Tories are seeking to curry favour with prospective voters in readiness for another General Election. Brenda of Bristol will be pleased!

While an election seems unlikely at this point, there is almost certainly a kernel of truth in the suggestion that electoral gain is the principle motivation. Facing criticism that the Tories have forgotten May’s promise to help the ‘just about managing’, they have chosen to both accelerate public spending increases and temporarily reduce the tax burden – until wage growth wipes out the benefit, returning it to a 50-year high.

That’s great news then, isn’t it? The government must be running a huge surplus so they can justify throwing our money around like some sort of Gordon Brown tribute act.

Sadly not! While the deficit has reduced significantly under successive Conservative Chancellors, spending continues to exceed revenue. So, the question of whether austerity has ended is erroneous; true austerity never even began!

Austerity used to mean living within one’s means. But since David Cameron bastardised the term by applying it to the slowing of government spending growth, opponents of economic freedom have seized the opportunity to conflate that new meaning with the original negative connotations of ‘going without’, despite the reality being a period of sustained economic growth, job creation and increasing real wages. In doing so, they have managed to promote the notion that limitless state expansion is a laudable goal, which is some feat considering the vast weight of evidence to the contrary…

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The Coalition Government should have been brave enough to deal with the gaping hole in public finances by ripping off the sticking plaster and reducing expenditure much further eight years ago. But, encumbered by Liberal Democrat fence-straddling wets, fiscal hawks within Conservative ranks were always going to be disappointed.

To make matters worse, they were unable to capitalise on their 2015 majority because it was politically difficult to reduce spending during negotiations with the EU, both before the referendum and ever since. The net result is public fatigue after an eight-year ‘death by a thousand cuts’.

May and Hammond are now in an incredibly weak position. They lack the popularity to get away with increasing the tax burden, but nor can they continue to withstand the mounting pressure to overspend. The only option remaining is to follow Labour’s lead in ignoring the moral repugnance of buying votes today with borrowing underwritten by the taxpayers of tomorrow.

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The iniquity of such an approach cannot be overstated. We, as eligible voters, are directly culpable for our failure to insist that governments properly manage public finances – their core responsibility! By demanding the opposite, the wealth that is transferred from working people to international money-lenders continues to grow exponentially. Ironically,  with over £600Bn frittered away on interest payments since electoral bribes (spending) were last covered by funds extorted (revenue), those that detest the richest 1% most are playing directly into their hands. We are literally being made to pay for our greed!

State expansion fans are right about one thing; slowing public spending growth – or “austerity” in Newspeak – is a political choice. It’s a choice that sits halfway between responsible governance by actually reducing spending and shitting all over future generations by expanding it even quicker. As a parent, I know which direction I’d prefer them to have gone, but judging by the capitulation of what passes for the Conservative Party these days, it appears that I’m in the minority on this one.

 


 

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