Austerity? Don’t make me laugh!

By June 24, 2017February 18th, 2021No Comments

The myth of austerity means that the Left is howling for an end to cuts that never went far enough

By Peter Oborne

24 June 2017

After her shattering disappointment in the General Election, Mrs May is no longer the all-powerful figure we saw in the first six months of her premiership.

Nevertheless, her prospects for survival have greatly improved. Wednesday’s Queen’s Speech was not the unmitigated disaster some have claimed. For one thing, it contains eight Bills designed to put Britain firmly on the road to Brexit.

Some have claimed the obsession with Brexit prevents the British Government making vital reforms in other areas. I disagree. British membership of the European Union was an impediment to good government. Once Brexit is out of the way, Mrs May or her successor can set out on a programme of national renewal.

However, I accept that this week’s Queen’s Speech does contain one very serious flaw: it marks the moment when the British Government abandoned any serious attempt to control spending.

In many ways, Mrs May’s much-maligned election manifesto was a brave and admirable document, because it set out a series of measures to bring the nation’s finances back into balance. Unfortunately, too many voters did not enjoy being confronted with financial reality.

The most important proposed measures concerned the elderly. Mrs May pledged to reduce pension provision, and also promised to force homeowners to cough up for the costs of social care — a move cynically labelled the ‘dementia tax’ by Jeremy Corbyn’s opportunistic Labour Party.

There was no mention of any of these measures in the Queen’s Speech. That is no surprise. Mrs May has no chance at all of pushing them through, thanks to the delicate new parliamentary arithmetic.

More damaging even than this, though, is that both Labour and the Scottish National Party have interpreted the election result as a rebellion against so-called austerity.

They want more money spent on schools, hospitals, police forces, universities and roads. There is, in fact, no limit to the proposals for public spending put forward by Jeremy Corbyn and his front bench, who are clearly basing their economics on the existence of ‘magic money trees’.

Suddenly, the dominating narrative in public life is that, instead of trying to live within our means as a nation, we should cast off ‘austerity’.

Thus every national tragedy is interpreted as a consequence of the hated ‘cuts’.

Jeremy Corbyn used the terrorist attack at London Bridge to call for more police officers, even though the force performed faultlessly and were at the scene within eight minutes.

The Grenfell Tower disaster was, according to Labour, another consequence of austerity, even though £10 million was recently spent on the building. We cannot yet rule that austerity was indeed to blame, and we will not know for sure until we have the findings of the Government’s public inquiry.

Paradoxically, however, there is some evidence that spending money on Grenfell Tower made matters worse.

It is a bitter irony, but the decision by Kensington and Chelsea council to refurbish the tower block by adding new cladding increased the risk of fire in a way that didn’t exist before.

That aside, now that Britain’s so-called austerity has become the focus of intense debate, it is important to expose the myth that the nation’s finances have been cut to the bone under the Tories. That suggestion is nonsense — for the simple reason that there has been very little austerity at all.

Last week, Sir Nicholas Macpherson, Permanent Secretary at the Treasury from 2005-2016, wrote an exceptionally important article for the Financial Times. He noted that gross public debt actually rose as a proportion of national income between 2010 and 2016, from 76 per cent to 89 per cent.

As Sir Nicholas wrote: ‘Britain never experienced austerity.’ As someone who ran Britain’s most important financial institution for 11 years, he is in a position to know.

Sir Nicholas also noted that our profligacy distinguished us from other countries such as Ireland, which reduced its indebtedness from 86 per cent to 75 per cent of national income during the same period. (Spain is another telling example of a nation that really did cut its spending.)

This, I believe, is a devastating indictment of George Osborne, who was Chancellor of the Exchequer throughout this period.

In 2010, he took office promising to rein back public spending significantly and improve national finances. Because of the crash, the British people understood the need for financial belt-tightening.

But the truth is Osborne never did actually make the cuts he promised. Under his aegis, national debt nearly doubled to a terrifying £1.7 trillion, and public spending barely fell. It’s easy to forget that spending on the NHS is higher in real terms than it has ever been before. Britain spends (or, many would say, wastes) an astonishing £13 billion a year on overseas aid projects.

Meanwhile, Britain’s debt as a percentage of national income is higher than it has been for more than 50 years. The budget deficit is an eye-watering £50 billion, and that is after seven years of so-called Tory austerity.

Now, with Jeremy Corbyn gaining in confidence every day, we are about to set out on a new splurge — sparked by a panicky response to Labour’s wild promises of huge increases in public spending.

This is monstrously irresponsible. All talk of balancing the books has now been abandoned and I shudder to think what this means for the future of Britain.

The deficit, which has never been tamed, will again rise inexorably. It can’t be long before the national debt surges beyond £2 trillion. This will force up interest rates as the financial markets lose faith in the ability of the British Government to repay what it owes.

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Patria says:-

As Dr Andrew Emerson said at the hustings held at Chichester Cathedral on the eve of the last general election, “To give credit where it’s due, the Conservatives do tend to manage the economy slightly more responsibly than Labour when they are in government”.

After all, it’s only common sense to fix the roof while the sun is shining.