An analysis of what the latest spending review says about the direction of the Tory party, and the future of UK economic policy.
Yesterday saw Rishi Sunak, an incarnation of what you'd get if Canary Wharf had a prefect, give the UK his covid-centered ‘spending review’. The review includes a series of ‘difficult decisions’, including pay freezes for non-NHS public sector workers, cuts to overseas aid, as well as a series of spending increases.
Despite the fact that overall spending is going up, this review perhaps marks the end of the Tory Party’s insistence that austerity is over. David Cameron, in the lead up to the 2015 General Election was the first to start this narrative, insisting that the "hard work" Britain had put in under the coalition government was starting to pay off, and that we would once again be able to increase public spending. This did not happen, of course, and one year later his failure to convince the country to vote Remain in his EU referendum saw him resign. Theresa May, in a rare display of understanding public opinion, predicted “better days ahead” at the 2017 Conservative Party conference as she became the second Tory prime minister to let the nation know that the Cameron-Clegg austerity program had come to and end, presumably because no one had noticed.
In 2019, then-chancellor Sajid Javid AGAIN told the country that they had “turned the page” on austerity. Finally, in April 2020, Boris Johnson reassured the country that austerity was “certainly not part of the covid-response plan”. You know where this is going…
To be clear, this specific spending review marks an overall rise in government spending, with pay rises for NHS workers, increased education funding, and a commitment to match regional EU subsidies for the next year. However, I see this review as setting the parameters for future budgets, budgets which I highly doubt will see Britain end austerity for good. I say this because, at a time Britain is running a national debt of over £2 trillion, Sunak deemed it necessary to save a measly £4B (0.1% of GDP) on foreign aid. To me, this shows that the Tory’s still see the benefits in taking money away from people they deem ‘undeserving’ .
By this point, it is abundantly clear that decisions taken by the Tory party, whether social or economic, are taken with self-preservation as the sole guiding influence. Boris Johnson's no-deal threats have only had negative effects on the country's finances, resulting in further drops in the value of sterling, and leaving businesses, big and small, with less certainty and less investment. But both he and Theresa May (kind of) won elections by promising that Brexit would come before anything else, including economic stability, whether measured by GDP, the London Stock Exchange, unemployment, or any other metric. The goal was reelection, not economic growth or better living standards, and it worked.
This is because the British public possess an extreme tendency to cast their vote based on spite. We vote to deprive others of things we don't think they deserve, regardless of whether it effects us or not. The latest YouGov polls show that two-thirds of the country support cutting the foreign aid budget. Is this because they think it will improve their lives or the lives of their fellow Brits? Of course not. They support it so they can take solace in knowing that "they" won't be getting any more of "our" money.
This is the line of thinking that led to the demonisation of people on benefits in the 2000s. People who didn't need state support saw benefits as unfair, and voted accordingly, in most cases accepting a stagnation of their own income in return for a cut to the income of others. The evidence suggests, as much as I wish it didn't, that the people of Britain are most motivated to vote when given the opportunity to fuck someone else over, whether it's immigrants, poor people, the EU, or developing countries.
Sunak justifies such a petty cut by saying that, during a “domestic fiscal emergency”, maintaining the overseas aid budget is "difficult to justify to the British people". He's right, but then, what isn't?
Media reactions to the budget give me little hope that austerity is well and truly behind us, with top political corespondents such as Robert Peston and Laura Kuensberg already talking up the "tough decisions" the country will have to take in order to deal with our growing debt, and evoking the Tory response to 2008.
Comparing the UK economy to a "household with maxed-out credit cards", a Thatcher metaphor perpetuated decades later by Cameron, is one that reduces the economy of one of the richest countries on earth to a simple balance sheet. Bad metaphors like this are perhaps the most insidious and damaging forms of propaganda, making sense internally while failing to represent what they claim to. When a country increases it's spending, it increases the size of its economy, meaning more can be borrowed for less, thereby funding capital investments that will yield returns. When a household does this... well...it can't.
Drawing parallels between 2008 and now is highly fashionable, and not without its uses, but given the UK's god-awful response to 2008, which made life worse for millions while failing to do the one thing it was supposed to- get rid of the deficit, perhaps it would be safer to invoke 1945. The last economic downturn comparable to now was the second world war, after which the UK, being more indebted ever, invested in it's own economy. This investment saw the country build up a wealth of publicly owned infrastructure and services, services that enabled a rise in living standards whilst simultaneously putting Britain in a better place to pay off most of its debts over the next couple of decades.
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