As Britain Approaches a New Round of Austerity Let’s Look Back at the Old . . .
My study of the neoliberal turn in British economic and social policy since Thatcher’s time took the story only up to the brink of the Great Recession — which broke out fifteen years ago.
The period before had plenty of pain — but I suspect that what happened afterward made a great many positively nostalgic for the earlier era.
I have a fuller account of that decade of “austerity” (2010–2019), with the requisite citation, here. In lieu of that consider these highlights:
* A significant increase in the Value Added Tax, to 20 percent. (By contrast the VAT was 17.5 percent pre-crisis, and while the top income tax bracket was raised from 40 to 50 percent, swiftly knocked back down to 45 percent. Meanwhile they actually cut the Corporate Tax from 28 to 19 percent.)
* Significant changes in Social Security. Two major welfare reform acts (2012 and 2016, the latter amending the former) replaced a large number of the social safety net’s former benefits with a less accessible and less generous system of Universal Credit, and Personal Independence Payments, while other benefits were likewise eliminated, or made less generous or accessible (as with the elimination of the Council Tax Benefit that helped low-income persons pay their local tax bill, or the introduction of means-testing for Child Benefit). There was also repeated capping and freezing of Social Security more broadly.
* Austerity (as well as privatization) in the National Health Service, not least at the level of funding increases — likewise, held to below the inflation rate, and so working out to real cuts over time, as hospitals coped with an aging population’s higher demand for medical care, and paying for those Private Finance Initiatives a certain prior government treated in the manner of a simpleton who thinks credit cards mean “Buy Now, Pay Never.”
* The continuation of the movement away from tuition-free university attendance toward an American-style system of paying for higher education, with the cap on tuition raised from the £3225 it had been under Gordon Brown to over three times as much (£9250 pounds at present).
* The continued raising of the state pension age (66 for men and women as of 2020, with the raising of the age to 67 brought forward a decade in each case, from 2036 to 2026).
* The sharp reduction of government investment in housing (at the level of both the number of units and investment per unit) as “social” housing is marginalized (rather than being a main product of the program, “only to be supported in exceptional cases”).
* Deep reductions in funding for public programs ranging from legal aid, to regulators providing consumer protection (the Food Standards Agency suffering a 51 percent cut in 2009–2019) and environmental protection (i.e. Natural England and the Environmental Agency).
* The across-the-board capping and freezing of public sector worker pay (which, apart from affecting the performance of the above duties, affects the incomes of the one-sixth of the British labor force which is part of this category), producing a long-term decline in median wages among such persons as doctors, teachers and police officers.
* The reduction of central government support to local councils (by 60 percent in 2010–2020 according to the Local Government Association), which have had to depend more heavily on their own resources — with the result higher council-set taxes (and a heavier reliance on sales, fees and charges), along with a significant drop in per capita spending ( taxes up 8 percent and per capita spending down 23 percent according to the Institute for Fiscal Studies). Additionally, even as “statutory duties” received increased emphasis, the diminution of resources generally led to significant cuts to the most “protected” services, such as social care. (Social care saw a 10 percent drop in spending even as there was a 20 percent+ rise in the number of elderly, and the gap may have played a part in some 120,000 “excess deaths” by 2017 alone.) Meanwhile other services were cut still more steeply (with regulatory services and transport and culture and recreation subject to cuts of over 40 percent, and housing of over 50 percent).
And of course, while we consider all that remember the “synergies” that combined to make these cuts more painful (like the fact that Council Tax Benefits were cut just as Council Tax went up, or how the fact that public libraries were being closed down in record numbers meant that people who needed libraries for computer access and help with their applications for UC did not have them).
Of course, all that was before the pandemic, its own even sharper recession, the energy and broader price shocks of 2021–2022, Britain’s having the kind of old-style currency crisis out of which the British right made a legend when it happened back in ’76, and, under the third British government in as many months, a new round of austerity coming that, w e are told by Paul Johnson of the Institute for Fiscal Studies (whose valuable work I cited above, and not for the first time), will mean “the largest fall in real household disposable income per head (4.3%) since the late 1940s” in 2023, and the year after that, “the second-largest fall (2.8%).” Indeed, “[a]verage household income per head is due to be the same in 2027–28 as it was in 2018–19, and 31% below where it would have been if the pre-2008 trend had continued” — or, as Johnson’s colleague Tom Waters observed, “if we’d kept to trend, we’d be 47% richer. Imagine your income being 47% higher!”
If people aren’t already nostalgic for the pre-Recession era, lousy as it was, they may — after Rishi Sunak’s “austerity on steroids” — well find themselves thinking warmly of the ‘00s.
Or even the terrible, horrible, no good, very bad ‘10s.
Originally published at https://naderelhefnawy.blogspot.com.