Despite the Autumn Statement's projection for the future being bleak, the Tory austerity project remains in place, argues Adam Tomes
The Chancellor may have changed but the tune has stayed the same. The emphasis was yet again on “fiscal discipline” and keeping Britain “match fit” for business and absent yet again was any sort of vision that will tackle the crises facing ordinary people in their day to day lives or solve the underlying economic problems. There are five main lessons to take from this budget:
1Austerity means more debt and more borrowing
Philip Hammond has quietly abandoned the idea of balancing the budget by 2020, the last key target that George Osborne setting himself before departing for the political wilderness his talents deserve. However the figures were clear. The years of austerity have increased the debt, with debt headed for over 90% of GDP and that is before the economy has reacted to the weakness of this budget. Hammond also announced that borrowing will be $122bn higher than initially expected by 2020/21 and this involves a large fiscal consolidation just prior to the election that no self-interested government is likely to attempt so expect the figures to be worse in reality. In essence, the long term economic plan to balance the books has failed, spectacularly, even on its own terms.
2Austerity means slower growth
Growth has been anaemic under the coalition and conservative governments. And yet again, the figures have been revised down. By 2021, growth will 2.4% lower than predicted, with much of this blamed on the Brexit vote. Whilst Brexit may be important to these growth figures, the underlying trends of anaemic growth in response to austerity should not be overlooked. In essence, Hammond’s message was austerity without a foreseeable end and continued growth at a level that will make little or no difference to the state of the economy.
3Hammond’s industrial strategy is facile
Hammond has announced £23bn of extra infrastructure spending to help deal with the economic turbulence due to Brexit. This is trying to treat a symptom without understanding the cause. £23bn extra infrastructure spending is not the visionary message to undo the 40 years of industrial decline of the Blair and Thatcher years. This will do nothing for the left behind communities across the UK, especially in coastal areas and old manufacturing areas. Here we find a hollowing out of the skilled, well paid jobs leaving a much higher concentration of people on low wages, relying on tax credits or on employment and support allowances. A recent study by Sheffield Hallam University, looked at this hollowing out and estimates that the annual bill to the state is between £20bn and 30bn, a considerable part of the deficit. What is needed here is an ambitious program of investment that will regenerate these communities by investing in health, education and green infrastructure.
4Productivity reveals the failings of austerity
The state of the British economy under the Tories is revealed best in the productivity figures. These figures show that Britain lags behind Germany and the USA by 30%, behind France by 20% and behind Italy by 8%. This means that the British worker is working longer hours and for lower pay, which comes as little surprise as the growth in jobs over the last 6 years have been in the low paid, precarious sector rather than in skilled, well paid work. Alarmingly, and unsurprisingly, Hammond did not mention that productivity in London is 30% above the national average again highlighting the scale of the human cost in the Midlands, the North and coastal communities. Hammond needs to understand this decline and invest in a health, education and green technology program to rebuild these communities.
5Welfare cuts remain in place
Hammond tried to show his human side by stating that there will be no more welfare cuts within this parliament. However this means that the vast welfare cuts which have attacked the lives of the weakest and vulnerable in our society remain in place so the damage has already been done. The uneven nature of the costs of welfare reform means that 83% of the cuts will target families with dependent children, over 50% will hit those in social housing and most of the cuts will fall in older industrial areas, seaside towns, some parts of London and northern cities. These are exactly the areas that need to the huge investment in order to tackle their slow decline brought about by the neoliberal economics of the Thatcher and Blair years.
This autumn statement makes grim reading. The projection for the future is bleak yet the Chancellor chooses to tinker when radical, bold thinking is needed. The austerity project remains in place for the foreseeable future and now is the time to challenge this view of Britain which emphasises a false fiscal discipline over tackling real economic problems and rebuilding the shattered working communities of this country.
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