A shrivelled state and cuts are not inevitable

By Bernadette Meaden
December 6, 2013

After the Chancellor’s Autumn Statement on 5 December 2013, the BBC’s Business Editor, Robert Peston, made an extraordinarily political statement which went unchallenged.

He mentioned that the Office for Budget Responsibility (OBR) has calculated that the government’s austerity measures would result in government spending as a percentage of GDP being "at least as small as in 1948".

He acknowledged that this was quite remarkable and a result of austerity measures, but went on to say: "I guess what it shows is how unaffordable so much of what we take for granted as state services has become as a result of that calamitous crisis back in 2008."

You can listen here about 28 minutes in.

There were two political assumptions contained in that almost throwaway remark. First, Robert Peston accepts that it was probably the ‘calamitous crisis’ in 2008 triggered by the banks that caused our problems, not government overspending as Mr Osborne would have us believe.

This may be contended by some, but the fact that the crisis occurred simultaneously in countries around the globe suggests that it was not due to the actions of one national government, but a systemic failure of the financial sector.

As Professor Mark Blyth has written: "We need to remember that the crisis that brought us here was a private sector crisis. Their debts landed on the balance sheet of the public sector through bank bailouts, recapitalisations and unlimited quantitative easing."

The second assumption contained in Robert Peston’s remark is far more contentious and highly political. Namely, his apparently wholesale acceptance that the crisis has made our post-war state unaffordable. This is exactly what neoliberals would like us to believe, but it is certainly not an established fact.

Prior to the last General Election, and prior to the financial crisis, a variety of right-wing think-tanks produced a plethora of policy ideas, all of which involved shrinking the state to as small a size as possible.

The privatisation of every possible service, from education to roads, was proposed; and the US model of welfare, where people receive precious little but foodstamps to prevent them from starving, was admired and strongly advocated.

The Institute of Economic Affairs summed up the philosophy in the title of their 2011 paper, ‘Sharper Axes, Lower taxes: Bigger Steps to a Smaller State’. When implemented, however, such policies are highly beneficial to the rich, who don’t rely on public services, and very damaging to the poor.

Once in government, the Conservative Party, aided by the Liberal Democrats and a supportive media, set about implementing as many of these policies as they could, with the crisis used as a convenient opportunity to do things that may otherwise have been politically impossible. We may have foodbanks instead of food stamps, but our state is becoming more and more like the American model.

Quite simply, the cuts and increasing privatisation of what would once have been considered sacrosanct public services, like the NHS, probation and social services, are an ideological choice, and not inevitable, as Peston appeared to be stating.

David Cameron recently made it quite clear that even in an improved economy he wants a slimmed down state. Earlier, before the 2010 election, he had denied this.

Quite obviously, the percentage of GDP we spend on public services is a political choice, not an economic inevitability. For example, it soars dramatically during wars, when money seems to be no object. Similarly, credit for a £500 billion bank bailout became available after the 2008 financial collapse - a sum that dwarfs cuts being touted as pure necessity.

It is disappointing that a highly regarded, high-profile and, one would have hoped, independent commentator should seem to have completely accepted one side of the political argument. To be fair, the remarks were made just hours after the Autumn Statement, with little time for reflection, but unthinking comments usually reveal our frame of reference, where we’re coming from.

It would be worrying if this remark revealed that the BBC’s Business Editor -- often an insightful commentator -- has closed his mind to the possibility of any alternative economic approach.

* See also (video), Ann Pettifor on 'Delusional economics and the economic consequences of Mr Osborne, February 2012: http://www.youtube.com/watch?v=l1GHWrvtI6I

* More from Ekklesia on the Autumn Statement 2013: http://www.ekklesia.co.uk/autumnstatement


© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.