Assault on ‘welfare state’ has damaged UK economy too

By Savi Hensman
May 6, 2015

Over the past five years, the UK’s ruling Coalition has brought in heavy cuts to social security and public services. If a Conservative-led alliance comes to power in the general election, this is likely to intensify.

Previous governments since the late 1970s have been less than enthusiastic about the ‘welfare state’. Indeed ‘welfare’ has become almost a dirty word in political circles. But none have been as ambitious in their assault on the social infrastructure.

Cuts in benefits and funding for services such as the NHS and education were supposedly justified by economic necessity as well as ideology. Yet austerity policies, especially in the wake of a global financial crisis, have done heavy economic damage as well as causing much suffering.

In April 2015, the Centre for Macroeconomics released the results of a survey of 33 economists. Two-thirds disagreed that the government’s policies since 2010 had had a “positive effect” on the economy and only 15 per cent thought the Coalition’s policies had boosted Gross Domestic Product and employment.

“The only interesting question is how much GDP has been lost as a result of austerity,” said Simon Wren-Lewis, an Oxford University economics professor.

Professor David Blanchflower was a member of the Bank of England’s monetary policy committee during the run-up to the 2008 crash. He alone realised what was happening and called in vain for urgent action. This widely respected economist recently pointed out that it was not public spending under Labour that caused the crisis and described the austerity policy as “utterly misconceived.”

He wrote that this is “the slowest recovery in more than 100 years... most of the growth came because there were more people, and especially more migrants. These are the people whose entry the Coalition wants to restrict. But the most telling statistic is the growth in GDP per head, which is still 1.1 per cent below its starting level. This sustains Labour’s claims of a crisis in living standards; the majority of people aren’t feeling recovery.”

The finances of a nation are not the same as those of a household, despite government attempts to make out that public spending is simply a loss. If, say, a disabled person gets ‘benefits’ which allow her to go to work, or babysit her grandchildren so her son can do so, this contributes to the economy.

Likewise, if social care support allows a frail older person to employ personal assistants, this means those assistants can pay taxes as well as their household bills.

Harsh government policies have meant that large numbers of people have had to rely on foodbanks so as not to starve. Libraries, day centres, playschemes and health projects have closed. But such hardship has not encouraged economic growth: quite the opposite.

It has also become clear that such measures have not generally made families and communities more virtuous and ‘independent’. Instead they have left many demoralised and have deepened divisions.

It is time for politicians to admit that austerity is ideologically-driven, and for the media to examine more closely the underlying values and type of society which is being created.

It is also important to recognise that there are alternatives. It is maybe not such a bad thing if the vulnerable are protected and the majority – not just the prosperous and powerful – fare well.

* Social security and the 'shrinking state', by Savitri Hensman http://www.ekklesia.co.uk/node/21664

* Reforming welfare: moving beyond the austerity mentality, by Bernadette Meaden http://www.ekklesia.co.uk/node/21665

* More on the issues in the 2015 General Election from Ekklesia: http://www.ekklesia.co.uk/generalelection2015

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© Savitri Hensman is a widely published Christian commentator on politics, welfare, religion and more. An Ekklesia associate, she works in the equalities and care sector.

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.