Today (16 March 2016) will be George Osborne’s seventh Spring budget.
Today (16 March 2016) will be George Osborne’s seventh Spring budget. As with all his previous budgets, he is clinging to the mantra that we need to get the deficit down and austerity is the only way to do that.
Ekklesia has long argued that the Chancellor’s fiscal approach is ideologically based, damaging to the country as a whole and fails on economic terms. The evidence is accumulating that we have been right about all these things. And yet, he continues to persist.
Ideology
The ideology behind Mr Osborne’s plans has been clear from the outset. In 2008, at the time of the bankers’ crisis, before he was even in the job, he was frequently on the television arguing that the public sector was profligate and the only way to tackle the problem was to reduce funding. Though I can find none of these interviews on the internet now, I remember them clearly and the way he cleverly translated this into the message that Labour had broken the economy and couldn’t be trusted to fix it.
Mr Osborne’s first austerity budget focused on local government and welfare, stating that we were spending too much in these areas. Subsequent budgets have continued this trend, resulting in a predicted loss of over 800,000 public sector jobs by 2020. Meanwhile the public sector continues to outsource jobs, and it is likely that after today’s budget, all state schools will be academised. Six years ago, the majority of our public services were run by local authorities or government, today, they are more likely to be run by G4S or Serco. Austerity and privatisation are intertwined.
Damage to the country
The damage these changes have wrought have become increasingly visible as time has gone on. Sick and disabled people continue to bear the brunt of the cuts, enduring poverty, stress, deteriorating health. By 2020 local government funding will have contracted by 35 per cent leading to cuts in every essential service from social care and children’s centres to libraries and swimming pools. We live in a country where a woman fleeing domestic violence can no longer be sure there is a safe place for her to go; where a person dying of cancer does not have enough money to live on; where food banks are now asking for sanitary towels because women can no longer afford to buy them. Increased tuition fees are pricing young people out of university. Meanwhile, the housing market continues to spiral out of control, fuelled by buy to let policies that favour rich landlords, first time buyer deals that result in ‘affordable’ properties being priced at £450,000 and a contraction in social housing. There isn’t a single section of society unaffected by this. Since 2010, we’ve seen protests from sick and disabled people, students, teachers, junior doctors and lawyers, a sure sign that something is very wrong.
Economic recovery
It is the view of the majority of mainstream economists that reducing the deficit without investing in public services is counterproductive and so it has proved. When George Osborne gave us his first budget, he promised the deficit would be eliminated by 2015. By 2015 he had only managed to halve it, whilst the real value was higher still. Meanwhile the public debt increased due to the government claiming insufficient tax receipts. As the economists predicted, cutting services was counterproductive, as salary cuts have undoubtedly contributed to the fall in tax receipts.
Despite the evidence, today’s budget will promise more of the same. More welfare cuts, the academisation of schools, more austerity. Apparently, there will be a nod to the fact that homelessness is on the rise, but the proffered £150 million will be chicken feed in the face of the scale of the problem.
Meanwhile, the Shadow Chancellor, John O’Donnell, is beginning to make fiscal arguments that most economists suggest would be a sensible way out of our problem. Richard Murphy provides a good analysis of these here. As Paul Mason notes it is a marked change from the previous economic theories of Ed Balls, but fiscally credible nonetheless.
As Paul Mason notes here the Chancellor has failed on his own terms for the last six years. There is every chance that whatever he says he will fail again. It is time to try something different.
We can’t go on like this. George Osborne’s economy isn’t working. Isn’t it time he changed tack?
* You can access all Ekklesia’s commentary and analysis on the 2016 Budget here: http://www.ekklesia.co.
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© Virginia Moffatt is Chief Operating Officer for Ekklesia