FIRST, you stick out your jaw and appear as Churchillian as you possibly can. You must look and sound tough – unafraid to make the hard call in the national interest – but also compassionate, someone who really cares. You need to appear statesmanlike, yet not above ordinary people. You feel their pain; we’re all in this together. Be sombre – don’t even hint you’re enjoying it. Maintain that frown; don’t look smug; these are bad times. And, of course, blame your predecessor for the terribly difficult (but necessary and responsible) things you have to do.
That’s how you cut £81 billion of government spending over four years if you’re a member of the British Conservative–Liberal Democrat government. “Today is the day when Britain steps back from the brink, when we confront the bills from a decade of debt,” George Osborne, the chancellor of the exchequer, told the House of Commons at the beginning of his recent announcement of the spending review.
Do voters believe him? Certainly, there’s been no revolt. The protests in the streets of Paris over the lifting of the retirement age feel much more than a two-hour Eurostar ride away. Some commentators have made dark references to the poll-tax riots of twenty years ago, but no one seriously expects anything like that – not, at least, until the cuts really begin to cut into the lives of ordinary folk.
The government’s manipulation of public opinion has been astute. Ministers have given the impression that it’s five minutes to midnight – which, although widely regarded as hyperbole, has enough plausibility about it to justify large reductions in expenditure. The government allowed rumours of 40 per cent cuts to government departments to circulate widely, and so enjoys a little kudos by applying average cuts of only around 20 per cent. It was able to act a little more gently towards government departments by slashing welfare payments, and so faces less opposition in the civil service and less hostility from a middle class and business world nervous about excessive winding back of the public sector. The state is, after all, a major source of jobs and contracts for many of the people who helped Cameron, Osborne, Clegg and friends into power last May.
Nevertheless, the projected loss of public-sector jobs is still staggering. Even the government’s own estimate runs to almost 500,000. That’s 40,000 teachers, 15,000 in Work and Pensions and 13,000 in Revenue and Customs. There are no official figures for police, but chief constables estimate 11,500 job losses. Many hundreds of thousands more public-sector workers will be fired; government spin will pass them off as useless backroom paper-pushers.
It’s difficult to imagine, though, that anyone in the government is kidding themselves that the easy run – assisted so far by a notably cooperative media – will last for long. While there’s solid support for austerity, opinion polling has found much less support for the size of the cuts, as well as a growing feeling that they’ll fall most severely on those least able to bear them. A Guardian/ICM poll found that just over half the respondents thought the cuts would be unfair. This percentage is not likely to decrease as the cuts are actually implemented.
Many commentators, including the respected Institute for Fiscal Studies, have argued that the cuts are “clearly not progressive.” Among their most regressive features is the £7 billion cut to welfare, which hits the poor, the ill and the disabled. If you cut public spending, it’s those who are most vulnerable – which means those most dependent on government – who inevitably are hit hardest. No fine calculations about who is losing what can really escape that hard reality.
A new cap on housing benefits, for instance, is widely predicted to lead to a mass evacuation of the poorest people to the outer suburbs. Councils in areas likely to have to absorb such people are bracing for the costs involved; or, more accurately, they’re telling Whitehall they don’t have the money to deal with the fall-out. School places will need to be found while services such as child protection will come under additional pressure. There are reports of councils even making block-bookings of rooms in bed-and-breakfast accommodation in preparation for the “flight to the suburbs.” Boris Johnson, the Tory mayor of London, no doubt with an eye on the upcoming mayoral election, has complained of “Kosovo-style social cleansing.”
Meanwhile, the response of the warm and cuddly coterie running this country to such complaints is to stoke taxpayer resentment against people who are supposedly living it up in expensive inner-city housing at the public’s expense. There’ll no doubt be plenty more of this kind of thing as the government seeks to defend the indefensible, as it had to do recently when it withdrew the previously universal child benefit from any family in which a wage-earner was on more than £44,000 a year but left it in place for some households with two wage-earners bringing in a combined income of £86,000. The chancellor’s feeble explanation for this anomaly rested on the administrative expense of calculating household income. But the main defence involved wrinkled brows, determined jaws, references to tough times and tough measures, Labour’s debt, and all the rest of it.
THE POINT of diminishing returns for this kind of performance will arrive soon enough; it always does. For the time being, though, the government is determined to present every cut as grim necessity forced on it by its predecessor’s incompetence and irresponsibility, never as part of an ideological thrust, and certainly not as a return to Thatcherism. Indeed, the need not to appear Thatcherite remains critical to the public presentation of the Tories in government, as it did in opposition. For the Lib Dems, who have everything to lose if it all goes pear-shaped (and perhaps even if it doesn’t), any association with the social division that is central to the collective memory of the Thatcher years is especially unappealing.
The paradox is that the government’s spending cuts rely on a Thatcherite calculation. In particular, as Keynes’s biographer Robert Skidelsky has recently explained in the New Statesman, they depend on the dubious proposition that Geoffrey Howe’s savage 1981 budget paved the way for the prosperity of the later 1980s. Cut public spending, the argument goes, and private investment will fill the breach. Businesses and households are holding back from spending because they believe that tax increases will soon be needed to reduce Britain’s massive public debt, but if there are rapid cuts in government outlays now then they will be more willing to spend. The happy ending is a growing economy. In a variation of this argument, high government borrowing boosts interest rates so that private borrowers find taking out a loan more expensive, thereby strangling investment.
This analysis is highly debatable. Skidelsky, for one, believes that it was a reduction in interest rates and an expansion of credit that led to the 1980s boom, and the Howe–Thatcher cuts had nothing to do with it. Moreover, considering the lack of much scope for further reductions in interest rates given their present bargain-basement level, that’s an instrument barely available to government.
Skidelsky also points out that on previous occasions when British governments have taken the axe to government spending, the result was a brake on growth and an increase in public debt measured as a percentage of GDP. Like many economic commentators, Skidelsky believes the government’s strategy of cuts will “worsen immediate growth prospects” while the printing of money – on which the chancellor relies heavily to assist recovery – will probably produce a housing boom while leaving demand in much of the economy fairly flat.
Commentators on the left accuse the government of a bold ideological attempt to reshape the relationship between state and economy under cover of an ostensible program of debt reduction. They point to the radical winding back of the welfare bill and the likelihood that the government will go a long way towards implementing the recommendations of the Browne Review into the Funding of Higher Education, which will greatly increase the role of market forces in undergraduate education. The drastic reduction in civil-servant numbers and quangos (non-departmental public bodies) also assumes that the private sector will play a greater role in performing functions currently carried out by the state. Companies likely to benefit from outsourcing are rubbing their hands together in expectation of a large windfall.
The government will naturally find itself in some difficulty if its policies do not lead to economic recovery. But it has other problems, too, which are associated with the unique political context of these cuts. It’s worth recalling that the voters didn’t actually vote for this coalition government. All the signs at the moment suggest that they’re willing to tolerate it for the time being, but the highly conditional nature of this backing seems only too obvious. This fragility is, in turn, related to the broader discrediting of the political class associated especially with New Labour’s culture of spin and the parliamentary expenses scandal.
A related problem is that the “we’re all in this together” act is more difficult to perform persuasively in modern Britain. Mrs Thatcher’s skill lay partly in her ability to present herself as the grocer’s daughter from Grantham, outside the Tory establishment but perfectly in touch with the respectable, industrious and conservative Middle England that she epitomised. She was, in fact, Oxford-educated and – largely through her wealthy and well-connected husband – very rich. “Call me Tony” Blair’s charade that he was a regular family guy who just happened to be prime minister fell away quickly enough on those yachting holidays with rich friends. Since his departure from politics, he’s mercifully given up even pretending. David Cameron and Nick Clegg, meanwhile, try to persuade us that despite their obvious membership of a wealthy and privileged elite, they’re really “middle class” – just like the teachers, nurses, police and middle-ranking public servants who fear for their jobs and homes. It’s hard to be sure, but the combination of spin-fatigue and the expenses scandal might have made this sleight of hand easier to notice – especially in the context of government decisions that wreck lives while leaving a few untouched or better off.
Finally, there’s the peculiarity of relying so heavily on a market that has demonstrably failed. Just a couple of years ago, governments were shovelling money into banks whose behaviour had threatened the stability of the whole economy. Now, we’re expected to believe that governments are the enemy, the market our friend, and that debts run up in propping up the banks should be paid by cutting child benefits and withdrawing welfare from those on the bottom rungs of society. Meanwhile, boardroom pay is going where it normally goes – up and fast, increasing by 55 per cent in the last year, to 200 times the average for British employees.
As John Gray recently pointed out in the London Review of Books, a critical effect of the financial crisis has been greatly to enhance the role of the state as an actor in the international economy. The neo-liberal ascendancy is over, a victim of its own inability to maintain either economic or social stability. Governments of every colour have found it necessary to act to protect their populations from its devastating consequences. What they haven’t yet been able to do is create either national or international regulatory institutions capable of avoiding more of the same.
Oddly, in a brave gamble against the odds, the Conservative–Lib-Dem coalition believes that it can ignore this political task by occupying the post-Thatcherite default position for the elites who dominate all of the main British political parties: a belief in the beneficent role of the market. Time will tell whether these eighties children are generals deploying cavalry against tanks. •