Austerity's lasting impact

Daniel Leal-Olivas/AFP/Getty Images

At her party conference in Birmingham last month Prime Minister Theresa May boldly claimed ‘austerity’ is over. ‘Better days are coming,’ she said to a country reeling from cuts to public spending. In a tumultuous time where the head spin of Brexit negotiations brings new and frantic warnings of gloom and economic doom day in and day out it’s a sigh of relief for most to hear that austerity is over.

Cash-strapped families who’ve seen their incomes fall over the years will be happier hearing they might not see a further reduction in their working tax credits. The cuts to welfare have been deep ones for many families in the UK as shown by the Child Poverty Action Group and the Institute for Public Policy Research’s report that a couple with two young children, one working full-time and the other part-time on the national living wage, will lose more than £1,200 a year due to universal credit cuts.

The Institute for Fiscal Studies showed the annual median wage to be £700 less than it was a decade ago and living standards are the worst they’ve been in over 200 years. This has meant that welfare programs have become more important as families struggle to make ends meet. But the cuts may have a bigger and more unspoken impact.

“If you think of austerity as a political project and you think back to the banking crisis of 2008/2009, the arrival of the Conservative Government 2010; they argue we have to do something about public finances and public spending.

“But another way of looking at that is that they took advantage politically of the economic situation to say let’s not just deal with the current fiscal crisis lets fundamentally alter the whole nature of the welfare state and people’s relationship to it, what it can do and what it means.

“If you take that view of austerity then that whole reshaping of welfare is clearly still happening and in that sense that political project will have a lasting legacy so even if you were to increase some aspects of public spending again in which, financially, would look as though austerity has finished then that political project of austerity will have done its work and will have reshaped the whole idea of the welfare state as a support mechanism,” says Dr Andrew Eccles, a social policy lecturer at Strathclyde University.

While this structural change may be a hard pill to swallow for many it is something the Tories argue must be done. Why? Because we need to balance the books, they’d say. But if what Dr Eccles says is true then this goes way beyond balancing the books; way beyond a fiscal policy designed to clear the debt, and it becomes a change so drastic that the Overton window shifts way to the right making opposition seem more left than is actually the case.

Changes to the political landscape, however, are not new and should be expected. Tony Blair introduced ‘New Labour’ and since then anyone to the left of Blair – who, historically is fairly right-wing for the party – seems far left...too left. Take Jeremy Corbyn, a man only voted into the leadership battle to ‘widen the debate’ but to the parliamentary Labour Party’s surprise (and to be fair to a lot of people’s) became leader with overwhelming in-party support.

Total public spending from OECD countries in 2014. Source: IFS

“You can see a very clear sense in which the levels of spending on public spending effectively in Britain is very significantly below other European countries...most of the countries in Europe would have public spending somewhere between 40-50%. Public spending in Britain is below 40%,” Dr Eccles says.

Economic austerity may be soon taking a nap, but the structural changes underwent in our politics and society have moved the goal post. So much cash has been stripped from our public spending that to recover it to pre-crisis levels would seem not bold, but extreme.

The Tories have not won in their efforts to reduce the debt by cutting public spending. They have, however, won in changing the political landscape to be viewed through the lens of their ideology. Everything is relative. This is the new normal. For change, any opposition will need to be bold and confident in their ideals, policies and vision for the future of our country.