Autumn Statement: Is austerity over?


In a year of political surprises, what are the chances that this Tory government will surprise us by abandoning austerity? Unfortunately, they are vanishingly small. 

Writes economist Michael Burke

There has been a concerted effort by the mainstream media to portray this government as radically different from its predecessor, even to suggest that it will reverse austerity. But the evidence we have so far suggests exactly the opposite:

  • A lobby to provide the NHS with extra funds as it faces potentially its worst winter ever has been brushed aside
  • Philip Hammond has offered £2 billion of extra funding for housing (as well as soft loans to small builders) over 4 years, when £30 billion a year is needed to meet the housing shortage
  • The planned cut in the cap on social security from £26,000 to £23,000 has just been implemented, and down to £20,000 outside London
  • A  large number of other cuts to pensions, to social security and working tax credits have also been implemented
  • The government has just announced the postponement of work to electrify the Great Western rail network in south-west England, a £2.8 billion project.
  • The Northern Powerhouse remains a slogan, not a project
  • Hammond did announce £2 billion package to combat cyber-crime, specifically motivated as ‘this could lead to war’

This summary of measures could have been taken straight from the Osborne playbook, with cuts to social security, pensions and other entitlements that all hit working people again combined with further cuts to investment. The only thing that is new is this security and immigration-obsessed government has provided a small amount of funding to conduct cyber-warfare because it feels it is falling behind. If the Osborne approach was completely mimicked in the upcoming Autumn Statement, there would also be a new tax giveaway for big business.

There is a fundamental reason for this. The Tories have not implemented austerity because they are ‘the Nasty Party’, although they are. The entire austerity programme, the cuts to public services and pay, cuts to social welfare, cuts to business taxes, further privatisation and cuts to public sector investment all have one central purpose. This is not, as stated, to eliminate the deficit, otherwise the Corporation Tax rate would not have been cut and costly privatisations made.

The purpose of austerity is to restore profitability. And this has been a failure. Even before taking rising prices into account, the level of profits in the second quarter of this year was lower that it was in the third quarter of 2014. Profits are not sufficiently recovering to allow any major reversal of austerity for a government wholly committed to driving down wages and the social wage while giving big handouts to big business.

Of course, some tinkering and publicity-seeking measures are likely, as the government pretends to be on the side of working people. No doubt it will be aided by the extremely compliant media. But anti-austerity activists should be clear. This will be the same old austerity Tories as before. 

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