When George Osborne announced the age of austerity in his 2010 budget the were plenty of critics. What is often forgotten was the formidable consensus among the world’s most respected economic bodies fighting his corner.
Anyone who questioned Osborne’s wisdom of generating growth by slashing public spending was met by a praetorian guard of experts drawn from the world’s major think tanks and top universities.
Many of them have performed dramatic U-turns, usually without much fanfare. Finance ministers in the main have stuck to their hard line austerity policies.
One of them is Osborne, who, despite ditching his commitment to achieve a budget surplus by 2020, remains aligned with his friend Wolfgang Schäuble, the German finance minister and Europe’s austerian-in-chief.
Labour’s shadow chancellor, John McDonnell, might have welcomed his opposite number into the anti-austerity camp, but this Osborne’s not for turning.
He still believes that reducing the size of the state is necessary for a successful economy. He believed it in 2012 when he relaxed the pace of austerity in response to the euro-crisis and the prospect of Greece going bust, and he believes it now.
And if it wasn’t politically convenient as part of his battle with Conservative Brexiters to make a big deal of the current mild slowdown in GDP growth, which at the moment is nothing like as bad as the 2012 meltdown in Athens, he would be sticking to his austerity guns with even deeper cuts to meet his original aim.
On Osborne’s watch, the number of Britain’s civil servants by some counts is at its lowest level for 75 years, councils are heading towards providing the legal minimum to people entitled to mental health and elderly care services, while NHS spending is predicted to fall more than £20bn short of what is needed in 2020.
Planned cuts for the next four years will go ahead, including a £12bn welfare spending reduction. And the cuts so far have been anything but fair. A study for the Joseph Rowntree Foundation last year found that social care spending fell by £65 per capita, or 14% adjusted for inflation, in the UK’s most deprived communities between 2010 and 2015 and at the same time increased by £28 per capita, or 8% in the least deprived communities.
Never mind that the International Monetary Fund has called for higher public investment spending on transport, housing and the digital infrastructure and the Paris-based Organisation for Economic Cooperation and Development has said much the same. Under the Treasury’s current plans, public spending on infrastructure is scheduled to fall sharply from 2018.
Earlier this week the boss of the European Central Bank, Mario Draghi, made a yet another speech calling for governments to end their reliance on cheap central bank money to keep their economies afloat and start spending some of their own.
Mark Carney made much the same point on Thursday in a speech that was mostly about his plans to protect the financial system from collapse following the vote to leave the European Union, but found space to chide the government for not joining him by taking some action of its own to boost growth in the economy.
Osborne is not going to pay heed. Maybe his successor will have a change of heart. It seems unlikely. A budget in the autumn in response to a threatened downturn could still happen, and that could still heap more pain on the public sector and least well off.
