Enter your email address to stay in touch

‘Austerity is over’ shocker

Tory Lord says economy just peachy. We don’t believe him
Duncan Milligan, Friday, July 24th, 2015


Austerity is over, the new Tory minister in charge of the ‘Northern Powerhouse’ has declared. That’s great news, coming in the wake of the end of poverty and economic sunshine breaking out over the miracle that is modern Britain.

 

Lord O’Neill, who told the House of Lords that austerity is over, is an ex-Goldman Sachs chief economist no less. He’s so rich that he works as a Treasury minister for no pay.

 

It’s just as well as it saves us asking him for our money back. Most of us back in the real world are still feeling the cold chill of austerity blowing down our neck.

 

So what did this former chief economist and Treasury minister say? He told the Lords as part of the Budget debate: “There is still a view in some quarters that we are still in an age of austerity. But from an overall fiscal perspective, with strong employment, and recently above-trend growth, this is surely no longer the case.”

 

He must have missed his boss George Osborne’s announcement of further 40 per cent cuts to departmental budgets, which will devastate local government and other services. The cuts to child tax credits for over four million families most on modest or low pay.

 

That another 400,000 public sector workers will lose their jobs. Those that remain will see no more than 1 per cent pay rises for another four years, on top of the last five years of austerity.

 

It is the greatest and most sustained assault on the living standards of public sector workers in vital care and social services, the NHS and education ever. Every worker as suffered (although not the upper levels of Goldman Sachs) the longest fall in living standards since the 1870s, when Gladstone was prime minister.

 

The household incomes of those of working age – that is not pensioner households – are still below where they were in 2008. Low pay and inflation outstripping pay rises for most of that time have eaten into living standards.

 

Some low inflation has meant there are some pay rises now a few points above inflation as measured by the Retail Price Index. But it may take half a generation to recover the value that has been lost – and public sector workers that might take a whole generation to recover from.

 

According to a TUC analysis, the years from 2010 to 2014 was the worst five-year period for living standards for at least half a century. During that time another 500,000 more children fell into absolute poverty, although none were the children of Goldman Sachs bankers.

 

The Minimum Income Standard figures from the Joseph Rowntree Foundation show that under the Tories households reliant on basic benefits and on the minimum wage have fallen further below the Minimum Income Standard. That is not a measure of poverty, but what the public believe is a decent standard of living that would allow someone to, for example, buy a birthday present.

 

Those on modest and low incomes are now further away from the minimum income standard than they were when the banking crisis struck the global economy. The Poverty and Social Exclusion project found that in the UK:

4m people are not properly fed by today’s standards;

2.5m children live in homes that are damp;

2.3m households cannot afford to heat the living areas of their homes;

5.5m adults go without one or more basic clothing necessities, such as a warm coat.

 

And the economic mess? The weakest recovery from recession ever.

 

Economic growth that is bumping along, driven by population growth and people buying things on credit they cannot afford. Inflation rates so low they worry economists who wonder how much life there is in the economy – money is changing hands much more slowly, for example.

 

The balance of payments deficit – how much we earn by selling good abroad, against how much we bring in from abroad and buy – is truly terrible. It’s been the worse few years since before Victoria took the throne.

 

Manufacturing is still below what was being produced before the great banking crash. Productivity growth has been non-existent.

 

But the Tories think the sun is shining. Lord O’Neill says austerity is over (clearly he must have missed the massive cuts in the Budget).

 

And what do some usually supportive Toy publications think of Lord O’Neill? Philip Delves Broughton expressed his own opinion of him in the Spectator – a devoutly Tory weekly magazine.

 

Mr Broughton wrote (before O’Neill’s austerity announcement): “The economist entrusted with reviving the North is a Goldman Sachs B-teamer who spouts airline-lounge nonsense….for the government to think they have entrusted the Northern Powerhouse project to a rough-and-tough Goldman veteran is rather like a soccer team thinking they have recruited Lionel Messi from Barcelona — only to discover they’ve hired Dave Messi, the reserve goalie for the under-16s.”

 

Steve Turner, Unite assistant general secretary told UniteLive, “The wealthy and privileged few have not suffered from austerity, in fact many make money from a crisis. It’s those on low pay or with modest incomes, families, the sick and disabled that are paying the price; relying on food banks, charitable support, rising personal debt and too often paying with their lives.

 

Horribly out of touch

“Lord O’Neill’s comments show just how horribly out of touch he is – people have suffered the impact of five years of ideological austerity, which has been more about ‘shrinking the state’, privatising public services, slashing budgets and undermining our welfare state.

 

“Their attacks on trade unions and workers rights alongside continued cuts to public sector pay are about forcing down pay across the economy, instilling fear and helplessness in a race to the bottom at workplaces across our nations.

 

“None of this has stopped, it is continuing apace as the Welfare Bill, Trade Union Bill and the latest spending cuts demonstrate. Worse is yet to come as departments identify another 40 per cent cut to budgets.

 

“It makes challenging austerity at every turn absolutely vital, it’s our duty, our responsibility to do that. Standing up with those who can and for those that can’t. Mobilising resistance industrially and socially, protesting and demonstrating, supporting direct action alongside industrial action.”

Related Articles