Downloading PDF. Please wait... Issue 2144

A neoliberal attack on the public sector

This article is over 12 years, 9 months old
There is an increasingly ugly and strident – but also quite ridiculous – campaign building up against the public sector.
Issue 2144

There is an increasingly ugly and strident – but also quite ridiculous – campaign building up against the public sector.

It’s not surprising that the Tories should be in the vanguard of this campaign. Conservative leader David Cameron is taking his party on an increasingly Thatcherite course.

This isn’t completely of his own choosing. Just look at the hullabaloo in the Tory ranks, led by London mayor Boris Johnson, after Cameron implied that he wouldn’t scrap Labour’s planned new 45 percent income tax band for those earning more than £150,000.

But the assault on the public sector is coming from the centre of the political spectrum as well. Andrew Rawnsley’s column in last Sunday’s Observer newspaper was headlined “The long party is over for the public sector, whoever wins”.

“The public sector of the future must be much more impressive at demonstrating that it is spending cleverly and effectively,” Rawnsley pontificated. “Apart from being a virtue in itself, there will be heightened voter intolerance for the squandering of public money when so many of those providing it are experiencing the squeeze of their lives.”

And he went off into a riff about how wasteful quangos are, giving Ofcom as an example. Now I would happily see all these regulators strung up in a row along the Thames. They are a wretched bunch of overpaid pro-business privatisers. But they aren’t typical of the public sector.

The bulk of government spending is devoted to employing teachers, nurses, civil service workers, carers and the like, who are paid not very good wages for doing demanding but valuable work. Most are subject to constant treasury-imposed “efficiency savings” that make life in the public sector the opposite of a “party”.


Rawnsley works himself into a frenzy about government borrowing, which next year will be at the highest level in Britain since the Second World War. And a good thing too. If we really are facing the most severe economic crisis since the 1930s, then higher government borrowing is a positive good. Every pound the state borrows and spends helps to maintain demand for goods and services and thereby to keep people in jobs.

Martin Wolf of the Financial Times, hardly a raving leftie, argued recently that the resulting increase in government debt would be quite easy to pay off over time. He concluded, “It makes no sense to avoid action that would greatly lower the real economic costs of the crisis now, to eliminate a hypothetical and avoidable fiscal crisis later on. This would be like committing suicide in order to stop worrying about death.”

Yet precisely this kind of mentality increasingly pervades public discussion in Britain. There was an absurd programme on BBC Radio 4 a couple of weeks ago where a panel of experts unanimously demanded ferocious cuts in the next budget.

An economist from the Swiss bank UBS was especially stern. I couldn’t believe my ears. UBS lost $18 billion last year thanks to its speculation in financial derivatives – the biggest loss in the history of Swiss banking. It also had its collar felt by the US tax authorities.

But instead of a prolonged and humble silence from UBS, we get demands to slash and burn the public sector. This shows the extent to which the political and economic establishment still don’t get the crisis. They have suffered a series of enormous shocks and are still very prone to panic.

But at the same time their outlook is deeply imbued with neoliberalism. So, as soon as they get back the slightest sense of security, then they are off again raging against the public sector and those who work in it. If they had their way we really would go back to the 1930s.

Back then governments were desperate to reduce their borrowing so slashed their spending and raised taxes. The effect was to drive the world economy into a pit so deep that it took the Second World War to get out of it.

The current campaign against the public sector is motivated by a toxic combination of free market ideology, economic illiteracy, and class hatred. It should be resisted at all costs.

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