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Austerity—a system of cuts and plunder to benefit rich

This article is over 1 years, 3 months old
Austerity was presented as a system that was desperately needed to rescue the economy. But Sophie Squire argues the experiment led to the poor paying the price for the rich
Anti-austerity protest

Protesters demand an end to austerity in London, 2014. (Picture: David B Young)

One thing that you can always be sure of is that the Tories will make ordinary people pay for their crises. That was their plan in 2010 when Tory chancellor, George Osborne outlined an austerity plan causing a decade of misery and death for ordinary people. 

He promised that the Tory and Lib Dem coalition government would pay the debts of a “failed past” and lay the foundations for a “more prosperous future” following the 2008 economic crash. 

Their plan was to cut public services and raise taxes to reduce the deficit—the gap between government spending and tax money collected. The coalition presented this £155 billion gap in 2010 as a crisis that we were “all in it together” to fix.

They said the government was bankrupt, despite the deficit not being as large as in other countries at the time. It was an excuse to slash benefits and public services and transfer more money from the poor to the rich.

Behind these plans was an ideological drive to create what former prime minister David Cameron described as the “big society”. For him and the Tories, this meant the “biggest, most dramatic redistribution of power” from the state to individuals. 

Services were privatised and helping the vulnerable was outsourced to charities and volunteers. Osborne ordered all government departments to slash an average of 25 percent from their budgets yearly. The Tories massively cut spending on welfare, benefits, road maintenance, libraries, courts, housing, councils, education and local government. 

Osborne also announced a two year public sector pay freeze. Since then the Tories have imposed either more pay freezes or capped pay increases. For ordinary people the damage is done, and it’s still felt today. From 2010 until 2019, real wage growth slowed by an average of half, according to the TUC union federationAnd at the beginning of this month, it was revealed that Tory austerity killed more people than Covid in Britain. 

While austerity has been a disaster for ordinary people, it has resulted in mixed outcomes for the ruling class. By 2016 the deficit had risen again. And as Covid hit four years later, Britain’s budget deficit reached its highest level since the end of the Second World War. 

Austerity didn’t usher in transformation of economic growth either. In fact economic recovery from the 2008-09 financial crisis was the slowest it had been for any recession in the post-war period. And because of cuts, plummeting living conditions and falling real-term wages, worker productivity hasn’t risen fast enough for those in power.

But despite all this, the Tories did get some things they wanted. The government was able to shrink the amount it put into public spending. In 2009, 46.1 percent of GDP went to the public sector, falling to 39 percent in 2018.

This squeeze on public spending has opened the door for the privatisation of sections of the state. This includes the NHS following the 2012 Health and Social Care Act, which opened the door to private firms.

Sadly, for the ruling class, this couldn’t last. The Covid‑19 pandemic hitting already underfunded social projects meant they were forced to increase public spending again. 

For the Tories and the ruling class, austerity was an experiment with mixed results that the poor paid the price for. But ordinary people never passively accepted austerity. Tens of thousands of people took to the streets soon after Osborne’s announcement of cuts. Our class needs to be ready to do the same, but on an even larger scale if austerity is intensified.

  • This is the third in a series of columns about economics.

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