Never-ending austerity is a threat to our social rights

Public services are giving way under the weight of the cuts


The latest report from the Institute of Government on five public services — hospitals, adult social care, schools, prisons and the police — provides a bleak commentary on failures of government policies and with it the future of the hard won social rights and the welfare state.

Hospitals have received additional funding but that has not matched the financial pressures generated by the Private Finance Initiative (PFI) which requires hospitals to pay millions of pounds to contractors each year. The additional funding has not matched the demands for healthcare due to demographic changes.

Up to 95 per cent of hospital beds are occupied daily and that reduces the possibility of admitting new patients.  Hospital queues are getting longer and even people suffering from acute illnesses have to wait longer for treatment. There isn’t much relief on the horizon as 90 per cent of the hospitals are running a high financial deficit.

Adult social care, that is the provision of support and personal care (as opposed to treatment) to meet needs arising from illness, disability or old age, is at breaking point. The main responsibility for this falls on the Department for Communities and Local Government and its budget has been cut by 60 per cent since 2011/12 and additional reductions planned by 2020 will mean that its budget would have been reduced by 88 per cent.

This at a time when due to demographic changes the demand is rising. Increasingly, hard pressed local authorities are expected to meet the costs and they just don’t have the capacity to do so.

Perpetual cuts

The past five years have seen a seven per cent real-term increase in schools’ day-to-day spending budgets but overall the position is bleak as the number of pupils is rising. The Institute for Fiscal studies expects spending per pupil to fall by eight between 2014/15 and 2019/20 due to higher number of pupils, and higher national insurance contributions imposed on employers.

Prisons have been in the news because of riots and low staff morale which reduces opportunity for rehabilitation. Spending on prisons has decreased by 21 per cent in real terms between 2009/10 and 2015/16 even though the prison population has remained steady. Most of the savings have been made by reducing staff numbers by around 27 per cent.

The Conservative Party portrays itself as a party of law and order, but spending on the police has decreased by 17 per cent from 2009/10 and 2015/16. The number of police officers has fallen by 13.7 per cent between 2009 and 2016. The increasing stress at work has resulted in a 35 per cent increase in officers going on long-term sick leave.

The above is a brief snippet of the Institute of Government report. It is further evidence that the austerity programme introduced in the wake of the 2007-08 banking crash has turned into a programme of perpetual cuts to public services.   Public spending as a percentage of GDP has declined from 45 per cent in 2010 to 40 per cent now, and the government is looking for further cuts of between two and six per cent in departmental budgets by 2019-20.

Obsessed with austerity

Public services are a key part of building a sense of community and social solidarity. They enable the state to redistribute wealth by ensuring that all citizens, regardless of their wealth, can secure essential services. The degradation of public services in the world’s fifth largest economy is avoidable.

For example, the government can reverse the recent tax cuts handed to corporations and wealthy individuals. It could generate additional resources by being tougher on tax avoidance and broaden the tax base by levying a modest rate of tax on speculative financial transactions and introducing Land Value Tax. It could levy additional taxes on profiteering by gas, electricity, water, phone and train companies.  It could curtail the vast corporate welfare programme and reduce the vast subsidies given to oil, gas farming, electricity, train, telecommunications, property, motor racing, film and other companies.

How about evaluating the benefit of 1,140 tax reliefs or special tax concessions worth more than £117 billion given to corporations? The Public Accounts Committee  isn’t really convinced they deliver the promised social benefits and in its own words ‘HMRC and HM Treasury often show a worrying lack of curiosity about the cost of tax reliefs’.  The above would reduce the deficit on public finances too.

A government obsessed with austerity is unlikely to follow any of the above suggestions. One might speculate that its strategy is to inflict cuts and make things intolerable. Then it offers privatisation as the only magical solution and thus achieves its ideological goal.

Conservative governments have been very adept at camouflaging their ideological aims with the rhetoric of rebuilding the economy.  We have heard it all before in the Thatcher years when the government claimed that it needed to rebuild the economy by controlling inflation. Here are the reflections of Sir Alan Budd, a key economic advisor to the Thatcher government:

“My worry is … that there may have been people making the actual policy decisions … who never believed for a moment that this was the correct way to bring down inflation. They did, however, see that it would be a very, very good way to raise unemployment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes – if you like, that what was engineered there in Marxist terms was a crisis of capitalism which recreated a reserve army of labour and has allowed the capitalists to make high profits ever since”.

Beware the government that talks about the need to cut financial deficits, with the real aim of restructuring the state and dilute social rights.

Prem Sikka is Emeritus Professor of Accounting at the University of Essex

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