‘People who don’t understand the capacities of a currency-issuing govt telling us we have no choice but to accept deaths in the community for the sake of the economy. Tell me again how understanding economics is “obscure” and “academic.”’
Tweeted by Jason Restante
In this week’s news, ITV exposed the shocking examples of poor housing which are seriously affecting people’s health and costing the NHS an estimated £1.4bn each year. Matt Hancock, the Secretary of Health, responding to the investigation said that what he wanted to do with the whole health system was to ‘focus much more on what causes ill health, not just picking up the pieces afterwards.’ You couldn’t make it up, could you? After 10 years of cuts to government spending on public services, local government, and the social security system, as a result of ideologically driven economic dogma which suggested that the fundamentals of a good society were no longer affordable, the government seems to have no idea that the system is failing due to its own policies.
After having spent years deferring to the dogma that the market is king, whilst at the same time overseeing the decay of vital public infrastructure in the name of balanced public accounts, one might be forgiven for thinking that the social determinants of health are distinct and external to government policies and spending decisions. Although, of course, neoliberal dogma has informed the policies of successive governments since the mid-70s and has skewed the power relations between capital and working people, over the last ten years we have witnessed an entrenchment in wealth inequality as a result of cuts to public spending and legislation which has favoured capital, with government washing its hands of its responsibilities towards those that have elected them. It is staggering that now it is feigning concern for something it alone is responsible for.
A report published by Shelter in 2014 indicated that a third of private sector accommodation failed to meet the government’s Decent Homes Standard, with over six in ten renters (61%) experiencing problems such as damp, mould, leaking roofs or windows, electrical hazards, animal infestation and gas leaks. Despite laws introduced in 2018 which enabled local authorities to ban landlords from renting out properties that were unfit for human habitation, seven years on from Shelter’s report this ITV broadcast shows that the problem of poor housing is still continuing to have a significant impact on the health and well-being of those affected, with all the related economic costs that derive from poor living conditions. It is clear that professional standards in the private rented sector remain low and are insufficiently regulated. A situation made worse by cuts to local government grants which have also left local authorities under-resourced and less able to prosecute offenders.
When the Secretary of Health says it is up to landlords to respond to inadequate homes, has he forgotten that it is the role of the government to legislate to ensure that they cannot flout the law? And, whilst he confirms that it is the responsibility of government to ‘make sure… there is enough good quality housing’, its own record is deplorable. Social housing has not been at the top of its agenda, affordable housing is not affordable for many people, and a reliance on the private sector has put housing out of the reach of many whose incomes simply cannot extend to private home ownership and who then often find themselves at the mercy of bad landlords in the private rented sector.
Government policies, or lack of them, are increasingly revealing the cracks in a system which is broken for many people and yet which continues to serve those whose wealth and power has continued to set them apart as an entitled elite.
This week a new government initiative was announced to tackle homelessness. The ‘Rough Sleeping’ Initiative will allocate an additional £203 million so that 281 local authorities can provide support for people ‘living on the street’ as it is euphemistically referred to, as if somehow those who have the misfortune to be made homeless have chosen to be so. The Maldon MP John Whittingdale commented that the last year had been hard on those sleeping rough and welcomed the additional funding. Whittingdale clearly has no shame and ought to ask himself why there has been an increase in homelessness. Could it be anything to do with his government’s policies over the last 10 years, perhaps?
The facts on homelessness are stark. Between 2010 and 2019 there was a 165% increase in so-called ‘rough sleeping’ according to official figures, and homelessness charities commenting said that the number was likely much higher. Add to this the fact that rent arrears may put further thousands at risk of homelessness as the end of the eviction ban approaches at the end of the month, and the grandstanding by the government clearly does not match the realities in terms of the government policies and spending decisions that have led us here.
Whittingdale, who graduated with a 2.2 in economics in 1982, continues to cling to the neoliberal economic orthodoxy which has done so much damage, and yet when confronted with the reality of that position prefers to mitigate for it rather than ask questions about how we got here. He, like many others, has perpetuated the myth that austerity was necessary to restore the public finances, claiming at the same time that good fiscal management by the Tories would enable them to spend on the NHS, policing and education. This was always a deceit, and we are now paying the price for it. The classic household budget narrative of the public accounts has done a huge amount of damage through the imposition of austerity, and now those chickens are coming home to roost as the nation tries to pick up the pieces after a terrible year of suffering and death, which in actual fact preceded the arrival of Covid-19.
It seems that not a week goes by when the media does not have a report on child poverty. The End Child Poverty Coalition reported this week that 4.3m children were living in poverty in 2019/20, with the North East of England suffering the largest increase. The figures showed that numbers were up 200,000 over the previous year, and up 500,000 over the past five years. Loughborough University, which was commissioned by the Coalition to carry out the study, said that ‘stagnating wages and high housing costs were pushing people to the brink.’ The coalition called on the government to recognise the scale of the problem and its impact on the lives of children, and to invest in a credible plan to end child poverty.
Anna Feuchtwang, Chair of the End Child Poverty Coalition said:
“The figures speak for themselves – the situation for children couldn’t be starker. We all want to live in a society where children are supported to be the best they can be, but the reality is very different for too many.
“The UK Government can be in no doubt about the challenge it faces if it is serious about ‘levelling up’ parts of the country hardest hit by poverty. After the year we have all had, they owe it to our children to come up with a plan to tackle child poverty that includes a boost to children’s benefits. And they need to scrap plans to cut Universal Credit given parents and children are having a tough enough time as it is.”
Again, this week, the Local Government Association raised the alarm over schools which are set to lose £118 million in funding for providing academic support for poorer pupils. If the government is committed to its levelling up agenda, it is vital that schools under threat of cuts get what they need to ensure that no children are left behind. While the gnomes in the bowels of the Treasury count their beans, children are being denied the support they need to live healthy and enriched lives.
Poverty, homelessness, hunger, and inequality are not accidents, or the result of individual human failings. They are the creations of a government which has failed and continues to fail to serve its citizens; whose duty is to make adequate legislation and spending policies designed to create a stable, functioning public and social infrastructure, when instead, we see employment policies which leave people on low incomes often in insecure, precarious work. Moreover, this suffering is also the creation of a government that has chosen to serve another estate – the wealthy global elites, and usually for their own personal benefit too, either monetary or through the revolving door.
This week, the National Audit Office published its report ‘Initial learning from the government’s response to the Covid-19 pandemic’. In this report it indicated that the crisis has ‘laid bare existing fault lines within society and has exacerbated inequalities’, which it suggested has been aggravated, amongst other things, by failure to reform the adult social care system (yet again swept into the long grass by the Queen’s speech last week) and workforce shortages; all of which needed addressing to find long term solutions.
Whilst ministers feign caring and employ empty rhetoric in an attempt to get the public on side, the blame for both the poor response and the ‘fault lines’ lies fairly and squarely at the government’s door.
In the same context, the NAO also mentioned the financial pressures felt by central and local government in being able to deal with these pressing issues. Of course, it is true to say that the spending of local government is constrained by the amount of government funding it receives, how much it might borrow from the financial markets and the local taxes it can impose, but central government has none of those constraints. The real constraints to national government spending are related not to how much tax can be collected or how much money can be borrowed, but to the real resources that will be needed to enact government policies. The long terms solutions to the ‘existing fault lines within society’ and the entrenched ‘inequalities’ which deny people sufficient income and access to real resources, including public infrastructure, lie in the hands of the government itself. The financing is a red herring when you understand how government really spends.
The nation is now standing at a crossroads, with so many challenges related to the climate emergency and dealing with the existing deep-rooted wealth inequalities, not just in the UK but worldwide, it should be noted.
The Resolution Foundation and the London School of Economics warned in a report published this week that the political decisions taken in the next 10 years will be critical to the nation’s economic health. One cannot help but concur. It suggested that without radical change the economy could resemble that of Italy (which for decades has slipped into economic decline) and could without action lead to further plummeting of living standards in the UK. Sir Clive Cowdery, the founder of the Resolution Foundation and co-chair of the Economy 2030 inquiry said that:
“The UK’s recent record of weak productivity, stagnant living standards and high inequality makes a new economic approach desirable. What makes a new approach essential is the scale of coming change.
Indeed, we are facing a moment of great change which requires decisive action, but in no way can we be compared to Italy, whose spending has been constrained by conceding its economic sovereignty through its membership of the Eurozone and the rules imposed by the EU through its Stability and Growth Pact. The UK government has no such constraints as a currency issuer with a floating currency and no foreign debt. It could, tomorrow if it chose to do so, address weak productivity, stagnant living standards and high inequality levels through its policies and spending, and the implementation of a publicly managed and paid for Job Guarantee.
If the post-war governments could be radical in their economic approach, during a time when governments were not afraid to deficit spend and committed to full employment, created a substantial public infrastructure including the NHS and set up a social security system which supported people from cradle to grave, then so can a future government with the political desire to do so. The deficit is not the bogeyman. And nor is the national debt. They are deliberately created figments of the imagination designed to keep people in their place. The real bogeyman is a government which fails to act in the interests of its citizens and for public and planetary purpose.
Whilst the smoke and mirrors of the public accounts continues to pretend that the government needs tax to spend or to borrow to cover its deficit, we might on that basis have to question how we will be able to create a sustainable, fairer, and more stable society using such a crock narrative. For the media and politicians alike, such narratives are the bread and butter of their reporting. From tax rises to pay for Covid-19 to more cuts to public services to get the public accounts back into balance, these ‘household budget’ references reinforce the lie of monetary scarcity, either because politicians actually believe it, or because it forms a useful part of their ideological agenda. As Patricia Pinot, GIMMS’ Associate Member and one of the hosts of the MMT Podcast, tweeted recently:
‘The reason why neoliberals dislike MMT is precisely because it exposes the true capacity of the state and thus exposes previous constraints and optimisation exercises as political choices.’
This is the moment to reimagine our world, not fall back into our comfort zone. MMT offers us a mechanism to do just that.
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