You have to ask yourself: if our economic system actively destroys the biosphere *and* fails to meet most people’s basic needs, then what is actually the point?
Jason Hickel – Economic Anthropologist
The Chancellor’s Budget and Spending Review has dominated the media reporting this week. It was summed up in the Mirror headline, ‘Champagne budget for the rich means real pain for poor as bills rocket’. Whilst the Chancellor gave his banking chums a helping hand with a tax cut, slashed the duties on champagne and domestic flights (what environmental crisis?) those with the least are left with the crumbs. With increasing costs as food and energy prices rise, combined with the recent £20 cut to universal credit which is already affecting some of the UK’s poorest families, a mere 59p increase in the misnamed ‘national living wage’ and a universal credit taper rate cut which will allow people to earn more before they lose benefit, is just yet more smoke and mirrors.
As the expensively dressed Chancellor gave his speech, you could be mistaken for believing that he really cared to make a difference as he set out what he termed his ‘moral mission’. However, subsequent analysis has shown that it will do little to address the financial struggle that many people in this country are facing. A crisis that has resulted, not just from the effects of the pandemic, but also from the 10 years of government policies and spending decisions that preceded it. Like many organisations pleading for the Chancellor to act, The Joseph Rowntree Foundation noted in the week before the Budget:
‘There is a debt crisis hanging over millions of families on low incomes. Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction.
‘While many households on higher incomes have enjoyed increased savings and rising house prices during the pandemic, people on low incomes are under serious financial pressure that shows no sign of abating. As a society, we believe in protecting one another from harm. As costs pile up and incomes have been cut, we urgently need to rethink the support in place for people at the sharp end of the cost-of-living crisis.’
This week’s budget, as is to be expected despite the hype, has barely scratched the surface of the mounting crisis which experts are saying can only worsen over the coming months, not just in terms of the lives of working people, but also our public and social infrastructure. Institutions that, whilst forming the foundational backbone of a civilised society, are in a state of deepening decay as a result of the lack of funding, and the encroachment of the private sector leaching away public money. From the NHS to social care, education, and local government, all have come under increasing pressure as budgets have been cut, and the consequences are in plain sight. We live them every day. In addition, the chickens are finally coming home to roost on the strategically vital but privatised energy, water and transport networks. The passage of time since the first privatisations has shown the limitations of competition and the deregulated environment which accompanied it. Higher prices and poorer service quality have been the principal consequences, whilst CEOs and shareholders have been the beneficiaries.
Whilst the pay freeze for public sector workers has been lifted, there is little suggestion that they will benefit from it. Just more pleasing soundbites which do not reflect the real issues, and which do not present immediate solutions to the shortages of nurses, doctors, paramedics and care workers.
When Boris Johnson claims that he has got ‘social care done’ or that he has fixed it, it demonstrates his lack of intellectual reasoning. This should tell him that it won’t matter how much money he throws at the problem, (and it isn’t anywhere enough anyway), it won’t magic up social care workers. People who are currently working in a low wage and insecure employment environment, brought about by, yes, you guessed it, government policies! Policies that have shifted responsibility to a profit-motivated private sector and failed to plan and train, along with inadequate spending and cuts to local government budgets.
To emphasise the scale of the coming winter disaster, Stephen Chandler, who is president of the Association of Directors of Adult Social Services, issued a very stark warning, saying on the Telegraph website:
‘Unless the government takes immediate steps to shore up the care system for winter, tens of thousands of people will lose services on which they rely to get up, wash and dress, eat and drink, take vital medication, go out to work or to other activities and go to bed.
‘Family carers, already exhausted by the extra demands of Covid, will have to do even more to plug the gaps and may have to cut their working hours or give up jobs altogether. The NHS, which depends utterly on social care support, will be put in jeopardy.’
And whilst, contrary to expectations, Sunak announced that Whitehall departments would receive a proposed 3% yearly increase, as has been noted, this will not make up for the impact of a decade of austerity, especially in local councils (and many other public institutions) which are struggling to cope with the additional pressures that Covid-19 presented, on top of their already dire financial state.
While the Chancellor declared that the UK was entering an economic ‘age of optimism’, the reality on the ground is somewhat different. His budget is nothing more than a sop that will do little to remedy a decade of tory austerity and fiscal discipline which has done so much harm, justified as it was, on the supposed need to restore the public finances, and also concealing another objective to destroy the UK’s public infrastructure through privatisation. It was promoted as being about being a low tax, small state economy with a hands-off approach, but which, in reality, has turned into a government-funded corporate fest of public money, whilst at the same time our public services have been decimated on the basis of the lie of financial unaffordability. As a result, as Frances Ryan noted in a recent Guardian article, ‘what was once a functioning state is now a patchwork of broken services’. The neoliberal state has failed us completely.
Furthermore, the four million low-income families who are behind on rent, bills and debt payments, a number that has increased threefold since the pandemic began, cannot be relegated to a set of unfortunate statistics which bear no relationship to government policies or the economic ideology that drives them. Poverty cannot be ascribed, as some politicians allege, to the failings of the individual human beings who suffer it. Such thinking has poisoned the public discourse and created a damning but false picture of the feckless and lazy poor. It has also led to a general acceptance of food banks and other charitable support, on the grounds that we have been persuaded that feeding the hungry and housing the homeless are not the responsibility of the government. As a result, the public dutifully puts food donations into the crate at the local supermarket or makes cash contributions to local charities. We seem to have stepped back in time to the Victorian Poor Law boards and Dickens’ Beadle in Oliver Twist, deciding arbitrarily who was deserving of help. But if anyone has been feckless or ineffectual, it is, in fact, the government, which has abdicated responsibility for its citizens. Where we are now is a direct consequence of government decisions which have cut spending on essential public infrastructure, along with its ideological preference for a great free market ‘free-for-all’, which has left families to struggle on low incomes and in precarious employment to suit its corporate donors. The question is never ‘Is there enough money?’ The question is ‘What are the government’s priorities and who benefits from them?’
As the Dispatches programme this week, ‘Growing up Poor: Hidden Homeless‘, showed so starkly, poverty destroys people’s lives. For those suffering in the midst of it through no fault of their own, from those on low incomes, involuntarily unemployed, sick or with disabilities, their lives are an endless round of struggle and stress, and not just for the adults. In the end, it comes down to the social determinants of health and well-being, and disregarding those, as this government has done over a decade, will have significant real human costs on future generations, as a result of childhoods that have been blighted by this government’s policies. To listen to those children’s hopes and fears, expressed in this programme, should be a salutary lesson for us all.
It is pathetic that the Tories, after having cut funding to local councils and charities, which, in turn, affected Labour’s Sure Start Programme and led to many centres being scaled back or closed, are now committing a measly £500 million of support for families, which includes a similar network of ‘family hubs’ as ‘one-stop shops’ for advice and guidance. It amounts to a sticking plaster that will not fix the problems they caused in the first place. It is a drop in the ocean in terms of repairing the damage which has already been done by the government through a decade of cuts and austerity measures. People on low incomes and in insecure employment are disadvantaged from the start. It leads to grinding poverty, hunger, and homelessness, the consequences of which then filter into every aspect of their lives, leaving families ill-equipped and struggling to manage. This isn’t an accident. It is by government design. A policy choice. Society is creaking under the weight of decades of neoliberal orthodoxy and handbag economics, which this cruel government has purposefully refined to cause increased pain and suffering for those who least deserve it.
It is truly sickening to hear the Chancellor defending that decade of cuts to vital support for families with young children, by saying that the ‘one thing my predecessors, not just George [Osborne] did was ensure that I had a very strong economy and set of public finances that I inherited’.
And here we come to the crux of the matter. A political establishment, that includes both sides of the spectrum, touting handbag economics as if they represented monetary reality. The cult of fiscal discipline has had dire consequences for those burdened by its yoke. The real costs to working people and their families have been substantial. People who should be able to depend on good economic governance to ride the waves of the inevitable economic cycles and emergency events like the pandemic and the climate crisis (which critically was scarcely mentioned in the Chancellor’s budget), and which require an effective macroeconomic response.
It is further compounded by a compliant neoliberal media which largely fails to challenge the ideology which drives such policy, as well as left-wing economists who, whilst claiming to want to tackle the huge inequity that exists and address the climate crisis, hunker down in mainstream orthodoxy, thus inhibiting, at a stroke, any progress that could be made. Indeed, prior to the Budget, a Guardian editorial opined that the government would shortly have to ‘disclose its cash position; how much it expects to be taxing the public over the next few years, how much it will spend on schools, policing, and mitigating climate change – and how much it will have to borrow…’
The mainstream media does its very best to keep the public in the dark and fails to ask the right questions. The government doesn’t have a ‘cash position’. It’s not a business. It doesn’t have to tax or borrow to fund its spending or cut one departmental budget to fund another.
The only thing the editorial helpfully gets right, is what is the point of a capital investment programme to build libraries or hospitals, if then, because of the rules on day-to-day spending, you can’t employ librarians or nurses and doctors to work in them? These are arbitrary rules which make no sense if one knows how the government spends and that its real constraints are resources, not money.
There is no limited pot of money to be divvied out, and a post-covid economic miracle will not take place while such ideology influences government spending and policy decisions. If people don’t have good, secure, well-paying jobs, as is the case for so many because of an economic ideology which has allowed worker exploitation over decades and the fruits of that productivity to be taken by a bloated corporate sector obsessed with profit, then we cannot make any progress.
As usual, Labour can’t help but reinforce that dominant narrative. This week, John Trickett set out his radical alternative to target the rich, saying that wealth taxes would ‘raise’ up to £86bn a year to rebuild Britain. Labour’s Rachel Reeves told ITV that it was important to ‘raise money … but not in the way the government was doing it’. Once again, the use of language, in this case the word ‘raise’, implies that they think that government needs taxes to spend, or pay down its debts. Yet again the smoke and mirrors of public accounting continue to obfuscate the truth about how the government spends. It also ignores the real roles that taxation plays in managing the nation’s economy, one of them being to deal with the huge wealth inequities that exist, as well as to facilitate through taxes and government policies, a fairer access for all to the nation’s resources. But no, they both imply, that government should be taxing the wealthy to raise money to spend on public services. Taxing the rich will not transform our public services or the economy, and the idea that we are beholden to the rich for a functioning public sector is just more cap doffing to big business and the excessively wealthy, as well as being offensive.
The State, as the currency issuer, is the only institution that has the capacity to spend money into existence to do what is needed within the context of available resources and their allocation. It is desperately depressing to see progressive politicians framing their plans in Thatcherite terms of household budgets and taxes paying for stuff.
The left-wing mainstream economist Grace Blakeley, in The Tribune, got a little closer to the truth this week by exposing the fallacy. The government is not a household, and therefore ‘not subject to any imperative to balance its books, and as the currency issuer, ‘cannot meaningfully run out of money’. But then in a show of inconsistency, whilst referring to government stepping in to create employment to ensure that underutilised resources can be put to work, went on to say, ‘In doing so, it triggers higher rates of growth and ultimately creates the revenues needed to repay the initial borrowing over the long term’. It then begs the question, if the government is not a household and cannot meaningfully run out of money, why would it need to create revenues to repay its borrowing? It doesn’t make any logical sense and leads to inevitable confusion on the part of anyone who reads it. Given the serious nature of the challenges we face, we have no time for incremental progress. Let’s tell the story of money correctly.
Both sides of the political spectrum collude in these lies in one way or another and to varying degrees. As such we will be a laughingstock at the COP26 table next week, and will effectively drown in the cost of these lies, should the government fail to act with purpose through its real spending capacity.
It is worrying that a report from the Treasury has suggested that moving towards net-zero would require tax rises, as revenue from fossil fuel-related activity is eroded. As the Guardian reported, the Treasury warned that serious economic damage could occur ‘if the UK overspends or misdirects green investment.’ They suggested that the government ‘may need to consider changes to existing taxes and new sources of revenue throughout the transition in order to deliver net-zero sustainably, and consistently with the government’s fiscal principles.’
None of this will matter, least of all a balanced budget or fiscal principles, if we haven’t got a healthy planet to sustain human survival. And as for new sources of revenue, the Chancellor doesn’t need them to spend in the public interest or to address the climate emergency. Whilst government can overspend, that is not an issue of the scarcity of money. The Chancellor has the power to authorise the central bank to spend what is necessary, within the boundaries of available resources and deciding how those resources will be allocated and to whom.
As Ed Matthew, campaign director of the E3G think tank, noted:
‘To governments looking to Cop26, this looks unprofessional and embarrassing. The UK is standing in front of the world at Cop26 trying to galvanise ambitious action from every country. If the government has not presented the robust economic case in favour of action, that’s going to significantly undermine those attempts.’
The government is in disarray on the subject, and we are being led to believe by the Treasury that growing the economy to get the public finances back in order should be prioritised over addressing the climate emergency. Fiscal discipline rules.
There is still much uncertainty about the outcome of COP26, with many fearing that it will go the way of all other climate conferences, with lots of hot air and meaningless promises, and little real commitment to change. However, Antonio Guterres, Secretary-General of the UN has warned that the world is risking a ‘hellish future’ if it fails to confront the crisis. On the current trajectory, the hosts of COP26 will, depressingly, oversee failure.
The Channel 4 programme ‘Growing up Poor’, ended with a clip from a speech by Boris Johnson who said that the UK needs, ‘every other country to follow its lead and commit to net-zero carbon emissions by the middle of the century.’ Aside from the fact that 2050 is too late, as Peter Kalmus noted in an article a few weeks ago, in the light of the government’s record on poverty and inequality which has overseen growing societal destabilisation and the decay of our public and social infrastructure, why would anyone follow our lead on anything, let alone addressing the climate and planetary crisis for which, so far, Johnson has shown no commitment? If we fail to make progress, the planet will continue to face increasing frequency of heatwaves, storms, flooding and crop failures, which will lead to the displacement of millions of people.
Depressingly, it all feels very ‘last minute.com’, and, as such, leaves us little time to act decisively. But as the MP Richard Burgon, recently speaking in Parliament, made clear, we need to be on a war footing. We need to replicate the war effort in the US and the UK from 1940 onwards, with the same sense of urgency as they did, but for very different reasons and objectives. Perhaps we need to issue climate bonds, not to fund anything, but to ensure that the government can access the real resources it will need to address the climate emergency without creating inflationary pressures. We need to stop deferring to big business and philanthropists as if markets and technology can provide all solutions without a radical rethink about how we live. Their agendas are not about challenging the status quo but serving their own interests rather than the public purpose. Bill Gates and his philanthropist cronies should not be dictating the agenda because their wealth allows them to.
We need, above all, to realise what is at stake and what it will mean for our children and their children, if we fail to act now. Instead, currently we have a government helping the corporate sector to greenwash its way to maintaining the status quo with all that means for human survival on a wasted planet.
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