Thursday, 10 May 2012

Austerity - everywhere but government

  1. Sternness or severity of manner or attitude.
  2. Extreme plainness and simplicity of style or appearance.
Or as European voters would have it, a monstrous evil loaded upon them by bankers and their cronies in government. But what exactly are we speaking of here – what exactly do we mean by ‘austerity’?

I’m not here to present some sort of economic case as to the existence or otherwise of austerity, of a time when financial reality forces us to adopt – from necessity – that plainness and simplicity of style. The truth is that austerity for most of us is a fact but the austerity isn’t being driven by cuts in public spending – there are, in aggregate, precious few of those cuts. No, the circumstances forcing us to live an austere life are coming from the private sector and from the manner in which governments have responded to the unresponsiveness of the private economy.

Look around you, speak to a few of your neighbours, wander down the food aisles of the supermarket and, above all, spend an hour or two watching television advertisements. All will tell you of two things – the two things that are bringing that unwanted austerity upon us:

  1. We have less money in our pockets – for some of us this is because we don’t have any work but for nearly everyone the amount has fallen because employers, struggling for business, aren’t raising wages, are reducing hours, cutting overtime and ending bonuses. Plus, of course, the government, fixed on its own cash flow problems has bunged up taxes
  2. What money we have in our pockets doesn’t buy as much – that’s right folks, we’ve never had the deflation we were promised at the start of this crisis. The clever folk in the treasury told us that we needed to keep real interest rates negative because otherwise deflation would destroy value and wealth – we would be doomed. Some of us said this was rubbish and that the government wanted some inflation so as to reduce its (and the banks’) debt problems. And we were right – there’s now been at least four years of above trend inflation. That’s four years where savings have shrunk, four years of price rises. Plus, to cap it all, the government has put up taxes – VAT, excise duties, airport tax

Austerity isn’t a consequence of reduced government spending but of other government actions – taxes that are too high, interest rates that are too low, running the Royal Mint’s printing presses at full whack and failing to cut spending. Yes that’s right – failing to cut spending.

Let’s remind you that over three years Bradford Council will have cut over £100 million from its budget – that’s 25% of what we get in grant from government. And it’s true, jobs have gone, some unnecessary cuts have been imposed, a few facilities have closed but, in the main, the “cuts” have barely inconvenienced the majority of the City’s population.

And look a little further – those financial strictures haven’t been applied to the NHS where budgets have risen not fallen, we’re still spending millions each week maintaining an unwanted armed presence in Afghanistan and the merest of dents has been made in the welfare budget. In truth the government predicts that spending will rise by £50 billion between 2011 and 2015 – what sort of dire austerity is that?

Yet there is austerity – people are struggling out there, we may not have starvation but everywhere you’ll see faces telling you it’s tough. As I said, watch those adverts – not just the offers of loans or the debt scams but the everyday adverts. Look at the styling, consider the way we now see less of the flash, hedonistic and aspiration imagery and instead get and older, solid, calming language.

And that austerity is the fault of government – for they have created the inflation, they have increased the taxes, they have made the jobs more expensive. What they haven’t done is cut their own spending.


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