The Extravagance of Austerity

Good chancellor, bad chancellor.  George Osborne played a little double act with himself this week.  It started with lots of spending announcements.  A whopping £15.1 billion on roads and £2.3 billion on flood defences.  Oh, and Bicester is to be a new town.

Then there was the Autumn Statement, seized on with the claim that public spending as a share of GDP could be heading back to the levels of 80 years ago.  A golden age as far as the Tories are concerned.  Grinding poverty, plus all-round militarism.  The Jarrow March and the Blackshirts.  Plus the Greenshirts having a go at the bankers: sounds familiar?

How do we reconcile spend, spend, spend with a policy of downsizing that has no end in sight?

The spending announcements are real, but not all new.  Some just firm up details of spending already announced.  And at Bicester, many of the houses have already been built.  Smoke and mirrors then.  Just what you’d expect from a government with a former PR man at the helm.

The roads programme can be unpicked from many angles.  One is to point out that an opportunity to rebalance the national economy away from over-reliance on London has been under-played.  The self-fulfilling prophecy of ‘invest in success’ has triumphed again, with £250 million re-pledged for yet another Lower Thames Crossing near Dartford.  At least development at the estuary would take some of the pressure off the environment (and house prices) in eastern Wessex.  But not a lot.

Wessex gets at least £500 million for two miles of tunnel to by-pass Stonehenge.  Cornwall and Devon have been agitating for years to put the environment of Somerset and Wiltshire at their service, speeding up access to the London market.  Why is the London market so much more important than any other?  That’s where the money is.  And why do we allow that to happen?  Turning the A303 into a motorway in all but name won’t just increase accessibility to London.  It will increase accessibility FROM London, cutting precious minutes off the drive to the weekend cottage in Salcombe.

But for how long?  The strategic vision for roads spending does not include the words ‘Peak Oil’.  Instead it reassures us as follows:

“In the short to medium term, as domestic production declines, our dependence on imported oil and gas will grow and we will become increasingly exposed to the pressures and risks of global markets. Over the same period, global energy consumption is anticipated to increase significantly, implying increasing competition for available resources. Despite this, fuel costs are not projected to rise significantly over this time period.”

Apparently, that’s all down to increased fuel efficiency.  And wishful thinking.  And beyond the short to medium term?  Infrastructure is for the long term.  Are we planning for the next five years, or the next fifty?  Are we buying the wrong kind of infrastructure because no-one will admit to the necessity of a radical re-think?  We aren’t building a resilient future, because we can’t accept that the comfortable present is just an illusion.

So the spending plans are all part of hiding the harsh facts.  The real state of public finances ought to give real cause for concern.  An analysis of the background to the Autumn Statement done by The Independent (a London newspaper) shows that the plan to boost growth relies on boosting borrowing by the general public:

“According to the small print in the latest report from the Office for Budget Responsibility (OBR), the public is forecast to add to its pile of unsecured lending, which includes credit card debt and bank overdrafts, by £360bn over the next five years.  If the public fails to spend, then growth would collapse and the Government’s deficit would be likely to start increasing again.  The £360bn figure represents a £41bn increase on the OBR’s forecasts just nine months ago and would take households’ unsecured lending, as a share of total household incomes, to a record 55 per cent by 2020.  That would be well above even the pre-financial crisis unsecured debt ratio of 44 per cent.”

Add-in secured lending, like mortgages, and total household debt is projected to rise from £1.7trn to £2.6trn by the end of the decade.  With that figure rising faster than incomes, the ratio of total household debt to household incomes will rise from 169% to a new high of 184%.  But this has to happen if public spending is to be cut, because economies are sustained by spending and if the Government is unable or unwilling to run a big budget deficit, then someone else has to.  (Even though governments, as a lower risk, can borrow more cheaply than anyone else.)  Like all Ponzi schemes, it’s about using an imagined future to sustain the actual present.  And it’s a trick that only works so long as the population continues to grow and natural resources continue to come on-stream to support it.

One of the easiest ways to grow the economy, here and worldwide, is to spend more on armaments, things created for the sole purpose of being destroyed.  Civilian expenditure meets human needs, which are finite.  Military expenditure is not subject to any such limit.  At September’s NATO summit in Newport, the UK successfully lobbied for defence spending to be raised to 2% of GDP across the alliance.  Military budgets ought to have some relationship to expected outcomes but a budget expressed in terms of inputs – a percentage share of GDP – looks very suspicious.  A 2% share doesn’t automatically translate into a given level of security, not least because it fluctuates with the size of the economy.  All it does for sure is sustain or increase NATO orders placed with the arms trade.  DO panic, because panic is good for business.

With the NHS, schools and overseas aid budgets protected, defence now set to be protected too, and pensions politically unassailable, the Chancellor has little room for manoeuvre.  Paul Johnson of the Institute for Fiscal Studies said this week that voters would be justified in asking whether Osborne was planning “a fundamental reimagining of the role of the state”.

Others are planning a fundamental reimagining of the state too.  Not so much in terms of its role as in terms of its territory.  Scotland and perhaps Wales may yet see a future outside the UK as more attractive than one within.  England will not be so lucky.  Our political establishment is so entwined with the City financial establishment that we can only break free by reimagining both our constitution and our economy, dispersing power and wealth to the regions.  And on a scale beyond what it’s acceptable to contemplate in London. 

It has to be, because the cost of maintaining the status quo is unsustainable and this cannot be admitted.  If power is to remain centralised it cannot remain even nominally democratic because that would cost too much, and if it’s to become truly democratic it cannot remain centralised because that would cost too much as well.  The really big savings come from letting go, from setting areas free to do their own thing, precisely what the likes of Michael Gove or Eric Pickles, or any other champions of ‘British values’ handed down from above, are in politics to prevent.

Those who wish the grip to tighten really need no identification.  Those who wish it to end are to be found among nationalist and regionalist movements across Europe, each one sparklingly particular, but linked in solidarity against centralism.  The politics of change today is territorial.  The choice is between non-government – in the sense of a state whose will to intervene has shrunk back to defending the property of a global elite – and self-government – in the sense of a society organised for the benefit of the community.

The Labour Party sits uneasily between these two visions.  Miliband – with his call for ‘responsible capitalism’ – is as determined as Cameron to outsource the job of government but thinks asking for things nicely might help.  Having ditched Clause 4, what remains of Labour cannot be other than fraudulent, all sound-bites and cheesy grins.  The public appetite for taking back the commanding heights of the economy is huge but Labour no longer knows how to tell that story.  In the Celtic nations it’s losing ground to those who can.  The English regions will follow.

One of the lies that Thatcher got away with all too easily was that the State doesn’t have any money.  All the money it has is money taken from taxpayers.  Not true.  That’s the kind of state that has sold off or given away every other source of revenue, from land, from minerals, from trading services and from sovereign monopolies.  And done so because it’s clear to the politicians responsible that a state dependent solely on taxation will be a precarious state.  It’s a state left without those assets that could have given it a high degree of practical independence (and which therefore now need to be repossessed).  The Thatcherite State, designed to be economically crippled, cannot avoid becoming politically crippled.  It’s a state with a death-wish, clinging to an exalted imperial vision it can no longer fund, digging an ever deeper hole for itself.

If that’s truly the state of the UK, then we need to imagine its replacements and work to bring them into being.  We must defend our local services, and link them regionally.  If the London regime won’t do these things for us then we need to do them ourselves.  Or it will take us down with it.