General election 2017 and the insidiousness of austerity politics

Craig Berry - Deputy Director at SPERI

This reasoning cannot be accepted at face value. The notion that savings in one area enable fewer cuts elsewhere is a tortuous logic which validates austerity even as it appears to soften some measures related to deficit reduction. And while the dementia tax would have increased spending on public services, it would have done so by further individualising the financing of the welfare state (I have argued previously that this agenda, rather than spending cuts, is the true purpose of austerity).

Where does this leave austerity? It is surely significant that, after marginalising the austerity narrative, the Conservative Party sought to define its renewed welfare reform agenda in quite progressive terms (while choosing not to highlight the welfare policies of the Cameron government which it planned to persist with). It is equally significant, however, that the electorate appears to have rejected this rather duplicitous spin.

Was Jeremy Corbyn’s Labour Party able to capitalise upon this so-called ‘austerity fatigue’? Only partially. Opposition manifestos should always be handled with caution: it is incredibly difficult to craft a fully costed programme for government from the opposition benches – and the consistency and credibility of policies often, quite understandably, comes second to the need to develop eye-catching policies that will win the party a greater hearing from the electorate.

And it of course has to be acknowledged that austerity was repeatedly denounced in the Labour’s election communications – Corbyn’s anti-austerity platform is at the heart of his appeal to those on the left of the Labour Party, upon which his leadership depends, and his supporters have certainly taken this message to the doorstep. Labour promised more capital investment, on things like infrastructure – but so did the Conservatives.

Corbyn’s welfare policies paint a far more mixed portrait. He opposed the Conservatives’ cuts to pensioner benefits and instead proposed to protect them, but the fact that this policy was presented primarily as a ‘pensioner offer’ rather than a policy that benefited young people (since measures such as the ‘triple lock’ on state pension indexation benefit future pensioners far more so than current pensioners) meant that, despite offering different policies, Labour and the Conservatives were largely operating on the same discursive terrain. Corbyn made little attempt to validate the principle of social insurance – traditionally one of the defining features of social democratic or democratic socialist statecraft.

The Labour manifesto did promise to increase benefit expenditure in some areas – but generally only that related to vulnerable groups such as carers and disabled people. Labour did not propose to reverse cuts to key in-work benefits such as Universal Credit, and promised only to review the benefits cap.

There was also a significant degree of confusion about the party’s position on the uprating of working-age benefits. Even if we assume the most generous interpretation of the party’s policy – an end to the uprating freeze – is the correct one, the impact that the freeze has had since 2010 would not have been undone.

The fact that the Conservatives’ charge that Labour still believed in a ‘magic money tree’ demonstrably failed to stick to Corbyn is evidence of the waning power of austerity logic. But it is also evidence, in part, that Corbyn is much more comfortable with fiscal conservatism – at least in terms of current spending – than Ed Miliband ever was.

This fiscal conservatism was necessitated, to some extent, by Labour’s insistence on not raising taxes for anyone but the richest five per cent of households. Promising to protect people at the ninety-fourth percentile of the income distribution from tax rises is a rather novel approach to socialism! Ultimately, Labour’s welfare and tax agendas combined to make its manifesto every inch as regressive in a strict accounting sense as the Conservatives (if the top five per cent are excluded from analysis) – and quite possibly one of the most regressive programmes the Labour Party has ever put before the electorate.

It is perhaps also worth mentioning Labour’s promise to abolish university tuition fees in this context – probably the policy which achieved greatest ‘cut through’ for the party, and which was central to its mobilisation of younger voters. I offer no judgement on whether this is the correct policy, but would point out that for this to be a Labour government’s key priority, given the absence of other new social policy spending commitments of a similar scale in Corbyn’s manifesto, is rather incongruous.

Abolishing fees and restoring maintenance grants was estimated to cost more than £11 billion per year. Contrast this with a promised £4 billion for working-age benefits, and £2 billion for social care. Moreover, the policy was advanced with little attempt to explain why free university education is a public good which benefits all parts of society; the emphasis was very much on university education as an inalienable right for the individuals who might take it up (see page 43 of the manifesto).

When assessing the implications of the general election for austerity, it is important of course not to overlook the trivial detail that the Conservative Party won, and will govern – albeit without a majority – for the foreseeable future. Even if Labour could be said to be beginning to fashion an anti-austerity agenda (which I would admit very much applies to the party’s membership, if not quite its leadership), austerity is here to stay. And whatever conciliatory noises come out of the Conservative Party now are bound to dampen once the shock of Brexit to economy becomes more apparent. It is worth remembering that Labour under Jeremy Corbyn ultimately supports withdrawal from the EU. Incidentally, the borrow-to-invest approach that both parties now rightly support, especially Labour, will come under pressure if Brexit causes the cost of government borrowing to rise sharply (which is highly likely).

Moreover, the slightly awkward relationship of both party leaders with the anti-austerity mantle perhaps testifies that, while the austerity narrative is no longer in vogue, some of the assumptions underpinning austerity (the individualisation of welfare, a transactional relationship between citizens and the state, the notion of tax as burdensome, etc.) have become deeply and insidiously rooted in the British polity.