The shame of Austerity Britain

The coalition Government’s Austerity policy was supposed to be a short term solution to balance the books. But eight years of austerity have seriously damaged our economy and society. And our national debt has nearly doubled in that time. It clearly isn’t working.

the national debt started at 800million when the coalition took office,its now over 1.9 TRILLION and rising.Austerity isn't and never was a necessity ,its ideological .Tories attempt to keep the "common" folk in their place .Foodbanks are a "good thing" according to JRM ..well it saves the government cash when they cut folks income doesn't it?Austerity will be around as long as the tory government is

I agree with you but how to redress this state of affairs is the problem -

The economist Richard Murphy says of “austerity”:

The result has been a myth about money that is now being used to oppress people. That myth suggests that governments do not have money, and that they only use taxpayer-generated funds. It also claims that this means that the money in question must be restricted in use. And it suggests governments must copy the characteristics of households, with whom they have literally nothing in common because governments can create money which households can't, and so limit the amount of money that they might put into use.
www.taxresearch.org.uk/Blog/

In other words governments can create money to invest in the economy. More money for the NHS would create more secure well paid jobs, meaning these workers can then afford to spend more thus creating more demand for goods and services, ultimately creating more jobs. Investment in building new houses creates jobs, demand for building materials to be manufactured and then those workers create more demand for goods and services etc.

The same could happen in social care, road maintenance (those damned potholes), libraries, Sure Start nurseries, schools, fire services, police forces and so on.

The extra income and spending means much higher tax receipts coming back to the government. A small amount of investment can go a long way. Win, win!

Doing that by devaluing the currency ie printing money doesn't have a great success record.

there should have been investment in infrastructure thst way we were creating /keeping jobs and building homes etc.Money doesn't trckle down as many appear to think ..its SPENT by people on low or average incomes..so the very people these kinds of jobs would benefit. That spending and taxation would have benefitted communities and local governments and been of far more use to the ordinary joe than a foodbank is .Tax cuts for the wealthier doesn't work the same way ..just more money to stash in offshore accounts

Quite agree paddyann.

The choice is between paying more tax for decent services or having a low tax, low welfare system.

Even the Labour party hasn't the guts to admit that to provide the services we should expect and have received in the past, standard taxation rates need to go up by at least 10p in the £1, but keeps standing on its head to try and convince us that everything can be improved simply by 'soaking the rich' while keeping tax rates low. The British electorate, of all political persuasions has consistently voted for low taxes rather than good services.

I would be quite happy to see basic rate tax go back to the 33p in the £1 that it was in my early working years to get in return decent education, decent health services, free university education and roads that are not so potholed that my DH has to avoid some because he has a spinal problem.

You cannot have a Scandinavian welfare state on US level taxation. This is what all our politicians are too frit to admit.

I have just read an interesting article in the New York Times of all places, about austerity and its effects in Britain In Britain, Austerity Changes Everything. It is a full and comprehensive review of austerity in UK in last 8 years and in summary states After 8years of budget cutting Britain is looking less like the rest of Europe and more like the US, with a shrinking welfare state and spreading poverty.
I wholeheartedly agree, but is this the way we want our erstwhile generous nation to go I wonder? Austerity I believe is a political decision rather than a necessity.

'Printing money' isn't 'devaluing it', Jane10. That is an idea which belongs to the old days when the amount of money a government could use or issue was restricted by the amount of gold they held. 'Devaluation' then meant that the pound (or any coin/note) was backed by a smaller amount of gold and thus worth less in relation to gold reserves. But we came off the 'gold standard' in the 1971. Since then sterling has been backed by nothing. Its international 'value' is dictated by the money markets and affects imports and exports but 'internally', so long as there are resources available (goods and services) to be bought the government can issue as much as it needs to. Inflation (too much money chasing too few goods/services) can be controlled by taxation. Taxation is the method by which a government gets back money it has issued and so reuse it. So long as money is circulated in the 'real' economy the government doesn't 'lose' it as it comes back to it via taxation.

It's the 'real' economy that matters. When the government created money by 'quantitative easing' after the banking crisis of 2009 very little of it was used in the real economy where it would circulate in the form of wages and purchase of goods and services. It just went into the equities and bond markets where it inflated prices and profits were frequently squirrelled off abroad into tax havens. So very little was returned to the Treasury and the country generally had very little of the benefit of it.

For those who would reply with Venezuela and Zimbabwe I'd just say that their economies were very different from ours and much more vulnerable to scarcity and inflation.

Spending your way out of a depression is sound economics, Austerity, by reducing the amount of money in circulation just leads to poverty. As we know from our experience of the last eight years.

If you're going to run a capitalist based economy like ours it depends on people spending money. Reducing the amount of money they have to spend makes no sense whatsoever.

Yes austerity is a political choice. Many Brexit voters voted as a protest against austerity believing the line that they would be better off outside the EU. Now it appears that austerity isn’t going to end anytime soon.

BRITAIN’S BIG SQUEEZE
From the New York Times yesterday

In Britain, Austerity Is Changing Everything
After eight years of budget cutting, Britain is looking less like the rest of Europe and more like the United States, with a shrinking welfare state and spreading poverty

Conservative Party leaders initially sold budget cuts as a virtue, ushering in what they called the Big Society. Diminish the role of a bloated government bureaucracy, they contended, and grass-roots organizations, charities and private companies would step to the fore, reviving communities and delivering public services more efficiently.

To a degree, a spirit of voluntarism materialized. At public libraries, volunteers now outnumber paid staff. In struggling communities, residents have formed food banks while distributing hand-me-down school uniforms. But to many in Britain, this is akin to setting your house on fire and then reveling in the community spirit as neighbors come running to help extinguish the blaze.
www.nytimes.com/2018/05/28/world/europe/uk-austerity-poverty.html

MaizieD Can you give an example of a country who has spent their way out of austerity in an effective way? That's an honest question btw.

Jane10 America between the wars funded huge infrastructure and other public investment to help them get their economy back on its feet. It was called the New Deal. Some aspects of this system were questionable but, economically, it helped.

Why is everyone talking about austerity is a political problem. No it isn't it is a personal problem. We are responsible for austerity, every one of us, when we go to the polls and choose to vote for parties that promise low taxation or those that pretend that welfare can be improved without substantial hikes in taxes.

Look at the response there was to the Lib Dems when they wanted to add just 1p to tax to improve education.

Did the Uk in the immediate post war years not implement an anti-austerity programme of re-construction?

You are not being unreasonable mostlyharmless we are having services cut all the time while people like the Rees Mogg creature add to their multimillion property folios. How is this progress?

Varian yes, but with a lot of help from the Marshall Plan, an American support programme.

But I will say it again, the problem lies with us. We are the ones voting for parties on the basis of low taxation or cloud cuckoo plans to increase welfare without increasing taxation.

I don't choose parties which go for low taxation, Jane. I would go for a party which went for fair taxation.

But taxation doesn't fund spending; spending has to come before taxation else there's no money to tax.

We spent our way out of austerity (or would 'depression' be a better way to describe it?) in the 1930s and most notably after WW2. Yes, the money post WW2 came from the USA but the point is, whatever the source, we spent it and the economy responded. Massive housebuilding programme for a start, with a boom for all the related industries and businesses. It was the foreign debt and having to stick to the gold standard which ultimately caused problems, as well as failure to modernise.

Ironically, the panacea for lifting communities out of poverty is usually held to be investment. If it works for a deprived community why is it frowned on for a country?

As far as I can see, all that austerity has done is increase welfare spending (causing the government to respond by cutting benefits to make the money stretch) and cause people to have to take low wage and insecure jobs in an effort to survive. Not only that, but it has led to damaging cuts in public services which are affecting people's health, safety and wellbeing (I'm thinking of things like libraries and the arts here which contribute to our enjoyment of life and so our mental health)

I could go on but I don't want to bore people any further...

Sorry, I attributed the voting for low taxation comment to the wrong person

Sorry Lazigirl crossed posts above.

Of course the Government would say that the current low unemployment rates prove the economy is doing well. We know that in reality the employment market is very difficult, with an emphasis on low wages, gig economy, and zero hours contracts.
No longer is it easy to walk into a reasonably well paid, secure, pensionable, union protected job.
Family tax credits have been reduced to nearly nothing, childcare places (supposedly free) have been squeezed.

But taxation doesn't fund spending; spending has to come before taxation else there's no money to tax.

Sorry, that is wrong. It is sometimes possible to pre-empt capital expenditure, but what is wanted in this country more than anything at the moment is revenue expenditure to properly fund the NHS, education at all levels and care for the elderly and that has to come out of current income.

It was borrowing to fund revenue expenditure that was the siren that lured Gordon Brown to his destruction and landed us in this current mess, financial crisis of no financial crisis, that was just the cherry on the cake!

fair taxation is just one of those weasel words used, especially by Labour to pretend that major improvements in welfare standards can be got without raising general taxation. It can't and the sooner we realise it the better.

The only way to finance improved services is by raising taxation and the only way to raise a significant sum is to raise the rate of general taxation. Sure put lots of 'fairer tax' bells and ribbons on it if you wish. I am grown-up I don't need a spoonful of sugar to help the medicine go down.

Look at countries with the standards we aspire to and the basic rate of tax is higher than ours. You cannot have your cake and eat it.

This is quite an old reference but it is still appropriate
www.theguardian.com/money/2008/nov/16/sweden-tax-burden-welfare (and its from The Guardian!)

The taxation system is a mess of course. The richest manage to create trusts, companies, and off-shore arrangements to avoid tax. Corporation tax has been cut. While our National Insurance scheme is a regressive tax system that taxes people less the more they earn with a ceiling at £45,000 income p.a.
Council tax has many issues too.

I just despair. Money goes to money. The 1% get richer. Greed and me first mentality has taken over completely in the higher echelons of power while the rest of us struggle, and worse, accept it's right and proper! Turkeys voting for Christmas. I have no energy left to get mad anymore. Until this greedy, corrupt government is out there is no hope for us as far as I can see.