With the recent supposed “constitutional crisis” in the news, George Osborne’s budget has been put to question by both the Lords and the public. His dreaded Tax Credit cuts, amid a flurry of more sensible reductions, will cut an enormous £12 billion from the welfare bill. These cuts in particular are seen as a step too far, part of a bizarre ideological conspiracy designed to hinder the poor. This, of course, is not really the case: broadly speaking, the Tories’ austerity plan is not the worst path Britain could be taking right now, as many would have you believe.
The cuts have partly evolved to make Osborne appear as the Iron Chancellor; whose heightened resolve, he hopes, may appear somewhat prime-ministerial. Primarily, they exist to reduce government spending as a means of bringing the state down to a more controllable size for the late 2010s and 2020s. This is not an unreasonable argument when the private sector is beginning to thrive again, especially when new technology and innovation could lead to exciting new developments.
After the general election, Osborne announced new plans to maintain a budget surplus in Britain in order to cut the national debt and stimulate the economy in the long-term. He described it as “fixing the roof while the sun is shining”; suggesting that a new wave of economic optimism is sweeping Britain. Ever since the 2008 recession, the economic narrative in many nations has been overwhelmingly and understandably pessimistic. The Blair years led to uncomfortably high levels of borrowing, meaning that when the recession struck, we had dug ourselves into a hole that has actually been deepening (albeit at a slower pace) ever since.
Some suggest we notice this higher spending in our schools and hospitals, or that more spending was necessary to confront modern challenges such as technology. Though he might believe this spending went too far, the Chancellor recently announced a £100 billion, Blairite-led National Infrastructure Commission, which continues this legacy of investing in British infrastructure to keep the country modern and stable. These plans go against the populist notion that the Tories shy away from investing in infrastructure projects, citing that it is not their concern. The Government has shown that it is possible to aim toward attaining a surplus whilst spending its money more wisely.
There are many, including those currently on Labour’s front bench, who believe that the Tory turnaround of the economy has roots in ideology and right-wing dogma. This might have been true in the 1980s and 1990s, but if you assess modern Tory policies such as the Living Wage and Grandparental leave, nobody can deny that Margaret Thatcher would be wincing from all the private sector meddling going on. Part of the economic success of the Tories currently is down to pragmatism. There is no ‘Cameronism’ to speak of; if anything, many of these new policies are continuing the New Labour legacy.
The Tories are doing all they can to stigmatise the notion of heavy borrowing (it’s one of David Cameron’s favourite put-downs to the Opposition during PMQs), and whether you like it or not, it looks like Cameron’s favourite sound-bite (the “long-term economic plan”) might be working. Certainly, the foundations are being laid: new attempts to balance the books, slight (but relatively harmless) deflation, and successful attempts to boost productivity. Employees are regaining bargaining power, as private sector got an average pay rise of 3.4% in the months leading up to July, with this growth continuing a little more slowly now. The unemployment rate is down to 5.5%, from 6.2% last year. All of this, whichever way you look at it, is pretty good news.
It is possible to argue, of course, that the Tories aren’t complete realists who act purely as political pragmatists. Many have suggested that Osborne’s permanent surplus is a party-political ploy to alienate Labour, who after an extremely embarrassing U-turn on their position towards the Fiscal Charter, are conflicted and admit that some borrowing is necessary to implement their own budget. Perhaps borrowing is necessary; Osborne’s goal for a budget surplus has already been pushed back from initial estimates, suggesting that it is hard to aim towards, let alone maintain. Then again, perhaps a permanent surplus might be good for the country; the ‘least worst’ option so to speak, when assessing Labour’s desire for inflation-inducing “people’s quantitative easing”.
It is really odd to think that currently, the Conservative Party is more Blairite than the Labour Party. Yet this is, as the recent budget suggests, the new direction for the Tories. Labour has swerved to the left and the Tories are hoovering up the centre-ground for both political and economic reasons. The result? The Tories gain an image as the only people credible enough to handle the economy, whilst attempting to, as a former Tory vice-chairman put it, “discredit socialist thinking for good”. Whilst we should in some respects remain sceptical of Conservative policy (in areas such as surveillance and the approach to the refugee crisis) it is good to see the private sector booming not because of a tiny, un-regulating, uncaring government; but because of a government that stays a sensible size, borrows less, and guides the private sector down a more moral, higher-earning, productive path.BLOG COMMENTS POWERED BY DISQUS