Yahoo Finance By freezing pay and benefits, Sunak will be levelling down, not up
The gargantuan sums will look big enough to see from space. Noughts too many to count, in every number for borrowing and spending, may numb the senses. “No austerity,” the government will declare. But not for long.
In this week’s spending review, the chancellor will fulfil Boris Johnson’s lavish manifesto bribes – more police, doctors, nurses and hospitals, as well as infrastructure projects in the north of England. (Although not that 0.7% foreign-aid pledge.) Pensioners will keep their triple lock. Yet the two-child limit and the benefit cap will help child poverty reach record levels.
Rishi Sunak will let rip the credit card for the prime minister’s favourite Christmas eye-catchers: a £16.5bn splurge on new MoD PlayStations and, God help us, millions for a “festival of Brexit”. Yet Sunak’s clear message is that this is for one Keynesian year only. The chancellor is a natural fiscal conservative and any plan of his to be prime minister depends on wooing his ultra shrink-the-state party members.
As his cash-register rings out tomorrow, don’t imagine largesse will repair the damage done in the last decade: every citizen has lost 25% in public spending. Not even the “protected” NHS will get enough: before Covid, waiting lists had already soared after a decade of its harshest squeeze. Most threadbare public services face deeper cuts, not growth, as councils teeter on the brink of bankruptcy after losing more than 50% of government grants since 2010. Northamptonshire and Croydon have gone bust, and many more are shredding everything they can to balance their budgets by January.
Take Tory-run Bexley council: it is cutting 304 jobs, but hasn’t the reserves to cover redundancies. Now it is begging for permission to switch £15m from its capital budget, intended for essential building and maintenance. One in five staff will go – from social care, libraries, parks maintenance, and there’ll be no one left to check CCTV. Dan Francis, the opposition Labour group leader, protests in vain: forget “building back better”.
Look at damage to the next generation. Bexley once had 13 children’s centres, but cuts will leave just one, in a more affluent area. One centre leader listed to me all that families will lose from neighbourhood centres: midwives, health visitors, antenatal depression care, domestic violence protection, English and maths adult education, vouchers for food banks and much more. “It’s heartbreaking,” she says.
Lift the stones on the basic fabric of civilisation and you soon discover what’s no longer there. Kettering, in Northamptonshire, has just three full-time-equivalent environmental health officers, half the team of a decade ago. One seasoned officer says health and safety was slashed immediately in 2010, ideologically driven by years of “’elf and safety” mockery. “Now inspections are forbidden, unless there’s an accident or complaint.” He’s indignant that the Food Standards Agency has forbidden all inspections during the pandemic, “so now there’s a huge backlog of regular offenders and suspect food outlets that keep changing hands”. A hundred more food outlets have appeared since March: “In the last recession people started selling food made at home. We found a couple bottling and canning fruit who had never heard of botulism.” Wherever you look these basic protections, once taken for granted, are vanishing.
The Tory-controlled Local Government Association says that councils need £4bn just to stand still in today’s broken state. No 10, meanwhile, prefers to let councils take the blame for cuts, leaving social care funding in limbo. If only this time councils of all parties would rebel: councillors could resign en masse and refuse to wield Whitehall’s axe against their own. But Tory leaders want honours and power, while Labour fears being tarred as 1980s Militant-style renegades.
Restoring growth and jobs is the only hope for economic salvation, so this is the time to borrow and spend without flinching. But it has to be the right kind of spending. Massive prestige infrastructure projects take for ever when the need is for cash injections for immediate jobs. We should start by saving councils from shedding any more staff. And then we could add in half a million jobs to retro-fit home insulation.
A public-sector pay freeze is a purely political gesture, presaging austerity to come. The Institute for Fiscal Studies (IFS) finds public servants are not paid more, once qualifications are considered, and they are already paid 1.5% less than in 2010. Watch out for the chancellor’s untruth on this: comparing them with insecure gig workers is to level down, not up.
This freeze will hit “red wall” seats hardest, given they have higher proportions of public-sector workers. They will be hardest hit, too, by another benefits freeze, also threatened: the UK is already at the bottom end of the G7 for benefit generosity, and also among the most miserly in our compensation for those hit by Covid. Chancellor, be warned that – as seen by the popularity of Marcus Rashford, and backed up by the British Social Attitudes survey – there is a strong new public empathy towards those on benefits.
Keynes would say spend, spend, spend for the next three years to pump-prime growth, as does the IFS director, Paul Johnson: and once growth returns, tax rises will be more effective than spending cuts.
This government is not the one to open the great debate on spending and taxation that the country needs. Brexit might have been a moment to face hard realities, but last week’s fantastical defence splurge suggests it inhabits a realm of national delusion. This is not the leadership to build a social infrastructure made by and for people in worthwhile jobs. That requires taxes as high as in all those countries with a stronger social fabric, who have done better than us in this pandemic.
Tomorrow’s dazzling digits will pretend to a new munificence, but the underlying message is designed to frighten people with borrowing numbers, preparing the way for a new austerity, even if they never use the “A-word”.
Polly Toynbee is a Guardian columnist
