Who Needs the Cuts? E-Book

Barry Kushner

• Herausgeber: Hesperus Press Ltd.
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Seitenzahl: 212

Veröffentlichungsjahr: 2024

Beschreibung

The Coalition Government in the UK, like other governments, is embarking on an unprecedented round of spending cuts. Talk of deficits, and the National Debt, and Quantitative Easing, and other economic terminology is presented to the public as evidence that there is a vital need for some of the most drastic cuts the West has faced. But according to author, Barry Kushner, there is an alternative story that is not being told. There is an explanation of the economic events of the past five years that does not describe the UK in debt crisis. It offers choice, differences of opinion, uncertainty, and hope. It takes us on a different voyage beyond economics into politics and visions of society, our expectations and ambitions. It is an alternative story that prompted an American Nobel prizewinning economist to write "'Jobs now, deficits later' was and is the right strategy. Unfortunately, it's a strategy that halter Hadwens been abandoned in the face of phantom risks and delusional hopes."

Leseprobe

Who Needs the Cuts?

Myths of the Economic Crisis

Barry Kushner

Saville Kushner

Published by Hesperus Press Limited

167-169 Great Portland Street

W1W 5PF

www.hesperus.press

First published Hesperus Press Limited, 2013

This ebook edition first published in 2024

© Barry Kushner and Saville Kushner, 2013

isbn: 978-1-84391-381-8 (paperback)

isbn: 978-1-84391-347-4 (e-book)

All rights reserved. This book is sold subject to the condition that it shall not be resold, lent, hired out or otherwise circulated without the express prior consent of the publisher.

Contents

1. The Single Narrative And Where It Came From

2. Debt, Love and History

3. Two Sides of the Deficit

4. What Caused the Deficit?

5. The Banks

6. Politics, Not Economics

7. Not the Debt Narrative

Acknowledgments

Notes

About the Authors

The Single Narrative And Where It Came From

What is the use of repeating all that stuff, if you don’t explain it as you go on? It’s by far the most confusing thing I ever heard!

Alice in Wonderland

Barry’s Story

It was an unusually chilly July day when I arrived with a colleague in the small, proud but unmistakably impoverished town on the coastal fringe of north-west England. We had come for a meeting of the ‘Children with Disabilities’ planning group which we had been brought in to support.

A room was booked in a dilapidated ex-junior school that was accommodating the Children’s Services offices. The meeting room, when we eventually found it, was in an ante-room off the old main hall that had all the feel of an equipment store.

Squeezed into this cramped space were local parents, representatives of voluntary sector organisations and council officers. Although the group was relatively new, its importance could not be overstated. For the first time in many years we had parents at the heart of the service planning process. They were coming together with both commissioners and providers to oversee the design, delivery and review of local services for their own children. This opportunity had been afforded by Aiming High for Disabled Children, a central government programme, based on sound evidence and articulating an ambitious vision for some of our most excluded and disadvantaged children. In practice, where I was working, this meant that the local network of parents was now actively leading on the design of a long-awaited respite care centre. But beyond the tangible, beyond the targets and measures, there was no mistaking the level of trust being slowly established between parents and professionals – a breaking-down of institutional barriers that had hampered partnership and progress for many years.

Sadly, the agenda for the meeting had changed at the last minute, so rather than giving an update on the capital project which I had been leading, I was now required to facilitate a discussion on how they had to abandon plans for the new centre.

This sudden change of plan was a direct result of the moratorium on spending that the incoming Chancellor, George Osborne, had introduced in his first ‘emergency’ budget. In May 2010 he had proudly announced that ‘In the space of just a week, we have found and agreed to cut £61⁄4 billion of wasteful spending, across the public sector.’⁠1 The respite care centre was a real example of Osborne’s ‘wasteful spending’. But why was he doing it? The Chancellor was clear and confident: ‘We need to tackle the deficit so that our debt repayments don’t spiral out of control.’⁠2

This is the kind of argument that we had been hearing since the inception of the new government, if not longer, and it amounts to a debt and deficit narrative that goes like this:

–Our national debt is higher than it’s ever been

–Our deficit and debt interest payments are unmanageable

–Our debt crisis was caused by the overspending of the previous government

– We are on the brink of bankruptcy

The narrative was turned into simple mantras by Coalition government ministers, amplified by supporters in the media and embedded into the consciousness of the British people: ‘The cost of repaying our debt is £120 million per day, we maxed out our credit card, our debt interest payments are higher than our spending on education, and the debt crisis was caused by Labour government overspending.’

The potency of this story, its ability to gain traction with ordinary people, is rooted in fear, anxiety and the almost effortless way in which the personal is woven into the national. The fear of financial meltdown – personal and national ruin. David Cameron had said it before, but repeated at the Davos get-together that Britain needed to cut its deficit or risk a full-blown fiscal crisis such as the one that has engulfed Greece. In June 2010, George Osborne told Andrew Marr: ‘You can see in Greece an example of a country that didn’t face up to its problems, and that is the fate that I want to avoid.’⁠3 What is more, the Coalition was telling us that ‘we are all in this together’, the obvious connotation being that you are either ‘with us or against us’.

In truth, all this comes close to what could be described as economic McCarthyism: tapping into fear and prejudice to drive a narrative aimed at establishing a level of acquiescence sufficient to force through a radical programme of action.

It is interesting to reflect that at the height of the witch hunt for communists in the United States in the 1950s, Senator McCarthy would hold up papers that he said contained lists of people whom he was investigating. In reality, we now know that there were often no lists of names; that his evidence was thin, but that the climate of fear he created was powerful enough to galvanise action and subdue challenge. It was a narrative that even the American president at the time found hard to resist, fearful of challenging in case the finger was pointed at him. In this way it disarmed people, stifled challenge and showed that you don’t need cold hard evidence to build a compelling story. On the contrary, a powerful argument, statements that look like facts and the fear of consequences are quite sufficient.

In the same vein, the evidence tells us that our present debt narrative is just as much a construct of untested assertions, laced with fear. How bad would it be if there were no cuts? The government has made references to our economy ending up in the same position as that of Greece. After all ‘we were on the brink of bankruptcy’, George Osborne told us, and what’s more the markets would abandon the UK: ‘The largest bond investor in the world was saying that UK gilts were a no-go area, sitting on a bed of nitroglycerine.’ ⁠4Nitroglycerine.

In the face of such scaremongering, no wonder we are made to feel awkward and risk being marginalised as heretics if we dare to even question the storyline. For example why, when our debt is lower than it has been in 200 of the last 250 years, when our borrowing is cheaper than it was during Thatcher’s government, when unemployment and a decrease in taxation revenue has caused the deficit, are we told that the cuts are necessary and the only option? But more of that later.

Returning to the scene of the crime, the narrative started to build in the wake of the credit crunch in 2008, with bank bailouts and an increase in unemployment. By the time the political parties were preparing for the autumn 2009 conference season, they were rehearsing arguments they were to take into the forthcoming election. Public sector spending cuts had become the main plank of Conservative Party policy and so it was for the Liberal Democrats, who even began to identify where the cuts would fall if they were in government. The Labour Party joined the cuts camp in full force slightly later, when Alistair Darling finally persuaded Gordon Brown and Ed Balls to change Labour Party policy in autumn 2009. Brown and Balls had been arguing that spending could be maintained if growth began to reduce the deficit – remember the media making hay with Gordon Brown’s reluctance to utter ‘the C-word’? Alistair Darling, James Purnell and others were arguing for cuts, and they won the day. By the time of the budget in March 2010, the Labour Party was committed to halving the deficit in four years. And Darling had confirmed in his interview with Nick Robinson about his March 2010 budget⁠5 that the cuts would be ‘tougher and deeper’ than those implemented by Thatcher’s government in the 1980s.

This statement was a bombshell and the final confirmation that this debt story would see the country return to the divisive, unhappy period of the 1980s. Was that what we and our families and children had to look forward to? That period left its scars on us, as it has many baby boomers who lived through it. Austerity measures in the 1980s were met with marches, strikes, protests; Darling’s offer to return to the 1980s was greeted with an intake of breath and a resigned nod of the head.

In December 2009, three months before Darling’s statement, I had been at a reunion of the successful parent occupation of Croxteth Comprehensive in Liverpool. The school had been closed down in 1981, an early victim of Conservative Party cuts, and the parents’ knee-jerk reaction had been to take over the school and open it up for their children. Three years later in 1984, after a campaign that brought together trade unions, educationalists, communities, musicians, actors and journalists, ‘Crocky Comp’ was re-opened. I was one of the campaigners and a teacher. The reunion was the first time the parents, some pupils and volunteer teachers and staff had come together to remember the successful campaign since then, and the heart of the event was an exhibition of photographs and a film retrospective of the events at the time.

In 1980 Croxteth was one of the poorest neighbourhoods in the country and the pictures brought it back: young people posing in the no-man’s land of overgrown grass, dumped furniture and supermarket trolleys lying like tumbleweed in front of 1970s maisonettes, half of them empty and boarded up. The net result of cuts and limitations on social welfare in places like Croxteth was poor health, poor life chances for young people, few jobs and low life expectancy. Sean, who was a cute, cheeky, mischievous eleven-year-old when I taught him in 1983, was now forty, and had just stopped using drugs after twenty-eight years. He was taking me through the old school photograph, putting the names to the faces of the children who attended the school in 1983. At least seven were now dead.

Invoking the 1980s as the closest comparison to what was about to happen in the 2010s, this time with a political consensus, was shocking. Darling’s statement was accepted by politicians and the media and absorbed into the inevitability of cuts. In fact Nick Robinson put the words in Alistair Darling’s mouth:

Robinson: The Treasury’s own figures suggest deeper, tougher [cuts] than Thatcher’s – do you accept that? Darling: They will be deeper and tougher.⁠6

True, Robinson flushed out Darling’s position, but where was his follow-up question about whether it was ethical or viable to return to a society that convulsed under the impact of austerity in the 1980s? ‘Where we make the precise comparison, I think, is secondary to the fact that there is an acknowledgement that these reductions will be tough.’ That was what Darling told us.

But how could that be the case? We all knew this began as a banking crisis that had its roots in the USA, with the mass sale of mortgages to people who couldn’t afford them. These mortgages were consolidated into packages and sold on as investments to UK, American and other international banks, who in turn sold them on again, in large part to borrow money to finance re-mortgaging and 120 per cent mortgage deals in the UK. These are known as mortgage-backed securities. When homeowners in the USA began to default on their mortgages, the value these mortgage packages had as investments fell. When it came time for the banks to cash in these investments to return the money they had borrowed, they were worthless; the banks didn’t have the cash to cover their own repayments and would have gone bust had governments in the UK, USA and other countries not stepped in and bailed them out.

The evidence was too strong and too well known by the British public for Mervyn King, the governor of the Bank of England, to walk away from. He knew cuts were coming; after all, he had taken the extraordinary step of planning government tax and spending policy with Cameron and Osborne prior to the election. He then took another extraordinary step of speaking to the Trades Union Congress (TUC) in 2010 to take the blame, and to soften us all up for public sector cuts: ‘The billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector.’ ⁠7But if public spending was not the cause of the economic crisis, how can public sector cuts be the only solution? And why do we have to wait for a banker to tell us that?

Nevertheless, the narrative was getting through to the public. A Daily Telegraph⁠8poll back in June 2009 had already recorded that seventy-five per cent of voters believed cuts were necessary. TUC polling throughout 2010 and 2011 consistently confirmed that most of the public felt the same, believing that there was no alternative. Indeed, the clamour of the debt narrative had drowned out dissenting voices and had now established a political consensus. A consensus that merely needed stating, often without recourse to analysis, let alone facts and (recent) history. The political parties were backed up by the Confederation of British Industry (CBI), leading businessmen, the Centre for Economics and Business Research, the Governor of the Bank of England and by a number (though by no means all) of prominent economists. All were shouting for public sector spending cuts.

The narrative finally became government policy in May 2010, as the Conservative and Liberal Democrat Coalition picked up the reins of power. By October 2010 the government had issued the Comprehensive Spending Review, which translated the story into a reality of £80bn of public spending cuts. For you and for us, this means that certain operations and procedures are no longer available on the NHS, the poorest in our society are losing welfare benefits, police, nurses, social workers and teachers are cut back, and city councils like Liverpool’s are losing £150m per year in a thirty per cent cut to their budgets. Sure Start centres and libraries are closing up and down the country, and the Institute of Fiscal Studies is forecasting that 600,000 more children will enter poverty. The list is endless, but it amounts to a fundamental structural change in the funding and delivery of public services, and a scale of shrinkage to our public sector never before seen. Will Hutton implored anyone who would listen to understand how extreme these cuts were:

No country has ever volunteered such austerity. It is as tough a package of retrenchment as the IMF imposed on Greece, a country on the brink of bankruptcy. It is twice as tough as the famously harsh measures Canada took between 1994 and 1997. It is three times tougher than Sweden’s measures between 1993 and 1995. In British terms, it is immeasurably tougher than what we did after the IMF crisis in 1976 or after the ERM crisis in 1992...⁠9

To explore this a little further, let’s step back to where this chapter started, and my meeting with parents of children with disabilities, where I had to confirm that the capital programme had been closed and that the funds required to build the new respite care centre had been cut. The news was greeted with resignation. A parent representative was the first to respond, and given how proactive and uncompromising he and other parents had been in developing services for disabled children and the demands made on the council to provide facilities, I expected a tirade. I expected the council to be blamed for taking away the money or not spending it correctly, or calls to mount a campaign to have the programme reinstated. But no. He accepted the decision with resignation and said that in the face of ‘overspending’ there was little choice. The other parents and members of the meeting agreed. It was a devastating moment. I felt powerless to respond.

I had been working on this project for months and had witnessed the passion and commitment parents brought to the development of services for their disabled children. One parent broke down in tears at a meeting, out of the pain and frustration in trying to get across the need for the centre to give her and her family a respite break from their disabled daughter. The parent representatives on the planning group had gone into minute detail about the size of the rooms, the facilities and location of the centre. They had spent their own money travelling to meetings and volunteered their time to attend them. Over the previous ten years they had developed a confidence in their own views and opinions through having access to local policy and decision makers and their inclusion in decision-making – even about how money would be spent. They overcame their suspicion of local government and its officers, to work with them to develop facilities, after-school groups and support networks.

We caught a flavour of what this passion and moral purpose looks like on national TV when Jonathan Bartley,⁠10 the father of a disabled child, tackled David Cameron in the 2010 election campaign about his decision to close down special needs support in mainstream schools. Back at that planning meeting, I was witnessing at first hand how easily purpose and drive can be undermined and dissipated so much more quickly than it can be built up. In practice, the debt narrative was ploughing through people’s ideals, ambitions and plans. No one else in the meeting disagreed with this parent, but all felt uncomfortable, powerless and lacking the necessary insight to frame a response.

It wasn’t just people who attended the meeting who felt this way. The sense of powerlessness extended much further – arguably even to Alistair Darling. A lot of people felt helpless to challenge the cuts because the debt narrative was so overwhelming. As my brother and I became active in promoting resistance to cuts we saw people fall into three broad categories of response: those who agreed with the debt analysis of the necessity for cuts; those who were resigned and felt that there was no alternative; and those who disagreed with the cuts out of the sense that the rationale was political and not economically driven, but couldn’t marshal a coherent argument.

The sovereign debt and spending-cuts narrative was cemented. The only difference between the political parties now boiled down to how many billion pounds were to be cut and over how many years. It was a matter of degree, not substance. The media picked this up and ran with it.

Students, in the first challenge to government cuts, marched against the increase in university tuition fees. What reporters wanted to know was where the cuts would fall if more money were put into university education to bring down the level of fees. BBC’s Question Time became a national, weekly platform for the debt narrative. Almost every discussion on almost any topic whether it be defence, schools, international development or sport followed a similar pattern. Government ministers and supporters argued that with the ‘mess’ they were left by the previous government there was no alternative to the political decisions the government was taking. Cuts were in the national interest. More often than not the Labour Party representatives remained quiet, uncomfortable and unable to challenge.

There was no better evidence of the predominance of the new consensus than the media build up to the Comprehensive Spending Review in October 2010. National and regional BBC radio stations, Sky and ITV national news, local and national press were asking readers, viewers and listeners to make suggestions as to where the cuts should fall. This didn’t happen in the 1980s when there were alternative and competing arguments and analyses. So why is there no challenge to this now? In the 1980s the decisions to make public sector spending cuts were clearly political. In 2010, the need for cuts was a given and our leading journalists were seduced by the argument. John Humphrys prefixed his interview with Nick Clegg in the week before the CSR with the words ‘We know you need to make cuts, but...’ Andrew Marr followed this up in his keynote inquisition of George Osborne: ‘You clearly need to make the savings, the cuts and raise taxes...’ He even allowed Osborne’s historic, unprecedented assertion that the country was on the brink of bankruptcy to go unchallenged.

Even Andrew Tyrie, the Conservative chair of the Treasury Select Committee, did better than Marr. He told George Osborne that talk of bankruptcy was ‘over-egging it’.⁠11 But a distinctive feature of the coverage of the debt narrative has been the mainstream media’s largely unquestioning acceptance of government statistics and political assertions about the economy.

Stephanie Flanders, economics editor at the BBC, in her report of 9 September 2011, put the reason for poor growth figures down to the good weather, the tsunami in Japan and the day off for the Royal Wedding. Why did she not mention that the retail sales and manufacturing slump, combined with redundancies as a result of spending cuts, were starting to have an impact, and consumer confidence was at an all-time low? ‘We were providing the explanation provided by the ONS, the independent statistical body,’ Stephanie wrote.⁠12 Yet her role in the BBC is analysis, not news reporting. Her unquestioned reproduction of a government/ONS press release is closer to her previous role as speechwriter and advisor to Larry Summers than that of the BBC’s chief analyst. (She had also worked with the US Treasury Secretary, as he presided over the deregulation of the banking system that unleashed the whirlwind of mortgage-backed securities, credit default swaps, sub-prime mortgages and over-leveraged banks that sit behind the whole debt issue.) ‘If this was not emphasised yesterday, that was simply because there were other things to focus on in a 2.5 minute package, and the broad political and economic arguments about austerity are now so well understood by our viewers.’⁠13 I was referred to her blog.

What was worse, any challenge to the debt narrative was now being questioned in moral terms. Martha Kearney accused Hilary Benn of being a ‘deficit denier’ and the Conservatives had singled out Ed Balls as the number one ‘deficit denier’. This is emotive, powerful language redolent of attacks on Holocaust ‘deniers’ and used regularly to dismiss argument and debate about climate change. There is no way of understanding ‘deficit denier’ other than its suggestion that challenging the debt narrative is immoral. In fact it was denying the British public a debate. Without as much information as possible being placed in the public domain, how can we make judgements, ask intelligent questions, be sceptical, come up with other solutions? Never mind the fiscal deficit – the debt narrative has created a democratic deficit.

In our desperation, my brother and I started to write to the BBC and to The Guardian to complain about the coverage of debt and the lack of challenge to the debt narrative. We made the point in a series of emails and interventions on radio phone-ins that although the coverage reflected the political consensus it did not reflect the broader economic analysis represented by numerous economists and people on both sides of the political spectrum. We crystallised our scepticism into a Powerpoint presentation and gave talks wherever we could. We begged the question, doesn’t the BBC have a duty to do this?

‘The Editorial Guidelines state that we strive to reflect a wide range of opinion and explore a range and conflict of views so that no significant strand of thought is knowingly unreflected or under-represented,’ a senior executive at BBC News told us. She almost sounded as though she may have been agreeing with us, until she went on to write: ‘However, reflecting a broad range of views is not the same as giving equal weight to all shades of opinion and nor are we required to give totally comprehensive coverage.’

That even appears to be the case when journalists know that there is more to add to an analysis. Evan Davis had given Len McCluskey, the Unite union general secretary, a grilling on the radio, unlike anything to which Danny Alexander, George Osborne or other government ministers had been subjected. We wrote to Evan Davis to ask him why he prevented McCluskey from elaborating on his argument and why he didn’t challenge ministers in the same way. For example, we asked, why are ministers not asked to explain the significance of the low level of national debt and borrowing on their cuts planning? He replied:

I personally think there are arguments to be made for not dealing with the deficit at the moment. Indeed there are arguments for monetising it too. But these need to be set out by those who want to assert them not by me.⁠14

So Evan knows the answers, but won’t tell us what they are? Aren’t journalists supposed to use their knowledge and experience to ask more intelligent, searching questions?