The term austerity refers to a set of economic policies that aims to reduce government budget deficits (the difference between government revenues and spending) through spending cuts, tax increases, or a combination of both. Austerity policies are often put into place by governments that find it difficult to borrow or pay back existing loans, as the goal of the policies are to reduce the budget deficit. Austerity policies that reduce government spending lead to increased unemployment in the short term, usually occurring in the public sector (public services and enterprises). While austerity policies that increase tax can reduce consumption by cutting household disposable income. Reduced government spending can also reduce gross domestic product growth in the short term.
When austerity policies were introduced in 2010 by David Cameron, they were first presented as “a short period of necessary pain that had to be forced on the country to put the public finances right.” In response to the Great Recession – the deepest UK recession since World War II – where global commodity prices rose and banks suffered, causing a credit crunch (a sudden reduction in the availability of loans or tightening of conditions required to take a loan). Austerity was seen as the solution to this issue as the 2007-2008 financial crisis and the Great Recession followed many years of government budget surplus which Cameron criticised as “excessive government spending”, in April of 2009 he declared “the age of irresponsibility is giving way to the age of austerity”. The conservative party also promoted the idea that budget cuts would bring about Big Society – a political ideology revolving around reduced government, with charities and private companies delivering public goods and services more efficiently.
A main criticism of the system was that the policies where just not needed, in 2010 the world economy was growing again, but all major economies were still operating far below capacity and had high unemployment. Normally, when unemployment is high and inflation is lower, governments should try to stimulate demand with reduced interest rates and fiscal deficits (the negative difference between a country’s revenue and spending). Yet the Cameron government did the opposite, pulling back fiscal support from an economy that needed it badly – an error that was entirely unforced and avoidable, and seemed to have more to do with the party’s political and social policies than their economic ones. Denunciations of debt and deficits often go hand in hand with demands for smaller government, which conflicts with the aim of politicians whose real goal is to move policy to the right by exploiting the fear of deficits to push an agenda that would otherwise be unpopular.
Another important criticism of the austerity policies was the effect they had on people who financially relied on the government and the increase of poverty across all demographics; one in thee children and around one in five pensioners dropped below the poverty line and over a million people a year relied on foodbanks. The average height of children during the years of austerity also decreased, leaving British children shorter and more obese than many of their European peers. Since the start of the austerity policies there has been a roughly 19% year-on-year increase in food bank use.
Many different public bodies and institutions suffered due to the austerity policies, for instance a report by the Arts Council England revealed that arts and culture had suffered a 20% decline from 2010 to 2020, and in some areas council arts funding is set to cease entirely within the decade. Libraries have also been suffering, with almost 800 public libraries closing since 2010 and 773 of those closured happening in 2010 alone. The Chartered Institute of Public Finance and Accountability released a report stating that annual funding for public libraries also saw a massive decrease in 2010, falling from £1 billion to £775 million.
The Work Capability Assessment (WCA) was introduced in 2008 to determine entitlement to benefits that help cover day-to-day living costs for people whose capability for work is limited by a disability or health condition. The outcome of this assessment determines: entitlement to Employment and Support Allowance (ESA), entitlement of Universal Credit (UC) claimants to an additional ‘limited capability for work and work-related activity’ amount for ill health and disability, whether UC claimants without children are allowed to earn certain amount each month (the work allowance) before they UC payment is affected, and what, if any, work-related conditions claimants are required to meet.
The WCA has been controversial since its introduction, a Work and Pensions Committee report said that failings in the assessment and decision-making process for ESA had resulted in the “pervasive lack of trust” that risked undermining the operation of the benefits. It is known from Reassessing Assessments that “It (The WCA) frequently causes people’s mental health to decline, and all too often leaves people claiming benefits feeling that their mental health problems were not understood by the assessor.”
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