The ghost of austerity still haunts us today.
When front-line healthcare workers avoid their own family to prevent passing on potential infections, ration inadequate protective equipment, and resort to scavenging for groceries after gruelling days of work, do you think clapping for them will help?
What they need is something more tangible.
Austerity has been Dismantling the NHS
A shallow show of gratitude will not help our country. Immunity is not built from applause nor is healthcare bolstered by feelings.
The pillars of social infrastructure defend us when crises hit. During these critical periods, we need sectors like healthcare and education to be especially resilient — the former keeps people healthy and the latter considers future growth. However, in blind support of questionable economic theories, successive governments have been absent-mindedly whittling away the support from underneath us for over a decade.
Following the global financial crisis of 2008, the UK government used taxpayer money to bail out the banks. To recover from this overspending, the Conservative government in 2010 spearheaded a set of economic policies under the collective term of ‘austerity’, which were meant to increase taxes and cut public spending. However, taxes were not increased to generate more revenue, evident by its stagnation. On the contrary, taxation of the rich was reduced. Although deficits now match pre-crisis levels, the national debt has almost quadrupled without any investment to speak of.
The Outcome of Slashing Public Spending?
A decade of austerity has deteriorated the capability of the NHS. Spending on healthcare has been held flat for the past decade, compared to other advanced economies which have been increasing their bill. Reduced financial spending necessitates an increase in productivity. Despite the demands of a growing and ageing population experiencing more chronic diseases, the NHS has been expected to do more with less. Instead of support, health care workers are confronted with redundancies and suffer wage cuts to compensate for the lack of funding.
Researchers from Oxford University further assessed the effect of austerity on health and wellbeing, finding that contracted health services combined with spending cuts to social services caused needless increases in unemployment, poverty and homelessness. To further highlight the profound failure that is austerity, the focus on cost reduction and competition completely conflicts with the NHS’ priority to protect public health. As a result of the cuts, a report in 2014 detailing how the NHS was wholly unprepared for a pandemic was outright dismissed and ignored.
At the time, it seems the cure was worse than the disease.
Alternatives to Austerity?
When faced with a crisis, whether it be a financial meltdown or a pandemic, the government has to choose with great precision and deep deliberation on where scarce resources should be spent. The Covid–19 pandemic has disrupted the economy through disabling the movement of people and goods. With fewer goods being produced and sold, entire industries are at risk of shutting down — the aviation industry, for example. With fewer employers, employment inevitably falls. People facing redundancy and worklessness will be unable to meet utility and housing bills. Thus, a priority emerges here, focusing on unemployment.
Researchers from the International Monetary Fund stated that without ‘deliberate and strenuous attempts to protect the vulnerable, this pandemic could end up exerting a significant adverse impact on inequality’.
Further detailing where investments should occur is outside the aims of this article. However, what is evident is that the country will need to rush headfirst into indebtedness.
Is debt bad?
Debt owed by the government, called public debt, has been mislabelled as injurious to the economy in an effort to justify cuts to public spending. In reality, like personal debt, public debts can lead to fruitful investments, depending on how much debt already exists, how much borrowing will cost and what the borrowed money will be used for. Britain has relatively low debt. Eighty per cent of the national debt is owned by the government itself, so interest is minimal. Lastly, debt accrued from investing in growth is actually the economically logical decision. All the evidence points towards sensible indebtedness to serve the economy.
In response to the Covid-19 pandemic, we should not hesitate to become indebted today to invest for tomorrow because the only way recovery is possible is through investment. Yet, it is of paramount importance that the burden from overspending is shared across society. The poor and the vulnerable paid the price of regressive austerity policies. Moving forward, debt should be recouped through stimulating growth and permitting real economic growth to reduce the weight of the debt burden.
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