The government found £5bn for weapons to Ukraine, but 'can’t afford' £2bn so UK kids don’t go hungry? Why the Austerity scam is back.

"There is no money". "We can't afford that". "We have to make tough decisions".

You will have undoubtedly heard these asinine phrases spouted ad infinitum by politicians of all stripes over the last year or so - because, depressingly, it seems as if both the Conservatives and Labour have seemingly time-travelled back to 2010 to once again try and outcompete each other in how tightfisted, miserly, and pro-austerity they can be.

So I'm here to explain why the austerity narrative is back, and why it is is still complete and utter bollocks - as well as show you how both main parties are simply taking the absolute piss out of us all.

I mean, just take these facts for starters:

• The Tories (and Keir Starmer's Labour) say we can't afford £2.5bn to fund Free School Meals for all school children, but they somehow found double that amount - £5bn - down the back of the chaise longue to send weapons to Ukraine. This is despite the fact that research shows that Universal Free School Meals would more than pay for itself in economic benefits in the long run - to the tune of around £25bn over 20 years.

• The Conservative government rustled up around £37bn out of thin air during the pandemic to pay for a Test and Trace system which didn't even work, but the NHS staff we clapped for - along with other essential public sector workers - now have to suffer real terms pay cuts because there is supposedly 'no money left'.

• Since 2010, MPs have voted through £20,846 of increases to their own salaries - going from £65,738 to £86,584. Yet, in the same time frame, there has supposedly only been enough money to increase nurses' salaries by just £5,400 (way below inflation, and over £15,000 less than MPs have handed themselves).

• The government wasted around £5bn trying to crush striking rail workers, when it would have only cost £1bn to give them the pay rises they were asking for in the first place!

• As Chancellor, Rishi Sunak simply wrote off £4.3bn that the government lost to Covid payment fraudsters, but in 2021 he allocated £500m in an attempt to claw back £1bn lost to benefit overpayments - this despite the fact that a staggering £19bn worth of benefits go unclaimed by UK citizens every single year!

• The Tories have spent £140m of our money on a scheme to send asylum seekers to be processed in Rwanda - a plan which the government themselves have admitted will cost taxpayers around £169,000 per person sent. Ridiculously, it would cost less to just buy each one a 1-bed flat! And this is even before we acknowledge the fact that study after study shows that immigrants to this country actually contribute more to the UK economy than they take out - unlike their native counterparts!

• Then there was the £162m spent on the Queen's funeral, the £100m spent on King Charles' coronation, the £120m spent on the 'Festival of Brexit' which virtually nobody attended, the £920m that the government spent advertising their own policies before the 2019 election, the £2.3bn fine paid to China for lax import checks, the £80bn spent supporting the fossil fuel industry over the last 8 years, the £466m spent on Brexit import check facilities that were never needed, the £11bn wasted because Rishi Sunak failed to insure the UK National Debt against interest rate rises, the £14.9bn wasted on unusable PPE, etc, etc, etc.

And we could go on, and on, and on (please leave your examples of the government's austerity hypocrisy in the comments)!

So, why can the government always seem to find money for war (or tax cuts for the rich, extortionate contracts for government cronies, and above inflation pay rises for themselves etc), but somehow never find money to help the rest of us?

The Ridiculous Lie

The whole austerity scam started just after the 2008 Financial Crisis. According to David Cameron and George Osborne, Labour's domestic "overspending" had somehow caused banks in the USA and across the world to collapse. It was nothing to do with these multinational financial institutions making extraordinarily reckless gambles and essentially acting like casinos, safe in the knowledge that they were 'too big to fail' and that taxpayers in their respective countries would ultimately have to bail them out. No. This massive global crisis was definitely all caused by Labour funding UK schools and hospitals a little better.

Ridiculously, both the 2010 and 2015 General Elections were fought on the premise of this truly absurd narrative. It didn't matter that it made absolutely no sense. The Tories and their mates in the media seized an opportunity from the crisis; concocted a story to suit their wealth-shifting agenda, and then pushed the line as hard as they possibly could. Both Gordon Brown and Ed Miliband were, ultimately, simply too weak to try and counter it - so they just went along with it. And, surprise surprise, they lost.

However, following Labour's 2015 election defeat - and after five years of crushing Tory austerity and essentially no pushback from the supposed Opposition - something quite strange happened. The party's membership stood up and said they weren't going to accept the blatant lie anymore; they'd had enough of swingeing cuts to public services and they wanted the party to argue in favour of investment, not cuts, once again. And, in the subsequent leadership election, they elected the only candidate with the guts to actually argue against the austerity scam - Jeremy Corbyn.

Despite an unprecedented media onslaught against him and his policies, Corbyn's anti-austerity narrative clearly resonated with ordinary people. In addition to making against-the-odds gains at the 2017 General Election - with Labour winning the largest swing towards them since 1945 and stealing away Theresa May's majority - polls routinely showed that over 60% of the general public, including even a plurality of Conservative voters, now believed that austerity had gone too far.

But Brexit got in the way. Parliamentary stalemate over the issue took over the country, enraged a huge section of the public, and the 2019 General Election essentially became a single-issue election. Labour were hammered from both sides, with Remainers wanting the party to be more pro-Remain and Leavers wanting them to be more pro-Leave. Nigel Farage's Brexit Party took working class Brexiteers away from Labour, and the Lib Dems took away liberal Remainers, meaning that Labour's stupidly convoluted, worst-of-all-worlds Brexit policy - concocted by none other than the then Shadow Brexit Secretary, and current Labour leader, Keir Starmer - played an undeniably leading role in their crushing defeat.

Poll after poll showed that Labour's economic policies were hugely popular, but their Brexit policy was the complete opposite.

Yet, under the leadership of Keir Starmer, Labour have now not only ditched all of their extremely popular economic policies, they have also once again become pro-austerity.

The 'Magic Money Tree' exists

So why, even though poll after poll shows that Labour's domestic policies under Corbyn - such as reversing the privatisation of public services, scrapping tuition fees and increasing taxes on the rich - were so popular, has Starmer completely ditched them and re-embraced austerity?

The main reason is that, despite a large section of the public hating the effects of austerity, they still accept the premise behind it. They believe that we should treat public finances like a household budget; that we should 'live within our means' and, if we have debt, we should pay it back before we spend money on 'nice things'.

However, government finances are absolute nothing like a household budget.

Firstly, no household has the ability to simply create more money. The UK does. We have a sovereign currency, and can simply 'print' more money, so to speak - a method known as Quantitative Easing (QE). Since the 2008 Financial Crisis, the UK has essentially magicked up almost £900bn in new money through this method to pay for spending.

In addition, the Bank of England has the ability to raise or lower interest rates, meaning that it can significantly lower the cost of borrowing money for the government whenever they want.

Thirdly, a household budget does not see returns on its outgoings. For example, ordinary people don't rake in dividends a year after paying their water bill. However, if the government gives above inflation pay rises to public sector workers, these people then have more money in their pockets, they spend more money in the wider economy, they pay more in income tax, VAT, etc, and the economy grows as a result.

In addition, if the government spends money investing in new infrastructure such as roads and railways, it creates new jobs. Not only does this sort of investment boost businesses and the wider economy, it also helps to lower national debt as a proportion of GDP.

And on the subject of debt: the UK's national debt currently stands at £2.5 trillion, or 101% of GDP. This sounds high, but it’s actually the second lowest in the G7. Moreover, this includes the £900bn created through QE - which the government essentially owes to itself!

And by historic standards, national debt is nowhere near its peak - as the graph below shows.

 

Following World War II, Britain's National Debt stood at over 250% as a proportion of GDP, but it steadily fell until around the 1990s.

So, how did the UK achieve such an astonishing reduction in National Debt during this half century? Did they cut public services to the bone, refuse all pay rises, and rigidly stick to 50 years of belt-tightening?

No. We borrowed, we spent, and we invested in our future.

Labour created the NHS, introduced the Welfare State, and began a huge project of social house building. This led to huge improvements in people's health and reductions in poverty. And it also meant that more people were living longer lives and most people people were now healthy enough to work.

Money was also spent investing in education, and rebuilding infrastructure and industry. This led to a sustained period of economic growth where people's incomes rose steadily, productivity soared and - largely thanks to high taxes on the very richest in society - led to increasingly healthy government tax receipts which could then be reinvested in the economy.

It truly was a post-war boom. And it was built on the back of tax and spend policies, with wealth redistribution, equality, and investment at its fundamental core.

Neoliberal Decline

However, the election of Margaret Thatcher changed everything.

Public services were systematically privatised. Social Housing stocks were sold off and not replaced. Taxes on the rich were hugely decreased, whilst taxes which hit ordinary people the hardest - such as VAT and National Insurance - were steadily increased. Trade Unions were crushed, workers' rights attacked, and business deregulation ran rampant.

The result was a steady shift of wealth and power away from ordinary people and back into the hands of the rich and powerful - a complete reversal of the policies that the post-war economic boom was built on.

Austerity is merely a continuation of this systematic transfer of wealth and power away from ordinary people.

Thatcher used the money from privatising public services to fund tax cuts for the rich, and Cameron and Osborne used austerity as a pretext to do precisely the same.

But now, the fact that yet another Labour leader is refusing to argue against it - when the arguments are so simple and backed by overwhelming historical evidence, and he literally stood on an unashamed anti-austerity platform for win the Labour leadership in the first place  - is not only infuriating, it's deeply dangerous for the future of our country.

Such is the dire state of the UK that the Tories are clearly heading for defeat at the next election. But, with a Labour Party offering absolutely no alternative to the very policies that have brought about our nation's catastrophic decline over the last half decade, what good will a change from blue to red really do?