The politics of austerity: global and local

As part of #BISA2022 in Newcastle-Upon-Tyne, UK, we hosted a public event ‘The politics of austerity: global and local’ at Newcastle University. Newcastle was the epicentre of the 2008 financial crisis (with the collapse of Northern Rock), and has suffered disproportionately from the austerity programme that followed, experiencing £327 million in cuts to the Newcastle Council budget alone. Thus, it was a fitting location a decade on to reflect upon what makes austerity possible and what austerity makes possible in its wake, including community led resistance and regeneration. An esteemed panel of academics and professionals  discussed topics ranging from macroeconomics and finance to local government, inequality, and the realities of living in poverty, as well as climate change and political instability. Read on for a summary of the key talking points.

The panel consisted of:

• Amanda Bailey from the North East Child Poverty Commission
• Matt Davies, Senior Lecturer in International Political Economy, Newcastle University 
• Stuart Macintosh, Executive Director of the Group of Thirty, an international economic think tank
• Jane Robinson, Pro-Vice Chancellor for Engagement and Place, Newcastle University
• Tracy Shildrick, Professor of Inequalities, Newcastle University

Austerity: macroeconomics and metaphors

After welcomes and introductions, one of the panellists was asked about the logic of austerity – how was it justified? They responded that it was packaged as ‘stimulatory’, as an attempt to reign in the excessive spending that supposedly caused the crash. But, they argued, this notion of ‘stimulatory austerity’ – the idea that ‘by all doing less we stimulate the economy’ – is nonsense. What was needed was a Keynesian-style policy package to prop up demand in the credit crunch and ensuing recession. Further constraints on demand through austerity were the opposite of this. As evidence, the panellist pointed to the $800bn package passed by Barack Obama that kept the US afloat during this crisis period.

In terms of reigning in excessive spending, this panellist argued austerity was merely a ‘slogan’. It did nothing to fix or prevent excessive risk taking. This is because pre-crisis risk was taken by banks and enabled by policy. The crisis was not the fault of individuals – but it was individuals that were blamed by austerity, and it was individuals that faced the consequences.

A second panellist took this opportunity to reflect on the role of metaphor in politics. They noted that austerity was packaged as a ‘necessary tightening of belts’, as the only possible response to the 2008 crash. It was presented as a hardship we had no choice but to bear. This was a metaphor, though, designed to hide the fact that it was a political choice to cut spending, and allow the consequences to fall on certain groups. They went further, suggesting that when austerity is discussed in these macroeconomic terms it cuts out precisely those people who have the greatest interest in being included in these political decisions. People in extreme poverty are part of our society, but discussing the problems affecting them in ways that are exclusive, technical, and academic leaves them out of decision-making. 

Poverty, the Northeast, and the local impact of austerity

Another panellist was asked about how austerity was conducted at the local level. They explained that local governments were told how much of their budgets they needed to cut, and it was mainly left to them to decide where to implement these cuts. Local government has statutory obligations to provide certain services. Once those were fulfilled, the budget restrictions meant there was very little money left over. This led to comprehensive cuts that deeply affected the lives of individuals and families. They gave the example of Surestart, which was started in 1998 and received nearly 10 years of substantial investment in children and their families. It joined up social welfare with the NHS and had a real impact on people’s lives. So when it was cut it had deep and lasting effects, leaving people without a service that had become essential.

The Northeast was hit disproportionately hard by austerity because it was especially vulnerable to harm from service cuts. It has among the lowest weekly wages in England, with many relying on Universal Credit, and families having few savings to fall back on. Austerity cuts were particularly felt by children and families, through the reduction and closure of surestart, children’s centres, and family services. The Northeast has second highest rate of child poverty in UK, with almost 1/3 of children eligible for free school meals. This existing vulnerability, combined with the disproportionate austerity measures, meant that the Northeast saw the steepest increase in child poverty in the ten years between the financial crisis and the pandemic. This panellist noted that almost half of children under five in the Northeast are now growing up in poverty. They called for us to be ambitious to help every child in this region.

One panellist was asked about their experience working with people in poverty. They responded that the majority of children in poverty are in families where a parent has a job. They explained that the effects of poverty are cumulative - it limits choices and chances more and more, and as time goes on, it gets harder and harder to escape. They discussed the post-pandemic ‘missing children’, noting reports from Middlesborough of children bereaved during the pandemic, sometimes even losing both parents, as young as in their thirties. They argue we need to take a holistic approach to poverty, to understand fully the comprehensive effects on people’s lives. Some policies have been providing cover, they said, such as the £20 uplift to UC and energy subsidies, the effects of which can be seen in the poverty figures released during the pandemic. However, they argued that our national social security system is failing to perform its basic function. Social security should at bare minimum prevent people falling destitute. It is failing to do this. The government needs to take a step back and address these inadequacies, they argued. Levelling up and addressing regional equalities is going to get nowhere until we address the issue of children growing up in poverty.

Why does the idea of austerity endure?

One panellist was then asked why austerity endures as an idea. They began by noting that its impacts are not unknown – we have plenty of evidence documenting the negative effects of austerity policies. They argued that it continues to hold sway despite this because it serves the interests of people in power, as a mechanism of restricting individual spending and shifting blame. Austerity endures because it serves the interests of lenders. Lenders want to criticise the borrowers and blame particular groups to detract from their failings and responsibility. They also noted that disregard among the powerful for disadvantaged groups is reflected at the international level. Powerful organisations operate with little regard for developing countries. A good example of this is the current monetary tightening occurring across the developed world, which is hurting developing countries by causing their currencies to depreciate and increasing the costs of servicing their debts. The panellist concluded that there are always vested interests in maintaining status quo, and we should bear this in mind when trying to understand why harmful ideas and policies like austerity endure.

Another then considered what should be done with the notion of ‘austerity’. Being ‘austere’ is not necessarily a bad thing, after all. But ‘austerity’ is deployed as a metaphor, a way of hiding from judgement when deciding who bears the cost of political problems. We are in a climate crisis, and the panellist argued that it may be possible and useful to reappropriate the notion of ‘austerity’ in a way truer to its semantic root. It would entail a policy of living within our means, distributing burdens in a fairer way, and being positive and hopeful about the climate.

The panellist then further explored the possibility of changing meanings. They argued that we should consider understanding Britishness in a different way too. Over the Jubilee weekend we celebrated Britishness through the Queen and the Royal Family, a system of hereditary wealth and privilege. But what if we understood Britishness not as grandeur and exceptionalism, but as being poor and excluded? This would be closer to the experience of many real British people, they argued. If we understand Britishness as exclusion and deprivation, we might learn better from these experiences, and become better at making things better.

What’s next for austerity, poverty, and inequality?

The panellists were then invited to consider how we move forward. One suggested focusing on the jobs market, and particularly on combating insecure work, as this would make a real difference. They explained that the jobs that leave people in working poverty are necessary to our functioning but often overlooked, like cleaners in our universities. Over half of people in insecure work earn less than the living wage. The North East has the highest rate of insecure work in the UK. We should change how we think about value in the labour market, and what we consider to be valuable jobs. They also suggested there was a ‘bigger elephant in the room around unearned income’, and that we should seek to dismantle an ingrained sense of meritocracy in British society. We should dispense with the view that privilege is somehow earned and that people get what they deserve, as it leads us to consider inequality as something natural and somehow fair. This prevents us from tackling poverty and inequality properly, with all the resources at our disposal.

Another panellist then highlighted the significant set of interconnected challenges we are facing, particularly growing political extremism and the climate crisis. They asked how we could address these existential threats when we are still working with growing inequalities as parameters in our analyses. They argued that we need to reject our social scientific models that have not and cannot take us to our policy goals. They highlighted the Edinburgh Talks Climate programme as a way of moving our modelling and analysis forward. First, have scientists lay out the facts, and then debate what we can do about it. They argued that once people see the evidence laid bare, they will understand the scale of the challenges we face, and start to seriously consider solutions. What worked in this climate solution may also work with respect to inequality. Laying out the facts - with careful detail and without preconception - may be the first step to truly solving this issue.

Finally, a panellist was asked for their ‘wish list’ – the policies they would implement if they had a magic wand to wave. Their answer was detailed and practical, starting with specific poverty and inequality policies, before moving outward to the level of society as a whole. First they said that people shouldn’t have to wait five weeks for a first welfare payment – this drives up their personal debt and leads to huge increases in food bank use. Similarly, removing the two child limit, expanding free school meals access and eligibility, and increasing child benefits (which have fallen 23% since 2010) would go some way to helping the 800,000 children in poverty in the UK today. Restoring the £20 Universal Credit uplift is also needed. They noted the fact that household support cover is given in vouchers, not cash, as an example of the effects of a belief that poor people don’t know how to spend their money. In fact, people in poverty often know better than anyone else what they need.

They also suggested a focus on low paid work would go a long way to helping people out of poverty, considering that 75% of UK children in poverty have working parents. We need more investment in children and family services that have been cut by austerity measures, alongside measures to mitigate the incredibly high costs of childcare. With respect to child poverty, though, they argued, all these objectives are made so much harder by the fact that the government does not recognise child poverty as a unique issue, and doesn’t pay adequate attention to the cumulative detrimental effects of living in poverty. England is the only part of the UK without a child poverty strategy – they argued that this government has to acknowledge the gravity of child poverty as an issue, as the bare minimum starting point.

Further reading

• https://www.ncl.ac.uk/press/articles/latest/2021/11/costofcovidforchildreninthenorth/
• North East Child Poverty Commission https://www.nechildpoverty.org.uk/

Author

Josh Priest is a second year student at Oxford, studying Philosophy, Politics, and Economics. He works part-time as BISA's Communications and Admin Assistant.

Image by Betty Longbottom, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.