So you think you\’re having a hard time, what with the cuts and the scrapping of public services and those threats of losing your job? Well, I bring good news. The austerity we\’ve heard so much time about – this historic, unparalleled slashing of spending – is all made up. David Cameron is simply fudging his figures. Those Jobcentre staff haven\’t been made redundant. And remember the Sure Start centre that you thought had shut? Why, it\’s still open, and bursting with toddlers.
This magical thinking comes from one of the world\’s biggest money brokers, Tullett Prebon. It argued last week that Britain\’s austerity is \”mendacious\” spin, and a \”con\” and, in case you hadn\’t got the message and been bathed in sufficient spittle, \”bare-faced deception\”.
Gosh, that\’s interesting. For Tellett Prebon\’s figures were in fact accurate. There hasn\’t been much cutting of total spending and much of the deficit reduction has been from tax rises.
But it\’s the final trick that gives away what the austerity deniers are really up to. The Tullett research lumps together departmental budgets, which are almost all being slashed, as Theresa May and her police officers can tell you, with total government expenditure, which includes welfare benefits and repayments on already outstanding loans. Since there\’s not much any chancellor can do about debts racked up by his predecessors, what\’s the one group that leaves to be hit? That\’s right: the disabled, the unemployed and the others on benefits.
Well, yes, that\’s the point that is being made. There have not been any massive cuts to total expenditure. Much the same amount is in fact being spent. It\’s just that, as you say, the last lot spent too much and so those debts must be paid and departmental budgets cut.
That is, Tullett Prebon is actually correct. Total spending has not been slashed.
Yet the thing is this: there is a part of Britain that isn\’t experiencing austerity. It\’s the banks that have received £325bn of free money in the past couple of years, as part of the Bank of England\’s quantitative-easing programme.
And that\’s a very strange thing to say indeed. QE just isn\’t free money. A bank, or anyone else, cannot knock on hte BoE\’s door, ask for 50 p for a cup os tea and walk away with a few billions. They have to sell something to the bank to get the cash. A gilt, a corporate bond perhaps. This just isn\’t \”free\”.
But then, as I\’ve said before, The Guardian doesn\’t do itself many favours by having an historian writing its economics leaders.