Proposing eye-watering spending cuts should never be seen as normal

Martin Shipton

When a think tank described as the most influential in Westminster publishes a set of economic proposals whose implementation would have truly devastating human consequences in Wales, we are in serious trouble.

We’re in the unenviable position where contemplation of the wholly unacceptable has been normalised.

Policy Exchange wants to reduce public spending by £115bn per year by 2030 and in its report Beyond Our Means: A Plan To Tame Public Spending it sets out 15 cuts it says would make the target achievable:

* Freeze state pensions for three years. Raise the retirement age to 70 by 2040. Replace the triple lock with earnings or inflation linkage only.

* Means-test pensioner benefits: restrict free passes/prescriptions to those on Pension Credit.

*  Freeze working-age benefits for three years; tighten eligibility, especially around disability.

* Introduce a charge of £20 to see a GP; end national pay bargaining; charge for ‘luxury’ hospital accommodation; move towards an insurance-based model long term.

* Cut 25% of the civil service’s administrative costs and staff; restructure and merge arm's-length bodies.

* Move public sector pensions from defined benefit to defined contribution schemes (10% employer contribution); recycle one-third of savings into staff pay.

* Scrap Great British Energy, EV and boiler subsidies, and public sector decarbonisation schemes.

* Cut overseas aid to 0.1% of GDP.

* End universal infant entitlement to free school meals; target low-income families only.

* Cut university places by 30%; reinvest half the savings in further education and apprenticeships.

* Replace free childcare with flexible vouchers.

* Restrict Education, Health and Care Plans to special schools; move to a budget-led funding model.

* Halve the current £6bn annual cost of housing asylum seekers through deterrence and efficiency.

* Tighten eligibility for housing benefit; reduce local housing allowance; expand housebuilding.

* Barnett consequentials: apply savings formula to devolved administrations.

The final line is included to send a message to the parliaments in Wales, Scotland and Northern Ireland that they need not harbour the notion that they will be able to fend off the full force of the cuts: their budgets will be slashed whether they like it or not and there will be no room for negotiation.

Crackpot

The list of cuts may sound like crackpot proposals that are well into the sphere of fantasy politics, but the foreword to the report was written by Sir Robert Chote, a former director of the Office for Budget Responsibility, who states: “The situation is not yet such as to require policymakers to think the unthinkable. But they certainly need to ponder the unpalatable, and this paper will help them do so.”

If these ideas are merely unpalatable, what does Chote consider unthinkable?

The fact that such proposals can be advocated seriously - and needless to say were publicised uncritically in the predominantly right wing UK-wide news outlets - shows how perilous our situation is.

While Reform UK hasn’t formally endorsed them, they chime with the party’s general “anti-big government” ideology. Unsurprisingly, Reform has so far been quite vague about the public sector cuts it would like to impose on communities, instead majoring on dependable dog whistles like small boats and, in Wales, the nation of sanctuary programme.

But anyone who is considering voting for them because of their anti-immigrant rhetoric needs to be aware that there is a larger hidden agenda that would impact negatively on them personally.

Harm

I ran the Policy Exchange list of cuts past Plaid Cymru MS Mabon ap Gwynfor, who said: “I don’t think anyone should take seriously what Policy Exchange says about the economy, and certainly Wales would suffer a great deal of harm if their proposals were implemented.

“Taking money from the poorest people and introducing charges into the NHS would have the direct consequence of shortening people’s lives.

“In their report, they make the point that the cost of borrowing money is higher for the UK than for some other European countries, and that is true. But the reason for that is that there is a lack of confidence in the UK’s sluggish economy, which is the result of 15 and more years of austerity and latterly Brexit.

“The Nordic countries run successful economies without punishing ordinary people and don’t have the levels of inequality that the UK has.

“The Policy Exchange report reads like a template for Reform, whose true agenda is dictated by their billionaire backers, some of whom hold very large amounts of money in offshore accounts. They don’t care in the least about Wales and its people and the result of the Caerphilly by-election showed that the majority of people don’t want what they offer.”

Foolish

Nevertheless, it would be foolish to deny that for many people, Reform’s racist scapegoating of minorities succeeds in distracting them from the massive inequalities in our society that are the real cause of their sense of grievance.

The idea that immigration is responsible for Britain’s ills, rather than austerity policies that have created hardship and exacerbated social injustice, needs to be challenged constantly - as does the notion that drastic public spending cuts would make things better rather than demonstrably worse.

Politicians on the progressive left need to tackle head on the right-wing austerity narrative that presents itself as the only realistic option. Those, like Reform, who are pushing this agenda are doing the bidding of those who fund them: extremely wealthy people who want to get even wealthier through deregulation, the decimation of the public sector and the abandonment of measures aimed at combatting climate change.

In pursuing their aims, they have no conscience about using racist rhetoric to hoodwink the vulnerable and the gullible into voting for them. In this context it’s regrettable that too many people, including too many journalists, regard Nigel Farage and Reform as a form of entertainment that it’s safe to indulge.

Blackshirts

This is happening against a backdrop succinctly described by the journalist Tom Collins in the Irish News, a paper mainly read by the nationalist community in Northern Ireland: “Over the course of the past 15 years or so, Britain’s leaders have hobbled its economy by exiting the European Union and negotiating the worst divorce settlement possible; they have killed many of their citizens through inept management of the Covid pandemic and insulted the survivors by partying their way through it; they have brought pension funds to the point of meltdown in a budget that shook the markets; and they have facilitated the rise of English nationalism/fascism to an extent unseen since the 1930s, when the British establishment feted Hitler and Sir Oswald Mosley’s Blackshirts took to the streets.”

The left-wing academic Richard Murphy, a former economics adviser to the Labour Party when it was led by Jeremy Corbyn, has written an excoriating critique of the Policy Exchange report in which he states: “The supposed savings to the state will be saved by giving tax cuts to the wealthy, who will simply increase their idle wealth, and by cutting deficits, which necessarily reduces private well-being whilst also reducing demand in the economy, further reducing prospects for growth.

“ … As a recipe for chaos, disorder, disruption, economic decline, and a failing private sector due to a lack of demand from those who are now its customers, this takes some beating. But that is what Policy Exchange, usually one of the less extreme of the right-wing think tanks, is now proposing. It is, in short, a recipe for economic madness, all of it proposed because:

* They hate the state.

* They think shrinking it will make the private sector bigger, when there is no sign that it has any real desire to grow, let alone any ideas as to how to.

* They loathe 'ordinary people'.

* They want to privilege a few.

* They think those few can more than make up for the economic losses arising to the many, without ever having to worry about the consequences for distribution of well-being, spending power, saving and investment within the state, or the massive impacts of the economic lags that will suppress demand that they build into their ideas.

“And this is probably the best of right-wing thinking right now, and almost half the people in Britain indicate in recent polls that they might support either Reform or the Tories, both of whom might subscribe to this. We are in deep trouble.”

Next May’s Senedd election will at least have a proportional outcome, and it’s likely that Reform won’t be in a position to form a government. But the First Past The Post electoral system we still have for general elections makes it plausible that Reform could win power with around one third of the vote and impose such disastrous policies on Wales.

We must all do what we can to confront, challenge and defeat this serious threat to our future.