Alan Bennett is best known as a playwright (The History
Boys, The Madness of George III) although he is also a prolific screenwriter,
actor and author. In addition to all this, he is an inveterate diarist and in
his 2015 journal, an edited version of which was published in the London Review
of Books (here),
he made the following entry:
“11 September. David Cameron has been in Leeds preaching to businessmen the virtues of what he calls ‘the smart state’. Smart to Mr Cameron seems to mean doing as little as one can get away with and calling it enterprise.“
In a recent TV documentary I heard Bennett repeat the comment in his cosy, affable tones which makes it even more devastating. It accurately captures the thrust of fiscal policy over the last six years and is a withering indictment of thirty years of market economics. But before we swallow this soundbite wholesale, we should acknowledge that there is a genuine discussion to be had about the role of the state in a modern economy. One of the big issues is the size of the safety net that the state should be expected to provide, and the answer will differ according to the prevailing mood. Nonetheless, according to Jonathan Bradshaw of the University of York (here) “the real damage has been done by this present government … The uprating of working age benefits by substantially less than inflation since 2010 and cuts made in tax credits has resulted in falling living standards. This was the first time that the real level of the safety net had fallen since Unemployment Assistance began in 1934.
No one should be in any doubt that life at the bottom is tough, and getting tougher. Ironically, when the German government introduced a series of welfare reforms in the first half of the last decade, which cut benefits in order to force people back into the labour force, it was lauded for the boldness of its move. Other European countries are being urged to follow suit – notably France and Italy. And with Germany today held up as a paragon of economic virtue, there does appear to be some merit in a policy of welfare reform. Indeed, the UK reforms of the 1980s are credited with kickstarting the economic recovery of the Thatcher era. But like many economic policies, there are diminishing returns to more of the same, and I wonder whether in the UK we have hit the limits of what people are prepared to tolerate.
But it is not only those at the bottom who are being squeezed: middle income groups across the industrialised world are not faring well either. According to the Institute for Fiscal Studies, real average wages in the UK in 2021 are expected to be lower than they were in 2008 and it concludes that “we have certainly not seen a period remotely like it in the last 70 years.” At issue is what the government can and should be expected to do about it. In an economy where the government’s direct role has been reduced as many activities have been privatised, it can only play a limited role by setting the framework. After all, it is no longer in a position to set wages for large parts of the workforce.
Bennett’s criticisms go deeper, however. The UK government under David Cameron adopted a laissez faire approach to many economic problems which frankly failed to deliver the desired results. Bennett was undoubtedly referring to Cameron’s flagship Big Society project which was designed to give more power to local communities by encouraging a transfer of power from central to local government. It was a nice idea in theory, but it was the wrong policy at the wrong time. Faced with the aftermath of the biggest economic crisis since the 1930s, most economists would argue that more government rather than less are what is required.
Moreover, with around 60% of UK local government spending being funded by central government, it was always a pipedream to assume that more local decision making was ever going to work without more local control over budgets. With central government funding for local activities such as the police having been cut by 22% in real terms between FY 2010-11 and 2015-16 (source: National Audit Office) Bennett’s criticisms start to hit home. It is indeed hard to avoid the suspicion that government policy in recent years has focused on shrinking the size of the state whilst telling the electorate that it is promoting enterprise or increasing choice. And I still hold the view that at least part of the reason for the Brexit vote was directed at the failure of government to manage the economy in ways that benefited large parts of the electorate.
As we look ahead to 2017, it would be nice to think that the UK government will spend less time fretting about cutting the deficit and more about how to use fiscal policy as an instrument to promote growth. But from what we have heard so far, which amount to words rather than actions, I have to say that I am not confident.
“11 September. David Cameron has been in Leeds preaching to businessmen the virtues of what he calls ‘the smart state’. Smart to Mr Cameron seems to mean doing as little as one can get away with and calling it enterprise.“
In a recent TV documentary I heard Bennett repeat the comment in his cosy, affable tones which makes it even more devastating. It accurately captures the thrust of fiscal policy over the last six years and is a withering indictment of thirty years of market economics. But before we swallow this soundbite wholesale, we should acknowledge that there is a genuine discussion to be had about the role of the state in a modern economy. One of the big issues is the size of the safety net that the state should be expected to provide, and the answer will differ according to the prevailing mood. Nonetheless, according to Jonathan Bradshaw of the University of York (here) “the real damage has been done by this present government … The uprating of working age benefits by substantially less than inflation since 2010 and cuts made in tax credits has resulted in falling living standards. This was the first time that the real level of the safety net had fallen since Unemployment Assistance began in 1934.
No one should be in any doubt that life at the bottom is tough, and getting tougher. Ironically, when the German government introduced a series of welfare reforms in the first half of the last decade, which cut benefits in order to force people back into the labour force, it was lauded for the boldness of its move. Other European countries are being urged to follow suit – notably France and Italy. And with Germany today held up as a paragon of economic virtue, there does appear to be some merit in a policy of welfare reform. Indeed, the UK reforms of the 1980s are credited with kickstarting the economic recovery of the Thatcher era. But like many economic policies, there are diminishing returns to more of the same, and I wonder whether in the UK we have hit the limits of what people are prepared to tolerate.
But it is not only those at the bottom who are being squeezed: middle income groups across the industrialised world are not faring well either. According to the Institute for Fiscal Studies, real average wages in the UK in 2021 are expected to be lower than they were in 2008 and it concludes that “we have certainly not seen a period remotely like it in the last 70 years.” At issue is what the government can and should be expected to do about it. In an economy where the government’s direct role has been reduced as many activities have been privatised, it can only play a limited role by setting the framework. After all, it is no longer in a position to set wages for large parts of the workforce.
Bennett’s criticisms go deeper, however. The UK government under David Cameron adopted a laissez faire approach to many economic problems which frankly failed to deliver the desired results. Bennett was undoubtedly referring to Cameron’s flagship Big Society project which was designed to give more power to local communities by encouraging a transfer of power from central to local government. It was a nice idea in theory, but it was the wrong policy at the wrong time. Faced with the aftermath of the biggest economic crisis since the 1930s, most economists would argue that more government rather than less are what is required.
Moreover, with around 60% of UK local government spending being funded by central government, it was always a pipedream to assume that more local decision making was ever going to work without more local control over budgets. With central government funding for local activities such as the police having been cut by 22% in real terms between FY 2010-11 and 2015-16 (source: National Audit Office) Bennett’s criticisms start to hit home. It is indeed hard to avoid the suspicion that government policy in recent years has focused on shrinking the size of the state whilst telling the electorate that it is promoting enterprise or increasing choice. And I still hold the view that at least part of the reason for the Brexit vote was directed at the failure of government to manage the economy in ways that benefited large parts of the electorate.
As we look ahead to 2017, it would be nice to think that the UK government will spend less time fretting about cutting the deficit and more about how to use fiscal policy as an instrument to promote growth. But from what we have heard so far, which amount to words rather than actions, I have to say that I am not confident.
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