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The Age Of Austerity Isn't Over Yet

24/08/2017 15:31 BST | Updated 24/08/2017 15:31 BST
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In the recent elections the dog that not only did not bark but seemed to have got lost completely was the state of the public finances. Where in the General Elections of 2010 and 2015 the deficit, the debt and the scale of public spending dominated the battles and debates, they were largely ignored in 2017.

There was no traditional Tory attack on Labour promises, with a big round number in billions calculated, turned into a pounds per household number and plastered all over the billboards of Britain. There was little time spent in telling us that we would emulate the economic and social crisis of Greece unless austerity continued. There was not much even on the need to reduce the debt to avoid placing today's bills in the laps of future generations. Whatever one thinks of these policies economically, they were undoubtedly effective politics in previous elections.

Maybe some of this was a result of complacency by the Tories, who thought they had the election in the bag whatever they did, but most of the commentariat also think it is because the politicians sense that the public are sick of austerity and want to see them reading from a different script.

The net result, post-election, is that we no longer have a chancellor constantly lecturing us on the folly of debt or Conservative MPs, strictly on message, regurgitating the debt line at every opportunity.

The public may well think we are out the woods in terms of spending and that we will start to see the cash flowing again. If that were true it would matter a lot, not only for families and communities but for public sector leaders. But has anything really changed - except the rhetoric?

The spending plans pre-election have not been revised so far. Despite a clamour for change, the Government has held firm on public sector pay and no spending totals have been changed, no spending review announced. The widely trumpeted giving of more money to schools came from other places in the department's budget, not from an injection of new money.

The benefit cuts announced a while back have not been reversed and are now hurting, leading to an increase in homelessness and hardship for many of the 'deserving' poor.

The only place we have seen a reversal of proposed cuts or policies to save money are ones that were never in the financial arithmetic anyway. The Conservative manifesto bravely, or maybe foolishly, talked of big cuts to some spending - many aimed at older people with the end of the pension triple lock, the means testing of the winter fuel allowance and some new ideas for raising more from families to fund social care. These have all been scrapped.

It seems clear the Treasury is determined to hold the fort at least until the Budget in the Autumn. They fear if they start loosening the purse strings now, in an ad hoc way, it will be an anarchic free-for-all. But when we get to the Budget, how will they move?

We are already starting to get hints the chancellor will push back yet further the point he wants the deficit to be in balance back to 2027. If true, this will ease austerity a little.

Yet Tory MPs will be screaming for more public spending, as their constituents can no longer fail to notice the squeeze as it manifests itself in prison riots, schools with missing teachers and increasing waits for hospital and GP appointments.

For the great swathe of those in the public sector, the long period of holding down pay seems unlikely to last long. Something, surely, will have to give. And a sensible betting person may suspect it is going to be a bit of pulling back on tax breaks, a bit of creative accounting and a bit of relaxing of the fiscal position (especially in terms of infrastructure). But a bold end to austerity, with the taps turned fully on, is unlikely.

All this uncertainty is added to by the half-decent chance that the current Government, embroiled in the Brexit debates and reliant on the whim of the DUP forces, may not survive that long.

So exactly how all this plays out is a guessing game. In an ideal world the Government would signal which way they are heading to help people plan. In reality, I doubt even they know where we are going to land or how.

A version of this blog was first published in the MJ.