From business to the disabled, Monday was special even for a cabinet whose dogmatic bungling is unrivalled in modern Britain
Greece, the birthplace of democracy, has set off a voters’ rebellion against the dictatorship of financiers. In the eye of the vortex, no one knows if the centre can hold or what happens next when voters say no to austerity imposed by the same financiers who caused the crash. JP Morgan’s reckless derivatives gamble lands on cue to make the point. As François Hollande and Angela Merkel meet for the first time on Tuesday, Karl Marx could not have devised so perfect a crisis of capitalism.
At first the voters acquiesced, tightened their belts, obeyed the iron laws set by bankers whose grotesque pay flows from bailouts by states they impoverished. But the prospect of years of unremitting high unemployment and stagnation shows the great austerity experiment has failed, and even its north European proponents are being gingerly forced to acknowledge it.
In Britain the failure of that experiment is most telling, because no one imposed it on us except our own government. Inflation is predicted to stay obstinately high while wages lag, shrinking demand in households with ever less to spend. Industry now begs the government to kick-start the economy. Bond rates here fell even lower on Monday: our government can borrow more cheaply than for 300 years. The refusal of Cameron and Osborne to borrow and invest in housing, energy, schools and transport is the ideological fixation that will destroy them. Once a Conservative government loses the trust of industry, it’s in deep trouble.
The cabinet’s only response to criticism is to attack, but how unwise to set upon business. Stop whingeing, said Philip Hammond. Stop complaining, said William Hague: “There’s only one growth strategy – hard work”. Impudently he ordered firms to get “on a plane, go sell things overseas”, as if every country isn’t desperately trying to export its crisis by selling into one another’s moribund markets.
The British Chambers of Commerce retorted: “Businesses up and down the country are busting a gut to find new growth opportunities at home and abroad. They think that the government could do more.” And to Eric Pickles’s assertion that “we should all work that little bit harder … Government can’t create growth”, the BCC replied tartly: “The government needs to recognise that it is a major customer, a maker of markets and the guardian of Britain’s infrastructure.”
Indeed, the public realm is an essential partner in growth and prosperity. Hammond blamed companies for hoarding £700bn, but they won’t invest without a glimmer of consumer demand. Babcock, the engineering group, calls for ministers to invest £4bn a year in an industrial bank. Even dry as dust John Cridland of the CBI agrees, while other engineering firms and Sainsbury’s Justin King join the chorus. For a serious government, this would be Plan B time.
This government’s blend of incompetence and ideological rigidity would be a fascinating spectacle if we were distant bystanders. The bungling and dogmatism are unrivalled in postwar Britain. Let’s take just one day of their collisions with the real world: see with what insouciance they can create new flotillas of unlikely and needless enemies. Insulting business was just one self-inflicted black eye, but here are others that Monday had to offer.
Iain Duncan Smith seems to enjoy shocking Telegraph readers with a boast that half a million people will lose disability living allowances: thalidomide victims and servicemen who have lost limbs may not qualify. All will undergo new tests: “They were just allowed to fester,” he says. Exactly £2.24bn will be saved, so he must have preordained the number who must fail.
Will they go quietly or will they fester very noisily indeed? As two-thirds of disabled children lose their allowance, is it politically wise to pick on them? The Institute for Fiscal Studies says 88% of benefit cuts are still to come, so it’s hard to gauge how voters will respond to housing-benefit evictions forcing families hundreds of miles, or disabled people left housebound. But enough voters will be shocked – and 74% of other public service cuts are yet to come.
Nick Clegg makes yet another speech claiming to promote social mobility, despite myriad policies to the contrary. Does it fool any of the people any of the time? The IFS says education funding is cut by 13%, the largest cut since the 1950s. Early years take a heavy hit, yet that’s where deprivation is best countered. Over half of schools say they use Clegg’s pupil premium to plug holes in their other spending: some are using it well to re-employ education welfare officers lost in the cuts. The IFS says the lost education maintenance allowance did well at keeping poorer pupils in post-16 education. But Michael Gove, speaking to private school heads, asserts: “Deprivation need not be destiny.” He says Finland has equal outcomes with less spending – but he ignores Finland’s place as one of the most socially equal countries, while Britain is one of the most unequal.
In the real world, Gove’s free schools take half as many pupils on free school meals as average while his academy scheme gives top schools extra money. Every Child a Reader brilliantly rescues six-year-olds from failing to read, but this year 9,000 fewer will get this programme that shoots the deprived ahead permanently. So until ministers’ deeds match their words, they would do well to be quiet about social mobility: it only angers those who care.
These are examples from one day in the life of this austerity government. Add in another of the day’s random ineptitudes: David Cameron will meet Mitt Romney as a candidate, having snubbed Hollande. Boris Johnson calls for a Tory – “someone who is free market” – to be BBC director general, setting a terrible precedent by making it a political post. Whatever they do, the crass and the cruel collide with cuts designed to diminish the state for ever.
Try though George Osborne did to frighten the markets with the comparison, luckily we are not Greece. We have choices. We need not cut so deep, we can borrow to invest, as Blair, Mandelson and Darling now join forces with the two Eds to urge. Business is protesting at scorched earth austerity after two years of failure, and Labour policies for investment in growth now look mainstream, while Tory austerity looks extreme. YouGov on Monday reported Ed Miliband polling higher than David Cameron, who with every passing day looks increasingly like the prime minister of a one-term government.
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