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The need for harmful austerity measures in Britain was based on a lie

The difficulty for politicians is that every public statement they make in the House of Commons is recorded, every new policy they introduce can be scrutinised and every lie they tell will eventually be exposed.

The difficulty for politicians is that every public statement they make in the House of Commons is recorded, every new policy they introduce can be scrutinised and every lie they tell will eventually be exposed.


In 2008 the global financial crisis (GFC) began on Wall Street in America and generated a near catastrophe for the world banks. Governments across the globe were required to inject emergency funding to prevent bankruptcy of both the banks and the nations responding to the financial crisis.

That was the explanation given to the British public when the New Labour government initially injected £37 billion of taxpayers’ cash into British banks in October 2008. Originally discussed in a Department for Work and Pensions (DWP) green paper in 2006, the GFC was used to justify the introduction of welfare reforms in 2008 as used to limit disability benefit funding for chronically sick and disabled people.

By December 2009, government financial support for Britain’s banks had reached £850 billion, with the eventual cost to taxpayers unknown for years to come according to the National Audit Office (NAO), who are the public spending watchdog.

This vast amount of money included £107 million paid to City advisers who were required to support the government with the rescue package following the GFC; and the banks still presumed to offer bonuses to their remaining shareholders when their largest shareholder was, in fact, the British government and the British taxpayers who fund the government.

Of course reports by the NAO are not common knowledge and so, following the 2010 general election, David Cameron assumed the position of Conservative Prime Minister in the new coalition government with the Liberal Democrats. It didn’t take him too long to justify the neoliberal policies of savage austerity measures; which had been adopted following the GFC by many countries with right leaning governments.

David Cameron announced the adoption of austerity measures in 2010 as an addition to the ongoing welfare reforms introduced by the Brown government in 2008. Guaranteed to attract press and media attention, Cameron claimed that the financial crash was due to overspending by the previous New Labour government, which justified more harsh spending reductions in the public sector to reduce the government deficit.

This claim successfully distracted blame from the real culprit of the GFC as it was the legislation of the Thatcher government in 1986 that had deregulated the City, and opened the door for prolific future dealing, which was always destined to result in a financial crisis at some time in the future.  However, the 2008 financial crisis was global, was not limited to the UK, and could not be controlled.

Of course, if a lie is repeated often enough it is possible for many people to presume it to be a confirmed fact.  That’s how political rhetoric is presumed to be a proven fact and, with the help of the Tory biased national press, it isn’t too difficult to mislead the public.

As demonstrated so well be Paul Krugman in his 2015 acclaimed articleThe case for cuts was a lie. Why does Britain still believe it?’ Paul’s article exposes the reality behind the harsh austerity measures as imposed by Cameron in 2010.  It also offers significant detail as to why the claims of the need for savage austerity measures, which were guaranteed to cause preventable harm to many people, were demonstrably untrue.

“Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of their austerity.  In late 2012, the IMF’s (International Monetary Fund) chief economist, Olivier Blanchard, went so far as to issue what amounted to a mea culpa: although his organisation never bought into the notion that austerity would actually boost economic growth, the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.

Meanwhile, all of the economic research that allegedly supported the austerity push has been discredited.  Widely touted statistical results were, it turned out, based on  highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under close scrutiny.

It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media…

Conservatives like to use the alleged dangers of debt and deficits as clubs with which to beat the welfare state and justify cuts in benefits; suggestions that higher spending might actually be beneficial are definitely not welcome…

When the coalition government came to power, then, all the pieces were in place for policymakers who were already inclined to push for austerity…

“Greece stands as a warning of what happens to countries that lose their credibility, or whose governments pretend that difficult decisions can somehow be avoided,” declared David Cameron soon after taking office.  It could also be presented as urgently needed to stop debt, already at 80% of GDP, from crossing then 90% redline…

Concerns about delaying recovery could be waved away with an appeal to positive effects on confidence.  Economists who objected to any or all of these lines of argument were simply ignored… By about two years ago, then, the entire edifice of austerian economics had crumbled.

Events had utterly failed to play out as austerians predicted, while the academic research that allegedly supported the doctrine had withered under scrutiny…

The doctrine that ruled the world in 2010 has more or less vanished from the scene. Except in Britain…

I’ve already suggested one answer: scare talk about debt and deficits is often used as a cover for a very different agenda, namely an attempt to reduce the overall size of government and especially spending on social insurance…

For whatever the politics, the economics of austerity are no different in Britain from what they are in the rest of the world.  Harsh austerity in depressed economies isn’t necessary, and does major damage when it is imposed…”

The case for cuts was a lie. Why does Britain still believe it?

The austerity delusion, by Paul Krugman

Fortunately, the Labour Party with Jeremy Corbyn isn’t the same as the New Labour Party when led by Tony Blair.  Corbyn believes in investment for the future, is committed to reducing the savage poverty imposed by the austerity measures and will, if given the chance, begin to stop the fear and the cruelty imposed on the sick and disabled community, and on the poor, by the right wing Conservatives, and the coalition government before them.

If elected to office in the general election, Corbyn may well provide the stimulus the country has needed for a decade.  He will certainly stop the politics of fear generated by Cameron, and his disciple Theresa May, and will return hope to people who feel they have none.


Mo Stewart is an independent researcher and retired healthcare professional. Her book Cash Not Care was published in 2016 by New Generation Publishing. 


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