difficult economic conditions
created by government measures
to reduce public expenditure
We've got that all right. We've had that for more than 5 years now. So how's it going? Is the national debt down? Nope. Is the deficit down? Nope. The message we're getting from the UK government is this:
How long will the electorate wait before kicking out a government that can't deliver what it promised?
To be fair, I don't know why we're not out on the streets already. There are many other countries where the avenidas and boulevards would be packed with crowds chanting: Austerity out! Maybe it's to do with us, the voters. We don't see ourselves as being the ones who make the money the government needs but somehow as servants of the government who get blown about back and forth like washing on a line as the government wishes.
This government seems to have a plan to force the UK to be competitive. I say 'seems' because there's not much talk in the media about what their plan is. In the past, governments wanted us to be competitive with other developed countries: the USA, Germany, etc. This government seems to want us to compete with China and India. And that means forcing wages down to the Chinese and Indian levels.
In the end, I suspect it won't work. And here's my thinking:
If a million people have jobs earning the national average of, say, £20,000 a year, they pay - after personal allowances - about £3,500 each in income tax. Actually, that average is not true: it's reckoned by the Rountree Foundation that the average wage is closer to £13,000.* But let's go for the
£20K figure. That gives the government £3,500,000,000 in income. And that's for every million of us that are working.
But under austerity, people are losing their jobs all over the UK. Everyone who has to go on to Social Security (no, I will not call it Welfare because all these people who were working have paid national insurance contributions to make sure they would be covered if ever they weren't in work. They're not getting a handout). The government assures us every month that there are jobs out there. Plenty of jobs. A lot of these jobs are on zero-hours, part-time and minimum wage contracts. People are forced by the job centres to take these jobs, even if they demand childcare arrangements and anti-social shifts many families can't handle.
People in these jobs obviously don't pay the income tax someone on £20K a year would pay so the government has less cash coming in. Unemployed people also don't spend money in the community the way they used to: home decorating, holidays, nights out, new clothes for the kids, etc, all have to go. So less VAT is coming in to government coffers. But worse than that, the government is forced to top up people's income with tax credits because people can't live on the wages being offered. And who pays for the tax credits? Well, you and I. They come out of our income tax payments.
Of course, the government doesn't have to rely on our taxes to get money. They can borrow. And they do. They pay interest on the borrowings, of course, and recently that interest has been higher because the UK has lost its AAA rating. Who sets the ratings? The banks naturally. If you're a bank, it's called win-win. If you're a UK taxpayer, it's called getting shafted.
There is talk of a global financial crisis coming soon, with another collapse in the banking system. I can't decide if there is any truth in this warning or if it's another attempt to frighten people in the UK. Much as the so-called immigration crisis is meant to frighten us. I do know if there is another crisis, the banks and billionaires won't pay for it.
There are economists out there who have examined austerity much better than I ever could and have decided it's not working: David Blanchflower, Robert Reich, Paul Krugman. Here's Krugman's view of what's happening:
His view is worth thinking about.
* You can read about pay averages here: https://www.jrf.org.uk/report/minimum-income-standard-uk-2013
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