The Sunak Special: What is the Conservative economic response to Covid-19?

(Photo: PoliticsHome)

By Harvey Bilbrough – Contributor

At the Conservative’s annual party press conference, Chancellor Rishi Sunak made it clear that the Conservative’s usual party line on reigning in public expenditure for apparent future economic prosperity was still in play. This is all whilst the government has borrowed the most since official records began, in order to cover the social and economic policies implemented to mitigate any fallout of the ongoing pandemic. However, Sunak’s “balancing the books” approach, all whilst swearing off excessive government borrowing, brings to mind similar rhetoric from the Cameron administration after the recession and throughout its time in power. Given that the tool for balancing the books after the last financial crisis was extensive austerity, one has to wonder what possible strategies for economic recovery Sunak has planned in the future. Although a world without COVID still seems far away, there will come a point where we as a country will have to ask: who and how do we pay for this? Austerity was the answer before in the last recession and crisis, and given that the UK is on the precipice of an even more calamitous crisis than the one seen in 2008, it may become the answer once again.

There is good reason to fear that not everyone will receive protection from the state during these times, and that cutting public spending or withholding any further state aid to those that need it is on the cards for the government. The Chancellor just this week advised those who have their careers in the arts should “retrain” and find a new career path, all whilst industry leaders cry out for further intervention from the state to protect them from financial ruin. As well as this, Rishi Sunak has a planned cut to the current amount recipients on welfare will receive, with a reversal of the extra £20 a week which will see many of the most poorest in Britain face further economic hardship, with estimates that up to 6 million families in the UK may see a reduction in income of up to £1,000. Given that the Bank of England expects the unemployment rate to double and the OBR forecasting unemployment to triple, this would only mean even more families forced onto a reduced and frankly lacklustre welfare support infrastructure which could spell untold damage for the UK economy. With furlough due to end, and the replacement job retention scheme that the Chancellor has planned facing widespread criticism, notably from Labour’s Shadow Chancellor, Anneliese Dodds. Specifically, she highlighted the stark differences between the UK’s retention scheme plans compared to other European countries, which offers more support to both employers and employees, dubbing Sunak’s plans as “sink or swim” and highlighting worries that employers do not have enough of an incentive to keep workers on part-time. This worry is backed up by the fact that the IPPR has warned that the new scheme may still see nearly two million people lose their jobs. With the north of England impacted with more lockdown restrictions on their hospitality industry, the Chancellor on the 9th announced that any businesses forced to shut due to local restrictions will have 67% of their wages paid by the government. One cannot help feel that for many thousands of workers already on minimum wage in the hospitality industry (this writer included) 67% of this rate of pay will be entirely insufficient for any long term sustainability, and overwhelmingly affect younger generations as they are most likely to work in the industries most affected by local lockdowns. 

This pandemic is picking at the seams of the neoliberal underpinnings of the Conservative party. Having been forced to utilize the power of the state to prevent a spiralling of economic and viral turmoil, there’s now an almost crisis of identity for the party of private power. The Prime Minister taking a shot at those who think that the state does have a vital role to play not only in the economy but in the very task of tackling the pandemic, producing effective treatments and medical breakthroughs. “I have a simple message for those on the left, who think everything can be funded by uncle sugar the taxpayer. It isn’t the state that produces the new drugs and therapies we are using” Boris Johnson stated at his party’s conference. This is not an issue of ideology, rather it is practical reality and historical fact that more often than not the state combined with the private sector, rather than one or the other, have historically produced medical breakthroughs. Whatever vaccine is produced in the future will be owned by private capital interests, and to surrender the state’s ability to achieve fairer prices for the public from these private interests seems like a severe mistake when dealing with such an unprecedented crisis. 

Boris’s and Sunak’s rhetoric is a stark contrast to the Prime Minister’s pledge in July, where he promised that austerity of the past decade was not going to be his answer to the crisis, and in fact doubled down on borrowing, public spending and investment in key infrastructure projects and even before the COVID pandemic one of Boris’s first promises on the steps of Downing Street was to end austerity. This comes after a decade of what, a UN report called a “harsh uncaring ethos”, when referring to the Conservative’s approach to austerity, predicting that by 2021 nearly 40% of all children will be living in some level of poverty in the UK. “Food banks have proliferated; homelessness and rough sleeping have increased greatly; tens of thousands of poor families must live in accommodation far from their schools, jobs and community networks; life expectancy is falling for certain groups; and the legal aid system has been decimated” were the official comments by the UN’s special rapporteur Philip Alston. It is not hard to understand how the UN came to such conclusions. The usage and demand for food banks has exploded over the past decade according to the House of Commons’ library, the rate at which people have become homeless or destitute has more than doubled. Whilst austerity may even end, the social fallout of the past ten years cannot go unignored as Britain becomes one of the most staggeringly unequal societies in the world. All of this will only be compounded by the economic destruction COVID will bring with it, and a focus on “balanced books” for this writer seems like a secondary concern. Avoiding a deepening of the crisis of poverty should be the focus of any government, since the last time the books were balanced it saw millions of the poorest and most vulnerable suffer needlessly. This aim is not mutually exclusive with controlling the virus either. If the ultra-rich of our societies can see their fortunes blossom, there is no reason why the rest of us have to bear the full weight of the societal burdens we face.

Time will only tell how the government plans to direct us through the storms to come and the debate about this will likely dominate the coming years. After a decade of austerity can more really follow it? Or will there be a revolution in relations between the state and private capital born out of necessity? It cannot be said for certain but for now the typical Conservative rhetoric remains unchanged and uninspired, when perhaps right now the country and the world needs new ideas and new vision in these unknown and uncertain circumstances.



References:

https://www.bbc.co.uk/news/uk-politics-54419352

https://www.independent.co.uk/news/uk/politics/rishi-sunak-resolution-foundation-universal-credit-covid-b749216.html

https://www.bbc.co.uk/news/business-54362373

https://www.publicfinance.co.uk/news/2014/10/cameron-vows-balance-books-and-cut-taxes

https://www.ft.com/content/26e4578f-ec72-4c50-8836-3252250844eb

https://www.conservatives.com/news/boris-johnson-read-the-prime-ministers-keynote-speech-in-full

https://www.theguardian.com/commentisfree/2020/mar/18/the-covid-19-crisis-is-a-chance-to-do-capitalism-differently

https://www.bbc.co.uk/news/business-52660591

https://www.ft.com/content/d42c5375-9491-40be-a3cd-3445bc637ffc

https://www.ft.com/content/a43e88e6-ad6b-45bc-a75a-170b545b1589

https://www.theguardian.com/politics/2020/oct/08/labour-calls-government-plan-for-uk-jobs-throwback-to-thatcher-era?fbclid=IwAR22OjVuwdY6b5A1Gz7AOkqrqkJZ-DDMDfec3JyRy4jo-GvniU0Ty00oNHI

https://www.bbc.co.uk/news/uk-54481817

https://undocs.org/A/HRC/41/39/Add.1

https://www.independent.co.uk/news/uk/politics/coronavirus-boris-johnson-austerity-uk-economy-level-a9589391.html

https://www.instituteforgovernment.org.uk/explainers/how-can-boris-johnson-pay-his-promises-tax-and-spending

https://www.bbc.co.uk/news/uk-53207700

https://www.independent.co.uk/news/uk/home-news/charts-which-show-how-homelessness-has-soared-under-conservatives-a7198966.html#r3z-addoor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s