Happy New Year folks… or is it? Our government tells us our economy is on the road to recovery after finally achieving growth, but what does this mean for the rest of us? After 4 years of austerity for those on middle to low incomes, and tax reduction and extended freedoms for those on higher incomes, Britain is finally experiencing modest growth that the government can claim as a victory for the Tory-led recovery. Osborne and Cameron are heaping praise upon their economic policies and ‘sticking to the plan’ after the 0.8% growth figure was announced for the last quarter, but the reality is; this fraction of growth is not felt by ordinary people or families. The cost of living crisis has meant that workers have experienced the longest squeeze on their incomes since the 19th century, now a period of over 40 consistent months where wages have risen slower than the rate of inflation. 2.5 million Brits are still unemployed, with another 1.5 forced to stay on part-time work due to the inability to secure long-term jobs. George Osborne promised the electorate 7.7% of economic growth when the Tories came to power, 3 years later, the real figure falls short of even 3%. Osborne promised a balancing of the books and an erosion of the national debt, yet this government has borrowed more in 3 years than the previous Labour government did in 13.
This ‘recovery’ hailed by the Tories as a return to prosperity, is precarious at best, and a façade at worst. Might I ask the Right Honourable Gentleman in charge of the Treasury, who has actually recovered? Is it ordinary hard-working families? No, they’re being exploited by the oligopoly market structure of the energy industry, where prices are being hiked by up to 10% by the ‘big 6’ energy firms. Is it those in need, like those living in social housing? No, they’re being charged higher and being displaced by the venomous bedroom tax. Is it hard-working immigrants contributing to the British economy? No, ‘Go Home’ vans have been sent up and down the country and immigrants may be expelled without a chance to appeal for their human rights according to the Home Secretary Theresa May. So is it the unemployed? No, in fact under new Conservative proposals those out of work will be forced to go to the jobcentre every day, re-applying for jobs that do not exist, demoralising and humiliating them further. Maybe it’s those on low incomes? No, under this government 500’000 people have been forced to visit food banks this past year alone. So who actually has recovered from the financial crisis? The tragic irony and pure predictable nature of the answer may well mean you’ve guessed it already. That’s right, the very architects of the crisis itself, the very people who acted so recklessly and plunged our proud nation into recession, the very people who actually made gains out of the major banks busting through enormous pay-outs and severance packages, and the same very people that this Etonian-led government strives to protect; the bankers.
It is the bankers whose bonuses are up 64% while ordinary people feel the squeeze of low wages combined with high inflation. It is the bankers who are being protected by the Tories in an EU court case combating a European Bankers’ Bonus levy while ordinary people are exploited by rail and energy monopolies. Finally, it is the bankers, and the bankers alone, who are being sheltered from austerity by George Osborne, and are being reserved the exclusive positive effects of this so-called ‘recovery’. The bankers would certainly consider these latest figures a recovery – as for them it is. Too-big-to-fail banks are back to making abnormal profits, and regulation falls off the policy agenda again as the Tories prove they are not only out of touch with the electorate, but they have failed to learn from the Thatcherite economic mistakes of pre-2008. If we do not regulate the financial sector, it will fail. If profit is its only motive, it will fail. This was proven in 2008, yet, the current government encourages more of the same. Make no mistake, New Labour made the same such mistakes, but it is the responsibility of the current and all future governments to learn from 2008. It was an unforgivably crisis – no doubt – but with every crisis comes an opportunity, an opportunity to learn from our mistakes of the past and strive to never repeat them. Sadly, it seems that this government is determined to do just that – repeat them. Just look at the Help to Buy scheme; a candour replication of Thatcher’s infamous ‘Right to Buy’. I accept Thatcher’s housing policy put a lot of people on the property ladder – for which I am sure they are grateful – but it also laid the foundations for a housing bubble, which would burst and contribute to the greatest financial crisis we’ve experienced since the Great Depression. A crisis from which we should have learned, yes? Apparently not, Osborne’s housing scheme promises only more of the same; another housing bubble which could burst at any moment. So much for ‘fixing the roof while the sun is shining’.
Aside from the housing market, let us look at the financial market in general. Since Thatcher’s deregulation of the private sector, we were promised unlimited prosperity and growth, as well as a departure from old boom-and-bust economies, from Conservative and Labour governments alike it should be noted. The reality; boom under Thatcher, bust under Major. Boom under Blair, bust under Brown. 2008 proved to us that deregulation is not only unreliable, but also highly dangerous. By giving the private sector a free reign over our economy, we have let our legislature to be held ransom by powerful vested interests, and we have allowed those interests to drive our economy into the ground, a process that hurt the vulnerable and the hard-working considerably more than it did the instigators. Was this economic catastrophe not the most prominent sign yet that there needs to be a rethink of national economic policy? Dogged monetarism and free-market economics has brought short-term prosperity at the cost of long-term peril. It is time Keynesian economics returned to the forefront of national economic debate. Only market interventionism will break up the monopolies that exploit our workers and consumers in favour of wealthy shareholders. Only market interventionism will bring down energy and rail prices to a level that is fair for our consumers. Only market interventionism will see the loan shark pay-day lenders end their merciless manipulation of those in need. And only market interventionism will ensure small businesses (a group hailed by all parties as a driver of economic growth) integrate into monopolised markets, spreading wealth and growth. It is time ‘market intervention’ were no longer considered dirty words in our national economic lexicon, and reconsidered as plausible and sensible policies that can make our markets more competitive and our country better, as well as help ensure this so-called recovery is actually felt by the majority of our society, not just the privileged minority.
Do not misunderstand my intentions, I wish all a happy new year and welcome the news of growth and falling unemployment. But the modest improvements in our economy are far from enough, and will remain temporary if Keynesian policies are not seriously deliberated to prop-up our economy and reinforce our vulnerable return to growth. It is not only Labour that have suggested a major expansion in home-building for example as a source of investment and jobs, but the IMF (debatably the most highly-respected economic institute in the world). It is interventionist policies like these that will expand on our Tory-heralded 0.8% growth, and return us to an economic state where growth can be felt by all, not just the upper echelons of society. So far, learning from the mistakes that led to 2008 has been an opportunity missed by our current government. Luckily, a new opportunity awaits them; 2014. This is the year to encourage Keynesian economic theory, not to dogmatically stick to the ‘plan A’ that has fallen short of its promises and benefitted an acute minority of our population. Intervention in the markets is required to ensure a fairer deal for consumers in areas such as energy and transport, as well as to boost investment and jobs in areas such as construction. I urge the government to seriously consider a change of course to ensure a strong long-term recovery for our country, one that can be felt and appreciated by all. 2014 is their last chance. If they do not change course, then the electorate just might in 2015.