People Feel Crushed, but Labour will Lift the Burden of Austerity

By John McDonnell MP, Shadow Chancellor

When Theresa May announced at Tory Party conference that austerity was over it was a great line but complete spin. She knows that austerity will continue for years if the Tories get their way.

It’s reported that Tory Chancellor Hammond was unaware that May was going to make this announcement and that he and his Treasury civil servants were furious at being set up by her. Remember May had planned to sack Hammond immediately after the last general election but was unable to because she failed to gain a Tory majority and was too weak to move against him.

Hammond is an evangelical neo-liberal. When the Tories were in opposition prior to 2010 it was Hammond as shadow Chief Secretary to the Treasury who designed the austerity programme. The Tories needed a bloodless, ruthless hatchet man and he was the obvious choice. If you are going to push people into poverty, make vulnerable people homeless and deprive families of sufficient income to even feed themselves, you need someone who is so uncaring that they are capable of inflicting this human suffering on our community.

Both now and in future years we must never let people forget what these Tories have done to our people. Not since the Depression in the 1930s has our society experienced the level of brutality associated with the austerity measures imposed upon our people over the last eight years. How can anyone ever forgive these Tories for what they have done – the fear, the insecurity, and the harsh poverty they have inflicted on so many?

Initially, after the financial crash of 2008, mainstream economists expected governments to respond in a way based upon the obvious lessons from the experience of the 1929 crash that led to the Great Depression. Most understood that the last thing you would do when faced with the risk of a recession is to impose austerity measures that would threaten and delay any economic recovery. Plus, if there were to be measures to increase demand in the economy, the people who would readily spend any increases in income via tax cuts or increased incomes would be those on middle and lower incomes. These are people who would spend on what they needed rather than the rich who were more like to hoard or invest in property speculation.

Sensible economists were astounded by the way in which politicians were in thrall to neo-liberal ideas that led them so enthusiastically to bring forward austerity programmes. Hammond and those around him were convinced neo-liberals and so austerity and tax cuts for the rich and corporations were a straightforward rolling out of their ideology. Osborne and others were cynically using the crisis as the opportunity to roll back everything the Tories hated in Labour’s welfare state, from the NHS and free education to having a decent social security safety net.

The calculation for the Tories was how much they could get away with and how long it would be before people woke up, saw through what they were doing and reacted against austerity. They thought that the Attlee Labour government built the welfare state in one Parliament – so they could demolish the welfare state within one parliamentary term. And that was what they planned.

Their problem was that neither in 2010 nor in 2015 nor in 2017 could they secure a sufficient parliamentary majority to drive through the complete demolition job they intended in the timescale they wanted. Their worry was that if they didn’t achieve the smashing of the welfare state speedily, time would catch up on them as people increasingly tired of year after year of austerity.

That is exactly what has happened. People have had enough of eight years of hard austerity. They are increasingly aware that the burden of austerity has fallen on their shoulders and not on the rich. They see that with wages still below 2010 levels the promised economic recovery hasn’t arrived for them. They see the fabric of our society falling apart under cuts, year in year out.

All that is left to the Tories now is to try and kid people that austerity is over. So we will see them throw some crumbs to us. But the grinding austerity will continue for years to come if we allow it. We must expose and confront every aspect of austerity as it continues to harm our community. We will need to be absolutely clear that as a party opposed to austerity we will lift the burden of austerity when we go into government.

This article first appeared in Labour Briefing magazine, where John McDonnell writes a monthly column.  Click to take out a regular subscription.