Vote Tory for a tiny economy, terrible jobs and no welfare state


No doubt some of you will scream that this post is overdramatizing, but the consequences of further fiscal consolidation (that’s austerity to most of us), as laid out in Professor Simon Wren-Lewis’s latest Mainly Macro article, seem undeniable.

He tells us the National Institute has used the model NIGEM to analyse the macroeconomic impact of the different political parties’ fiscal plans post-2015, which is published in the latest Review. (Chris Giles has a FT write-up.) The result: The more fiscal austerity you undertake, and if monetary policy fails to perfectly offset the impact on demand, the lower output will be.

You don’t need a crystal ball to see what this means, if we get another Conservative, or Tory-led, government. Lower output means a lower tax take, therefore less money to spend on the NHS and welfare benefits (areas like Defence and International Development will always have funds – we can’t let ourselves go defenceless and we must continue our programmes of cultural imperialism, after all).

So further Tory austerity instantly implies the imposition of even harsher standards of qualification for state benefits, pushing even more vulnerable, sick and disabled people off the books and into their graves. We’ve all known that voting Tory is an endorsement of state-sponsored suicide but it’s time we all owned up to it.

It means the sale of the National Health Service in England to private companies will be accelerated, with consequent impacts on the amount of grant funding for the health service in the other UK countries; the service will continue to worsen and even more deaths will be the result.

But the Tories will want to pretend to the media that all is well, which means an increased push to get people into part-time, temporary or zero-hours work, and an increased number of benefit claimants being funnelled into work activity programmes that, in fact, reduce the number of available jobs. The resulting low-pay economy is exactly what the Conservatives want; the workers will be kept down and the employers can pocket the profits.

Nobody in the government or even the Bank of England will tell you this because, it seems, they haven’t done any analysis and won’t make any such forecasts.

The Office for Budget Irresponsibility is not allowed to look at alternative fiscal policies in the short term and must therefore put the bravest possible face on what is offered to it – that is why every single forecast to come out of that organisation has been hopelessly optimistic.

We’re back to evidenceless policies again. The Tories are saying “everything will be okay”, because – for them – it will be. They and their rich friends will have loads of cash. Who cares that the entire infrastructure of the United Kingdom – and the British way of life – will be dismantled and disappearing from under them?

Think this is overexaggerating? Let’s go back to Prof Wren-Lewis and examine the Tories’ record. He writes: “If you go back to 2010, the OBR’s main forecast didn’t look too bad: the recovery was continuing, and interest rates were able to rise as a result.

“But good policy does not just look at central projections, but it also looks at risks. Then, the risks were asymmetric: if the recovery became too strong, interest rates could always rise further too cool things, but if the recovery did not happen, interest rates would be stuck at their lower bound and monetary policy would be unable to keep the recovery on track.

“In 2010 and beyond that downside risk came to pass [bolding mine], and the recovery was delayed. Fiscal policy put the economy in a position where it was particularly vulnerable to downside risks, which is why it was an entirely foreseeable mistake.

“Exactly this point applies to 2015 and beyond. The problem with further fiscal consolidation while interest rates remain at their lower bound is that it makes the economy much more vulnerable to downside risks.”

In other words, it seems Conservative policy, as set down by History graduate and towel-folder George Osborne, deliberately weakened this country’s ability to recover from the crash of 2008 and afterwards.

How secure is you job? How safe are your savings?

Do you really want to risk them on more Tory bungling?

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  1. NMac February 11, 2015 at 12:54 pm - Reply

    In short, back to the 18th century.

  2. hstorm February 11, 2015 at 9:06 pm - Reply

    There has to be a vigorous campaign to end the urban myth of welfare/benefits being a ‘burden’ on a national economy. They are an absolutely vital cog in the machine for keeping the money circulating, especially in times of bad industrial performance.

  3. Ian February 11, 2015 at 9:25 pm - Reply

    You’re right “Lower output means a lower tax take” but I think one thing is missing here is the government’s ability to create money from nothing. Because of this, the amount raised from taxes is almost irrelevant. What is most relevant is the attitude to the poor and the vulnerable.

    • Mike Sivier February 11, 2015 at 11:04 pm - Reply

      Aren’t there also issues of inflation and credit confidence?

  4. Chris February 12, 2015 at 12:39 am - Reply

    The welfare state is all but gone.

    The state pension is not a benefit and does not come from general taxation, but from a National Insurance Fund that John Prescott was in surplus by £30 billion since 2013.

    If Labour want to break away from being only neck and neck with the Tories in the GE2015, and form a majority government on its own, with no need of any coalition partner (but having the SNP has an even greater ally) in 2015,
    then Labour needs to:

    – Pay the full state pension to men and women citizens aged 60 to 66 in 2015, irregardless of National Insurance Fund record history. Currently £113.10 per week.

    – Pay the SERPs top up irregardless of history of opt / contract out
    (started since 6 April 1978). A sum given as £165 per week.

    The opt out from SERPs is why the flat rate is further the biggest con in UK history.

    Because people may not have even been aware they were contracted out, but certainly not aware it would impact their basic state pension, rather than now when it is a top up to the state pension.

    Many men and women remain unaware there has been any pension reform.

    As it is the mature person who shops in town cetnres, this will revive the high street from its decline into ghost towns, and generate youth jobs and business rates for cash strapped councils.

    The Department of Work and Pensions says the flat rate means individuals will be getting different rates from each other, for decades to come.

    There is no single tier of pension of people all getting the same with the flat rate.

    People are already getting state pension forecasts as low as £55 per week with a full NI record, because of the conditionality of SERPs opt out, that now has no effect on the £113.10 basic state pension. It does from 6 April 2016.

    There are many other reasons why the poorest men and women will also get NIL STATE PENSION FOR LIFE from the flat rate pension.

    See why, under my petiton, in my WHY THIS IS IMPORTANT section at:

    The Pensions Minister in the Coalition is Lib Dem Mr Steve Webb, who has been economical with the truth to despairing people with little or no other pension provision, because too low waged / income in life.

    The flat rate pension needs revoking as it will leave people on benefit for the rest of their lives in old age, and they will not survive the current cruel benefits regime.

    Not least because Jobcentres are now nicknamed Sanctions Centres.

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