Austerity operates not only as a set of economic policies but also as a cultural object within policy and popular debate

February 19, 2013February 19, 2013 dnmufcLeave a comment

While there has been some recognition of the gendered impact of austerity, less attention has been paid to its specific implications for mothers. Drawing on a journal special issue, Tracey Jensen explains how through understanding austerity in cultural as well as economic terms, we might come to see its implications for our shared culture and sensibilities, as well as its specifically gendered dimensions.

In the aftermath of the 2008-2009 recession and as the resultant austerity regime of reduced public spending began to be implemented, budget reviews demonstrated that it would be women who would bear the brunt. Fast forward to 2013 – with the second dip of recession a recent memory and a third dip imminent – the gendered effects of recession are impacting most acutely on one group in particular: mothers. The lattice of austerity policy – including reductions in public service provision, reduced levels in real terms of social security payments, frozen housing benefit and reductions in tax credit payments (amongst others) work together to have a compound effect on the support, income and security of mothers and especially those on low incomes, single mothers and those caring for disabled children. Changes in employment since the recession, such as the rise in short-term, part-time, insecure and precarious work, all impact disproportionately on those with caring responsibilities who are more likely to be snared within the ‘low-pay, no pay’ cycle of underemployment and poverty. The Equal Opportunities Commission estimated that some thirty thousand women a year lose their jobs as a result of becoming pregnant, and emerging evidence suggests that this maternal discrimination is currently increasing as employers seek to cut back, stall promotion and reduce workforces. Austerity is powerfully gendered, certainly, but it is particularly fixed upon women who have children.

Examining the public debate around austerity and gender, and extending it to consider more closely the implications and impacts of austerity upon families, the online journal Studies in the Maternal has published a Special Issue on the topic of ‘Austerity Parenting’. Drawing together work from sociology, critical social policy, community development, media and cultural studies, gender studies and economics, ‘Austerity Parenting’examines how the developing public narrative of austerity is connected to moral discourses of parenting. In particular we have asked how parents and parenting have been called upon by the architects of austerity, as both ‘to blame’ for the crisis (through ‘bad parenting’) and as being the solution (through ‘good parenting’) to an increasing variety of social and economic ills. ‘Parenting’ – articulated as moral and personal conduct and choices – is positioned as being the most important factor in determining a child’s life chances, more important than income, security, access to decent housing, healthcare, education, and so on. This moral narrative around good parenting distorts the wider debates we should be having about widening social and economic polarisation and stagnant social mobility.

An (initially tentative) rhetoric which has accompanied the implementation of austerity policies is that austerity is the necessary lean time which must follow on from the excessive spending of the previous Government. This rhetoric has grown bolder and is now echoed across policy and popular debate. We have spent too much money supporting those at the bottom, according to this narrative, and this spending has led to the breakdown of moral fibre and personal responsibility. This rhetoric rewrites the crisis of capitalism as being caused, not by the high-risk speculative financial sector, but rather by the ‘burdens’ of the welfare state and the ‘dependency culture’ it is said to create. Incredibly, social security levels (in 1979 worth 23% of the average income, now worth a paltry 11% and falling) are positioned as ‘too generous’ and as such enabling people to ‘choose’ a life on benefits. Those placed and blamed at the centre of this so-called dependency culture are ‘troubled families’, held to be chaotic, undisciplined, lacking in work ethic and responsibility; and importantly, to be transmitting these problems to their children who are doomed to repeat the cycle. These ideas are familiar enough to social scientists who remember Charles Murray’s claims about the underclass, which (despite a lack of evidence) exerted an enormous influence on policy in the early 1990s and as Imogen Tyler has documented dramatically re-emerged in media representations and political responses to the riots in August 2011. In the United States the underclass thesis led to the construction and circulation of figures such as ‘welfare queens’ and since the beginning of the current recession, we have seen a surge in similar stigmatized names for those in poverty, including ‘welfare scrounger’ and ‘feckless poor’.

But this particular moment is also bearing witness to the emergence of new terms and subjectivities designed to censure, accuse and condemn: the ‘skiver’ (vs striver) the ‘shirker’ (vs worker), the ‘feral parent’ and the ‘troubled family’. Such terms are wounding – they are designed to police, punish and hold in place, to individualise blame for stagnant social mobility and the conditions of poverty and worklessness. These ‘names for Britain’s poor’ are also arguably designed to produce or procure a consensus for welfare roll-back and deepening inequalities. Certainly, the enlivening and reanimating of such wounding terms alerts us to a profound poverty of imagination in policy debates. Emerging critical research demonstrates the inaccuracy of these emerging and moralising vocabularies and even more troubling the wilful ignorance of policy elites who insist on individualising poverty with no empirical evidence. This Special Issue contributes to this growing body of critical policy research, and seeks to explore the ways that austerity might be understood to operate not only as a set of economic policies but also as a cultural object within policy and popular debate, a subject-making discourse that is conferred, occupied and resisted, and as a web of socio-historical fantasies about the nation’s past and its possible futures. As such, this collection of work examines how austerity, in its connections with parenting, is circulating a particularly damaging vision of what causes poverty and social inequality and what our response could be. In proposing that social injustices are simply the result of bad choices made by lazy, irresponsible or workshy parents that ‘the rest of us’ can (and should) no longer afford, austerity parenting is reconfiguring our very sense of what public, mutual and collective sensibilities we should or ought to have towards one another.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. http://blogs.lse.ac.uk/politicsandpolicy/

About the Author

Tracey Jensen is a Lecturer at Newcastle University. Her research explores the classed and gendered intersections of contemporary parenting culture, and how these are reproduced across social, cultural, media and policy sites.

York strives to pay living wage as cuts bite and poverty spreads

February 11, 2013February 11, 2013 dnmufcLeave a comment

The city has a tradition of philanthropy dating back to the Rowntrees – and the council is determined that its workers will not bear the brunt of austerity

At the turn of the 20th century, the chocolatier and philanthropist Joseph Rowntree bought 150 acres of land north of York and created New Earswick, a low-rent garden village for his employees and others decanted from the rank slums of the city. A Quaker, he believed in investing in the wellbeing of his workers.

Today, New Earswick remains lavishly green and pleasant and is also home to a network of retirement bungalows and a care home in which Dawn Watson, 51, has worked as a general care assistant for 14 years. In January, her wage packet saw a dramatic and permanent increase of £200 a month, earned for the same job, and the same hours. The reason is that her employer, the Joseph Rowntree Foundation (JRF), now pays its staff the voluntary living wage of £7.45 an hour (£8.55 in London). “It helps with the cost of everyday life,” Watson says. “But it also makes me feel valued, better in myself – if better is the right word.”

This Tuesday marks the city of York’s 100th day as Britain’s first living wage city. The challenges it faces are immense. “Who is against a decent wage?” says Ian Gillies, leader of the Tory group on the Labour-held city council. “But it’s an issue of affordability. If we have to borrow to pay it, it becomes a political whim with dubious consequences.”

York, with a population 205,000, has significant areas of deprivation among large islands of affluence and a real housing crisis, with supply meeting only 8% of need. More than 250 jobs from a council staff of 7,500 will go over the next two years. By the end of 2015, the city will have cut 25% of its total budget – a sum amounting to millions. At the same time, £338,000 has been set aside to ensure that from April, 573 council employees will have salaries increased to the living wage. How can that make sense? Or is the living wage a compass by which progressive local authorities might steer a fairer way through austerity?

In 2011, the independent York Fairness Commission, sponsored by John Sentamu, the archbishop of York, was established. Commissioners came from JRF and Aviva, an important local employer, and included Kate Pickett and Richard Wilkinson of York University, who co-wrote a book called The Spirit Level. Its thesis is that a range of social ills, including illiteracy, violence, mental and physical illness, unemployment and low civic engagement – all costly to the public purse – are affected not by how wealthy society, is but by how unequal it is. Big gaps between rich and poor are bad for everyone, even the well-off. “Inequality is so much more widespread than many people realise,” Pickett says. “Once they do know, the first instinct is to say: ‘That’s not right’.”

According to the charity One Society, the pay gap between top and bottom earners is, on average, 15 to one in local authorities and a huge 262 to 1 in FTSE 100 companies. So far, one in eight local authorities have reduced the pay of chief executives and one in five are committed to paying employees the living wage.

In addition to the living wage, the Fairness Commission also recommended an investment in preventive action against inequality and a living wage clause in council contracts and procurements. All were adopted by the council. “Social justice is in the city’s DNA,” says Kersten England, the chief executive of the council. “We want to put money into the pockets of the poorest earned from a fair day’s pay. Money means status and has a psychological impact. York is a growth city but we want to take everyone on the journey, not just the privileged.”

“The living wage is necessary but not sufficient in itself,” Julia Unwin, JRF’s chief executive, points out. “It has to be part of a much bigger picture.” The Citizens Advice bureau in Blossom Street, York, deals with more than 60 increasingly desperate inquiries a day. Here, Unwin’s point is made manifest. “Two years ago, we always had a solution. It might not have been brilliant, but we had one,” says Clare Guinan of the CAB. “Now, we don’t.” For the working poor, income no longer matches expenditure while job insecurity is rampant. “You are no longer employed or unemployed for a period,” Guinan says. “It depends on the day.”

George Vickers, a manager at the bureau, says York has seen a 45% increase in involuntary part-time work in the past year. It is not uncommon for a person to work full time but be given a 20-hour-a-week contract. The reduction or withdrawal of benefits by Jobcentre Plus is widespread: in one case a man was given a job, beginning a fortnight later, and was sanctioned for not seeking work in the intervening 14 days. “That’s demeaning. The squeeze is on at such a fundamental level,” says Guinan.

The squeeze is also spreading. Julia Histon is the chief executive of York Housing Association, which pays the living wage and rents to those on the lowest incomes. She says: “People massively underclaim on benefits. We help them with budget planning and ways to avoid homelessness. But what’s now happening is that young professionals are also being squeezed out of the private rental market and they aren’t eligible for the housing we offer.”

Statistics reveal the scale of the crisis. The average income in the city is £20,420; the average house price £201,000. Nearly half of households have an income of less than £24,000 year but an annual income of £42,000 is required to rent a three-bedroom home. The waiting list to rent social housing is 2,690 names long and growing. “We are building 40 units a year but if you think of the scale of the problem, that’s tiny,” Histon says.

The council plans 5,000 affordable houses in four years. “Otherwise, the kids of our families can’t afford to live in their own city,” England says. “That’s also the challenge of income inequality.”

Martyn Weller is co-owner of a York business that organises adventure activities such as kayaking and caving. York has 800 small businesses employing, on average, a staff of seven. Weller’s has a turnover of £175,000 a year. Nationally, two-thirds of small businesses pay the living wage but it isn’t feasible for all. Weller pays his staff £6.50 an hour and himself £675 a month. The Ministry of Defence last year contracted his company at £255 a session, four sessions a week. Now, it’s two sessions, at £135 each. “That’s happening everywhere.”

According to KPMG, one in five of the national workforce are paid less than the living wage. In York, 103 of JRF staff have received a 20% pay increase while those at the top end have had no increase. JRF has commissioned a number of studies to assess the impact, but one bonus is already apparent. Previously, there was a 20-30% turnover of care staff, and it costs £600 to recruit and train each individual. “Turnover is much lower,” JRF’s Shaun Rafferty says. “The living wage can be a good deal for employers too.”

Six mornings a week, at Carecent, behind the giant Central Methodist church in York, volunteers provide free breakfasts, food, help and clothes to a large band of the homeless, many suffering mental ill health, all showing the wounds of permanent exile from society. Up to 60 come each morning. Donations from the public are plentiful. “York is that kind of place,” says Nicky Gladstone, project manager. Here, cuts and the living wage have little relevance. If you take nothing from nothing, you have nothing.”

“York looks pretty but it is very typical of a lot of England,” Unwin says. “Low income, low pay. What we have is strong leadership and a shared vision of what a sense of fairness might achieve. If it can be done here, it can be done anywhere.”

Yvonne Roberts The Observer, Sunday 10 February 2013

The Spirit of ’45 – first look review | Film | guardian.co.uk

February 11, 2013February 11, 2013 dnmufcLeave a comment

Ken Loach’s account of the Labour postwar programme of nationalisation favours reminiscence at the expense of detail, but it certainly packs an emotional punch

Andrew Pulver

guardian.co.uk, Monday 11 February 2013 11.25 GMT

Labour of love … a still from Ken Loach’s The Spirit of ’45

No one can accuse Ken Loach of sitting on the fence. This account of Labour’s postwar general election victory and the subsequent programme of nationalisation is about as partial as they come. In Loach’s eyes this was a glorious time, when the experiences of the second world war were put to era-changing use on a home front still crippled as much by the depression of the 1930s as by military expenditure. The rush of socialist enthusiasm ended dangerously exploitative conditions in heavy industry, rebuilt lousy housing and established a free-to-all medical service.

The Spirit of ’45

Production year: 2013

Country: UK

Directors: Ken Loach

Alex Salmond and David Cameron’s incoherent referendum plans mean that they are unlikely to get what they want for either Scotland or the UK

February 8, 2013February 8, 2013 dnmufcLeave a comment

Posted: 06 Feb 2013 06:00 AM PST
An independence referendum is due to be held in Scotland in 2014, with another referendum being pledged by UK Prime Minister David Cameron on the country’s relationship with Europe in 2017. Jo Murkens and Peter Jones argue that in both referendums the options put before the electorate are likely to be exceptionally vague. The UK’s proposed new relationship with Europe is still largely unknown, and it is unclear what the precise nature of an independent Scotland would involve.

This article was first published on LSE’s EUROPP blog

Countries that are used to referendums on constitutional matters use them sparingly. The UK has no such constitutional requirement, but faces the possibility of having to deal with two such referendums within the space of a few years. The first referendum could see Scotland break away from the United Kingdom, the second could see the United Kingdom(which by then may or may not include Scotland) break away from the European Union.

The common issue to both Scottish First Minister Alex Salmond, and UK Prime Minister David Cameron, is political sovereignty. They both want more of it; Salmond wants to claim it from the UK, Cameron wants to claim it from the EU. In that narrow sense, they are both nationalists: Salmond a Scottish one, Cameron a British one. Both also want, they claim, to be good European citizens but have to contend with the problem that the European club they want to be members of has rules which conflict with their visions of the idealised version they imagine it should be. And the promotion of this idealised vision to their voters leads them both to political positions which are incoherent.

Scotland’s difficult road towards independence and EU membership

Scotland’s First Minister Alex Salmond and UK Prime Minister David Cameron Credit: Scottish Government (Creative Commons BY NC)

For the Scottish National Party (SNP) which was, until the advent of devolution in 1999, a minority fringe party, the ‘Independence in Europe’ policy was never subjected to serious examination. It was not much more than a political slogan used in political debate to counter the separatist charge levelled by opponents. The most that was done to develop this policy was to locate sympathetic European luminaries who gave the SNP helpful quotes asserting that upon independence,Scotland would move seamlessly into EU membership. It became an article of SNP faith that Scotland would be warmly welcomed into the happy European family, effectively countering ‘separatist’ accusations. So cemented into SNP ideology is this belief that Nicola Sturgeon, deputy first minister, told the Scottish Parliament’s European and external relations committee in December 2007: ‘It is the clear view of the Scottish National Party and the [Scottish] government that Scotland would automatically be a member of the European Union upon independence.’

The automaticity proposition founders on the rather obvious point that while the people and territory of Scotland may already be in the EU, the Scottish government is not. And the Scottish government being in the EU requires its votes in the European Council and other entitlements to be written into EU treaties, which can only be done with the unanimous consent of all other member states. This remains the case. The SNP, however, refuses to acknowledge this point because it raises the vision of Scotland being outside the EU and having to bang on the door begging to be allowed in out of the cold, bringing the separatist bogey back into play.

The battle against the separatist charge has had to be fought on another front – within the UK. Unionists have alleged that independence will mean that families with members on either side of the border will become fragmented, that they and commercial trade will have to negotiate border controls at Berwick and Gretna Green, that Scotland will lose access to popular BBC shows such as East Enders and Strictly Come Dancing and so on. To counter this, the SNP has devised a new strategy – that while the political union of the UK will come to an end, the social and civil union will continue and prosper. Thus families will be just as united and able to jointly celebrate such things as the Queen’s birthdays and anniversaries as she will still be the titular head of state in an independent Scotland.

Harsh economic realities, however, have forced the extension of this soft unionism into harder areas. The stresses and strains that the euro is under have made it as unattractive to Scots as it is to the English. The SNP decided some time ago that it would stick with sterling as its currency until such time as there are economic benefits to joining the euro, which would only occur after a referendum. As some 60 per cent of Scottish trade is with the rest of the UK, it makes little sense to erect a currency barrier to that trade while tearing one down to benefit the 20 per cent of Scottish trade that is with the Eurozone.

The travails of the euro and the proposed deeper integration remedies, however, demonstrate that such a currency union would erode Scotland’s fiscal independence. Proposed tax changes and government budgets would have to come under the tutelage of the (by then) foreign institutions of the UK Treasury and the Bank of England. Various unionist politicians, such as Treasury chief secretary Danny Alexander and former chancellor Alistair Darling, have argued either that the UK government simply could not countenance such an arrangement, or that the arrangements would be so restrictive as to nullify the claimed gains from political independence.

The SNP’s counter to this has been to assert a rather crude truth, that as sterling is a fully tradeable currency, the UK cannot stop Scotland from unilaterally adopting the pound. This, however, looks unsatisfactory from the point of view of independence. It leaves monetary policy, the determination of interest rates, and the operation of quantitative easing in the Bank of England’s hands. The SNP also claim, rather more vaguely, that the fiscal stability pact necessary for a currency union need not be so restrictive when, in fact, the lesson of EU struggles to stabilise the euro point to tighter rather than looser centralised fiscal controls.

This puts Salmond in the odd position of being, simultaneously, a Scottish nationalist, a European federalist, and a British unionist. He wants Scotland to have untrammelled use of its own credit card to dine at the same time in the British and European restaurants, but refuses the table d’hôte menu and insists on picking from two à la carte menus, which neither chefs seem willing to offer.

David Cameron is asking the impossible of Europe

Cameron is in only a slightly less strange place. He wants to trade heavily on his British nationalism with his domestic audience, but waves his European unionism when on the other side of the English Channel. Both audiences are, however, able to see what is being presented to the other and thus he runs the high risk of undermining his message to one by his contrary calls to the other.

In his much publicised speech on 23 January 2013, David Cameron set out his intention to renegotiate the UK’s relationship with the EU and put the terms of that changed membership to the British people in an ‘in/out’ referendum by the end of 2017, subject to the Conservatives winning an outright majority in the general elections in 2015. His speech received global attention and a mixture of praise (e.g. those who agreed that the EU ‘needs to be reformed’) and criticism (e.g. those who disagreed with the‘language of unilateral negotiations and the threat of withdrawal’). Much of the commentary, indeed much of the speech itself, is based on the dubious premise that the UK is a major player in the European Union.

On one level, the UK undoubtedly sits at the top table: it has the third largest population and the third largest economy in the EU. However, the UK already has a different relationship with the EU than the other member states. It gets a significant rebate on its financial contributions to the EU budget; it has external borders with other EU member states; it has its own currency; it did not sign the fiscal stability treaty which requires budget prudence and introduces a debt brake for the 17 Eurozone states; and it will not (unlike 11 Eurozone states) impose a financial transaction tax which is designed to discourage speculative trading. Moreover, the UK limited the applicability of the Charter of Fundamental Rights and the way in which it may be interpreted. And its red-lines approach at the IGC in 2007 means that the UK can itself decide (by 31 May 2014) whether to implement all the European measures on police and justice (which will be subject to the jurisdiction of the Court of Justice of the European Union) or whether to opt out of all the measures and then adopt individual measures on an ad hoc basis (subject to the consent of the other member states). Although how exactly the latter option ‘cuts red tape’ is anyone’s guess.

If this isn’t à la carte, then what is? What more does Cameron want to renegotiate? No one knows, and no one has yet produced a checklist, although the government will be working on one until the autumn of 2014. For the time being, the Working Time Directive, the European Arrest Warrant, and a better deal on fisheries keep coming up in debate. Is it realistic to argue that powers in those areas can be returned to the member states? The practical options are the following. Either the UK tries to tackle the matter from above by reducing the law-making powers of the EU institutions (that option would require a treaty change and the unanimous agreement of the other member states which is, currently, unrealistic). Or the UK tries to negotiate a better ‘deal’ for itself (e.g. through opt outs and protocols that are attached to the Treaty). But is it credible that the other member states would grant the UK special treatment when every member state is subject to aspects of EU law of which it disapproves? Overall neither option seems workable.

On a more fundamental level it seems baffling that British Euroscepticism would appear to hinge on a handful of powers that need to be ‘repatriated’. It doesn’t, and it is ludicrous to suggest that the Europhobes in the Conservative party will be placated if junior doctors work longer, and UK nationals who are wanted on charges abroad cannot be extradited (whereas, of course, UK nationals who have committed a crime in the UK but fled to another EU member state will immediately be brought back home). On fishing, where the real issue is depleted stocks through overfishing, the Commission is already transferring decision-making powers to the member states in an attempt to decentralise fishing policy and tailor it to local conditions. As Douglas Alexander put it: ‘The gap between the minimum the Tories will demand and the maximum the EU could give is unbridgeable’. These are not the fundamental issues, and any self-respecting Europhobe will not rest until the UK has exited the Union and re-attached itself to the single market like a dingy to a supertanker.

So if Cameron’s speech does not stand up to scrutiny from a European perspective, maybe its intended target was closer to home. Almost all foreign and domestic observers noted that the speech was driven primarily by domestic party politicking (the United Kingdom Independence Party – UKIP) and internecine party struggles (Bill Cash). Cameron is trying to unify a fractured party in the run-up to the general elections in 2015, and UKIP and the Tory backbenchers forced his hand. But even domestically Cameron may have dealt himself a bad hand. The offer of a referendum on renegotiated membership after the next general election is subject to two unknowns: i) the outcome of the 2015 elections; ii) the outcome of the negotiations. It is presently far from clear whether he will be successful with respect to either or both.

Until then Cameron will be seeking, not so much nouvelle cuisine as cuisine impossible, just like Salmond: untrammelled UK access to the European single market restaurant, refusal of the table d’hôte menu and insistence on the à la carte menu which is not on offer. And then he will have the nerve to ask for a rebate (i.e. other member states subsidising his dining) when presented with the bill.

Two Incoherent Policies

Cameron’s policy on the EU is just as incoherent as the SNP’s policy on continuing EU membership on current terms. Cameron assumes he will win the next election, just as Alex Salmond assumes that Scotland will automatically be an EU member state. Cameron claims that he can walk into the room and negotiate a new deal. Salmond claims that he can secure Scotland’s place in Europe on current terms: i.e. by inheriting the UK’s opt outs on the euro currency and the Schengen free travel area, which is illusory.

Moreover, a referendum (if one is to be had) needs to set out two clear choices beforehand. The in/out referendum on the EU or the Yes/No referendums on Scottish independence do not offer sufficient alternatives. What will come after EU membership? A free trade (all pay and no say) agreement with the EU like Norway? The Commonwealth? The USA? NAFTA? The global market? Splendid isolation?

Likewise, Salmond promises continuity when any EU lawyer, politician, and bureaucrat will tell him that there is no automatic right to membership of the European Union. So, what if membership is not automatic? Will Scotland stay outside the EU? Have its application fast-tracked? Join the queue of applicant states? He also promises currency continuity within a skeletonised British union, when there are an array of economists and Treasury politicians past and present saying it either will not work, or will render the gaining of political independence pointless. So what will happen then? Freelance use of the pound? Enforced joining of the euro? Invention of a Scottish currency?

The à la carte menus offered by both are, in reality, a dog’s dinner.

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting.

About the Authors

Jo Murkens is Senior Lecturer in Law at the LSE. Dr Murkens was previously a researcher at the Constitution Unit, UCL, where he led the research on the legal, political and economic conditions and consequences of Scottish independence. Jo has taught at University College, King’s College, and Queen Mary College (all in London), and was called to the Bar in 2006.

Peter Jones is a freelance journalist, writing on Scottish current affairs for The Economist, the Times and The Scotsman. He is also, with Jo Murkens, a co-author of Scottish Independence: A Practical Guide, EUP 2001.

Measuring Leviathan: Big Government and the Myths of Public Spending | Whitehall Watch

January 31, 2013 dnmufcLeave a comment

Posted on January 14, 2013 by Colin Talbot

The political debate about public spending in the UK is bedevilled by myths and spin about how much we actually spend. So I thought it was time for a little myth-busting primer, with some pretty diagrams, about how we should be discussing public spending….

There are three main ways of measuring public spending, each of which has advantages and disadvantages.

Nominal (Cash) Spending

The first is in what is technically called the “nominal” amount spent – that is in actual cash that goes out of the Treasury coffers. Because of the effects of inflation, this nearly always rises (see Figure 1). Only twice in the past half century has the cash amount fallen – in 2000-01. It is forecast to fall again, for one year only, in 2012-13.

This is useful to some who want to argue that the State spends too much – for example some right-wing Conservative politicians and think-tanks currently claim that we are not experiencing “cuts” because the actual amount of cash being spent by the government continues to rise. Figure 1 makes it look like the State is an ever-increasing devourer of resources. But if inflation in prices is taken into account, things look a bit different.

Figure 1 Public Spending in ‘nominal (cash) terms 1965-66 to 20214-15 (£ billion)

Source: based on HM Treasury[i]

Real-Terms Spending

Real-terms spending is the amount spent with inflation taken into account.

Figure 2 Public Spending in Real-Terms (2011-12 prices)(£ billion)

Real-terms spending shows a far less dramatic increase than nominal spending, and some periods where spending levelled-off or even decreased. It shows, for example, a significant (mainly forecast) decrease in real-terms under the current Coalition government.

Again though, this way of looking at public spending can make it look like the State is a more-or-less ever expanding beast soaking up more and more of the nation’s wealth. This may, or may not be true – but the only real way of knowing is by seeing how public spending compares to nations wealth.

Spending as a proportion of GDP

Gross Domestic Product (GDP) is the main measure used by governments and others to estimate how wealthy countries are. There are many criticisms of GDP measurement, which we won’t go into here, but it’s the best we have at the moment for tracking growth (or lack of it) in our won economy and comparing our economic performance with other countries.

Public spending as a proportion of GDP has thus become the main, and most useful, way of tracking how much our national wealth we devote to public activities as opposed to private enterprise.

It’s main fault is obvious: because it is a ration of public spending and GDP a sudden change in GDP can easily look like a sudden change in public spending. Thus, for example, it looks like public spending suddenly sky-rocketed in the last three years of the last Labour government (see Figure 3) – whereas in fact (in real-terms – see Figure 2) it only increased slightly. The sudden change from 40.7% of GDP to 47.3% was almost entirely due to the recession the UK experienced as a result of the Global Financial Crisis (GFC).

Figure 3 Public Spending as a percentage of GDP (1965-66 to 2014-15)

Public spending as a proportion of GDP has averaged just under 43% of GDP (42.76% to be more precise) for the past 50 years.

It has swung between as high as 50% (under Labour 1975-76) and as low as 35% (also under Labour in 2000-01).

But what a detailed analysis of these figures shows is that some of mythology that passes for political “facts” in Britain is just that – myth.

The first is that Labour is always the “tax and spend” Party whereas the Conservatives are far more thrifty with the public’s money.

The facts are rather more mixed (see Figure 4). It is true that the 74-79 Labour Government spent on average more, as a proportion of GDP, than any other government in the past 50 years – but this is not true for the other periods of Labour government, when Labour spent less, on average, than the Conservative (or Conservative led) governments.

In particular the widespread myth that the last “New” Labour government spent vastly more is just that – a myth. On average, even including the effects of the GFC, the last Labour government spent the least of the Governments since 1965. The myth has grown up because both Labour and their opponents wanted to promote the idea Labour spent lots. And because, especially between 2000 and 2005, Labour did rapidly increase spending – especially on health and education – but only after a period of unprecedented low spending between 1997 and 2000.

Figure 4 Public spending as percentage of GDP under different Governments (1965-2015)

This analysis only covers one aspect of public finances – spending – which is itself only one measure of how big the State is. But I hope it will help people to explain, and explore, some of the real issues about public spending rather than trading in myths and spin.

[i] All the figures used in this analysis are based on Public Expenditure Statistical Analysis (PESA), published annually by HM Treasury. The figures for 1971-72 to 2014-15 are taken from PESA 2012. For 1965-66 to 1970-71 are taken from PESA 2003. Some of the calculations are my own, based on the HMT figures.

via Measuring Leviathan: Big Government and the Myths of Public Spending | Whitehall Watch.