David Cameron and George Osborne were shameless salesmen for austerity. They might argue that it sustained their political rise. Like doctors who say that bleeding the patient will help them recover, the pair claimed that cutting back government spending would produce economic growth. What Britain suffered was more food banks, more rough sleeping, fewer police, stagnant wages and longer NHS waiting lists. How could any of this have helped prepare Britain for when the pandemic struck? Such details weren’t going to shift Mr Cameron and Mr Osborne, who from the witness stand of the Covid-19 public inquiry remain unmoved by reality.
For Mr Cameron, the former prime minister, it was 2008 all over again. Britain had not wanted to end up like Greece, he warned, which had had to cut health budgets after losing control of its national debt and its budget deficit. This is an invidious comparison. Britain, unlike Greece, controls its own currency and can always afford to pay creditors. Greece also had a much lower per capita death rate than the UK during the pandemic. That might have been because, as experts suggested, of the widening health inequalities under Mr Cameron’s watch. These scientists, he averred, had got this wrong.
Misjudging the mood, Mr Cameron treated the public inquiry like a rerun of prime minister’s question time. When Kate Blackwell KC for the inquiry asked Mr Cameron a straightforward question about the effect of cuts to public health budgets being the largest in the most deprived areas, he suggested that she use a different measure of council spending power that his government preferred, which showed this not to be the case. Self-awareness is plainly not Mr Cameron’s strong point – and it was no surprise to see him heckled as he left the inquiry.
The former chancellor Mr Osborne was equally deluded. He went as far as saying that austerity had a positive effect because it meant that public finances recovered. “Reducing the deficit and placing debt as a percentage of GDP on a downward path was … essential to rebuild fiscal space to provide scope to respond to future economic shocks,” Mr Osborne told the inquiry. But Britain’s national debt and deficit are determined by the choices that businesses and households make. The UK’s national debt was actually higher in 2016-17 when Mr Osborne left office than when he arrived.
Once Covid-19 hit, the neoliberal temple emptied, leaving only the high priests alone at their altar. It turned out that governments can run large fiscal deficits. Central banks can make these fundable at close to zero rates. But almost everywhere, within months of its return, Keynesianism had been ejected again from the economic pantheon. High inflation, sparked by war in Ukraine, set the stage for today’s counter-reformation, permitting Mr Osborne and Mr Cameron – and their ideological soulmate Rishi Sunak – a space to peddle fallacies.
Both Tory grandees have a limited, detached view of the real economy. For a time they could sell this view through the media. That world – and their careers – were blown away in 2016 by the vote to leave the EU. Their arrogance did not let them see that their economic policies were building their political pyres. The irony is that the EU referendum could have resulted in a remain victory had it not been for austerity. Britain will pay long and dearly for the conceit of Mr Cameron and Mr Osborne.
