Austerity is an ideological smokescreen for class warfare – UK economists

(RT) –

Chancellor George Osborne’s post-2015 spending cuts are an ethically bankrupt assault on the public interest that serves the agenda of the one percent, leading UK economists have said.

Criticism of Osborne’s austerity plans surfaced on Wednesday in response to analysis conducted by academics from Sheffield Hallam University’s Centre for Regional Economic and Social Research. 

The study revealed large families will be the worst affected by the chancellor’s plans to slash £13 billion (US$18.5 billion) off the government’s welfare bill, with Asian communities expected to be at the forefront of the firing line. 

The report expands on an Austerity Audit conducted for the Financial Times in 2013, and is the first academic study to scrutinize the impact of Osborne’s latest round of cuts. 

‘Austerity isn’t working’ 

The report predicted over 80 percent of the £10.7 billion due to be slashed from the government’s welfare bill between now and 2021 will impact upon families with dependent children. 

Eight out of 10 of the worst hit regions across the UK will have a high proportion of households with three or more children, while half will have an Asian population of more than 10 percent, the study found. 

A growing income gap between homeowners and those who rent social housing was also apparent. While the report predicted social renters will lose almost £1,700 per year on average, home owners of working age were predicted to lose £290. 

The study also revealed 50 percent (£6.2 billion) of the annual welfare cuts planned post-2015 will fall on working-age households.

Lecturer in economics at Bristol Business School Jo Michell said that Osborne’s latest round of cuts counter the public interest.

“The story about deficit reduction is a smokescreen to cover what is an ideologically motivated attack on the weakest in society,” he told RT.

“The effects will be increasingly felt more widely, particularly among working families.”

Michell stressed that austerity is a deeply flawed economic doctrine. 

“The recent mini-boom, partly driven by the housing market, is coming to an end,” he said.

“Austerity will increasingly be a drag on economic activity, leading to falling employment and weakening wage growth.”

The British economist said that Osborne’s first round of austerity targeted the sick, the disabled and the unemployed.

“There is no scope for further cuts among these groups so the government is now targeting working families, particularly those who receive benefits and tax relief connected to children numbers,” he said.

Michell predicted further spending cuts will disproportionately affect Britain’s most vulnerable and impoverished, and negative effects to health, well-being and mortality rates will be apparent.

‘Economic policies for the 1%’

Michell’s views were echoed by Director of Policy Research in Macroeconomics at Prime Economics Ann Pettifor, who told RT there are “zero economic grounds” for further austerity in Britain at present.

Pettifor said Osborne’s policies are counter-intuitive because his objective of further shrinking the deficit undercuts his pledge to protect Britain’s elderly from spending cuts.

“This explains why in effect, he has little alternative, but to target families with children,” she said.

“Unprotected mainstream government programs have taken a hit, and so welfare programs for the non-elderly are in effect the residual to try to achieve his economically unwise target for a significant overall budget surplus.”

Pettifor argued a combination of weak demand at home and abroad and current levels of inflation negate the need for further spending cuts.

“For the last two quarters nominal GDP has almost ground to a halt – almost unheard of in post-WWII history,” she said.

“Further public spending reductions will reinforce the negative multiplier, and paradoxically increase public debt.”

‘Class warfare’ 

Left-leaning economist Michael Burke said Osborne’s spending cuts will push the burden of austerity onto Britain’s poorest people.

“The effects will be extremely negative for large families, who are often already among the poorest. It is entirely foolish,” he told RT.

“The entire austerity policy hits those on middle incomes and the poor. Large families will struggle even more. And the Women’s Budget group shows that women bear 74 percent of the burden of all cuts. Osborne’s policy will increase these negative effects.”

Burke argued Osborne’s long-term economic plan has failed.

“If his austerity program worked in the way he claims, the deficit would have been eliminated long before now,” he said.

Burke said Osborne’s austerity policies undermine the public interest, yet have attracted the backing of big business. He predicted the chancellor will continue to “act in the interests of the one percent.”

Geographical location and household composition were crucial factors in determining the impacts of the government’s next round of austerity. Older industrial areas, seaside towns and certain London boroughs will shoulder the brunt, while wealthy areas of South East England will remain almost untouched.

The Sheffield Hallam University study predicted Blackpool and Blackburn will each lose £560 per working-age adult as a result of the post-2015 cuts, Guildford in Surrey will lose £150, Richmond will lose £140, and the Hart district will lose £130.

This piece was reprinted by RINF Alternative News with permission or license.