‘Austerity’ is the controlled demolition of the welfare state

This is a fantastic post by Scriptonite Daily, a site that contains an excellent range of articles that aim to challenge the neoliberal status quo. This article is re-posted with permission. Follow @scriptonite on Twitter.

Austerity: Cameron & Tories demolishing the welfare stateThe breadth and depth of cuts in public sector jobs, pay and frontline services might lead some to believe that austerity exists and public spending is being reduced. However, public spending is actually 4% higher today that in 2010. We are not experiencing short term disruption to balance the books, we are experiencing the controlled demolition of the welfare state – transferring the UK from a social democracy to a corporate state.


Successive governments have dissolved the model of state owned schools, staffed by public sector employees. Today, our children largely attend privately owned schools, where the majority of services in the schools are delivered by private sector staff. The results have seen costs soar and quality plummet.

Academy Schools are publicly funded independent state schools (limited companies)– this means they receive their funding from central government and are accountable directly to central government, rather than their Local Authority. Contrary to the ‘Localism Agenda’ lauded by both mainstream parties, the trend is towards centralising control in Westminster. The schools are also able to make changes to staff pay and conditions, that is pay less.

Austerity: Private EducationDuring thirteen years of New Labour government, 203 state schools were turned into Academies. In just three years of the Coalition – this has risen more than twelve fold, to more than 2,600 (with a further 500 in the pipeline). This might suggest the programme was so successful it called for rapid national roll out. But it doesn’t.

A recent report by the Public Accounts Committee, the parliamentary select committee responsible for ensuring value for money for the tax payer, condemned the programme as ‘complex and inefficient’, leading to more than £1bn over spending. This £1bn had to be met by the budgets for other non-academy schools.

The report does not mince words and reports major issues across the programme including: poor cost control, a lack of transparency over expenditure, a governance and compliance framework prone to failure (exacerbated by significant staff cuts at the Department for Education), and confusion over roles, responsibilities and accountability.

Yet the programme continues apace.

Despite claiming to protect the Education budget, spending figures from last year demonstrate the Government are doing quite the opposite. Last year, the budget for education was cut by 5.7% in real terms. Whilst infrastructure spending was cut 81%, and the Non-Academy Schools Budget was cut 4.31%, the budget for Academy Schools was increased by a whopping 191%.

The state sector is being starved of funds, while the Academy sector enjoys a glut of funding which it spends inefficiently and opaquely.

The majority of schools built since 1992 have also been built under Private Finance Initiatives – were the government borrows from the private sector instead of raising the funds itself. PFI loans are at least twice the rate of interest of ordinary government loans, and repaid over 25-30 years. A recent report by the Treasury Committee condemned the Private Finance Initiative, as “always…more expensive than government borrowing”.

An Audit Commission Report ten years ago found “that the quality of PFI schools was significantly worse than that of the traditionally funded schools” (p.24), and the recent Treasury Committee report held the same findings a decade on.

It was recently revealed that there will be a shortfall of 250,000 school places by 2014, whilst the tax payer has picked up a £70m bill for PFI schools which had to close.

The Academies Programme and PFI are built to fail, and equivalent to setting charges to destroy the state education sector from within. Meanwhile, they allow the transfer of both education services, and the physical schools themselves, out of the public sector and into the waiting hands of corporations in advance of implosion.


Austerity: Cameron cutting up the NHSA similar model has been used in Health. The Health System is being gutted by endless and costly reorganisations, rampant commercialisation and outsourcing, and unaffordable PFI contracts.

The latest major reorganisation of the NHS, under the Health and Social Care Act, will suck another £4bn out of the health service. This comes on the back of £780m blown by New Labour on 70 reorganisations in just four years between 2005 and 2009. Anyone experienced in change management can tell you that this level of change, which does not allow for new systems and processes to bed in or for their benefits to be measured, is simply madness.

Each of these reorganisations has been centred not on the patient, but on vague concepts of ‘choice’ and ‘competition’. These are bywords for privatisation – the attempt to force open a closed market to the rabid private sector we already shunned in favour of our public service.

There is a growing trend across the country for NHS Trusts to become mere managers overseeing almost entirely privatised healthcare. To give just two examples:
Southampton Primary Care Trust has outsourced a third of its elective procedures to private providers.

Serco was recently awarded a £140m contract to deliver all of Suffolk’s community health services. Both areas have seen serious performance issues and large reductions of staff.

A report by corporate finance consultancy Catalyst, published in September, estimated that newly privatised healthcare services will be worth up to £20 billion over the next few years. Private companies Circle, Virgin Care and Serco have won contracts worth £700m to provide NHS services just this year. NHS outsourcing to private providers rose by 10% in a single year last year, and is set to increase to 40% of all services by 2020.

At the same time, 22 of the 103 NHS trusts to enter PFI are facing financial difficulty due to the exorbitant PFI repayments. Some hospitals are having to handover a fifth of their annual budget on paying for the PFI deal.

Big Banks are now setting up shell companies in offshore tax havens, which they use to buy up these struggling hospitals for a pittance. HSBC, recently found guilty of building an entire subsidiary bank to launder money for Mexican drug cartels, now owns three NHS hospitals outright in Barnet, West Middlesex and Middlesex. The shell company set up to buy the banks is registered in Guernsey, so no tax will ever reach the UK treasury.

New Labour laid the groundwork and the Coalition have expedited the break up, sell off and end of our National Health Service. We are left with just the brand and the funding mechanism. Given the clearly doomed fate of these services to prove financially viable, it will not be long before the case is made that we can no longer afford a public health service, and we will lose the last surviving principle of the NHS – free at the point of use.

Social Security

Austerity: Tories exterminating hopeThe underpinning of any social democracy, is a generous welfare state that ensures citizens finding themselves unable to work through involuntary unemployment, sickness, disability or age receive enough to live in dignity. Social Security means working people are less likely to be exploited by poverty wages, as they are in nations without a welfare state. Social Security means those who find themselves unable to work are not abandoned to the whims of charity or philanthropy. Social Security creates a guaranteed minimum standard of living for every citizen, regardless of their circumstances of birth.

These concepts are anathema to neoliberalism – which knows the price of everything and the value of nothing.

It is no surprise then, that in the last three years, a story has been whipped up to paint anyone who relies on these noble intentions as an unaffordable burden or a scrounger. This has been done to enlist public support for a raft of cuts and schemes including the Bedroom Tax, the Granny Tax, Universal Credit, PIP, and Workfare. Both the story and the cuts are having a catastrophic impact on the most vulnerable communities in the land.

  • 350,000 poor children will lose access to Free School Meals
  • There are 3.6m children living in poverty in the UK today, this will rise by 300,000 by 2015.
  • Hate crimes on disabled people rose by a quarter in just one year as disabled people were painted as scroungers on the take.
  • 32 people are dying every week after being assessed ‘Fit to Work’ and having their sickness/disability benefits removed.
  • 33 people have committed suicide, citing fear of impending poverty as a result of these welfare reforms as the principal reason.
  • 420,000 households containing a disabled person face rent rises of more than £700 a year as a result of the Bedroom Tax.
  • Cuts to Council Tax Benefit have seen the poorest facing up to 333% rises in their Council Tax bills.
  • More than 350,000 people had to rely on Food Banks in order to feed themselves and their families last year, a rise of 300% in a single year.
  • One in five people retiring this year will be forced to live below the poverty line due to pension cuts.

Our pensioners, our disabled people, our working and jobless poor – all have fallen toward a promised safety net only to find it has been replaced by a bed of nails.

It’s Not Temporary, It’s the New World Order

Austerity: Turkeys voting for xmasAll this is happening in what is purported to be one of the wealthiest nations on the planet. What is the point of having the world’s 22nd largest GDP, if we cannot feed our children?

Meanwhile, the fortunes of the FTSE100 companies is at record highs, Chief Executives are seeing 23% pay rises, taxes are being reduced for or simply not collected from the wealthiest individuals and corporations, MP expenses rose 25% last year and the Queen is about to receive a £5m pay rise from the public purse.

This is not a case of poor people suffering austerity while the wealthiest live large. It is a case of poor people suffering austerity in order that the wealthy live large.
Austerity is nothing more than the controlled demolition of the welfare state, and social democracy itself. The nation we are turning into is a less compassionate, less equal, less just nation than we have been before. This is a great step backwards and will cost us not only in human suffering, but in human lives.

Click here to read Part II – Law and Justice.

Take Action

The campaigns working to halt the destruction. Follow them and support their efforts.

Move Your Money – do you have an account with a big bank? Move it!
Boycott Workfare – the campaign against Workfare
Disabled People Against Cuts – inspirational campaign by disabled people.
Keep our NHS Public – save our NHS.

3 comments on “‘Austerity’ is the controlled demolition of the welfare state

  1. John Grimshaw on said:

    This is a very good article. Scriptonite could also have mentioned the “Free” Schools that are being set up in various places in the country. This seems to be a bit of a pet project of Gove’s, although the Liberals have hardly complained. Like Academies they are in effect state funded private schools. They are totally unaccountable and their financing is opaque. Unlike Academies which are either starters (i.e. new builds with sponsors) or converters (i.e. existing schools becoming Academies), these schools are run by interest groups. These can be parents, teachers, companies or others etc. who can present some rationale for a free school to the secretary of state. Most free schools have been set up in prosperous areas or by prosperous types of people (i.e. Toby Young – West London Free Schools) and are clearly intended to appeal to socio-economic groups who don’t want their children to mix with other group’s children. They are set up with out reference to the educational needs of an area and any overall ability to plan for the future. Inevitably they will drain money away from existing state maintained schools. At the moment Free Schools must be not for profit, but I wouldn’t hold your breath. The idea was adopted from Sweden, that bastion of social democracy, although there have been growing problems there.


  2. Thanks for that John – well worth adding to the article. It’s a great rebuttal of the arguments about austerity. I’d really like people to share it on FB or twitter (use the buttons at the start and end of the article)

  3. Manzil on said:

    Yes, fantastic article – appalling to see it all concentrated, especially the human cost of social security cuts. Who’d have thought a description of government policy would so easily read like a list of criminal charges…