The obituary for this government was published within days of its birth. Theresa May was a “dead woman walking”, proclaimed former cabinet colleague George Osborne. Thus was a sniggering bully transformed into an acerbic prophet. Who now dares argue with that verdict? Two senior ministers out within a week, two more barely clinging on to their jobs, and an administration that makes no progress, but merely lurches from disaster to catastrophe.
And so begins the Great Unravelling of the oldest political party in Europe, arguably the world. It leads the BBC bulletins. For the commentariat, it is their meat and drink and their tiramisu.
Yet what almost the entire political class cannot comprehend is why it is happening. To go by the stories told by most of the press, David Cameron’s Tories were essentially a haven of competence for six years – then came Brexit, then came May, then came death by pratfall.
This is to get things precisely the wrong way round. What is destroying the Conservatives is not outside forces, nor the cack-handed pricking of a gusher of ministerial ineptitude. No, the fundamental cause is their own economic strategy of austerity. Of cutting taxes for the wealthy, while cutting public services and social security for the rest. Of rewarding the owners of capital, while punishing those who rely on their labour. Of claiming to have fixed the economy, while tanking voters’ living standards.
Austerity is now the thudding drumbeat behind every ministerial misstep, from a family holiday with the Netanyahus to a fauxpology over Nazanin Zaghari-Ratcliffe. It is what unites these individual Westminster outrages into an outline of a ruling party no longer fit for office. By forcing an arbitrary limit on already severely constrained Whitehall and town hall budgets, it renders meaningful government close to impossible.
This is what makes next week’s autumn budget from Philip Hammond so crucial. If the Tories wish to regain any credibility, they will have to ditch the very strategy that defines them.
In the days immediately following this summer’s general election, I asked a number of leading figures in Labour how they managed to pull off one of the biggest surprises in postwar political history and rob May of her majority. Their answers all circled back to one thing: austerity fatigue. After seven straight years of seeing their kids’ school classes get bigger and their parents’ hospital waits grow longer, voters were ready for an anti-austerity party leader such as Jeremy Corbyn.
Austerity has done more than tear up the public realm; it has imposed private misery on millions of households. The age of austerity has been the era of the foodbank, the zero-hours contract, the privately rented slum. Unless there is a miracle, the economists at the Resolution Foundation project that the 2010s will be the worst decade for wage growth since the Napoleonic wars of the early 1800s.
The most important number in British politics today does not come from some other expensively commissioned poll. It comes from the Office for National Statistics and it measures real wages, which take inflation into account. Only when real wages have been rising for a sustained period of time will I believe the Tories have a shot at a parliamentary majority. The Resolution Foundation believes that the average British worker will continue to earn less than he or she did in 2007 until the end of 2022.
Austerity wasn’t May’s brainchild, it was Osborne’s. She merely inherited it. The great oddity of this moment is that it is the man delivering the obit, in his new role as newspaper editor, who is primarily responsible for his subject’s political death.
Nor was any of this unforeseen. I was one of those who warned from the outset that austerity would fail to bring the promised economic recovery. Like others, I believed it was madness to squeeze domestic spending amid a global slump. The idea that slashing the public sector – literally, sacking public servants and closing Sure Start centres – would cause private businesses to spend money like billy-o was a tasteless reheat of Margaret Thatcher’s failed economics.
Osborne and Cameron laughed at people such as me as irresponsible “deficit deniers”, who given half a chance would turn London into a basket case to be filed alongside Athens. We would endanger Britain’s AAA credit rating, warned the then-chancellor – before the credit rating agencies stripped him of it anyway. Nor did the Tories oppose a drop in wages – that would make them more competitive in the “global race”. It was Cameron who made Priti Patel employment minister, even after she’d co-authored a book attacking Britons as “among the worst idlers in the world”.
Even this July, Cameron branded critics of austerity as “selfish”. Addressing nurses and firefighters who simply wanted to see their wages rise by more than inflation, he said they would be “spending money today that you may need tomorrow”. This, from a man who reportedly earns £100,000 for one speech.
I rehearse all of this for two reasons. The first is that the years of coalition government are sometimes painted as a golden period for centrism – when the reality is that they were an era of extremist economics that has produced this era of extremist politics. Add years of cuts to decades of Westminster leaving some British regions for dead, and you have part of the explanation for Brexit.
Second, May clings to austerity. Just after she made Hammond her new chancellor in July 2016, I wrote: “To save the economy, Hammond will have to repudiate Osbornomics. I fear that that remains unthinkable for a Tory.”
So it has proved. The result is that the Office for Budget Responsibility and the Bank of England are now waking up to how sick the British economy is. The great rebound in our productivity will not come as the OBR repeatedly forecast, while the Bank is no longer so sure about wages recovering any time soon.
Those Tories calling for a relaxation of austerity next Wednesday are right – but Hammond shows little sign of listening. Which leaves him having to admit that government borrowing will rise sharply over the next few years, while British workers get even poorer. He will keep cutting social security for working-age families, so that by March 2022, the annual welfare budget will be reduced by £41bn, compared to 2010. Meanwhile, big corporates will be £12bn better off a year under the Conservatives’ tax changes. All this before factoring in the wreckage left by Brexit.
The problem with competence is that you can only bluff it for so long – and then your reputation is shot for good. That, in a nutshell, is the Tories of 2017. Austerity was a political tactic that Cameron and Osborne passed off as a long-term economic plan. It was no such thing. Now May and Hammond have been lumbered with a botchjob for a fiscal strategy and a reputation for ineptitude. Ditch the first and they might just about lose the second. Sadly, I see no chance of them doing either.
