Since David Cameron became prime minister in May, his Liberal-Conservative government has set to tackle Britain’s persistent fiscal woes in the face of mounting debt concerns in Europe and a public largely unprepared for the spending cuts that are ahead.
Just before May’s election, economic historian Niall Ferguson warned about the dire state of Britain’s public finances. “The trajectory of British public debt over the next thirty years,” he said, “absent a major change of policy, will take it to a mind blowing 500 percent of GDP.”
Ferguson predicated that the current government would have “a ghastly task on their hands” to try to reform Britain’s expansive, and costly, welfare state. The country was more ready for Thatcherism in 1979, according to Ferguson, “yet it needs it more today than it did then.”
Part of the country may not like the prospect of the state retreating, if only in part, from the public sphere, but that has not deterred Cameron so far. “We’re going to have to change the culture of government and stand up to some powerful vested interests,” he announced in The Observer last week. “[F]act is that this country wants and needs a power shift.”
Before the Conservatives came to power in coalition with the centrist Liberal Democrats, Britain’s budget deficit amounted to 12 percent of GDP, or £163 billion. The national debt had reached a record high of £857 billion.
During the preceding thirteen years of Labour rule, health care and education spending more than doubled while tax rates remained almost unchanged. More than 20 percent of the country’s workforce is now employed by the government. Almost 30 percent of public spending is devoured by an enormously complicated and complex welfare regime which still leaves many in financial despair. Nearly four of Britain’s twenty million households have no one who earns a wage.
Cameron believes that this pervasiveness of the British state in people’s lives has deprived them of any sense of personal responsibility. He intends to empower individuals as well as neighborhoods with what he calls the “big society” initiative. “We believe that when people are given the freedom to take responsibility, they start achieving things on their own and they’re possessed with a new dynamism,” he explained.
Immediately after their election, the Conservatives did launch their civil society program in order to “take power away from politicians and give it to people,” in the prime minister’s own words. Proposals include an annual “Big Society Day” that is supposed to inspire volunteering and the creation of a “Big Society Bank” that will provide finance for neighborhood groups, charities and social enterprises. A radical reshaping of local planning is also underway which will grant people a greater stake in determining the future of their own communities.
On the national level, the new government is decentralizing health care and education and preparing the overhaul of the whole welfare system. As soon as he took office, the prime minister had Parliament approve billions in emergency spending cuts while his Chancellor of the Exchequer, George Osborne, has promised to “balance the books” by 2016. All departments, except health care and foreign aid, must prepare to cut their spending levels by 25 percent in the next four years. By the end of their term, Cameron and Osborne would reduce public spending to 39 percent of the national income compared to 47 percent when they took office four months ago.
In the process, some 600,000 public-sector workers risk losing their jobs. Labor unions are already gearing up for a fight, announcing strikes and coordinated waves of civil disobedience. But Cameron marches on, preaching austerity and urging people to take back control of their own lives instead of relying on a government dole. “I promise you,” he wrote, “we will see this through.”