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The year is 2014. The Tories, led by David Cameron, are preparing to go to the polls, seeking a second term in government. Back in 2010 they crushed Labour in the general election, and promised to bring about a social transformation to match the economic reforms of the late Margaret Thatcher. And it’s true that four years of Cameron government have certainly brought many changes – they’re just not the ones the voters expected.
Cameron’s first term has been marked by two main themes: painful restrictions in public spending, primarily focused on the welfare budget, and a dramatic acceleration of privatisation in the public services. Many health services are now routinely provided by the private sector, and most new schools have been ‘new academies’, set up by private benefactors. But privatisation has been given far wider scope: the task of getting people into work has been privatised, prisons make a profit, and media deregulation and budget restrictions have sent the BBC into a spiral of decline.
This has not gone unnoticed by the public. Services that used to be taken for granted are no longer available. Others are harder to access. The quality of service has declined, and there is frustration that companies cannot be held to account for their mistakes. And there has been a series of scandals as corporate contract negotiators have ripped off the taxpayer for millions of pounds.
While privatisation has proved controversial, the big headlines have been reserved for the severe restrictions Cameron has put on public spending. The Tories found themselves in a bind after the election. They had promised to ‘share the proceeds of growth’ by reducing public spending as a proportion of GDP, but the global economic slowdown that began in 2008 was far more intractable and lengthy than they had expected.
Cameron’s chancellor, George Osborne, seemed to have little room for manoeuvre – the Conservatives had promised to match Labour’s spending on the NHS, and education was one of their flagship policy areas. So Osborne turned his sights on the welfare budget, the largest component of public spending, where cuts could be made without much political risk. The government launched a propaganda campaign deriding benefit scroungers, incapacity cheats and immigrants on state handouts.
This rhetoric proved popular, encouraging the re-emergence of the nasty streak in the party. But gradually news seeped through of the losers – those who had fallen through the now-threadbare safety net into destitution; vulnerable people, unable to speak up. The public noticed an increase in homelessness. Poverty, including child poverty, rose dramatically, regardless of the new Conservative rhetoric about helping the poorest. Crime ballooned, as it had under Thatcher, despite harsher penal policies. The Daily Mail carried screaming headlines about the ‘feral underclass’ and their lives of crime, drugs and prostitution. It was all a far cry from David Cameron’s promise to fix the ‘broken society’.
The Conservative government’s earliest reforms were designed to make the benefits system more difficult to access and far more judgemental of the citizen, in order to reduce the welfare budget. Benefit claimants who don’t participate in back-to-work programs now lose their benefits. The penalty for not accepting a job offer is the denial of a month’s jobseekers’ allowance. Three months’ benefit is docked for refusing a second offer, and if a third offer is turned down then the allowance is stopped for three years. Furthermore, anyone who has received jobseekers’ allowance for two out of three years is required to do community service.
The policy has achieved its objective – it has saved money – but it has proved far harder to actually get people into jobs. Instead, large numbers have simply disappeared from the system and descended into a black-market world of poverty and hopelessness, causing further social breakdown.
Those that have taken work have found that unscrupulous employers are well aware of their situation. Afraid of being left without jobseekers’ allowance, the new pool of unqualified labour is in no position to question illegal practices and poor conditions. They simply have to grin and bear it, clinging onto jobs with zero prospects for money that is never a penny over the minimum wage (which has risen far slower than inflation).
The problem has been exacerbated by the continuing long-term decline of manufacturing. The proportion of skilled employment has fallen, and the economy is now dependent on unskilled jobs. Eastern Europeans previously occupied many of these, but there has been a trend for migrant workers to return to their home countries – the workfare labour army has taken their place.
The Tories believed that the real treasure chest in the welfare budget was the money being spent on incapacity benefit. They thought that they could save more than £3 billion a year by 2014 – like New Labour before them, the Tories had a preconceived notion that many, if not most, of the two and a half million people claiming incapacity benefit were well enough to work. So the first step was a massive programme of ‘work capability assessments’, not just for new claimants (New Labour had already instituted much tighter criteria here), but for all existing incapacity claimants too.
This was a vast and hugely costly exercise, but the results were not what the Tories wanted. It has proved extremely difficult to significantly reduce the numbers on incapacity benefit. Those found partially capable of work by the assessments have been placed in jobs that are often inappropriate and stultifying.
It is the mentally ill who have suffered the most – because of the nature of their illnesses, their attendance at work is impossible to guarantee and confidence easily dashed, especially when the resources are not there for the kind of one-to-one support needed. For some, the harshness of the new regime has exacerbated their condition. So, despite making life very unpleasant for people on incapacity benefit, the Conservatives have not managed to make big spending reductions.
Poverty, tax credits and marriage
The Conservatives intended to use the savings from benefit cuts for other social ends, such as making marriage more fiscally rewarding and tackling poverty. But even if this had been possible, the problem of poverty has had its own impetus.
In opposition, the Tories were critical of Labour’s tax credits system, and so it has been no surprise that the value of tax credits has diminished. Child poverty is a hot issue. The Conservatives never committed to Labour’s target of ending child poverty by 2020, and this has served them well, as there is no way of achieving the target without massive investment. New Labour had believed the solution was to increase dramatically the number of parents in work, and to this end they ended income support for lone parents with children over the age of seven just before the election. But even before this change, low pay meant that two million children were living below the poverty line in working households.
Under the Tories, little has been done to combat bad employers. People have simply been moved from workless poverty to in-work poverty, and their inflexible, poorly paid jobs have undermined family life – the very thing that Conservatives said was essential to fix the ‘broken society’.
Cameron and Osborne championed marriage as one of their distinctive themes in the 2010 election. They promised to eliminate what they called the ‘couple penalty’ in the tax credit system. But the marriage issue came back to bite them when several cabinet ministers later went through messy divorces – to the delight of the tabloid press.
Some families have stuck together, but more out of necessity than desire. The ever-rising waiting list for dilapidated social housing has led to overcrowding in bad, privately-rented accommodation that has drawn parallels with Victorian times. But the most significant change has been to abandon the idea of mixed communities.
Particularly in London, under Ken Livingstone, it was accepted that the relationship between social housing and poverty, ill health and poor-quality education should be tackled by planning for mixed housing provision – having rich and poor living side by side, doing away with so-called ‘sink estates’. A clue to the different direction the Tories would take came immediately after Boris Johnson was elected as London mayor in May 2008: one of his first acts was to allow Conservative-led Hammersmith and Fulham council to cut all planned social housing from a new development in White City.
Under the banner of ‘decentralisation’, the Conservatives have reformed the housing revenue account – the mechanism Labour used to redistribute housing money from rich areas to poor, causing Conservative councils to claim that they were being ‘robbed by Whitehall’. Already-struggling estates have been left to deteriorate, while the more affluent Tory-controlled areas have built up surpluses. For inner cities, this has meant a return to the very worst kinds of neglect seen in the 1980s and 1990s, with huge backlogs of repairs. ‘Shameless estates,’ as they have become known (the Shameless TV show is now in its 17th series), are areas where unemployment is rife, prospects poor, and health bad.
With so many disappearing from the benefits system and living in poverty, often on abandoned estates, it came as no surprise that crime rocketed – except, that is, to the right-wing press and the Conservatives. They had thought that a tough penal system would deter people from breaking the law. Certainly, the small armies of mainly young people doing community sentences, dressed in their distinctive overalls designed to shame, are a visible symbol of punishment. But they also draw attention to an uncomfortable question: why are there so many criminals?
The prison population, already sky high under Labour, has grown exponentially. The Tory government has changed the sentencing rules so that judges set a minimum and a maximum sentence, ending automatic release. They had anticipated that this would lead to a 10 per cent increase in the average length of determinate sentences, but they thought this would be compensated for by a much-vaunted ‘rehabilitation revolution’, to be brought about by the involvement of private companies. It wasn’t: the effect of the Conservatives’ other social measures contributed to the sharp increase in crime, and that, in turn, kept prisons overcrowded, despite a prison-building scheme. This made rehabilitation work much more difficult.
Pensions and social care
For the elderly, times are hard. The pensions system has not yet reached complete crisis – that will be for the next generation – but the state pension has fallen further behind earnings, and pensioner poverty is rife. The Cameron project’s political strategy has been aimed at younger people from the start, as can be seen in George Osborne’s call for ‘fairness between the generations’ back in 2008, which suggested that the young were bearing the burden of an older nation. The elderly were never at the top of the priority list.
The most severe consequences have been in social care. The Tories have not cut spending on social care, but neither have they raised it to meet the enormous extra need. Since Derek Wanless’s social care report for the King’s Fund in 2006, it has been known that costs would rise from £10.1 billion in 2002 to £24 billion in 2026 just because of the ageing population. But under both Labour and the Conservatives the English government (unlike its Scottish counterpart) has been unwilling to take responsibility. The question has therefore been whether the state should ensure that the poorest in need of care get as much help as possible, or simply protect the assets of those who have property wealth.
The loudest voices in the debate have been the middle classes, understandably worried that they will have to sell their houses to fund care. So the Conservatives have looked for market-based solutions that protect property. For those without any assets, the quality of social care is in decline. It is the worst-case scenario – people have to get very poor or very ill before they can receive care that is patchy and poor quality.
The situation has attracted much political flak – and not just from the left. Tory councils, still in charge in most of the country and quite a force, have been under pressure to meet everyone’s needs with inadequate resources. Their rebellion has placed the issue in the spotlight, and it is looming large in the 2014 election.
The gravest consequence of the dearth of public investment has been the lack of progress on climate change. The ‘vote blue, go green’ slogan was a key part of the Tories’ rebranding exercise in opposition, but in 2011 the PR strategy backfired when journalists noticed that Cameron’s personal wind turbine kept on turning even when there was no wind. It transpired that it was powered by mains electricity, and was just for show.
Even so, Cameron has continued to make worthy speeches on climate change and has pushed for more international action. Unfortunately, the measures needed to avert climate catastrophe are ultimately incompatible with Conservative market philosophy.
The key area has been energy policy. The Tories went into the 2010 election with an ambitious plan for the micro-generation of energy, with German-style feed-in tariffs allowing individuals to sell sustainably-generated power to the national grid. In some pockets of the country, this has worked very well. However, coverage has not been national, and it has allowed the Conservatives to pose as a green party without bringing about a fundamental transformation of the energy sector.
Such a transformation would require a major role for the state, with massive investment in renewables, carbon-capture technology and energy efficiency. Britain’s private energy companies are simply not up to the job. There has been huge under-investment in energy infrastructure ever since the Conservatives privatised the sector in the 1980s and 1990s, and we are now starting to see the results.
Today, policy is adrift. Frequent climatic disasters keep the issue close to the top of the agenda, but all of the major parties still see the world strictly through the prism of the market. The political impetus to tackle climate change is lacking.
That same prism has refracted the state into a privatised entity. The second main theme of Cameron’s term in office, after the spending restrictions, has been the sweeping privatisation of public services. In many ways, it was laid out on a plate for him: New Labour fatally undermined the idea of public provision and changed the funding structures in areas such as the NHS, ready for an influx of private companies. It was as if New Labour had arranged all the dominoes in line, inviting the Tories to knock them down in one go.
Nowhere was this truer than in the English health service. By the time Tony Blair resigned, the English NHS was run on a payment-by-results basis, putting hospitals in competition with each other. Huge corporations such as Virgin and United Health were running GP surgeries, with a select few contracted for the crucial commissioning function, giving them control of billions of pounds of public money. (Blair, incidentally, has just taken up a £450,000-a-year part-time job as president of the Washington-based Institute for Christian-Muslim Relations, following his successful stint with the Exxon-sponsored Iraqi Freedom Foundation.)
It was difficult to see how the Tories could do more damage. In fact, they have managed to go even further down the market route. They have instituted what they call a ‘true payment-by-results system’ whereby hospitals are paid according to health outcomes rather than activity. This has been a disaster. Hospitals have no idea how much money to expect, leaving them with no ability to plan. The bureaucracy required is immense. League tables are produced for every conceivable treatment, with unintended consequences – private companies misreport their performance, as their profits depend on it, while NHS facilities are routinely pilloried in the tabloid press for supposedly poor (but in reality more honest) results.
All NHS hospitals are now foundation trusts, and, freed from Gordon Brown’s rather weak restrictions, they can now borrow like private hospitals. (Since resigning as an MP, Brown has focused on his writing, but his publisher has cancelled the release of his latest book, Vision, the follow up to 2007’s Courage.) Unprofitable treatments are no longer available. Again, this process began under New Labour with the denial of hernia operations in Oxfordshire, but it has greatly accelerated.
Conversely, the market leads hospitals and corporate-employed GPs to find ways to treat lucrative cases while shunting others aside. Also common is the levying of fees for extra services – some hospitals have even attempted to charge ‘bed rent’.
The public has perceived a degradation in service, but there has been no commensurate reduction in the cost of the NHS – indeed, the enormous performance bureaucracy created by the Tories, combined with the billing, contracting and accounting necessary in a market, means that costs are rising. Curiously, the public places the blame for this not only on the Conservatives but also on the NHS itself, feeding the frenzied calls of right-wing commentators for the complete handover of the service to the private sector.
The same privatised vision informs the Conservatives’ education policy. In England the key Tory idea has been the establishment of ‘new academies’ (although they aren’t really much different from the old academies). They can be set up and run by companies, charities, trusts, voluntary groups, philanthropists or co-operatives, and all the same fears attached to New Labour’s academies still apply, especially in regard to sponsorship and the capitalist – and sometimes religious – ethos of the schools.
New academies are outside the national curriculum and independent of the local authority – in fact, they compete with local authority schools, as their funding depends on the number of children who attend. They can be established even in areas where there is a surplus of school places. This is justified on the grounds that it ‘drives up standards’.
While the Conservatives have drawn on the Swedish example of diverse schools, studies have shown that Finland’s fully-comprehensive system is more successful. Although new academies are supposed to be non-selective, the schools are outside local authority control and deal with their own admissions, which has inevitably led to a more socially-segregated education system.
The policy’s only saving grace has been that there were not many people who wanted to establish a new academy. They are still not allowed to make a profit, so business wasn’t interested, and the Tories were surprised to find that parents were largely indifferent to the idea of opening and running their own schools.
Wider education policy has been marked by inconsistency and contradiction. Despite the rhetoric about ending central control, the Conservative government has insisted that schools must have a formal uniform, place children in sets, and use synthetic phonics. It has also required the teaching of a skewed version of British history that amounts to propaganda, designed to stir national sentiment.
Public dissatisfaction in England has been exacerbated by the contrast with the rest of Britain. Even under New Labour, the Scottish Parliament and Welsh Assembly set themselves against privatisation in health and education, and with the Tories in power the disparity has become even more pronounced. It is now a common theme of news coverage and pub conversation that the Scottish and Welsh are getting a better deal.
As well as squeezing the benefits system, the Conservatives have privatised its job placement function. Jobcentres now grade potential benefit claimants according to their capability for different kinds of work and refer them to a private company to find a job. This fundamental reshaping of the welfare system built on New Labour’s reforms – Tory ministers defend their policies by saying they are only continuing James Purnell’s work.
The ‘payment-by-results’ system, under which companies’ funding depends on getting people into jobs and keeping them there, is meant to provide the state with the levers it needs to control the process. But it doesn’t work like that. The Tory plans were largely based on the Australian system introduced by the Howard government, but in that country the profit motive produced perverse outcomes and fraudulent behaviour. There was no real market, because the ‘customers’ (unemployed people) didn’t pay for the service and couldn’t choose to switch between companies. Although private providers were paid by results in Australia as in the Tory scheme, there was minimal competition once a few companies became dominant. To compensate for the failure of the market, the Australian government was forced to tighten regulation and central control – undermining the original aim of cutting bureaucracy and costs.
The Conservatives chose to ignore this evidence, and promptly repeated the Australian experience. They also faced an outcry from the voluntary sector, which had been promised a key role delivering job placement services but didn’t have the capital necessary to win many contracts. The sector belatedly realised that its involvement had been used as PR cover for privatisation.
Conservative rhetoric on prison reform also emphasised the voluntary sector, but the reality has been the privatisation of prisons. To use the jargon, there is now an ‘offender management marketplace’. All public prisons have been made into Prison and Rehabilitation Trusts, along the lines of Foundation Trust hospitals, with financial independence. The government has encouraged the private sector to build more prisons, which then compete for the same funding as the public prisons through a tariff system. Prisons are paid a set amount for each convict, and get a premium if a former prisoner doesn’t re-offend for two years. Newly-released prisoners are handed over to the private workfare companies to be put into work.
But if the market fails in welfare because the jobseeker is not a real consumer, then it can hardly work for prisoners, whose defining characteristic is a lack of choice over their destiny. Re-offending rates have proved stubborn. Ex-prisoners don’t seem too bothered that their activities might cost their former institution its premium tariff.
The erosion of the public sphere has even spread into the broadcasting industry. The Tories have never been fans of the BBC, and the snappily dubbed ‘multi-channel, multi-platform era’ has provided the perfect excuse for Cameron (a former director of corporate affairs at Carlton Communications) to undermine it.
The Conservatives argued that it was unfair to expect commercial channels to carry current affairs or children’s programmes without a subsidy. Thus, the licence fee has been ‘top-sliced’: a proportion of the money is now distributed to commercial channels, leaving the BBC with less revenue and forced to close down channels.
Impartiality requirements on non-publicly funded broadcasters have been relaxed, meaning TV news on commercial channels can now wear its biases on its sleeve. While the BBC’s news still has to be impartial, all the editorial pressure now comes from the more boisterous and slanted end of the market, pulling even the publicly-funded newscasters rightwards. Newspapers have opened stations that follow their editorial line – and worse, Rupert Murdoch is in the process of launching a UK Fox News. The BBC has seen itself relegated to the role of making up for market failure, as it gradually loses out against its competitors. This has eroded faith in public broadcasting. People no longer expect to be treated as citizens by the broadcast media – merely as consumers.
The labour movement
The hurricane of privatisation has been opposed tooth and nail by the trade unions, and for good reason – union power is overwhelmingly centred in the public sector. Foundation hospitals, prison trusts and new academy schools have opted out of national pay bargaining agreements. The new, hostile employers make it difficult for unions to recruit members working for the private organisations that now deliver so many services, such as the health corporations or job placement companies.
Most of Margaret Thatcher’s anti-union legislation remained in place after 13 years of Labour government – it was nice of them to save the Tories the job of reintroducing it – but that hasn’t prevented further attempts to undermine the unions. In the first year of Cameron’s premiership, Boris Johnson, who had been kept on a tight leash before the 2010 election, was given free rein to take on the RMT transport union. He believed this would be popular with commuters. A drawn out battle ensued as the RMT surprised the Tories with its doggedness, and the dispute marred Cameron’s early period in office, casting an image of social strife.
Since then the Conservatives have been more subtle. Behind the scenes, the government has encouraged public sector employers, particularly in the NHS, to derecognise unions in areas where branch membership is not what it might be. After disputes in the health service and the fire brigades (where the Fire Brigades Union is fighting another wave of ‘rationalisation’ by cash-strapped local authorities), there is talk of strike bans in essential services.
A more fundamental change has been the end of direct union funding of the Labour party. Labour had the chance to settle the party funding issue before they left office, but lacked the political energy. So, under the guise of cleaning up politics, the new Conservative government outlawed donations of more than £50,000 from individuals, companies, organisations and trade unions, rejecting desperate pleas to allow individual union members to pay an optional affiliation fee as part of their annual membership. This was a financial disaster for Labour, as 90 per cent of the party’s money came from the unions in 2010.
Former Labour affiliates were left with a sudden surplus of cash that they could use for political ends, but only as third-party campaigning organisations. So, as the 2014 election looms, the big unions are agitating for a rise in the minimum wage and supporting candidates who back it, without directly mentioning the Labour Party. In many ways, this has made the unions higher-profile, more vibrant campaigning organisations.
For Labour, the change has made the party reliant on its members – and wealthy donors. This has pulled it in two different directions, causing tensions that have not been resolved as we go into the general election. The party has to compete for members in a political marketplace (an analogy the Conservatives are delighted with), and has found it easier to attract supporters by sounding social democratic and mildly left wing, keeping quiet about Blair and Brown. But the big £50,000 individual donations, which have started to pick up after four years of Tory government, generally come from unreconstructed Blairites who still want Labour to be like the US Democratic Party.
One of the great problems for Labour in opposition has been its inability to make political capital from unpopular Tory reforms. Whether it’s NHS privatisation or the brutal tightening of welfare, Labour has no credibility, thanks to its record in government. The Conservatives’ most effective defence has been to say ‘we’re only finishing what you started’. Without this handicap, Labour would be far more likely to win in 2014.
Even if Labour can scrape back to power, though, its long-term future in England is threatened by developments north of the border. The SNP narrowly lost the first referendum on Scottish independence in 2010, throwing Alex Salmond’s party into temporary disarray. But seeing a Conservative government in London soon revived the nationalist cause, and opinion polls now suggest that the Scottish public will vote for independence if given another chance – a referendum is expected imminently. Welsh nationalism is also on the rise. (See ‘Break up of Britain’, p33.)
The secession of Scotland would leave a very Conservative England – a Tory dystopia of a neoliberal, privatised state, dominated by a political consensus that stifles any hope of challenging the market. It would be a truly broken society.
Yet there are rays of hope. It was not public clamour for right-wing policies that brought the Tories to power in 2010, but recession and an apparently bereft Labour party. Cameron’s programme in office has been blunted – sometimes by lack of public interest, sometimes by obstruction – and where policies have been put into action, they have rarely worked as expected. The results are already generating opposition, and how this opposition will be expressed is the key question for the future.
Alex Nunns is a Grammy award-winning rock star. His band’s fourth album, Singing the Blues in Red, was the biggest-selling record of 2013
With thanks to the Fire Brigades Union for their support