LONDON — While cars smoldered in France following protests over pension reform, across the English Channel, Britain was digesting the harshest cuts in government spending and benefits since World War II, which promise to redefine the state and recast its position in the world.
As governments across Europe grapple with deficits following decades of big spending, Britain’s answer is a radical five-year austerity plan that slashes social services, government jobs, welfare benefits, and defense spending. It will retire naval aircraft carriers, trim military ranks, cut about 500,000 public-sector jobs, and drastically reduce spending for the poor and elderly.
Critics and supporters alike call the cuts historic, placing Britain in the vanguard of a retreat from Keynesian economics and setting in motion a massive social experiment in which citizens, nonprofit groups, and the private sector will be expected to fill the void left by the state.
Some say the new spending plan, which was announced Oct. 20 and aims to reduce spending by $125 billion in five years, marks Britain’s retreat from decades of punching above its weight and accepting a much smaller position in the world.
“Today is the day when Britain steps back from the brink, when we confront the bills from a decade of debt,” said the controller of Britain’s purse strings, Chancellor of the Exchequer George Osborne, as he outlined cuts of 19 percent on average across government departments.
Along with tax hikes, the cuts are designed to allow the government to start repaying debts that are expected to reach $1.4 trillion (70 percent of gross domestic product) in the next few years. But to many, the depth and speed of the cuts risk tipping the country’s fragile economy back into recession, while some experts doubt the government’s insistence that the private sector will power an economic recovery.
“It’s a huge gamble. It’s really betting the house, the whole economy, on one particular economic theory,” says Tony Dolphin, chief economist at the Institute of Public Policy Research, a left-leaning think tank. “It holds that the public sector, by getting larger, has in some sense inhibited the private sector from growing, and if you cut back on the public sector now, the private sector will in some sort of magical way fill in the gap.”
Britain’s reduced military clout
Across Europe, austerity has already been embraced by smaller debt-stricken European economies such as Greece (involuntarily) and Ireland (voluntarily) but Britain now leads larger countries in terms of the depths of its cuts, although France and Germany have smaller deficits.
Britain’s starkly reduced military ambitions are raising concerns about its ability to undertake complex missions overseas and whether the cuts will delay plans to upgrade its nuclear defenses.
“The government is keen to maintain its options for global deployment but it will have to accept, given the cuts, that it will be able to deploy fewer forces,” says Prof. Malcolm Chalmers of the Royal United Services Institute, a defense think tank. “If there was a future Afghanistan, we would not be able to deploy as large a force for as long, for example.”
To the left, the reduced military budget is at least a step toward exorcising residual postempire notions about Britain remaining a world military power. But not so welcome is the manner in which Mr. Osborne drove his ax deep into welfare spending.
Osborne came under fire thursday from one of his ‘own’, London’s Conservative mayor, Boris johnson. He said plans to cap the amount of benefit people could claim for housing rent would drive poorer ones out of more expensive areas of the capital – which he described as “Kosovo style social cleansing”
Could the cuts create a new society?
But while critics say that the poor will suffer most from the spending reductions, the government and the intellectual architects of its broader vision sense a unique opportunity to radically reshape society.
Phillip Blond, a Conservative writer credited with being a key ideological inspiration behind Prime Minister David Cameron’s thinking, says it’s essential to ensure civil society steps into the gap left by the state, “to deliver more for less.”
Mr. Blond, the author of the influential book “Red Tory” whose opposition to unchecked free-market doctrines has invited the suspicion of the Conservative Party’s Thatcherite wing, talks of “recapitalizing the poor” and creating assets for them.
His ideas and Mr. Cameron’s “big society” policy, which aims to shift traditional government roles onto civil society, are departures from traditional Conservative thought. Blond concedes that big society notions are not entirely unprecedented in a European context, but argues that Britain is breaking new ground by opening the entire public-sector budget to nonprofit and community organizations.
Opponents of the big society push say it’s merely window dressing for ideologically motivated spending reductions that form a blueprint for a smaller and callous society.
Public outrage will be delayed
Either way, pain lies ahead. But, will Britons swallow the cuts or throw off Anglo-Saxon reserve and take to the streets en masse? Sunder Katwala, general secretary of the Fabian Society, Britain’s oldest and best-known center-left think tank, says that the abstract nature of the size of the spending cuts means they didn’t immediately register
“People say it’s only 5, 6, or 7 percent cuts per year. The point is you can do that in Year 1 and you will have to lose some jobs, but when you do that in the third year, cumulatively you are cutting at the bone,” he says.
Gathering outside the railings at the Palace of Westminster for a protest before the cuts were announced, graying trade unionists stood in stark contrast to the cross-generational profile of France’s recent marches. Carrying the red flags of their own union, health-sector workers Sue Orwin and Trudy Brailey even conceded that Britain’s unions had for far too long been regarded as a hindrance rather than an asset.
“I would suggest that that’s because at least for decades workers have not had it bad, so they have not needed us like they will now,” said Ms. Orwin.
“It’s going to change though,” added Ms. Brailey, who predicted Britain would see strikes as the depth of the reductions begin to sink in. “Public services are under attack from every angle now and I don’t think people will grin and bear it.”