We'll all pay for Osborne's ideological gamble

For years now numerous voices, conveniently ignored by the bulk of the media, have sounded an alarm. Including Nobel prize-winning economists Joseph Stliglitz and Paul Krugman, along with like-minded experts such as David Blanchflower in the UK, they have warned of the folly of slashing government spending whilst the economy teeters on the edge of recession. Krugman termed it the 'austerity delusion' - and it was witnessed in its most ridiculous form in the early draft of David Cameron's recent conference speech.

However, on this one, the Prime Minister wasn't out of step with many of his fellow travellers. Many on the right have wheeled-out the 'credit card' analogy at every attempt, in a patronising attempt to persuade the masses of the validity of their arguments, none of the latter can supposedly grasp concepts more complicated or distant than the piece of plastic they carry in their wallets.

The coalition, as we all know, took a different track. It was a simple one: state spending - not the banking crisis - caused the deficit, never mind the fact that UK debt was on of the lowest in the G7 prior to the financial crisis. And, so the argument goes on, we must plow this course, lest 'the markets' (the deity-like entity that, despite utterly failing in 2007, has a unique intelligence on these matters) punish us. Finally, for the ideologically pure, the happy side effect is that the state will 'get out of the way' of the hard-pressed wealth-creators, despite scant empirical evidence that this theory really works.

Where has this left the UK? Well, under the stimulus packages that preceded this government, the British economy was growing out of recession at slow, but apparently robust rate. Since George Osborne's spending brakes were applied - just as the Keynesian critics warned - the economy has stalled and looks increasingly likely it'll slip into reverse.

In a strikingly blunt editorial, the New York Times had this to say:

"For a year now, Britain’s economy has been stuck in a vicious cycle of low growth, high unemployment and fiscal austerity. But unlike Greece, which has been forced into induced recession by misguided European Union creditors, Britain has inflicted this harmful quack cure on itself".

"Austerity was a deliberate ideological choice by Prime Minister David Cameron’s ruling coalition... It has failed and can be expected to keep failing. But neither party is yet prepared to acknowledge that reality and change course".

The warning, borne out by recent figures on government borrowing, show the irony of the slash-and-burn approach to public spending: that cuts will reduce demand leading, in the medium term, to even more cuts:

"Slashing government spending in an already stalled economy weakens anemic demand, leading to lost output and lost tax revenues. As revenues fall, deficit reduction requires longer, deeper spending cuts".

Finally, it signs off thus:

"Austerity is a political ideology masquerading as an economic policy. It rests on a myth, impervious to facts, that portrays all government spending as wasteful and harmful, and unnecessary to the recovery. The real world is a lot more complicated. America has no need to repeat Mr. Cameron’s failed experiment".

It's the economy, stupid

The economy now looks in a pitiful state. Unemployment is at a 17-year high, with youth unemployment at dire levels. Meanwhile, those in work are being squeezed by rocketing energy bills, transport costs and other inflationary pressures.  And, as if part of some terrible joke, many at the highest echilons of the finance sector continue to living the good life, pushing up rental and purchase property prices in the capital and provoking the ire of even those they would expect to support them.

And herein lies the critical problem for David Cameron. If this continues, history tells us he will lose the election, and badly.

Arguably, the issue that the New York Times highlights - that cuts in public spending may cause more cuts as demand (and therefore tax revenue) drops - may not be a big deal for many in the Tory Party. In fact, many on the political right would positively relish the opportunity to continue their ideological crusade to roll back the state, all in the name of deficit reduction.

But, whatever the impact on public services and other recipients of government spending, one political reality remains. If the economy doesn't recover - if Osborne's great gamble has failed - the Tory Party will suffer the consequences. Cameron and his Chancellor chose to ignore the lessons of history - including those drawn from the mistakes of the 1930s - and the electorate will be unforgiving if what is left is stagnation and decline.

Lansley's Bill marches on



© Steve Bell, Guardian, 2011 on the NHS



The Lords should remember this: no-one voted for these NHS changes

As today's letter to the Independent newspaper from leading clinicians makes clear - coupled with the announcement from the BMA that they remain opposed to the Bill in its current form -  there is huge disquiet amongst health professionals with the legislation as it stands,  including senior medical staff not known for engaging in politics.

Moreover, the evidence base upon which the Bill is based is weak and its proposals ill-though out. In fact, empirical evidence has demonstrated rising, not falling, satisfaction amongst the British people (in numerous different surveys) with the quality of care in the NHS and - as the Commonwealth Fund demonstrated - the health service performs strongly in comparison to those of most other developed countries' health systems.

Evidence also points to the fact that investment in the NHS has resulted in improved standards of care. Crucially, although some of the challenges outlined by supporters of the Bill do indeed exist - rising health costs, increasing demand, the causes of these are in fact common to health systems of all hues, including insurance-based models. These include the increasing costs associated with medical technology and the significant demographic changes the western world has seen over the past half century.

The solution that this Bill proposes is therefore flawed in four different ways: it lacks support (and has plenty of opposition) amongst health professionals; the base of evidence on which it is based is limited; it has many aspects that could create huge practical difficulties and, finally, in defending the Bill, its supporters seek to attribute problems that health systems of all hues are facing to be those particular to the National Health Service.

This Bill lacks a democratic mandate, it lacks public and professional support, it has fundamental flaws and - most damagingly for our democratic processes - its path so far through Parliament has been marked by a lack of sincere and rigorous examination that a Bill of such magnitude deserves.

NHS reforms: GPs target NHS patients for private work

The news last week that a medical practice in York wrote to a number of its NHS patients claiming, incorrectly, that the local NHS would not fund a number of routine operations - and then proceeded to promote private care from a company wholly owned by the same medical practice, is deeply worrying. Not only does it appear to be a dangerous new phase for the health service, but it also exposes what one commentator called (quite rightly) a "massive conflict of interest".

These kinds of conflicts of interest were highlighted by critics of Lansley's reforms, and this is no doubt one of the first of many such cases.

Meanwhile, news that many NHS hospitals are expanding the proportion of private patients only underlines the worries that so many people have over a bill that - as another commentator rightly points out - nobody voted for.

Yet more professionals oppose Lansley's bill - and still the Government pushes on

The fact that four hundred experts in public health have joined the British Medical Association and the armies of other health professionals calling for the withdrawal of the revised Health & Social Care Bill is hardly surprising - the Bill is flawed, and potentially ruinous.

What is more surprising is the sheer depth of ideological commitment the Government has to push ever onwards towards privatisation of the health service, despite the manifest failings of this legislation.

Is this why Osborne opposes a financial transaction tax?

These stories, of course, may be utterly unconnected.