CRASH LAND­ING INTO A DECADE OF AUS­TER­ITY

Yorkshire Post - - FEATURES & COMMENT -

TEN YEARS ago to­day the Amer­i­can in­vest­ment bank, Lehman Brothers, filed for bank­ruptcy. It set off a chain of tur­bu­lent events not seen since the Wall Street Crash of 1929 and the Great De­pres­sion. In the words of a pre­scient book by York-born Sir Vince Ca­ble, the world ex­pe­ri­enced the per­fect fi­nan­cial ‘storm’.

Quickly, the storm spread to Bri­tain, as the then Labour gov­ern­ment was forced to mount a mas­sive £500bn bailout of three of Bri­tain’s biggest banks: Royal Bank of Scot­land, HBOS and Lloyds TSB.

As Alis­tair Dar­ling, the nor­mally placid Chan­cel­lor of the Ex­che­quer re­flected on the eve of the bank res­cue plan: “I don’t be­lieve in pan­ick­ing be­fore it’s ab­so­lutely nec­es­sary, but I came close to con­sid­er­ing it.”

Mean­while, as Gor­don Brown walked into his of­fice on the morn­ing of the bailout, he did not know whether he would still be Prime Min­is­ter by the end of the day.

All of a sud­den, a long pe­riod of un­in­ter­rupted eco­nomic growth came to an abrupt end, and with it a pro­longed spend­ing spree by the Blair and Brown gov­ern­ments.

New Labour were swept from power, and as Min­is­ters handed over to the in­com­ing Tory and Lib Dem coali­tion in 2010, one, Liam Byrne, the out­go­ing Chief Sec­re­tary to the Trea­sury, of Scot­land whose ex­ces­sive sev­er­ance and pen­sions pack­age shocked many. The gen­eral per­cep­tion was that or­di­nary peo­ple were suf­fer­ing for the mis­takes of oth­ers, and yet no-one had been held ac­count­able.

In­creas­ingly, Bri­tish vot­ers be­gan vent­ing their grow­ing frustration by back­ing in­sur­gent, anti-es­tab­lish­ment par­ties, most no­tably with the rise of the United King­dom In­de­pen­dence Party (Ukip). Across the Western world, pol­i­tics ex­pe­ri­enced a pe­riod of ex­tra­or­di­nary voter volatil­ity.

In Scot­land, the Scot­tish Na­tional Party (SNP) came per­ilously close to win­ning the 2014 in­de­pen­dence ref­er­en­dum and then a year later, Jeremy Cor­byn was elected leader of the Labour Party. The un­ex­pected had started to hap­pen.

Aus­ter­ity had ush­ered in an age of ex­tremes, am­pli­fied by so­cial me­dia, leav­ing moder­ates ev­ery­where marginalised.

By the sum­mer of 2016, the Euro­pean Union gave vot­ers, an­gered by con­tin­ued aus­ter­ity, an ideal op­por­tu­nity to give the es­tab­lish­ment an­other kick­ing. Or­di­nary peo­ple, who had not voted for over a decade, came out of the hous­ing es­tates in Yorkshire and else­where to reg­is­ter their protest.

Mean­while, this volatile pat­tern was repli­cated across the At­lantic with the un­ex­pected elec­tion of Don­ald Trump as US Pres­i­dent, and in the rise of pop­ulist par­ties across con­ti­nen­tal Europe, mostly re­cently in Ger­many and now in Sweden, for­merly a bea­con of lib­eral val­ues.

With liv­ing stan­dards fall­ing, peo­ple across Europe start­ing cast­ing around for peo­ple to blame. Mi­grants stream­ing into Europe from war-torn coun­tries like Syria, were sin­gled out as scape­goats. The con­cept of glob­al­i­sa­tion, so wor­shipped by politi­cians in the 1980s and 1990s, seemed tar­nished as a grow­ing group of work­ers – known as the ‘just about manag­ing’ or (‘JAMs’) – strug­gled to make ends meet.

The new Prime Min­is­ter, Theresa May, thought she could ap­peal to the dis­il­lu­sioned work­ing class by call­ing an early gen­eral elec­tion in 2017 on the is­sue of Brexit. How­ever, quickly, the cam­paign mor­phed into a de­bate about con­tin­ued aus­ter­ity, as peo­ple saw at first hand cuts to their school’s bud­get and the se­vere pres­sures on their local NHS hospi­tal.

Clev­erly, Labour’s elec­tion leaflets re­flected voter con­cerns about these cuts to local ser­vices, while Jeremy Cor­byn suc­cess­fully re­branded Labour as an anti-es­tab­lish­ment party which promised to hold the rich and pow­er­ful to ac­count and end aus­ter­ity.

And when the Manch­ester Arena and the Lon­don Bridge ter­ror­ist at­tacks in­ter­rupted the elec­tion cam­paign, instead of the Con­ser­va­tives tri­umph­ing on their tra­di­tion­ally strong area of se­cu­rity and ter­ror­ism, pub­lic at­ten­tion fo­cused on cuts to po­lice num­bers, presided over by Mrs May when she was Home Sec­re­tary. Aus­ter­ity had come back to bite the po­lit­i­cal es­tab­lish­ment in the face.

Since the elec­tion, the pub­lic has looked on with grow­ing anger at the se­vere spend­ing con­straints be­ing im­posed on local gov­ern­ment, the po­lice and trans­port ser­vices, par­tic­u­larly in the North.

Ten years on, the 2008 fi­nan­cial crash has cast a long, dark shadow over Bri­tain’s eco­nomic and po­lit­i­cal land­scape. Or­di­nary peo­ple have had to en­dure a decade of gruel.

They long for po­lit­i­cal lead­er­ship, but it does not look like a frac­tured Con­ser­va­tive Party is ca­pa­ble of de­liv­er­ing that. Per­haps a fu­ture Labour gov­ern­ment can bridge the Brexit di­vide, cast­ing aside aus­ter­ity poli­cies that have so man­i­festly failed.

If nei­ther main party suc­ceeds, then the way may be open for a right-wing pop­ulist party to ex­ploit a di­vided Bri­tain. In such volatile times, we have to an­tic­i­pate the un­think­able if we are to avoid it.

Mark Stu­art is a po­lit­i­cal aca­demic from York. He has writ­ten bi­ogra­phies of John Smith and Dou­glas Hurd.

Prime Min­is­ter Gor­don Brown and Chan­cel­lor Alis­tair Dar­ling were faced with a ‘per­fect storm’ of fi­nan­cial melt­down in 2008, which swept them from power in 2010.

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