This is what "savage austerity" looks like

Let's avoid the euphemisms

Today and yesterday, Alphaville put up a pair of posts detailing the terrifying lengths that the Greek state has been forced to go to in order to meet their austerity targets:

The country’s pharmacies are owed €500m by the state-backed healthcare insurer, according to reports. From next week patients will have to stump up the cash for their medicines upfront, and then claim a reimbursement from the National Organization for Healthcare Provision (EOPYY).

Greece: when the drugs run out

The desperate cunning scheme to get Greeks to pay property taxes by bundling them with electricity bills didn’t last long. You guessed it, people stopped paying their electricity bills and now it looks like the power company – which had to be bailed out last month – has stopped even trying to collect the levy.

Greece: when the lights go out

If the state healthcare company can't pay the pharmacies, it seems somewhat unlikely that it will be able to reimburse patients either. Meanwhile, the nationalised power company looks like it will run out of money again towards the end of June, unless customers start paying their bills again.

All of which goes some way to explaining the curious result that is seen time and time again in Greek opinion polls: contrary to what their actions – and their votes – suggest, the Greek people are actually overwhelmingly in favour of staying in the euro. They know how much membership of the single currency has benefited their country, and they don't want to lose it.

But they also know that the path they are on now – which, if it only involved Russian-style shock doctrine privatisation, would be getting off lightly – is unsustainable. They are losing healthcare, power, they have been paid negative salaries, and the word coming from Germany is that this will get worse, not better. Well, they're mad as hell, and they're not going to take it anymore.

That said, the latest news out of Greece indicates that preferences may be swinging back to the devil they know. Joe Weisenthal reports a Nomura briefing which says:

Opinion polls are looking more constructive from a market perspective.

Which is a very euphemistic way of saying the pro-austerity New Democracy party may win the election.

Lighting over Athens, but the power's out. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.