Cameron's declaration that "money is no object" has destroyed his austerity message

By insisting that he will spend "whatever money is needed" on flood relief, Cameron has undermined his claim that austerity means we must tolerate rising homelessness and poverty.

It was just a few years ago that David Cameron was warning that Britain was "nearly bankrupt". The claim was, of course, nonsense. With its own currency, its own monetary policy and the ability to borrow at historically low rates, the UK was never at risk of insolvency. In extremis, the Bank of England could simply buy up government debt (as it has done through quantitative easing).

But the suggestion that Britain was bankrupt, or at least close to being so (Cameron often casually alternated between the two), was an immensely valuable means of justifying the coalition's austerity programme. Since 2010, Cameron has repeatedly invoked the deficit and the "tough choices" required to reduce it when confronted with the social and economic harm caused by the cuts to welfare and other government programmes.

Britain today is a country in which more than half a million people have turned to food banks since April 2013, in which homelessness has risen by 34 per cent since 2010, and in which, for the first time ever, there are more people from working families living in poverty (6.7 million) than from workless and retired ones (6.3 million). But Cameron has been able to justify all of this pain by presenting it as the tough medicine required to clear the country's debts. As yesterday's YouGov poll showed, 54 per cent of voters believe the cuts are "necessary", compared to just 30 per cent who believe they are unnecessary, a gap that has remained consistent throughout this parliament. 

But yesterday, during his Downing Street press conference on the floods, Cameron suddenly abandoned this austere message. "Money," he declared, "is no object in this relief effort. Whatever money is needed, we will spend it." Many voters, not least those who have lost their homes to the floods, will appreciate the sentiment, but it prompts the question: if money is no object in the case of flooding, why is it an object in the case of homelessness, unemployment and poverty? Indeed, had he adopted such a generous stance from the start, and not cut real-terms spending on flood defences (what a false economy that has proved to be), Britain would have been far better prepared for the deluge than it was. 

During the same press conference, after being challenged to divert money from the foreign aid budget to flood relief schemes, he replied: "I don’t think it’s needed to go for the aid budget because we will make available the money that’s needed here in Britain. We are a wealthy country, we have a growing economy. If money is needed for clean-up, money will be made available." 

The decision of the Daily Mail, Nigel Farage and others to target foreign aid may be a cynical one (exploiting the misperception that it is one of the largest areas of government spending) but it is entirely consistent with the logic employed by Cameron since 2010: spending increases in one area must be matched by cuts elsewhere. 

Yet having once declared that there is "no magic money tree", the PM now gives entirely the reverse impression. The coalition would no doubt argue that the return of growth, with GDP rising at its fastest rate since the crisis, and the fall in the deficit (from £160bn in 2009-10 to £115bn in 2012-13) means that there is some spare cash around. But this ignores the scale of austerity that the government believes is still necessary and desirable. As the IFS noted last week, just 40 per cent of George Osborne's planned spending cuts have been delivered. Indeed, so wedded to austerity is Cameron, that he has argued it should continue even once the deficit has been eliminated. As he argud in his speech at the Lord Mayor's banquet last year:

We are sticking to the task. But that doesn't just mean making difficult decisions on public spending. It also means something more profound. It means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently.

By now carelessly insisting that "money is no object", he has dramatically weakened the force of this message. 

David Cameron addresses the media during a press conference at 10 Downing Street yesterday. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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An unmatched font of knowledge

Edinburgh’s global reputation as a knowledge economy is rooted in the performance and international outlook of its four universities.

As sociologist-turned US Senator Daniel Patrick Moynihan recognised when asked how to create a world-class city, a strong academic offering is pivotal to any forward-looking, ambitious city. “Build a university,” he said, “and wait 200 years.” He recognised the long-term return such an investment can deliver; how a renowned academic institution can help attract the world. However, in today’s increasingly globalised higher education sector, world-class universities no longer rely on the world coming to come to them – their outlook is increasingly international.

Boasting four world-class universities, Edinburgh not only attracts and retains students from around the world, but also increasingly exports its own distinctively Scottish brand of academic excellence. In fact, 53.9% of the city’s working age population is educated to degree level.

In the most recent QS World University Rankings, the University of Edinburgh was named as the 21st best university in the world, reflecting its reputation for research and teaching. It’s a fact reflected in the latest UK Research Exercise Framework (REF), conducted in 2014, which judged 96% of its academic departments to be producing world-leading research.

Innovation engine

Measured across the UK, annual Gross Value Added (GVA) by University of Edinburgh start-ups contributes more than £164m to the UK economy. In fact, of 262 companies to emerge from the university since the 1960s, 81% remain active today, employing more than 2,700 staff globally. That performance places the University of Edinburgh ahead of institutions such as MIT in terms of the number of start-ups it generates; an innovation hothouse that underlines why one in four graduates remain in Edinburgh and why blue chip brands such as Amazon, IBM and Microsoft all have R&D facilities in the city.

One such spin out making its mark is PureLiFi, founded by Professor Harald Haas to commercialise his groundbreaking research on data transmission using the visible light spectrum. With data transfer speeds 10,000 times faster than radio waves, LiFi not only enables bandwidths of 1 Gigabit/sec but is also far more secure.

Edinburgh’s universities play a pivotal role in the local economy. Through its core operations, knowledge transfer activities and world-class research the University generated £4.9bn in GVA and 44,500 jobs globally, when accounting for international alumni.

With £1.4bn earmarked for estate development over the next 10 years, the University of Edinburgh remains the city’s largest property developer. Its extensive programme of investment includes the soon-to-open Higgs Centre for Innovation. A partnership with the UK Astronomy Technology Centre, the new centre will open next year and will supply business incubation support for potential big data and space technology applications, enabling start-ups to realise the commercial potential of applied research in subjects such as particle physics.

It’s a story of innovation that is mirrored across Edinburgh’s academic landscape. Each university has carved its own areas of academic excellence and research expertise, such as the University of Edinburgh’s renowned School of Informatics, ranked among the world’s elite institutions for Computer Science. 

The future of energy

Research conducted into the economic impact of Heriot-Watt University demonstrated that it generates £278m in annual GVA for the Scottish economy and directly supports more than 6,000 jobs.

Set in 380-acres of picturesque parkland, Heriot-Watt University incorporates the Edinburgh Research Park, the first science park of its kind in the UK and now home to more than 40 companies.

Consistently ranked in the top 25% of UK universities, Heriot-Watt University enjoys an increasingly international reputation underpinned by a strong track record in research. 82% of the institution’s research is considered world-class (REF) – a fact reflected in a record breaking year for the university, attracting £40.6m in research funding in 2015. With an expanding campus in Dubai and last year’s opening of a £35m campus in Malaysia, Heriot-Watt is now among the UK’s top five universities in terms of international presence and numbers of international students.

"In 2015, Heriot-Watt University was ranked 34th overall in the QS ‘Top 50 under 50’ world rankings." 

Its established strengths in industry-related research will be further boosted with the imminent opening of the £20m Lyell Centre. It will become the Scottish headquarters of the British Geological Survey, and research will focus on global issues such as energy supply, environmental impact and climate change. As well as providing laboratory facilities, the new centre will feature a 50,000 litre climate change research aquarium, the UK Natural Environment Research Council Centre for Doctoral Training (CDT) in Oil and Gas, and the Shell Centre for Exploration Geoscience.

International appeal

An increasingly global outlook, supported by a bold international strategy, is helping to drive Edinburgh Napier University’s growth. The university now has more than 4,500 students studying its overseas programmes, through partnerships with institutions in Hong Kong, Singapore, China, Sri Lanka and India.

Edinburgh Napier has been present in Hong Kong for more than 20 years and its impact grows year-on-year. Already the UK’s largest higher education provider in the territory, more than 1,500 students graduated in 2015 alone.

In terms of world-leading research, Edinburgh Napier continues to make its mark, with the REF judging 54% of its research to be either world-class or internationally excellent in 2014. The assessment singled out particular strengths in Earth Systems and Environmental Sciences, where it was rated the top UK modern university for research impact. Taking into account research, knowledge exchange, as well as student and staff spending, Edinburgh Napier University generates in excess of £201.9m GVA and supports 2,897 jobs in the city economy.

On the south-east side of Edinburgh, Queen Margaret University is Scotland’s first university to have an on-campus Business Gateway, highlighting the emphasis placed on business creation and innovation.

QMU moved up 49 places overall in the 2014 REF, taking it to 80th place in The Times’ rankings for research excellence in the UK. The Framework scored 58% of Queen Margaret’s research as either world-leading or internationally excellent, especially in relation to Speech and Language Sciences, where the University is ranked 2nd in the UK.

In terms of its international appeal, one in five of Queen Margaret’s students now comes from outside the EU, and it is also expanding its overseas programme offer, which already sees courses delivered in Greece, India, Nepal, Saudi Arabia and Singapore.

With 820 years of collective academic excellence to export to the world, Edinburgh enjoys a truly privileged position in the evolving story of academic globalisation and the commercialisation of world-class research and innovation. If he were still around today, Senator Moynihan would no doubt agree – a world-class city indeed.

For further information www.investinedinburgh.com