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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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.