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How the Budget undermined the Conservatives’ austerity argument

Philip Hammond has proved that the government can borrow and spend more without being punished by the markets. 

The Conservatives used to justify austerity on the grounds that it was unavoidable. Unless the UK sharply reduced borrowing, they warned, it would face a Greek-style debt crisis. 

Even before yesterday's Budget, this argument had been discredited. George Osborne continually missed his deficit targets and was never punished by the markets. But Philip Hammond yesterday provided definitive evidence. 

The Chancellor, a self-described fiscal conservative, uncharacteristically announced a £25bn stimulus in an effort to resurrect his fortunes and those of the government. Consequently, Britain will still have a budget deficit of £25.6bn in 2022-23 (after cumulatively borrowing £59bn more from 2018-19) and, on present trends, will not achieve a surplus until 2030-31 (16 years later than Osborne originally promised).

Yet faced with what the Tories once denounced as "reckless" profligacy, the markets have shrugged. Far from rising, UK ten-year bond yields have fallen. When Osborne missed his targets, his allies argued that his long-term commitment to a surplus bought him credibility with the market. But so persistent is government borrowing that this argument no longer holds weight (if it ever did). 

Austerity, it is crucial to note, has not been ended. As Institute for Fiscal Studies director Paul Johnson noted this afternoon, day-to-day spending on public services outside of the NHS is forecast to fall by 7 per cent over the next five years and a further £12bn of welfare cuts will be imposed. Indeed, far from ending austerity, Hammond has extended it to 2022-23 by pencilling in further departmental cuts to compensate for his earlier fiscal easing. 

This approach reflects the intense political and economic pressures on the Chancellor. There is no majority for austerity in the Commons, or in the country, and the Conservatives are terrified by Labour's advance. Brexit will depress economic growth in forthcoming years (and may eradicate it altogether). In these circumstances, it would be reckless for Hammond not to soften austerity. But in doing so, the Chancellor has conceded further political and intellectual ground to his opponents. The austerity consensus that Osborne worked relentlessly to establish has fractured. 

George Eaton is political editor of the New Statesman.

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What the university staff strike reveals about our broken higher education system

The marketisation of our universities is facing its biggest opposition yet.

The biggest industrial strike ever by academic staff in Britain's universities has begun.

National newspapers are running panicked headlines about what may happen if the strike lasts: “University strike puts final exams in danger”, warns The Times. “University strikes could hit exams and graduation ceremonies”, says the Guardian. But as well as affecting the education of students who are heavily in debt, the strikes will hit academics with very different levels of job security, and university establishments at a time when higher education is on the political agenda. 

The University and College Union voted for strike action last month over a failure to reach an agreement with Universities UK (UUK), the body which represents of the Vice Chancellors of every university in the country, over changes to academics' pension plans.

The pension scheme at the heart of the conflict, the Universities Superannuation Scheme, currently has over 400,000 participants. UUK have stated that the pension scheme currently has a £6.1bn deficit and that the cost of future benefits has increased by one third since 2014. They are proposing a switch from a direct benefit pension scheme (fixed, guaranteed pension payments) to a direct contribution scheme (reliant on stock markets) to maintain the scheme's sustainability.

However, many academics argue the deficit is overstated, and is instead a cynical attempt to reduce the universities' pension liabilties. 

Older and more senior academics who have already spent several decades paying into the system will be less affected by the changes, as contributions will be protected under the old scheme until 2019. 

UCU however allege that this change will result in an average yearly £10,000 loss in staff members' pensions. Academics at 61 universities, including the likes of Oxbridge, UCL, Imperial College London, Cardiff University and the University of Edinburgh will be striking for 14 days. 

The strikes begin on Thursday, and yet no-one seems to know what will happen. FAQs provided by universities to students all appear to have a similar theme: Academic disruption will be minimised, but if you have a complaint, please email us. 

16 percent of academic staff at these universities will be on strike (because most academics aren't a part of a union) but lectures and seminars have still been cancelled. It is still unclear for students whether they will be examined on subjects that they will miss. 

But for the most part, students appear to support the academics. Mark Crawford, a Postgraduate Sabbatical Officer at UCL (the biggest university in the country to strike) says he has been pleasantly surprised by the number of students who have messaged asking him how they can help. 

Perhaps this is due to the pains some academics have gone to minimise the disruption their students will face. Some lecturers have made presentations available online, and have amendeded their reading lists. One academic at King's College London, KCL, has even rearranged her seminars off campus. 

Yet this feeling of goodwill may disappear when reality kicks in. Robert Adderly, a second year Law student at KCL, and a campaigner for the student group provocatively titled “Students Against Strikes” says he’s unsure how supportive students will be once the action actually begins. 

Adderly, while sympathetic to the concerns of the academics does not believe striking is the most effective way to negotiate with Universities UK. He goes on to say that he believes “neither side is willing to compromise” and says that the “only people losing out are students.”

He also says he believes a lot of students “haven’t assessed how they really feel about the strikes” and that the “longer it goes on, the more students who will get angry”. 

Adderly's thoughts are backed by a poll conducted by Trendence UK, a market research company, which found that 38 per cent of students supported their academics on strike, compred to 38 per cent who did not.

Several academics have spoken to the New Statesman off the record about feelings of uneasiness around the strike, arguing that there is a better, less disruptive way of resolving the pension debate. Others are unsure about the leadership of UCU and believe striking will only lead to a build up of work later. 

Professor Andrew Pomiankowski at UCL emailed his students saying while he supported the strike, he would continue conducting his classes this week. He later told the New Statesman “I have a lot of sympathy with the reasons for the strike - the loss of provision of pensions, especially for the younger members of staff. Talking is the only way of resolving this problem. However, I don’t feel that I should disrupt teaching of students. That’s a step too far.”

The strikes go to the heart of the debate about the marketisation of university. Even students who support the strike are in conflict with one another. Notably, students who support the strikes are unhappy with campaigns such as Adderly’s which are also demanding universities compensate them for lost teaching hours. Crawford says your “first instinct shouldn’t be how much am I losing? It should be how much is our staff losing.”

On the other hand, Adderly argues we shouldn’t pretend the marketisation of university hasn’t already happened, saying “It’s here. It’s happening. We are now consumers.” 

Though it appears unlikely that universities will refund students, these strikes are highlighting how our attitudes to higher education have changed in a short space of time, and causing some to ask if this is the future we want for British higher education.