UK Prime Minister Theresa May promises better times ahead, as long as you don't vote Labour. Picture: AFP
UK Prime Minister Theresa May promises better times ahead, as long as you don't vote Labour. Picture: AFP

London — UK Prime Minister Theresa May promised austerity-weary Britons an end to years of public-spending cuts, in a speech designed to paint a positive vision for the country outside the EU.

“A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off,” May told the Conservative Party conference in her keynote speech in Birmingham on Wednesday.

Chancellor of the Exchequer Philip Hammond has faced months of calls to end the squeeze after a backlash cost the Conservatives their parliamentary majority last year. The government has already relaxed a 1% cap on pay increases in place since 2010 and promised extra funding for the National Health Service (NHS), a response to the electoral threat from the opposition Labour Party led by socialist Jeremy Corbyn, who has pledged to increase spending.

Britain has brought down the budget deficit from a peace-time record of almost 10% of GDP in 2009-2010 to less than 2% in the last fiscal year, but the cost has been felt keenly, with almost £140bn of spending cuts hitting public services and social aid at a time when wage packets for millions of people effectively stagnated.

Public spending in Britain has fallen to about 38% of GDP from 45% in 2010, according to figures from the Office for Budget Responsibility. Nowhere has the axe fallen hardest than on local authorities, which have shed more than half a million jobs — about a 10th of their workforce — over the past eight years.

But May’s claims that austerity is ending were questioned by economists, with the Resolution Foundation, an independent British think-tank, noting that further tax rises and spending cuts will be needed if Hammond is to achieve his ambition of balancing the books in the next decade.

An extra £12bn of spending will be needed in 2022-2023 to prevent real day-to-day spending per person falling as planned, Director Torsten Bell said. And even then there would be losers, as departments, including health, have been promised hefty budget boosts.

May contrasted her government’s pursuit of “sound finances” with the “endless expensive promises” of Labour, which has committed to nationalising industries, ending university tuition fees, and spending more on public services if it wins office.

May said the government’s new approach will be set out in a spending review next year “after we’ve secured a good Brexit deal for Britain.” 

Bloomberg 

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