‘Austerity’ is the Controlled Demolition of the Welfare State


The breadth and depth of cuts in public sector jobs, pay and frontline services might lead some to believe that austerity exists and public spending is being reduced.  However, public spending is actually 4% higher today that in 2010.  We are not experiencing short term disruption to balance the books, we are experiencing the controlled demolition of the welfare state – transferring the UK from a social democracy to a corporate state.



Successive governments have dissolved the model of state owned schools, staffed by public sector employees.  Today, our children largely attend privately owned schools, where the majority of services in the schools are delivered by private sector staff.  The results have seen costs soar and quality plummet.

Academy Schools are publicly funded independent state schools (limited companies)– this means they receive their funding from central government and are accountable directly to central government, rather than their Local Authority.  Contrary to the ‘Localism Agenda’ lauded by both mainstream parties, the trend is towards centralising control in Westminster.  The schools are also able to make changes to staff pay and conditions, that is pay less.

During thirteen years of New Labour government, 203 state schools were turned into Academies.  In just three years of the Coalition – this has risen more than twelve fold, to more than 2,600 (with a further 500 in the pipeline).   This might suggest the programme was so successful it called for rapid national roll out.  But it doesn’t.

A recent report by the Public Accounts Committee, the parliamentary select committee responsible for ensuring value for money for the tax payer, condemned the programme as ‘complex and inefficient’, leading to more than £1bn over spending.  This £1bn had to be met by the budgets for other non-academy schools.

The report does not mince words and reports major issues across the programme including: poor cost control, a lack of transparency over expenditure, a governance and compliance framework prone to failure (exacerbated by significant staff cuts at the Department for Education), and confusion over roles, responsibilities and accountability.

Yet the programme continues apace.

Despite claiming to protect the Education budget, spending figures from last year demonstrate the Government are doing quite the opposite.  Last year, the budget for education was cut by 5.7% in real terms.  Whilst infrastructure spending was cut 81%, and the Non-Academy Schools Budget was cut 4.31%, the budget for Academy Schools was increased by a whopping 191%.

The state sector is being starved of funds, while the Academy sector enjoys a glut of funding which it spends inefficiently and opaquely.

The majority of schools built since 1992 have also been built under Private Finance Initiatives – were the government borrows from the private sector instead of raising the funds itself.  PFI loans are at least twice the rate of interest of ordinary government loans, and repaid over 25-30 years.  A recent report by the Treasury Committee condemned the Private Finance Initiative, as “always…more expensive than government borrowing”.

An Audit Commission Report ten years ago found “that the quality of PFI schools was significantly worse than that of the traditionally funded schools” (p.24), and the recent Treasury Committee report held the same findings a decade on.

It was recently revealed that there will be a shortfall of 250,000 school places by 2014, whilst the tax payer has picked up a £70m bill for PFI schools which had to close.

The Academies Programme and PFI are built to fail, and equivalent to setting charges to destroy the state education sector from within. Meanwhile, they allow the transfer of both education services, and the physical schools themselves, out of the public sector and into the waiting hands of corporations in advance of implosion.



A similar model has been used in Health. The Health System is being gutted by endless and costly reorganisations, rampant commercialisation and outsourcing, and unaffordable PFI contracts.

The latest major reorganisation of the NHS, under the Health and Social Care Act, will suck another £4bn out of the health service.  This comes on the back of £780m blown by New Labour on 70 reorganisations in just four years between 2005 and 2009.  Anyone experienced in change management can tell you that this level of change, which does not allow for new systems and processes to bed in or for their benefits to be measured, is simply madness.

Each of these reorganisations has been centred not on the patient, but on vague concepts of ‘choice’ and ‘competition’.  These are bywords for privatisation – the attempt to force open a closed market to the rabid private sector we already shunned in favour of our public service.

There is a growing trend across the country for NHS Trusts to become mere managers overseeing almost entirely privatised healthcare.  To give just two examples:

Southampton Primary Care Trust has outsourced a third of its elective procedures to private providers.

Serco was recently awarded a £140m contract to deliver all of Suffolk’s community health services.  Both areas have seen serious performance issues and large reductions of staff.

A report by corporate finance consultancy Catalyst, published in September, estimated that newly privatised healthcare services will be worth up to £20 billion over the next few years.  Private companies Circle, Virgin Care and Serco have won contracts worth £700m to provide NHS services just this year.  NHS outsourcing to private providers rose by 10% in a single year last year, and is set to increase to 40% of all services by 2020.

At the same time, 22 of the 103 NHS trusts to enter PFI are facing financial difficulty due to the exorbitant PFI repayments.  Some hospitals are having to handover a fifth of their annual budget on paying for the PFI deal.

Big Banks are now setting up shell companies in offshore tax havens, which they use to buy up these struggling hospitals for a pittance.  HSBC, recently found guilty of building an entire subsidiary bank to launder money for Mexican drug cartels, now owns three NHS hospitals outright in Barnet, West Middlesex and Middlesex.  The shell company set up to buy the banks is registered in Guernsey, so no tax will ever reach the UK treasury.

New Labour laid the groundwork and the Coalition have expedited the break up, sell off and end of our National Health Service.  We are left with just the brand and the funding mechanism.  Given the clearly doomed fate of these services to prove financially viable, it will not be long before the case is made that we can no longer afford a public health service, and we will lose the last surviving principle of the NHS – free at the point of use.

Social Security


The underpinning of any social democracy, is a generous welfare state that ensures citizens finding themselves unable to work through involuntary unemployment, sickness, disability or age receive enough to live in dignity.  Social Security means working people are less likely to be exploited by poverty wages, as they are in nations without a welfare state.  Social Security means those who find themselves unable to work are not abandoned to the whims of charity or philanthropy.  Social Security creates a guaranteed minimum standard of living for every citizen, regardless of their circumstances of birth.

These concepts are anathema to neoliberalism – which knows the price of everything and the value of nothing.

It is no surprise then, that in the last three years, a story has been whipped up to paint anyone who relies on these noble intentions as an unaffordable burden or a scrounger.  This has been done to enlist public support for a raft of cuts and schemes including the Bedroom Tax, the Granny Tax, Universal Credit, PIP, and Workfare.  Both the story and the cuts are having a catastrophic impact on the most vulnerable communities in the land.

350,000 poor children will lose access to Free School Meals

There are 3.6m children living in poverty in the UK today, this will rise by 300,000 by 2015.

Hate crimes on disabled people rose by a quarter in just one year as disabled people were painted as scroungers on the take.

32 people are dying every week after being assessed ‘Fit to Work’ and having their sickness/disability benefits removed.

33 people have committed suicide, citing fear of impending poverty as a result of these welfare reforms as the principal reason.

420,000 households containing a disabled person face rent rises of more than £700 a year as a result of the Bedroom Tax.

Cuts to Council Tax Benefit have seen the poorest facing up to 333% rises in their Council Tax bills.

More than 350,000 people had to rely on Food Banks in order to feed themselves and their families last year, a rise of 300% in a single year.

One in five people retiring this year will be forced to live below the poverty line due to pension cuts.

Our pensioners, our disabled people, our working and jobless poor – all have fallen toward a promised safety net only to find it has been replaced by a bed of nails.

It’s Not Temporary, It’s the New World Order


All this is happening in what is purported to be one of the wealthiest nations on the planet.  What is the point of having the world’s 22nd largest GDP, if we cannot feed our children?

Meanwhile, the fortunes of the FTSE100 companies is at record highs, Chief Executives are seeing 23% pay rises, taxes are being reduced for or simply not collected from the wealthiest individuals and corporations, MP expenses rose 25% last year and the Queen is about to receive a £5m pay rise from the public purse.

This is not a case of poor people suffering austerity while the wealthiest live large.  It is a case of poor people suffering austerity in order that the wealthy live large.

Austerity is nothing more than the controlled demolition of the welfare state, and social democracy itself.  The nation we are turning into is a less compassionate, less equal, less just nation than we have been before.  This is a great step backwards and will cost us not only in human suffering, but in human lives.

Click here to read Part II – Law and Justice.

Take Action

The campaigns working to halt the destruction.  Follow them and support their efforts.

Move Your Money – do you have an account with a big bank? Move it!

Boycott Workfare – the campaign against Workfare

Disabled People Against Cuts – inspirational campaign by disabled people.

Keep our NHS Public – save our NHS.


24 thoughts on “‘Austerity’ is the Controlled Demolition of the Welfare State

  1. […] loan sale to private investors, the misrepresentation of government figures, protest, ideological austerity, welfare reforms, workfare, lobbying, and the corporate vested interests of MPs and Lords are all cases and […]

  2. […] I have covered economic issues such as LIBOR, PFI, and Banking Reform; Social issues such as the impacts of ideological austerity and growing inequalities; Environmental Issues such as the rise of palm oil, fracking and Big […]

  3. Why is the so-called ‘welfare state’ a good thing? If anything, we should be striving to minimise welfarism in our nation. I am not saying that austerity is the alternative and the massive bonuses CEOs get makes me sick. But the whole idea that the government should be handing out free money (which the government does not have) to everybody without restrictions is destructive to people.

  4. We live in sickening times. The rich are running scared and trying to cut off the wealth after they fucked the economy up, so as to preserve their own sorry arses while ensuring that those lower down the chain get the rawest deal possible.

    The thing is I doubt there’d be much difference if Labour was in power – New Labour = Conservative.


  5. […] The breadth and depth of cuts in public sector jobs, pay and frontline services might lead some to believe that austerity exists and public spending is being reduced. However, public spending is a…  […]

  6. The corporatisation, or privatisation, of the State was begun not under Thatcher, who would have abolished the State altogether, but under Blair. He began the process by privatising and transnationalising the UK’s Defence industries, securing the acquiesence of the Trade Unions in order to do so, then by using McKinsey to transform the MOD itself. This was the model for what Labour then began and the Tory/Lib Dems have continued with the NHS and Education in England . I have written a paper on the first [art of this, if anyone would like a copy

    • Niall says:

      I’m having difficulty finding defence contractors privatised under Blair, but no difficulty finding examples that the Thatcher government privatised. Why is it that you believe Blair began the process?

      The dates of privatisation of the major defence contractors I can think of are: BAe, 1981; Yarrow, 1985; VSEL 1986; Vosper Thornycroft, 1985; Royal Ordinance, 1986 & 1987, Short Brothers, 1989… All were privatised during the Thatcher administration, though further shares in some may have been sold later.

  7. Our monetary system is the cause of our debt crises; and our debts can be paid merely by changing our monetary system. And don’t take my word on it, ask the IMF if our debts can be paid merely by changing our monetary system, and this IMF working paper entitled, “The Chicago Plan Revisited,” states “yes.” The August, 2012 working paper by Jaromir Benes and Michael Kumhof is published on the IMF website and is linked here: http://www.imf.org/external/pubs/cat/longres.cfm?sk=26178.0

    This working paper confirms a long-held position by many economists dating at least back till the 1930s, when the Chicago Plan was presented. And what does the Chicago Plan do? It returns the benefit of our currency, to our nations. Over the past century, or more, nation after nation stopped receiving the benefit of their currency and gave that benefit to private bankers. Please don’t take my word for it, do your own research and ask yourself these questions: If the government creates the currency, why are our nations in debt? Who gets the benefit of the creation of the national currency? What percentage of the national budget is paid for with the national currency?

    When we realize that we have a simple answer to the debt, that is, returning the benefit of the currency to our nations, then we will no longer need austerity. And our nations, businesses and people will return to prosperity.

  8. Mark Cassidy says:

    Thank you. I’m absolutely with your central thesis. What this provides is lots of good examples to argue with.


  10. Just to point out the Move Your Money link is http://www.moveyourmoney.org.uk/ not that given in the article.

  11. well..today my council have told me they going to find me and my 4.5 year old daughter INTENTIONALLY HOMELESS becus i left my housing association house 3 years ago (causation of events and pressures made me run away)…I worked self sufficient overseas living in Egypt, where I was afraid of the future and revolution…..where are we going to go?I am petrified of social services taking my daughter and being street homeless again….WHAT CAN I DO?? THIS COUNTRY IS SO CRUEL PUSHING US AWAY INTO DEPRIVATIO N…WHERE IS THE HELP AND CARING…..WHATS GOING TO HAPPEN TO US NOW

  12. Linda says:

    A very astute article, well researched. I have shared it on Facebook. Would that people read it through and not just click ‘like’ seeing the title. We need a more robust opposition, but many are too tire, hurt, angry or poor to read and then act. We have to keep on going no matter what. Thank you.

  13. […] of the welfare state – transferring the UK from a social democracy to a corporate state. Yesterday we covered Schools, Health and Social Security.  Today we cover Law and […]

  14. Paul Callaghan says:

    You have hit the nail on the head “austerity” is simply a cover for the ideologically driven dismantling of the welfare state. Unfortunately Labour seems to be at least in part complicit in the rolling back of the welfare state

  15. davie says:

    Can’t wait to see the how the government act When the people of the UK have a had enough Should be fun

    • Anonymous says:

      the people of the uk dont give a fuck its the totally apathy that is allowing these vile cunts to do what they want the people of this country are a fucking joke .

      • Anonymous says:

        We need to elect a new people! Agree with you partly, but there are certainly plenty of people doing small things to try to fight back. Very disappointed with Labour – they could make saving the NHS a vision, but they come out with ‘let’s keep to the Tories’ cutting regime, but a tiny bit less’.

    • Rhisiart Gwilym says:

      Only popular uprising beyond government’s capacity to control will make a proper difference, and rescue our non-commercial, public services. No use expecting honest attention to our wishes from the political crooks.

      When enough of us get desperate enough, because of increasing costs of everything, and decreasing real incomes, we reach critical mass. Then the explosions begin. Shouldn’t be long now. Lots of other countries have already got there.

      The Condem junta has never had any democratic majority, and has NO popular mandate whatsoever for it’s theft of our public assets, to be given to its equally crooked buddies in bigbiz. These crooks — the pocket-pols, the corporate gangsters and the banksters — need to be forced from their privileged positions, then to be hauled before revolutionary tribunals, then be put to doing amends-making work, under strict surveillance, for substantial terms. And they should be grateful if they don’t end up strung-up from lamp-posts.

  16. keithpp says:

    Reblogged this on Keithpp's Blog and commented:
    The ConDem Government love a deficit (which they are making no attempts to cut) as it gives the excuse for Shock Therapy, slash and burn of public services, cut welfare to the poor and disadvantaged. Labour is not offering an alternative, to offer Tory-lite is not an alternative.

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