One thing that has become clear amid the misery of the past few years is that we have paid a high price for the austerity imposed by David Cameron and George Osborne in 2010.  It didn’t just reinforce entrenched social and economic inequality. 

The reduced capabilities of the state—and above all, the decline of the NHS—are a direct result of how the Tory-Lib Dem coalition slashed public spending.

But, in a demonstration that we have a ruling class that learns nothing, we face renewed calls for austerity. The pressure to cut expenditure is built into the economic planning of Rishi Sunak’s Tory government. Chancellor Jeremy Hunt had already projected a tightening of departmental expenditure and a cut in capital spending from 2025 onwards.

He thereby laid a trap for whatever party wins the next general election, which must take place by the end of 2024. To judge by the polls, this will probably be Labour. 

But two developments last week strengthened the drive for austerity. First, Sunak announced that the government was accepting the recommendations of the independent pay review bodies for increases of between 5 and 7 percent for public sector workers. 

Though these rises are still below inflation, the decision is a tribute to everyone who went on strike to defend real wages over the past year. But there is a sting in the tail.  The government won’t increase departmental budgets to cover the cost of the pay increases. Hunt estimates that ministers will have to find savings of £2 billion this year and £3 billion next year. 

The higher fees include the odious racist levies on migrant workers seeking visas and health care. But the overall thrust of the policy is that pay increases will be funded by further reducing state capabilities. Cutting capital expenditure means poorer public infrastructure and reduced preparations for climate change.

Secondly, the Office for Budget Responsibility (OBR) issued a report projecting that public debt could rise from 100 percent of gross domestic product in May to 310 percent in 50 years’ time. 

This calculation is based on a variety of factors. These include the impact of the inflationary upsurge, which looks more set to persist in Britain than in other advanced economies. An ageing population and shrinking workforce are other factors. 

Moreover, the OBR estimates that £327 billion in extra public investment will be needed to meet the government’s target of net zero carbon emissions by 2050.

Now this is just a projection, and is only as good as the assumptions it’s based on. The OBR was created by Osborne to police government spending. It is an austerity-biased institution. Nevertheless, as the economist Jonathan Portes points out, the OBR’s fine print implies that “taxes need to go up over the medium/long-term because of demographics, but no panic.”

Nevertheless, the austerity hawks are squawking for blood. Paul Johnson of the Institute for Fiscal Studies played a role in building up support for Osborne after the global financial crisis. He tweeted, “We cannot begin to afford current welfare state without huge tax rises. To put it another way, if we want to avoid big tax rises, we will need to dramatically reduce expectations of what government does.” 

Keir Starmer is bowing to these hawks, promising “prudence” rather than “big spending”. These arguments feed into the developing pre-election climate. Hunt has already squashed Tory hopes of tax cuts soon. So he and Sunak won’t be able to offer much jam as a reason for voting Tory. 

This explains why this government, which is supposedly steered by cool neoliberal technocrats after the excesses of Johnson and Truss, is playing the race card so persistently.

Who knows how much revenue the new racist levies will actually raise? Their real function is different—to keep the anti-migrant offensive in the headlines and reassure racists that Sunak is “doing something”. The class and anti-racist struggles are inseparable.