Britain is resigned to austerity

28.06.11 Publication:

In Britain a strange silence, or at least a strange calm, is about to be broken. It has been strange because we have a weak economy, high unemployment and sharp government spending cuts and yet there has been barely a murmur of protest on the streets. On Thursday, the calm is due to be broken, by a big strike by teachers and civil servants. Other public-sector unions threaten more strikes in the coming weeks. Might this be the beginning of a big confrontation, in the manner of Margaret Thatcher’s famous fights with the coal miners and other trade unions in the 1980s? Well, it might, but it doesn’t look likely.

Admittedly, there were protests last autumn about the government’s decision to treble most university tuition fees, but those have been the only real popular challenge to David Cameron’s Conservative-led coalition administration that took office in May 2010. Students can always be relied upon to march, shout and even throw bricks through shop windows, and the university protests anyway drew little real sympathy from the rest of the public. They faded away.

The reason for that is revealing, as well as being suggestive about the conflicts that are about to begin. The general atmosphere in Britain is one of acceptance. Most people know that the financial crisis of 2008-09 hit our economy especially hard because households had borrowed too much, because banks had behaved recklessly, and because the Labour government (1997-2010) had gradually become less disciplined both about controlling government spending and regulating the City.

So in the 2010 election campaign, the choice between the main political parties was between deep spending cuts and slightly deeper cuts. Whoever won, austerity was guaranteed. Since then, the Conservative Party, which is the coalition leader and the one most closely identified with spending cuts, has remained surprisingly popular.

In local elections in May and an electoral-reform referendum on the same day, it was its smaller partner, the Liberal Democrats, that suffered badly, not the Conservatives. That was strange, at first glance: surely the whole government should be blamed, or none of it? But no: the Liberal Democrats lost support not because of cuts or a weak economy but because they were believed to have broken some of their electoral promises. David Cameron has done roughly what he said he would do, like it or not.

This widespread acceptance of the need for austerity has been reinforced by a strong desire for fairness. As long as everyone, or at least most people, have to suffer from the government spending cuts, or from tax rises, then there has been no anger about it. That is why the Conservative government decided to keep the 50% top rate of income tax that Labour introduced, despite hating it in ideological terms: it was necessary, to show that the rich are paying their fair share. For the same reason, the government has been very tough on banks and the City, traditionally its big supporters.

Most significant, however, has been the strength of public opinion about unfairness in public spending. Opinion polls show that a majority of people believe that most recipients of public subsidies and other welfare benefits do not deserve them. They are scroungers in other words, lazy undeserving people. This provides the Cameron government with great cover for its most radical policy so far, namely its reform of the welfare benefits system. The aim is to simplify the system, but also reduce waste and cheating.

That brings us back to this week’s strikes. Public-sector employees are naturally angry about the job cuts and pay freezes that have come with reductions in public spending. They have chosen to call strikes, however, not on the issue of jobs or pay but rather pensions. The government is proposing to raise the retirement age for public employees from 60 to 66, and to increase the amount that such civil servants must contribute towards their own pensions. This is, in effect, a pay cut, twice over: they pay more now into the pension fund, and they will receive a smaller pension at their later retirement age.

On the face of it, a strike on this issue makes sense. As in all countries, workers often call strikes in the hope that even if austerity is necessary, the burden of it could be shifted to other, less militant workers, and away from them. But in Britain today, these strikes are a big gamble.

The reason is that as the strike begins, public opinion is against the teachers and other public servants. Public-sector pensions, as well as pay, have become more generous that private-sector ones, in recent years, both in reality and even more so in public perceptions. So unions face a hard task in convincing the public to support, or even tolerate, their actions.

It is a hard task, though not an impossible one. David Cameron’s government has been showing weakness recently through a series of reversals of policy, notably on the National Health Service and on criminals’ sentences. So the temptation to challenge them is strong. But the national mood is against strikes. In the private sector, there are currently fewer working days being lost to strikes every year than at any time in the past four decades.

The Conservative government could benefit from having an unpopular enemy. Hence, the overwhelming likelihood is that the trade unions will back down, if they are offered some cheap, modest concessions, and that there will be no repeat of the battles of the 1980s.

You can never be quite sure, when emotions and populist politics are involved. If the economy weakens further, and if unemployment, which is falling slowly, starts to rise again, public acceptance may disappear and be replaced by anger. But it does not feel like that at the moment.

Britain still feels like a calm, accepting place—never as loyal and cheery as the fantasy world of the Royal wedding might have implied, but still patient, for the time being. After all, the troubles in Greece and other parts of the euro area make Britain’s situation look benign. The country doesn’t expect to have a general election for another four years. It can afford to wait.