WITH a Conservative Government firmly in power, and people’s memories of what the Tories did to the economy and society following the 2008/09 recession still very fresh, it is difficult to shake a feeling of trepidation that we will before long see a resumption of austerity.

However, even taking into account Tory governments’ instincts to cut welfare pitilessly and attack public sector pay, views advanced recently by some very senior experts have perhaps provided room for hope that the Conservatives will not re-embrace their bad old ways as we emerge from the coronavirus crisis. This might only be a glimmer of hope, given their track record. However, it is far better than nothing because the alternative does not bear thinking about.

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Of course, in spite of former prime minister David Cameron’s “all in this together” claim when the Tories took office in summer 2010, propped up by the Liberal Democrats, the savage austerity programme that followed was very much targeted at those who could least afford it. At the same time as ordinary people were paying the price for the global financial crisis through savage welfare cuts, the Tories implemented massive reductions in corporation tax. These were meant to fuel investment. They did not.

The Liberal Democrats seemed to be convinced by the Tories in 2010 that austerity was necessary, in the context apparently of having had a good look at the public finances. This revised view was entirely at odds with their 2010 General Election campaign. One wonders what the senior Liberal Democrats of that time make of it all now, having seen the degree to which UK economic growth was choked off by the Tory policies as well as the Brexit vote that transpired in 2016 amid a backdrop of misery for many.

One of the big things being debated at the moment on the global stage, as experts assess the economic fall-out from the human tragedy that is the coronavirus pandemic, is whether governments around the world can avoid implementing major austerity on the way out of this crisis.

The public finances are taking a huge hit in many countries around the world.

In the UK, the Conservative Government implemented its massive coronavirus job retention scheme in March, and this is costing tens of billions of pounds. At the latest count, this programme was supporting the incomes of about 8.9 million furloughed UK workers. Under this scheme, the Government pays 80 per cent of the wages and salaries of furloughed workers up to £2,500 a month.

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Of course, the public finances will also have been hammered by the loss of a huge amount of tax revenues, as a result of the absolutely necessary shutdown or dramatic reduction of large parts of the economy to slow the spread of Covid-19. While attention is turning increasingly to the economic fall-out, we should not forget the importance of putting in place measures to save many thousands of lives during this awful pandemic.

It is important to bear in mind that public sector net debt had in any case spiralled under the Tories, from around £1 trillion when they came to power in 2010 to £1.8 trillion even before the coronavirus pandemic hit. This reflects in large part their failed economic policies over that period, as they took money out of the pockets of those who need to spend all they have to live and thus choked demand.

Recent comments from former chancellor George Osborne seem to indicate he sees the answer to the current situation as being much the same as the one he produced back in 2010. Earlier this month, he characterised his moves when he was chancellor as measures to “repair” the public finances.

The Tories might want to bear in mind what happened to public sector net debt between 2010 and 2018 under the policies put in train by Mr Osborne, and have a good think about whether a repeat of past behaviour would be a good idea or not.

Moving away from the misery and towards the hope, it was interesting to speak last week to Baillie Gifford partner James Anderson, joint manager of the £10 billion Scottish Mortgage Investment Trust.

Mr Anderson declared Boris Johnson would not be prepared to risk his prospects of re-election by returning to austerity in the wake of the coronavirus crisis, in spite of the Conservative Party’s “ideology”.

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He flagged the UK austerity programme implemented when Mr Osborne was chancellor following the global financial crisis, and the “ideology” of the Tories then as well as that of the Conservative Party today in this context. And Mr Anderson observed: “The UK, in that way, will be one of the test cases.”

However, referring to the Prime Minister and his adviser Dominic Cummings, Mr Anderson added: “Do I believe Boris Johnson and his lovely adviser are going to be prepared to risk not being re-elected by clamping down on public expenditure? I don’t.”

There has, amid the coronavirus pandemic and associated lockdowns, been much reflection throughout society of what will change permanently as a result of the crisis. There will be many red herrings in this regard, given the tendency for many things to return to their previous state. Such thinking might lead to a belief that the Tories will return to their natural habit of austerity, managing the public finances like a household budget and failing to look at the top line in terms of mitigating damage to economic activity and tax revenues.

Mulling what the coronavirus pandemic had actually changed people’s minds about, Mr Anderson said: “The big one, the most systemic one I think isn’t being thought about enough is it seems pretty unlikely that governments almost anywhere are going to be able to say ‘we are not going to be able to borrow money’ or ‘we should go back, in the British [sense], to austerity’.”

Noting people were drawing an analogy with 2010 when fiscal policy was tightened dramatically, Mr Anderson said: “I don’t think that is particularly likely.”

Flagging major developments in a European context, Mr Anderson noted the Spanish government was “underwriting universal basic income” and flagged the “obvious willingness of Germany and France to underwrite aid for southern Europe” in a way they had refused to do a decade ago.

He flagged a “probable path” where countries would continue to print money, and keep interest rates down and the cost of capital “very low” and “austerity doesn’t come back”.

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Bank of England Governor Andrew Bailey last month flagged his view that the UK had “choices” to make over whether more austerity would be needed, noting the Old Lady of Threadneedle Street could help spread the cost of the coronavirus crisis to society over time.

He said: “That, to me, is important. We have choices there and we need to exercise these choices.”

Asked if spending cuts would be necessary to restore balance to public finances, Mr Bailey told the Peston show on ITV this was a matter for ministers but highlighted the fact that the Bank’s increased holdings of government debt created policy options.

Meanwhile, the independent Irish Fiscal Advisory Council watchdog has concluded Ireland’s huge stimulus response to the pandemic will not necessarily mean a return to the austerity of a decade ago.

This range of expert voices hopefully provides room for hope in a UK context.

Ahead of the 2016 Brexit vote, Cabinet Office Minister Michael Gove declared “people in this country have had enough of experts”.

Hopefully, he and his Cabinet colleagues will listen to the experts on alternatives to grim austerity, rather than those likely loud Tory voices advocating that, as usual, the ordinary people should pay.