The British do a nice line in big government dystopias. George Orwell envisaged a soul-sapping totalitarianism in Nineteen Eighty-Four, Aldous Huxley’s Brave New World obeyed a global state and Anthony Burgess fretted about the abolition of free will in A Clockwork Orange. When we imagine the future, the state looms large.
Yet the opposite vision is now more plausible. After three years of government cuts, Britain is not even halfway through its age of austerity, which will endure regardless of who governs. The tight spending round announced this week by George Osborne, the chancellor, approximates what even the Labour party says it would do far beyond the next election in 2015. And if forecasts for growth and revenue prove as erringly optimistic as they have been of late, deficit-reduction will, as Margaret Thatcher once aspired to, “go on and on”.
How will the state look in, say, a decade? Austerity is usually invoked as an abstract noun when what really matters is its reified form – the practical, tangible changes wrought by a retreating government. Predicting these is tricky but worthwhile. Here is a glimpse of the cowed Leviathan of 2023.
Middle-class welfare will wane to vanishing point. Higher earners have already lost child benefit and tax credits are going to fewer households. Politicians talk of restoring the contributory principle that links a citizen’s benefits to taxes paid but, in practice, means-testing remains the fashion. It will ensnare pensioner benefits and much else. As their stake in welfare diminishes, these voters will resent it even more than they do already. Fiscal pressure on the system should lighten with time but the electoral majority against it is being locked in.
Public services will change too, but subtly. The National Health Service will be the great survivor in budget rounds. Demographic ageing will put paid to any government plan to cut its budget. Health spending will stay at about 10 per cent of gross domestic product, in line with other rich countries. But structural reform will romp on, bequeathing fewer large hospitals, a wider plurality of providers and more user charges to the patients of 2023.
There will be even more upheaval in education. Government involvement in universities will diminish as student fees and corporate sponsorship pay for the system. Research subsidies will not disappear but will be targeted at commercial fields such as advanced engineering, pharmaceuticals and – Whitehall’s great hope – life sciences. The trend towards operational independence for schools, in train for a decade already, will quicken and profit makers will be invited into the system. Unlike the NHS, the overall education budget will not withstand the force of austerity. Lamentably few voters name education as a main concern, giving governments the political freedom to trim it. With little money to work with, education secretaries will have to prioritise. With one eye on high-end research and the other on Britain’s long tail of low skills, the middle might suffer.
The state’s physical presence in everyday life will thin out. Local councils will sell off their compendious property portfolios and move libraries and other services online. Public sector workers will shrink in number. The entire increase in the government workforce under 13 years of Labour will be undone in this parliament alone and the contraction will continue beyond, as salary freezes and the inevitable introduction of regionally variable pay make the sector less enticing.
But austerity will not be limited to those on the ground. The imperial heart of the state will be hollowed out. Whitehall’s 20 departments – five more than the US federal government – will become a dozen or so, as functions are abolished, devolved or merged. A recent pamphlet by Dominic Raab, a young Conservative MP, suggests how. The idea of a business secretary or a culture ministry will come to seem as quaint as a prices and incomes policy. The central government payroll is already dwindling but, judging by plans being hatched behind the scenes, civil servants have not seen anything yet. The figure ministers and even many mandarins regard as realistic is a 70 per cent cut in the Whitehall headcount from the 2010 level.
As well as spending less, the state will change the way it raises money. A shift in taxation from incomes to assets is inevitable. The government is shuffling towards this idea already by chipping away at corporation tax while raising stamp duty on luxury properties. The income tax base will retreat at both ends. The starting threshold will reach £12,500 in current terms so that nobody on the minimum wage will pay the tax. The urgency of luring foreign investment will see the top rate fall back to 40 per cent. A new levy on homes will emerge, as a generation priced out of home-ownership by their elders forces politicians to take on the British cult of property.
All of this adds up to a much humbler state in our national life, but austerity has implications beyond the water’s edge. Military interventions will become unthinkable in all but the most extreme circumstances. Falling defence budgets will see to that. Fortress Britain will retain nuclear weapons and small, skilful armed forces but defence of the realm will be the extent of their remit. In 1999, Tony Blair gave a speech in Chicago calling for more western activism in the world. Before the 20th anniversary, a prime minister will give a speech saying the opposite.
It does not take a Huxley-grade imagination to picture these changes, and many more besides. The state pension will creep up to 70 and beyond. The government will not own a bank. Toll roads will proliferate. Planning rigidities will make way for a housebuilding boom and an augmented Heathrow. Scotland will get fiscal autonomy if not independence, spurring similar demands by local authorities.
Exit from the EU might allow the supply-side blitzkrieg of Thatcherite fantasies, if voters want them. London might pull further away from a country that it communicates with via cheque, winning not only fiscal powers but the right to issue its own work visas. The British state of 2023 could resemble many things. Big brother is not one of them.
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