Austerity and the Reconfiguration of the Welfare State: Dr Kevin Farnsworth opens Hilary Term’s new
Last Thursday, Hilary Term began with the first of the Oxford Institute of Social Policy’s new seminar series, Austerity and Beyond?. Dr Kevin Farnsworth, a Reader in Comparative and Social Policy at the University of York, discussed the impact of austerity on British social policies and the shift from social welfare to corporate welfare. His seminar, Austerity and the Reconfiguration of the Welfare State, prompted us to think about how we conceptualise austerity.
Image provided by Dr. Kevin Farnsworth
While not a new term, austerity has become a political project following 2008's Global Financial Crisis. Particularly in the UK, the concept is framed as something essential that had to be done. Dr Farnsworth contends that in the UK context, austerity was used actively as a government strategy to deal with the economic situation, contrasting with the situation in Greece, where austerity was not voluntary but imposed. The UK made a political choice to try to correct its economy by reducing spending rather than through tax mechanisms. But beyond this, austerity has been “more than just spending cuts; it’s an approach.”
Dr Farnsworth argues that one aspect of this is balancing social and corporate welfare. Welfare states are like balancing acts, as they play a part in mitigating the social and economic risks encountered by citizens and corporations. The squeeze of labour income in relation to corporate income is getting worse in the UK. 58% of benefits goes to working age households in paid work, effectively acting as wage and income subsidies to employers. As Dr Farnsworth argues, “austerity has helped to reconfigure the welfare state towards a model that favours corporate interests.”
Political crises such as Brexit create new challenges and opportunities. In order for the UK to induce investment going forward without providing access to Europe, it is likely that it will compensate by cutting corporation taxes and reductions in EU regulations. Only a radical departure from previous and current policies will prevent the balancing scales tipping further towards a corporate welfare model.
Eloise caught up with Dr Farnsworth after the seminar to discuss austerity, its influence on social policy and the implications of Brexit.
You’re the first of our speakers at our new seminar series on ‘Austerity and Beyond’. So clearly austerity is a really important issue at the moment in social policy and has been now for some time. How has this period of austerity influenced your research?
Austerity is important, and a defining feature of welfare states, so this Oxford seminar series makes a lot of sense. For me, the issues go beyond austerity. There’s an issue of both how we understand austerity and how we understand the implications of austerity. It’s not that austerity can necessarily just be understood in purely economic terms, it’s not just about cuts for instance, it is about redefining what the welfare state is about. I do think that austerity is a political choice primarily, and a political response to a set of economic criteria or conditions. It is a key social policy issue because how much is spent on the welfare state, how we deliver the welfare state, all of those kinds of things are core issues for social policy people and austerity has a bearing on all of those things.
You mentioned in your talk that austerity has ‘cemented the transformation towards a neoliberal welfare state’. To what extent do you see these as separate paradigms, or do you see austerity as part of a neoliberal paradigm?
It depends what we mean by neoliberal paradigm. Austerity is a policy response preceded any time we talk about neoliberalism, and even before neoliberalism really was grounded in social policy and how we understand the state. Neoliberalism and austerity are related, but they are related in different ways. I think that austerity in the UK is licensed to strengthen and reproduce neoliberalism. From 2009, Gordon Brown announced that neoliberalism is dead, the Washington consensus is over. So, it signalled a change. In an environment where neoliberalism and neoliberal responses are effectively closed down, what do you then do? In a way I think that neoliberalism had to morph into something. Don’t forget that neoliberals hardly ever consider themselves to be neoliberals. Not many people would say ‘I am pursuing a neoliberal path’. It’s a label that we impose on people, and we can impose that similar label on people who follow austerity in the same way. There are two issues:
The issue of austerity and how that is pursued and why it is pursued
What remains of neoliberalism? And how might neoliberalism be strengthened?
Austerity provides a way of strengthening neoliberalism in the UK. In Greece, austerity is not used in the same way – it is genuinely not a choice, it is a way of trying to persuade the IMF and the European Central Bank to bail you out. It doesn’t necessarily reinforce neoliberal ideas. Quite the opposite, because in Greece from 2009/10, there was a resurgence of the left who opposed neoliberalism but nonetheless ended up giving in to austerity demands. I think we have to see neoliberalism as a project that is employed in different ways in different states, and in the UK it is employed in a way that reinforces and rescues neoliberalism from its demise: austerity replaces it.
If we see the crisis as a critical juncture or as a window of opportunity for change, why was it that we ended up down the austerity path? How does institutional history and path dependency play a part in that?
I agree that it was a critical juncture and I also think that objectively UK policy could have gone in either direction, at least because questions were being raised about neoliberalism. The reason why it didn’t is complex and there are lots of reasons why – one of the reasons is an accident of history. It just so happened in the UK when the crisis struck, we had a centre-left government, across Europe, the centre-left and left were in the ascendance. What the crisis meant to most of those governments was that they crumbled; in most places whoever was in power during the crisis was voted out. They were blamed for the crisis. Part of the reason why there was a shift was just that. If it was the other way around the pathway would have been open to a change of ideas.
The reason why I think the UK pursued austerity, (although it didn’t to begin with – immediately after the crisis it had a massive expansion) was because it was a Conservative policy project. In the UK during the 2010 election campaign all parties were against austerity apart from the Conservative party – the Liberal Democrats, Labour, SNPs, Plaid Cymru. The Conservatives formulated an argument that was if we don’t pursue austerity then the UK is going to end up like Greece. Then they worked hard to talk up austerity, to emphasise its importance, to show that there was no other direction the UK could go in, and they succeeded in doing that. The UK did end up pursuing the austerity path. It doesn’t mean that they couldn’t have gone in a different direction, but there were a number of things lined up against the UK resisting austerity.
We are now 10 years on form the start of austerity, and we hear claims from government, particularly during the recent election, that we can now “afford to turn the page on austerity” and “bring about a new decade of renewal”. What do you see would need to happen or what would government need to do to close the door on austerity?
I think that for any government to close the door on austerity, it would have to engage enthusiastically and ideologically on a programme of expansion and recovery, and I do not see that. I don’t think when the government says it’s going against austerity that it is what it means. Two years ago Philip Hammond and Theresa May made an announcement that austerity is over, in fact what Philip Hammond later said was that the beginning of the end of austerity is here. If you look at government spending plans, if you look at government intentions, they don’t want to turn their back on austerity at all. What the Conservative government has been forced to do is to shift slightly, but that shift is towards a national populism. It’s about trying to do whatever is necessary in order to gain legitimation and legitimacy and so I think there will be increases in some areas, but I don’t see that there will be a reversal in austerity. For the government to legitimately declare an end to austerity I think that the ideas of austerity must be buried, but they are not, I think they are continuing. Why? Because the ideas of neoliberalism and an approach to the welfare state that is minimalist, which distinguishes between deserving and undeserving poor, continues.
And finally, what are your closing remarks on the likelihood of austerity ending in the United Kingdom?
I don’t see an end to austerity, what I see is that the UK government will have to forge a way forward in terms of competing in the world post-Brexit. So once Brexit happens the government will have to continue doing the things that it’s done in the past, guaranteeing investment or trying to induce investment, and looking after corporate profits and that will mean that, for me, the direction of policy will not be against austerity. And if it is, most of the emphasis will be on how we compensate capital, private businesses, for the costs of Brexit which will inevitably come.
I see policy change, I don’t see policy change that favours people, citizens. I think that national populism will see certain increases in expenditure but they will inevitably be in those areas that are considered to be vote winning – bit more for the NHS maybe, a bit more on social care – but the most damage has been done in relation to benefits for poorer people and I don’t think austerity will end for those people. I don’t think austerity will end in terms of benefits for people. I think we will see a mixed picture as we go
forward.
A short excerpt of Eloise Peck's interview with Dr. Farnsworth is available below.
Produced by Isobel Montgomery.
Music provided is "On The Streets" by Jonathan David Cotton & Ben Niblett
Eloise Peck is reading for the MSc in Comparative Social Policy, having graduated from the University of Manchester with a BA in Politics, Philosophy and Economics. She then worked at the London School of Economics Housing and Communities, where she was involved with the Housing Plus Academy, a programme working with social housing tenants, practitioners and government officials to tackle some of the biggest challenges facing the sector, particularly in light of the Grenfell Tower disaster. Eloise also has interests in the social determinants of health, particularly in relation to young people.
The views expressed in this article are the author's own and do not necessarily reflect any editorial policy.