According to the OBR, the Autumn Statement promises that Britain will be spending less of its income on public services than at any time since 1948. This should not be a surprise. From the outset, the agenda of the Conservatives in government has been to reduce the role of the public sector in the economy. Public expenditure is believed to stifle the private sector; George Osborne complained in June 2010 of it “crowding out private endeavour”. Robert Skidelsky, in the Financial Times, explains the implications of that term ‘crowding out’, which was popularised after a book by Bacon and Eltis in the 1970s. I commented earlier this year that the cuts have had ‘little to do with economic management and everything to do with ‘rolling back the frontiers of the state’’.
Austerity, by contrast, is about making do with less. The basic argument for the private market is that it offers choice: that implies diversity, duplication of services and a degree of waste. That can be an expensive option – the clearest demonstration of that is the cost of health care in the United States. By contrast, the post-war Welfare State was austere; it offered no luxury and very little choice. Essential Health Packages in Africa are austere – they offer a restricted, essential minimum to the whole population, often excluding services that are particularly expensive (for example for older people , psychiatric care, disability and high-tech medicine). Transferring liabilities to the private sector and to private purses is just not the same thing at all.