A Response To The Spending Review
By Economist, Michael Burke

The Spring Statement combines austerity with dangerous military spending


The Chancellor has delivered a Spending Review for the medium-term where the big winners were arms’ manufacturers and the builders of nuclear power stations, both of which specialise in cost overruns. But the economy will not get the public investment it needs and once again the most vulnerable are being attacked.

As a result, which is admitted in the detail of the Review, spending on services and social support will not be rising in line with needs. They will cut further by over £6bn. More than half of that will come from welfare cuts. The Universal Credit health element will be cut for new claimants by 50% and then frozen.

The overall package will increase spending and investment in total. Some will want to welcome it as a result. But economic policy should be judged in comparison to what the economy requires to support it and to lift living standards. The Spending Review does not do any of that.
It is quite right that investment is crucial to the future growth of the economy. Investment properly understood means expanding the means of production, the basis for future prosperity.

But the Chancellor has applied the term to a variety of areas which are not investment at all. These include military spending, subsidies to nuclear power builders and others which add up to more than half the investment total. The consequence is that the increase in actual investment which can add to the means of production will add up to much less than 1% of GDP over the next 5 years. It will not shift the dial on growth or prosperity at all.
Military spending, creating weapons, missiles and armaments, cannot add to the means of production – only to the means of destruction. If they are ever used at all, they can only destroy lives, as well as cities, transport and factories which are part of our shared prosperity.

In a different way, nuclear spending is also hugely wasteful. It is one of the most expensive energy sources of all, even typically huge budget over-runs, and unknown clean-up costs, even if nothing goes disastrously wrong.

This is a huge, missed opportunity. Spending on services and welfare will be cut again, while most of the investment total does not fit the bill and will not add to prosperity or lift living standards at all. In effect, a rising military budget and a nuclear waste is being paid for by sick and disabled people. It is morally, politically and economically wrong.


Michael Burke writes regularly for Socialist Economic Bulletin ([link removed])

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