What Britain's deep budget cuts mean for its future prosperity

Draconian cuts in social welfare benefits, a hike in the retirement age, fewer police, and less money to repair crumbling roads and infrastructure. On a day when Britain’s new age of austerity was ushered in by the harshest cuts in public spending for decades, Britons mulled over what their country will look like in the next few years.

“Today is the day that an abstract debate about spreadsheets and numbers turns into stark reality for people’s jobs and services,” was the grim warning from Alan Johnson, finance spokesman for the opposition Labour Party, who claimed that the poor will disproportionately shoulder the burden of cuts designed to begin reducing the UK’s spiraling deficit.

So, what happens next? While the left warns that the country’s social fabric will suffer from the withdrawal of public services, Britain’s coalition government and the intellectual architects of its broader vision sense a unique opportunity to remodel the boundaries of the state and the role of citizens.

Cameron's 'Big Society'

Under the banner of "The Big Society," a new way of thinking about government that underpinned his election campaign but which has yet to catch on in the public imagination, Prime Minister David Cameron believes that civil society and the private sector will together help fill the void left as the state sheds many of its traditional responsibilities.

Welfare and housing for the poor are just two areas from which the government is retreating. It's now encouraging the private citizens to play a greater role in the provision of services, through initiatives like charter schools.

Philip Blond, a Conservative writer credited with being a key inspiration behind Mr. Cameron’s thinking, says that the “next stage” was how to ensure that civil society moves into the gap left by the state, “to deliver more for less."

Mr. Blond, whose communitarian ideas and opposition to unchecked free market ideas invite the suspicion of many on the Conservative Party’s Thatcherite wing, talks of “recapitalizing the poor” and creating assets for them.

In a radical departure from traditional conservatism, Blond’s ideas and Cameron’s big society envisage public services like hospitals and garbage collection being run by companies owned by workers rather than the state.

“There has got to be a way to generate entrepreneurship and ownership for these people,” says Blond, who argues that the big society shares a pedigree with the successful small business structures of northern Italy and Germany industrial policy.

“However, what is really new about what Britain is doing is that it is trying to open up the whole of the public sector budget to civil society organizations," he says.

Will the poor shoulder the burden?

Critics, meanwhile, charge that the big society is merely window dressing for spending cuts and the wholesale destruction of the welfare state.

Today’s confirmation that funding for social housing is to be cut by $6.3 billion and that rent assistance for those in need will be set close to market levels is an example. It effectively ends the traditional guarantee that the state would pay the rent of unemployed occupants of social housing.

Rather than encouraging the jobless to move in order to find work, left-wing commentators say it will create a demographic apartheid as the poor are forced to move out en masse from more expensive areas, such as central London.

Sunder Katwala, general secretary of the Fabian Society, Britain's oldest and best-known center-left think tank, says the last month has at least clarified the value of public spending in people’s minds, even if the “abstract figures” unveiled will go over the heads of many.

As for the government’s hope that more social cohesion and action by communities would fill the gap left by the state, he adds: “A traditional right-wing point of view is that the creation of public welfare services crowds out charity and community provisions, and that the removal of services bring it back.”


“David Cameron seems to oscillate between that view and the more sensible one that if society is to be rolled forward it will be the job of government to work out how to facilitate that," says Mr. Katwala. "It’s why he lacks an ability still to put anything other than just rhetoric into the big society."