Home Political science A Century of Fiscal Squeeze Politics : 100 Years of Austerity, Politics, and Bureaucracy in Britain
As mentioned at the outset, this episode is the most dramatic of the fiscal squeezes considered in this book in terms of its political impact, and there is a sizeable literature on the politics and constitutional issues of the late summer of 1931. As with the previous chapter, we conclude by returning to the three sets of issues raised in the opening chapter about the politics of fiscal squeeze.
Tax and Spending, Depth and Duration, Blame and Control
The squeezes discussed in this chapter comprise a two-year hard revenue squeeze initiated by a minority left-of-centre government and a three-year hard spending squeeze partly initiated by that left-of-centre party but extended and implemented by a multiparty coalition dominated by a right- of-centre party.
As we have seen, the relative balance of tax increases and spending cuts to correct the perceived deficit was much debated in this episode, particularly within the Labour Party. The debate also focused on what kind of taxes—and taxpayers—should be targeted for a revenue squeeze, with the left resisting increases in indirect taxes on staples and insurance contributions from employees and calling for higher taxes on upper-level incomes, 'unearned' income and inherited wealth. On the expenditure side, one of the things we noted earlier about this episode is the relatively small proportion of spending cuts that came from defence (but even that provoked a naval mutiny that forced the government to soften its position on public sector pay cuts) and the correspondingly large proportion of the cuts that came from social security and education. Another striking feature on the spending side was the fact that most of the spending cuts (especially on public sector pay and benefits) were explicitly presented as time-limited and applying for a limited period, rather than (as in some episodes we will discuss later in the book) part of a longer- term project to shrink the state or at least check the long-term growth of state spending.
When it comes to choices over blame and control, minority and coalition governments dominated this episode, making blame attribution harder than under majority government. And as we saw, there was both a short-term blame game over who had agreed to what spending cuts at what precise time in August and September 1931 and a longer-term narrative battle over the merits of the September 1931 measures enacted by the emergency National Government. And as in the previous episode, an 'expert committee' (indeed, two in this case) figured in the blame politics of the process, having been handed the poisoned chalice of identifying a spending cuts package, but with composition and outcomes different from those observed in Chapter Three, in that the committee was formed and split on party lines and seems to have become part of the problem it was intended to solve by the effects of its estimate of the size of the deficit on the financial markets.
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