Cameron & Osborne reached Easter Recess having survived another tough short term battle, but longer term dangers linger unaddressed from failure to invest

Approach of UK Conservative and Canada Liberal governments to their respective 2016 budgets were worlds apart. Photograph: Parliament of Canada in Ottawa from Pixabay (License) (Cropped)

As Parliament went into its Easter Recess on Friday, it appeared that the Cameron Government had weathered the political storm caused by the budget. Controversies had weakened the government's position, but had not toppled it. Yet Prime Minister Cameron and Chancellor Osborne have only won the week, as tends to be their criticised focus (Kuenssberg, 2016).

While they manage the short term, there are larger, longer term, dangers they're not addressing - not least of which is the long term danger of failing to invest. Cameron and Osborne like to talk of not leaving our debts to the next generation, yet there are debts other than fiscal to leave to the next generation. One deficit they are sure to leave behind is infrastructural (Yalnizyan, 2016).

It is interesting how different priorities can be on either side of the Atlantic. In Canada, their new Prime Minister Justin Trudeau unveiled his first budget. As promised during the election, it involved deliberately running deficits in order to fund public investment in rebuilding Canada and setting it up for the future (CBC News, 2015).

John McDonnell's focus as Shadow Chancellor has been to try and undermine the perception of the Conservatives as the economically competent party, that can be trusted with the national finances. In his response to the budget, he paid special attention to the Conservative habit of over-promising and under-delivering, especially when it comes to public investment (McDonnell & O'Connor, 2016).

McDonnell has expressed particular and repeated concern that the Conservatives keep sending out press releases launching projects and yet, as argues McDonnell, don't provide or secure adequate funding. Meanwhile, against the recommendations of the OECD and the IMF, Osborne has continued to let investment consistently fall as he pursues a budget surplus (McDonnell, 2016).

What is interesting this is not a trend that Osborne began, but is rather just fitting into. Public investment in the UK has been falling steadily for the better part of fifty years (Thornsby, 2016). At the last election, both Labour and the Lib Dems wanted to put aside money for public investment, exempt from the efforts to balance the budget, but their efforts were timid due to lingering doubts about ignoring the debt or deficit in the short term to pursue a longer view.

While these doubts are being harboured in the UK, in Canada the situation couldn't be more different. At the last election the Conservatives were defeated by the Liberals coming from third place into a sweeping majority while promising to run deficits in order to fund economy growing public investment (CBC News, 2015).

Now there were certainly other aspects of the Liberal approach that helped them over the finishing line - not the least the fact that none of the parties leaders were Stephen Harper. The Trudeau campaign was open, relaxed and friendly with the public and the offer of limited-deficit funded public investment in infrastructure cannot be discounted as a factor (The National, 2016).

Yet it would seem to have only been possible to propose those deficits because the Liberals did not have the weight of a reputation for fiscal irresponsibility on their shoulders. Pre-election polls suggested that the public not only trusted the Liberals the most on the economy, but also believed they would be the most likely to have a positive impact on the economy (CTV News, 2015) - and aligned more with their promise to invest in infrastructure rather than simply cut taxes and balance the books.

While tackling the Conservative reputation, Shadow Chancellor McDonnell has also been trying to rebuild one for Labour. Bringing on a team of advisors, he has taken them on tour where, speaking across the country, they have explained how negative austerity has been and what might be possible in its place.

No one has typified this more than economist Mariana Mazzucato. In her own work, and in her work advising Labour, Mazzucato has consistently argued that the private sector is too risk averse and too short term in its thinking to handle the kind of positive long term investment that the public sector excels at (Mazzucato, 2013{2}).

In fact, if anything, she suggests that the private sector leeches off of public investment - privatising the rewards (Mazzucato, 2013). For those wedded to the fear of progressives forever being labelled as high spending, controlling statists, Mazzucato's call if not for a bigger state, but for a much easier to stomach smarter state (Mazzucato, 2014). A state that promotes growth by making smart investments where the private sector only hinders or won't take the risk; a state that promotes justice by seeing more of the reward for public efforts returned to the public.

The second, and maybe harder, part that follows the building of a reputation, is maintaining it. In Canada, the Liberals have been smart, deliberately managing expectations (Evans, 2016). While every $1 of infrastructure spending can lead to much bigger revenue returns - what Willie Rennie, leader of the Scottish Liberal Democrats, refers to as a virtuous cycle of investment (Taylor, 2016; Gray, 2016) -  they have nonetheless managed their forecasts down, leaving themselves plenty of headroom for showing the positive impact of their policies.

Public investment is important. In infrastructure, in education, in housing, in healthcare. All of these materially benefit everyone, even tackle inequality. Yet despite the Chancellor's obvious pleasure at announcing investment projects, there has been little to back it up (Pidd, 2015; Boffey, 2015) - with announcements seemingly serving as publicity to encourage private investment instead of the making of public commitments.

Sooner or later, the public will have to face the reality of the Conservative failure to invest - in education; in affordable housing; in technology, science and research. Long term public investment will be missed when the reality of selfish, short term, private investment is grasped. In the meantime, progressives have to do what they can, building the credibility of the argument for a smarter state that invests in the common good.

Ideology in politics is unavoidable, but transparency should be as well - we need the facts to scrutinise policies and the societal ideal they are designed to build

As Romano Prodi, former President of the European Commission and Prime Minister of Italy, put it: the incorrect way to use facts is as a drunk uses lamp posts - more for support than for illumination. Photograph: Lamp Post in Rome from Pixabay (License) (Cropped)

Yesterday, George Osborne went before the Commons Treasury Committee to answer more detailed questions on the budget he announced last Wednesday (Sparrow, 2016). The Chancellor and his budget came in for some difficult questions.

During the hearing it was disclosed that, since the Coalition ended, the Chancellor had stopped analysis that would have showed, as the Institute for Fiscal Studies (IFS) analysis shows, that the budget appeared to be redistributing money from the poorest to the richest (Stone, 2016). The Chancellor's defence was that he believed that the statistics provided could be misleading, and make deficit reduction look like "a bad thing".

According to both Iain Duncan Smith and the IFS, the welfare changes will disproportionately - for the obvious reason that welfare is mostly needed by those in lower incomes - hurt the poorest 20% (Inman, 2016). It was this fact that Osborne was accused of attempting to hide by changing the way the Treasury analysed the budget impact.

Playing with facts to suit political purpose is bad enough on its own. But this was also the suppression of facts - showing austerity and deficit reduction, at the present time and by the present methods, appear to be disproportionately damaging to the poor - in order to protect an ideological political project (Dudman, 2016).

Yet the problem is not so much the ideological motivation. As Romano Prodi put it, the incorrect approach to using facts is as a drunk uses lamp posts - for support rather than illumination.

In order to reduce so called 'welfare dependence', Osborne has ignored the data in order to treat welfare as the problem in and of itself - rather than a symptom. That means ignoring the fact that high welfare bills are the result of its corrective role.

In reality, welfare at its best is a safety net that helps to guarantee basic freedoms and at worst can be criticised as a form of corporate welfare, when policies like tax credits or the personal allowance subsidise companies paying low wages - but either way it is a redistributive mechanism that anchors the affluence of the rich to the wellbeing of the poor.

In both cases a high welfare bill is a symptom. It represents people struggling with low or no incomes, a lack of access to affordable housing and a lack of opportunity (Johnson, 2015). But as conditions improve, as the low incomes turn into living incomes, housing becomes more affordable and greater opportunity spreads, the welfare bill decreases.

Ideology is an inescapable aspect of politics. It is the philosophical view of what the world is, the ethics of how to behave on a personal level and the shaping of society around those beliefs to enhance them and produce the ideal outcomes. But that is no excuse for a lack of transparency.

If the Chancellor believes that there is a positive outcome in the changes he is making, he should have no fear in these statistics. He should be able to explain how his changes fit his ideological narrative, and produce, from his perspective, a positive outcome.

Instead of trusting people with the facts, the people are shown fragments designed to fit a narrative. If people are to hold those in public office to account they need the facts. Vigilance can only do so much, without access to the facts and openness from public office holders and parties as to the big picture, broad context narrative, that they see written in the data.

Britain's tented Hoovervilles show the reality of the humanitarian crisis behind the debt and deficit obsession of the Great Recession

Desperation, in the time of recession and austerity, has led to tented encampments springing up across the UK. This one lies a stones throw from Manchester Piccadilly station.

Iain Duncan Smith framed his resignation as the drastic last straw of a reformer, who's efforts were curtailed by the Chancellor's obsession with austerity (Asthana & Stewart, 2016; Peston, 2016). Whatever the true conviction behind the claim, it highlights something incredibly important.

The economic crisis, to which the Conservatives have ever been keen to keep the eye drawn in the last six years, has masked a wider humanitarian crisis. Only one small moment of the Chancellor's budget statement was devoted to it. He told Members of Parliament that:

"Because under this Government we are not prepared to let people be left behind, I am also announcing a major new package of support worth over £115 million to support those who are homeless and to reduce rough sleeping."

The government tried hard during the election the evade the issue, despite attempts to confront the PM directly with the fact that rising numbers of people were using food banks (Channel 4, 2015; Worrall, 2015). Yet the fact remains that homelessness is still rising (Gentleman, 2016).

In his response to the budget, Jeremy Corbyn welcomed the Chancellor's package of assistance, but stressed that rising homelessness was the result of desperate under-investment by the Conservative government (BBC, 2016{2}). A lack of investment which had starved local government of the resources to help and housing associations of the capacity to offer shelter.

While the Chancellor's budget did offer some funds to 'reduce rough sleeping', it was in reality much less than he previously cut from housing support - estimated at only "£1 in every £5" by Shadow Housing Minister John Healey (Healey, 2016).

It is, however, something more than the approach of some local councils to rough sleeping, which has been less than humanitarian (Ellis-Petersen, 2015). Yet even harsh measures haven't been enough to stop the emergence of small, and not so small, shanty towns springing up in places like Manchester, like the Hoovervilles of the 1920s and 1930s.

Europe and the other half of the crisis

The living encamped amongst the dead, along the Rue Richard through the Cimetière du Montparnasse, in Southern Paris, where tents line the road.

On the face of it, the fact that this is as much a broader European as a specifically British problem, may seem to exonerate the Chancellor and his policies. After all, it would be unfair to blame Osborne for the living lodging amongst the dead on the Rue Richard, at the Cimetière du Montparnasse in Paris.

Yet while Osborne has no part in French system - where, in response to their own crisis, supermarkets are no longer being allowed to throw away surplus food and must donate it instead to help those in need of handouts (Derambarsh, 2016) - he does have a role in the other half of the crisis.

War on Europe's borders has led to a second element of the humanitarian crisis: an influx of refugees, for which Europe was not necessarily lacking in resources to tackle, but certainly appeared unprepared. With the British government unwilling to take on the burden of the refugees, a camp sprang up on the British border at Calais.

That camp grew to become a large slum town, administered by aid workers running soup kitchens and handing out charitable donations. But even that temporary solution could not last and the camp is now being broken up, by force, in order to disperse the refugees (Weaver & Walker, 2016).

Hoover and the Great Depression

As President, Herbert Hoover oversaw the Wall Street Crash and the Great Depression. Photograph: Herbert Hoover by Opus Penguin (License) (Cropped)

Osborne's approach, pulling back the state and public investment and looking to free markets and civil society to step in to the breach, has made him seem like a man more concerned about balancing his chequebook than acting in the face of a crisis. With that image, he risks receiving the same reputation that marred President Hoover during the Great Depression, as a 'do-nothing' (Leuchtenburg, 2009).

It isn't hard to draw comparisons between some key aspects of the approaches of George Osborne and Herbert Hoover. As US Secretary of Commerce, for two administrations between 1921 and 1928, Hoover was a follower of the efficiency movement - pursuing the ridding of inefficiency and waste from the economy (Hawley, 2006).

As when Osborne's Conservatives came to power in 2010 advocating for a 'Big Society' (Rigby, 2016), Hoover believed that the means of achieving his economic aims was 'volunteerism', as opposed to direction from government - trusting to, and nominally supporting, individual initiative, typified by his role as director of American charitable relief efforts in post-war Europe, particularly in Belgium.

His subsequent time as President, from 1929 and 1933, was however overshadowed by the Wall Street Crash and the beginning of the Great Depression that saw the poor of New York living in Central Park in tented encampments - one of many American shanty towns that became known as 'Hooverville'.

Hoover made more effort than previous Presidents to arrest the severe economic downturn, including some public works projects. And then (Gray, 1993), as now (Pidd, 2016), civil society stepped up to provide aid and relief. Yet when the election came, Franklin D Roosevelt won, and with his New Deal coalition led the United States for four terms, with a comprehensive and interventionist plan to support and rebuild.

While Osborne avoided the stigma of the crisis hitting on his watch, he has also avoided intervention. Instead he has cut public spending - saying that the roof must be fixed "while the sun is shining". Amidst years of economic turmoil and cuts to social security, while statistics say homelessness has continued to rise (Gentleman, 2016), its difficult to see an application for his maxim.

The cracks and those slipping through

The advent of these modern day Hooverville encampments suggest that there is an unacceptable break down in the welfare safety nets in Britain, in France and elsewhere in Europe. Not all of this can be put down to the pressures of the refugee crisis. There are cracks appearing and people are slipping through.

Throwing money at suppressing the symptoms is not enough. It won't tackle the core problems. As much as the Conservatives want the focus to be on the public debt, in order to justify their agenda, private debt is just as large of a problem. Individuals are hanging on by their fingernails, stretched thin by the high cost of living.

Housing is prohibitively expensive. The cost of energy needs to come down. Work for the lowest paid is too insecure and the safety net too full of holes. George Osborne doesn't have to become a believer in a big  interventionist state overnight to help. At the very least something might be done with small reforms, aimed at properly regulating the energy and housing industry to prevent anti-competitive behaviour and price gouging.

Above all that, Osborne might benefit from accepting a single simple lesson, one that most austerians should take note of: the bad times inevitably end up costing far more than the good.