The Observer’s view on how Britain’s crises can be fixed by a shift in political culture | Observer editorial
Last year will be remembered as the most turbulent for the global economy since the financial crisis of 2008. Russia’s invasion of Ukraine drove a huge spike in global energy prices, which sent inflation soaring across the world. And 2023 will be even tougher for many Brits; it will be a year of falling real wages at a time when costs have essentially never been higher.
The government would have us believe that this is entirely a product of these global headwinds. But the truth is that a series of long-term structural problems have left the UK more vulnerable to massive global shocks than many other countries. From the dysfunctional housing market to sluggish economic growth to a complete failure to grapple with the consequences of an aging population, these problems have been neglected by governments of both colors in recent years, but made progressively worse by 12 years of Conservative rule. If left unaddressed, they will hamper people’s quality of life for decades.
Britain’s growth prospects are poor according to international standards. This is because economic growth was for years overpowered by a financial services sector whose failures were exposed by the crisis of 2008. The dependence on the sector hid a lack of productive capacity in the rest of the economy and large geographical variations in economic prosperity . The 2010s should have been used to build investment in the public service and skills infrastructure needed to increase productivity across the country. Instead, public spending cuts hit the least affluent areas hardest, and the Conservatives pursued the hardest Brexits for ideological reasons, wiping out a whopping 5.5% of GDP by mid-2022, according to an estimate. It is families with lower incomes who will feel the impact on their living standards the most. The government urgently needs to support exporting businesses by restructuring trade with the EU, our closest and largest trading bloc, and introducing policies that allow people to dip in and out of training throughout their working lives to ensure the economy has the skills it needs. And ministers who in recent years have reneged on commitments to promote investments in green energymust prioritize low-carbon technology as a way to boost growth and ensure the UK meets its commitments to reduce CO2 emissions to net-zero by 2050.
The growing number of young people who will never be able to afford their own home is an indictment of politicians’ failure to deal with the worsening housing crisis. Britain has some of the most expensive rents in Europe and a housing market where rising prices provide windfall gains for homeowners at the expense of those who remain locked out of homeownership. This will increasingly affect many aspects of life: families having to move repeatedly, undermining any sense of stability for their children; people unable to move to take advantage of economic opportunities in higher growth areas of the country; older tenants who retire with insufficient retirement income to cover their rent. The number of people losing out will grow until the government gets to grips with the problem, not just by facilitating more housebuilding, but by properly taxing housing as an investment class, including buy to let, introducing longer tenancies and capping rents. increases.
After housing, childcare is one of the biggest costs for families with young children: the UK has second most expensive system in the world according to the OECD. Worst of all is the gap between when a parent goes back to work and when the 30 hours of free time start in the term after a child turns three; this leaves parents unable to afford childcare and thus unable to return to work, disproportionately affecting women’s careers and denying children the opportunity to learn in high-quality nursery environments, which is particularly important for children from less affluent backgrounds. The system is in urgent need of reform to offer free universal childcare for children under five; this would bring benefits not only to children and parents, but to the wider economy.
As in so many wealthy societies, Britain’s population is aging as a result of low birth rates. The consequence is that, overall, we will have to spend ever greater amounts on health care and personal care. Yet Britain significantly underinvests in healthcare – 18% below average person than comparable EU countries over the past decade – and the egregious levels of underfunding of later life care mean that far too many older people are left languishing without the support they need to live a dignified life or live weeks in hospital wards. This is unsustainable with dire consequences for people in their final years of life; The NHS cannot do its job without more resources and it is ridiculous that politicians have neglected to address the glaring problems in social care for two decades.
These are the difficult challenges ahead for Britain. They are eminently fixable, but require a generous-spirited policy that is aimed at the long term and able to maintain some of the cross-party consensus that developed around the NHS and the expansion of social housing in the 1960s and 70s’ the ones. Yet Britain is governed by a Conservative Party that has shamelessly embraced populist tactics as a means of driving through Brexit and brought political chaos in 2022. More broadly, our political discourse is gradually becoming tainted by tribalism, culture wars and identity politics playing out on social media. We must hope that 2023 will be the year our political leaders take the opportunity to rise above the fray to finally start talking about the social and economic reform Britain so desperately needs.
