We're all in this together: the shared pain and triumph of austerity economics

“We’re all in this together,” David Cameron assured us when he first came to office.

Labour, it seems, had caused a terrible worldwide financial crisis. Just how the Blair and Brown governments had managed to inflate the sub-prime mortgage market in the US and then bring it crashing down, was never made clear. But the British Conservatives are honourable men (and a few women), so who are we to question their pronouncements?

Cameron: who are we to question his judgement?

What was bountifully clear, in any case, was that we would all of us be paying the price. Austerity economics would be applied without fear and favour. That meant belts would be tightened in every part of society so that we could pay off the colossal debt Labour had accumulated and wipe out the government’s spending deficit. 

The pain would be hard to bear but such a prize was surely worth it.

Labour’s behaviour had indeed been intolerably bad. It had amassed a debt amounting to 76.6% of GDP by 2010. Fortunately, five years of enlightened Conservative rule delivered a figure of only 89.2%. Labour’s legacy was an unforgiveable debt to be passed on to our children and grandchildren. What the Tories have achieved is, I’m assured, a huge step in the right direction.

What about the deficit? Here, Tory success has been even more spectacular. At the height of the crisis, the deficit reached £103bn. That has been pretty much wiped out, as George Osborne, Cameron’s Chancellor of the Exchequer promised to do within five years – wiped out, that is, apart the final obstinate residue of £40bn or so. Still, look how that compares with the lamentable Labour government’s figure of £20bn in 2005, before the crash.

Which, don’t forget, it caused by manipulating the US sub-prime mortgage market.

These successes don’t come without a cost, of course. There has had to be a cut in the top rate of income tax, paid by those on the highest salaries, from 50% to 45%. Funnily enough, overall tax and benefit changes have reduced household incomes by about 3.3% on average.

Tough but fair, I’m sure you’ll agree. Especially as the elderly are much more assiduous in voting Tory.

Meanwhile, public sector workers have shouldered their share of the burden. They took two years of pay freeze from 2010, and since then have lived with a cap of 1% on pay increases.

Private sector employees have played their part too. For five years, their increases averaged 1.5%. But last year, there was a great loosening of the shackles as pay soared, on average by 1.8%.

There was at least one consolation for those coping with pay restraint. At least they know that everyone is shouldering their share of the burden. For instance, top executives of the biggest companies saw their salaries rise by a mere 10% last year. It seems that these fine gentlemen (there are no ladies among them) are now paid £5.5m a year on average which is 129 times as much as their employees, or just shy of 250 times as much as median income in the UK.

Achievements like taking the deficit down to twice what it was in 2005 and public debt from 78.4% of GDP to 90.6% don’t come free. Someone has to pay.

Isn’t it comforting that the pain has been so well-shared, confirming that we are indeed “all in this together”?