How Neoliberalism Made Britain Vulnerable to Covid

Neoliberalism has marketed itself on efficiency and pragmatism for almost fifty years, but Britain's experience of Covid-19 has exposed those claims as false – at the cost of many thousands of lives.

Ten months in, Britain’s resolve continues to be tested by the coronavirus pandemic. In July, prime minister Boris Johnson set out a plan for ‘significant normality’ by Christmas – but aside from the slow vaccine rollout, things are getting worse, not better. London and vast swathes of Southeast England have been plunged into the new Tier 4, with talk of a new Tier 5 on the way. More than 40 countries have banned UK arrivals.

How has Britain ended up in such a state? To find a culprit, look no further than the economic ideology that has governed political policy for almost half a century.

Back in 1945, Labour’s sweeping electoral victory came with the promise of a social revolution. The 1944 Education Act, the 1945 Family Allowance Act, and the 1946 National Health Service Act were all passed, illustrating the belief in an economic prescription that had the relief of poverty, the redistribution of wealth, and the advancement of a robust safety net at its core.

As prime minister in the 1980s, Margaret Thatcher overrode these ideals and ushered in a neoliberal formula which has been the modus operandi of elected governments since. At its heart is a conviction that tax and regulation should be minimised, social welfare reduced, and public services privatised. Emphasis is placed on the free market, and the belief that it ensures everyone gets what they deserve. The 1988 tax reform budget—which slashed corporation and inheritance taxes and cut the top income tax rate from 60 percent to 40 percent—was proof of the changing economic orthodoxy.

Neoliberal economics remained the central pillar of politics under Blair’s New Labour, and starting with David Cameron’s 2010 government, the last decade has seen the neoliberal blueprint combined with a complementary austerity programme which seeks to solve a lack of public funds by any measure other than raising the top rate of tax to a sustainable level.

Austerity is itself a symptom of the neoliberal doctrine; former chancellor George Osborne made that clear when, in the aftermath of the financial crisis, he stipulated that ‘The country has overspent; it has not been under-taxed’. Reduction had to come from lower spending rather than higher taxes – the outcome supposedly being that market forces would be left to operate spontaneously, enhancing efficiency and increasing investment.

This thinking is rooted in the idea that insofar as increased taxation hits the rich, it will deter ‘wealth creation’ and everyone will end up poorer. That, alongside state intervention and the organisation of labour, is a distortion of the market that impedes the formation of a natural hierarchy of winners and losers.

But it was these neoliberal austerity measures that hamstrung Britain’s chances of adequately coping with a pandemic.

A report by the Institute for Public Policy Research has showed that austerity ‘ripped the resilience out of health and care services’ even before the Covid crisis kicked in. NHS reform legislation passed in 2012 moved responsibility for public health from the centralised NHS to local authorities – and those local authority budgets were cut by nearly a third from 2010 to 2018.

As a result, life expectancy has stalled, and the amount of time people spend in poor health had increased. Ahead of the outbreak, four in five hospitals had bed occupancy levels above the acceptable safe limit of 85 percent. In three out of five hospitals, bed occupancy exceeded 90 percent; England had just 700 unoccupied ICU beds at the end of 2019. The South West had access to the least, at a dispiriting 51.

That this data was recorded before the pandemic shows that Covid chose its moment well: Britain’s healthcare system was critically depleted and unable to meet the needs of its patients, making a high mortality rate far more likely. This isn’t just a British problem, either. Cuts in public health spending across Europe made the possibility of a quick continent-wide recovery impossible.

The harsher the effect of austerity on an area, the more destructive the impact of the virus has been. Research shows that the North was disproportionately affected by spending cuts in the last decade, and a report by Northern Health Science Alliance found that 57.7 more people per 100,000 died in the North of England than in the rest of the country between March and July this year. Up until the new strain developed in London, the Northwest of England and Yorkshire and Humber had the highest infection rates in the country: an estimated 2.24 percent of people in the Northwest had Covid-19 at the end of October compared with 0.82 percent in London. Health inequality has been thrown into relief by Covid, but the reality is that the discrepancy has been growing for over a decade.

In the neoliberal worldview, inequality forms an inherent part of laissez-faire capitalism, stimulating innovation and creativity—and thereby generating well-deserved wealth—and punishing only those who lack enterprise and are too lazy to do anything about their lot. But the pillars of free-market thinking are intrinsically flawed and the convenient myth that inequality is inevitable is imprecise.

A new study by the London School of Economics examining the fiscal policies in 18 countries over 50 years has concluded tax cuts for the rich have never really trickled down. Instead, they exacerbate inequality. By pursuing an ideology based on fantasy, Britain was digging its own grave – and the pandemic has ensured those most in need lie in it.

Even now, that fantasy continues to wreak havoc. Ministers have wasted billions on outsourcing public health systems and resources to ‘efficient’ and ‘innovative’ private companies, which have repeatedly failed to deliver and sent the country spiralling towards another nationwide lockdown.

Britain has spent almost half a century cutting taxes, slashing social welfare, deregulating the market and inviting profit-driven corporations to provide public services. Every year prised the door open a little wider for devastation. Now, the country is watching hundreds of friends and loved ones die daily while unemployment spikes and infrastructure falls apart. Neoliberalism has proved the mother of all political own goals.