On Monday 7 June, David Cameron declared war on British workers — the public sector workers who will lose jobs, the jobless who will lose benefits, the working-class people who will find the services they depend on are gone, or have been privatised out.
Britain’s “way of life”, said Cameron, would be fundamentally disrupted, for years to come. Was Cameron just preparing expectations and talking up the scale of the cuts? No.
One consultancy firm, Capital Economics, predicts as many as 750,000 jobs will go in the public sector.
We are not, as Cameron put it, “all in this together”. Bosses who win new private sector contracts for public sector services will not be feeling the pinch. Bankers will not be throwing themselves out of office windows.
Playing on a “threat” that Britain will lose its credit rating if the deficit is not slashed back, Chancellor George Osborne and his Treasury Lib-Dem junior partner — the now-politically-indistinguishable-from-the Tories Danny Alexander — outlined the “processes” by which these cuts will get selected.
After the budget on 22 June, comes an autumn spending review.
An Office for Budget Responsibility will oversee economic forecasts.
Departmental ministers will have to justify their budgets to other ministers — inevitably setting up a competition for who can cut the most.
The government will run a consultation exercise over the summer, supposedly to “engage” with voluntary groups, civil servants, etc. to create a national plan to reduce the deficit.
The consultation is a PR ploy, said former Tory chancellor Lord Lawson. He’s right. And no self-respecting community group, or anyone connected to the labour movement, should buy into this exercise. Why would you beg for crumbs from people who want to give you... just crumbs?
In any case the lie behind the government consultation exercise is shown up by the fact that government departments have already been told to axe hundreds of millions of pounds from their budgets for this year. The key targets for government cuts are benefits, tax credits and public sector pensions.
There may also be tax increases, perhaps a hike in VAT, on the horizon.
As expected, these cuts are being modelled on the Canadian Liberal government’s mid-1990s “successful” programme of deficit reduction.
As outlined by Canadian socialist Greg Albo in Solidarity 3-173 (www.workersliberty.org/node/14177) the Canadian government radically reduced central social provision, pushing responsibility for the social consequences of the cuts onto the provinces and the cities, and shifted the tax burden onto the poorest people. Although Britain does not have Canada’s federal political system, we may see a similar pattern of a heavy, and increasingly unaffordable, spending burden being put on local authorities.
But the central point about the Canadian plan was that no service, no spending item was regarded as sacred.
As part of the already-announced £6 billion package of cuts the government has said it expects local authorities to save £1.165 billion. At the same time there will be a one-, possibly two-year, council tax freeze. £700 million has already been cut from central government allocations to Scotland, Wales, and Northern Ireland. Most of the cuts outside of England have been deferred to next year.
If local government trade unions do not fight the squeeze, if every Labour-controlled council bows to “the inevitable” and at best looks at how to mitigate the “worst effects” of the cuts, then pretty soon only services regarded as absolutely vital will be left. There will be one central library in every city. Children will go swimming only if their parents can pay an expensive admission price. Adults will not be able to learn to speak English or become more numerate. Such services cannot easily be recreated.
But there are structural problems with some of the government’s plans. For instance they will not find it easy to make real cuts in public sector pensions.
These pensions are now held by a little under five million people, across seven main schemes. Only the local government pension fund has assets to cover government pension promises. All of the schemes in recent years have been reduced in value to new entrants. But public pensions still account for about 25% of the total national debt. What can the Lib Con government do?
An increase in the retirement age won’t fix things up. Nor will a £50,000 cap on pension payments, that is on the pensions of higher paid civil servants. Further change and restrictions will require legislation — and potential legal wrangles.
The government’s stated intention of finding a private capital “boost” to Royal Mail (i.e. part privatisation) may fail, as it did under Labour, because of Royal Mail’s unattractive £10 billion pensions deficit.
In all areas of deficit reduction the government wants to boost private business. Effectively it is pushing through a radical extension of New Labour’s neo-liberalism.
Part of it is a “vision thing”. Ex-BP boss Lord Browne has been asked to be an official “super director”, to insert private sector business practices into government.
Part of it is handing over responsibilities, and integrating big business into every level of public services.
For instance the Lib-Cons’ potential massive extension of the Academy programme, alongside the setting up of “free schools” by parents and other groups, is an invitation for businesses to manage chains of schools, or make money by competing for contracts from school heads.
As in Canada, each concrete cut, each privatisation, each “reform” may spark a concrete struggle. Studying the lessons from Canada will help us.
There, the unions were not prepared to push strikes to another level, to organise sustained and national action. And the unions failed to push for a political alternative inside and outside the social democratic New Democratic Party to which unions were affiliated.
The unions should set up across-the-board anti-cuts committees in all cities. We need to challenge entrenched patterns of official union activity — passivity and minimal bargaining in the face of attacks. We need a movement of industrial and political resistance.
The labour movement needs to defend its very means of fighting. It will need to assert the right to strike if it is to defend working-class people. That means being prepared to defy the anti-union laws, to fight any bans or restrictions on strikes in the public sector.
A legal ban on union finance for political parties is on the cards. We say the unions have the fundamental right to democratically decide where to channel their funds, and the right to use those funds to back political organisations, including the Labour Party.
Right now all the big unions are affiliated to the Labour Party. Yet for many years they have let the Labour leadership get away with restricting Labour’s democratic structures, thus easing Labour’s economic and political servicing of the bosses. A review of those structures is on the cards — the left in Labour, and crucially the unions, must mobilise on this issue. If they do not they will set back the creation of any political alternatives which could be forged in the struggles ahead.
The AWL thinks left in the labour movement should unite on these four planks. If you agree with us, contact us, to discuss how we can put these ideas into practice.
There are four sets of figures involved in the government plans.
1. The overall long-term debt.
For 2010-11 this is predicted to be £952 billion.
For 2014-15 this is predicted to be £1.4 trillion
The government wants to reduce this by £64 billion over five years.
2. The annual deficit (i.e. the gap between tax and other revenue and public spending).
For this year it is predicted to be £156 billion.
3. The debt servicing (i.e. the amount of interest paid on the overall debt).
For 2010-11 this is predicted to be £41.6 billion
For 2014-15 this is predicted to be £70 billion
4. Public spending.
For this financial year it has been set at £661 billion. But the government has said it will only ring fence health spending (£119 billion). Everything else is up for the chop. They have already announced over £6 billion in cuts.