Cuts battles will shape an epoch to come

Submitted by Anon on 26 June, 2009 - 7:45

If the Government puts out £1100 billion in cash, credit, and guarantees to the banks, as it has done, then someone is going to foot the bill. On current plans, both Tory and New Labour, it is public services and public service workers.

A lot of the £1100 billion has been guarantees given on the principle that, if the guarantees are in place, they will never be called on. But a lot is actual loans or actual cash, to buy shares in the banks.

The Financial Times summarises the results: “[Government] borrowing is set to rise to £175 billion a year, or 12.5% of national income... Public debt is set to hit £1000 billion next year, and public spending [has seen] an unplanned surge resulting from the recession, increased debt interest and social security spending...

“Unless people are willing to pay £5 in future for every £4 they currently pay in taxes... some parts of public spending will have to give”.

“Have to” only given some assumptions. If the whole financial system were nationalised (instead of just the loss-making banks) and run as a public service (instead of being left to the bankers to run as seems most profitable to them), a great deal of the debt drain would be abolished.

Comprehensive bringing-back into public ownership of public services themselves would yield large revenues, by cutting off the huge amounts currently paid to PFI and contractors. Just abolishing the Trident replacement would save £20 billion over coming years.

Under the Tory government of the 1980s, taxes for the well-off were cut drastically, while taxes for the worse-off actually rose, because of VAT and similar. New Labour has mostly maintained that policy, its recent increase in the top tax rate being only a small exception.

The Tory tax cuts of the 1980s and early 1990s saved the top ten per cent about £14 billion a year on today’s prices. Together with that went big rises in pre-tax incomes of the well-off — all those bankers’ bonuses and spiralling top-boss salaries — raising the top ten per cent’s slice of national income from 21 to 27% and almost exactly reversing the redistribution from the wealthy to the rest achieved between 1938 and 1949.

Reversals can in turn be reversed. Take six per cent of national income off the wealthy — which only means reducing them to their relative status of 1979 — and you have something of the order of the entire education budget.

No-one “has to” cut public spending unless the incomes of the rich are sacrosanct.

Read the latest economic snapshot from the Office of National Statistics: “Compensation of employees at current prices fell by 1.1 per cent in the first quarter of 2009... Total gross operating surplus of corporations is now 3.2 per cent higher than a year ago”. Some bosses are doing badly, but not all.

To get hold of what now goes to the luxuries of the rich and turn it to public services would probably require drastic measures: comprehensive nationalisations with limited compensation, workers’ control. But we only “have to” accept the alternative — public service cuts — if we leave government in the hands of those who reckon the luxuries of the rich to be sacrosanct, and do not fight instead for a workers’ government.

As it is, Tory Shadow Chancellor George Osborne is already boasting to his friends: “After three months in power we will be the most unpopular government since the war”. The Tories’ plan, if they win the election, as they probably will, is to cut deeply and fast, to ride out the storm while they are still fresh from an election victory, and hope that by the next general election the economy will have improved enough for them to ease off a bit and tell voters that it was a matter of “no gain without pain”.

Despite Gordon Brown’s talk of “Labour investment” versus “Tory cuts”, New Labour has already published projections for cuts if they stay in office. Alistair Darling refuses to give details, conveniently pleading that economic conditions are too unstable for that. According to the Financial Times, top Tories see Brown as “taking the electorate for fools” and can’t understand why he doesn’t, more plausibly, present the election choice as “between limited Labour cuts and... savage Tory cuts”.

Cuts are coming. They have already started seriously in local government. They can be resisted, if the labour movement is rallied to fight for an alternative.

The problem is, the unions are sleepwalking. Leaders of Unison, the biggest public services union, scarcely mentioned the looming cuts at its conference on 14-19 June.

But these cuts are likely to hit in many ways.

• Welfare payments will be further reduced.

• Services will be lost.

• Jobs will be lost.

• Public service workers’ wages, conditions, and pensions will be lost.

The majority of workers across the economy have suffered cuts in wage rates, paid hours, or benefits, in recent months. Most of those who have kept their wages, paid hours, and benefits will be in the public services, where agreements on these things tend to be more rigid. The Government will be out to “level down” public service workers to match the losses in the private sector. The Tories have already promised they will rip up the deals on pensions for public service workers.

Union organisation will be a target, too. CBI boss John Cridland has been rejoicing that “the UK’s flexible labour market” is helping bosses through the crisis. To make public-services workers “flexible” the Government will want to weaken unions there.

The bosses want to come out of the crisis with profits renewed, with a few casualties in their own ranks, to be sure, but with a clear road to capitalist expansion ahead of them, on the back of a battered, scared, desperately insecure working class, a working class in which the word “solidarity” has become too risky even to speak.

The alternative is for the labour movement to draw on the strengths of solidarity, as the engineering construction workers have shown them in their wave of strikes; to go on the offensive against a capitalist class which is, despite all its tough words, shaken, divided, and uncertain; to impose “the political economy of the working class”.

In France, the right-wing president Nicolas Sarkozy is now promising that: “I will not have a policy of austerity”. That does not mean he will keep that promise. It means that the French labour movement has pushed him onto the back foot. A combative, militant labour movement can push the bosses back.

The coming battles will shape a whole epoch to come.

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.