The Autumn Statement – no light at the end of the tunnel – Dec 2012

Cameron and Osborne

‘It has taken time but the British economy is healing,’ so announced the Chancellor of the Exchequer George Osborne in the Autumn Statement of 5 December 2012. He then proceeded to deliver data and prescribe policies that show the economy deteriorating, defying every effort to revive it.

In 2010 Osborne declared his number one rule to be that public debt as a share of national income must fall by 2015-16. This is the government’s stated justification for cuts to benefits and the public sector. In September 2010 public sector debt amounted to 57.2% of gross domestic product (GDP). At the end of October 2012, after two and a half years of public spending cuts, public sector net debt was £1,068.8 billion (excluding bank bail-out money), equivalent to 67.9% of GDP. This debt is now predicted to reach 80% of GDP in 2015-16. Two and half years ago Osborne said he needed 5 years to sort out the deficit problem, now he says he needs another 5 years and that cuts and austerity will be extended to 2018. There is no light at the end of the tunnel; capitalism has switched it off.

This heir to the Baronetcy of Ballintaylor, County Tipperary, privileged pupil of St Paul’s private school and graduate of Oxford University, whose fortune (excluding bank balances, share ownership and other investments) was estimated to be £4.6m in 2010, is now charged with stewarding the nation’s finances and spending. He declared that the Coalition government was about ‘being fair to the person who leaves home every morning to go out to work and sees their neighbour still asleep, living a life on benefits…’. Osborne is for the nation’s ‘strivers’ and not the ‘skivers’, and he is, he assures us, ‘on the side of those who want to work hard and get on’: such is this government’s contempt for those that it, (and the Labour government before it), has thrown in to unemployment and poverty. 60% of the benefit cuts announced in the Autumn Statement will fall on people who work but are paid so little that they depend on benefits to survive. The government may attempt to divide the working class with slanders against the poorest among us but the cuts snare wider and wider sections of the population. The Office for Budget Responsibility (OBR) said that the bottom 70% of the population will be worse off as a result of the Autumn Statement and the poorest 10% will be hit the hardest.

Osborne and Prime Minister Cameron may be presiding over an economic disaster but they laugh and sneer at the Opposition because they know that they are getting away with the City of London’s agenda to slash public spending and privatise public services. This is the biggest attack on the working class in 80 years and Labour is incapable of putting up any resistance and does not want to – that is why they laugh with contempt.

The government stated that most working-age benefits will rise by only 1% a year for the next three years. This, it says, will save £3.7bn by 2015-16. This is £3.7bn taken off job seeker’s allowance, income support, child tax credit, employment and support allowance and housing benefit – money taken from the poorest people in Britain. A typical working family on £20,000 a year with two children will lose £279 a year from April 2013. Single parents who claim tax credit and child benefit will lose nearly £330 a year.

What about the wealthy? Two days before the Autumn Statement the Office for National Statistics stated, ‘The wealthiest tenth of households owned more than 40% of overall wealth and were over 850 times wealthier than the least wealthy tenth of households...The wealth held by the top 10% of households was...over four times greater than the bottom half of all households combined.’ This enormous inequality is the result of over three decades of transfer of resources from the poorest to the richest in society. This transfer now applies to half or more of the population being looted by the rich. From April 2013 the top rate of income tax will be cut from 50p to 45p in the pound. 8,000 people earning £1m or more a year will receive an average tax cut of £107,500 a year. Corporation tax on company profits is to be cut to 21% in 2014, the lowest rate for any of the most developed capitalist countries. Corporation tax was 28% in 2010. British firms now have a cash stockpile of over £700bn that they are simply not investing in production. This corporation tax cut will just add to the stockpile and the dividends paid to the wealthy shareholders.

A bleak mid-winter
Just to show that ‘We are all in this together’, the Chancellor said that from 2014 the amount that can be saved into a pension and receive tax relief will fall from £1.5m to £1.25m and that the annual pension saving allowance will fall from £50,000 to £40,000 – this will affect perhaps 250,000 savers. It will hardly sour their port this Christmas, but for many hundreds of thousands of people in Britain the choice will be between eating and heating. Freezing benefit payments at 1% a year for 3 years will force many people to cut back on eating and heating. Milk has risen from 37p a pint in 2007 to 46p today, a 25% increase. Minced beef is up 19% in the past year, bread prices are set to rise by 10% or more. Fruit and vegetable consumption is falling; the bottom 10% of income earners cut purchases by a fifth between 2007 and 2010. Fruit prices are up 34% since 2007. Good food is being put out of reach of many people by these benefit cuts. Gas heating costs rose 70% between 2007 and the start of 2012. In the past year they have risen by 6.4%, while electric heating costs are up 1.7%. Mansions will blaze with fires and lights this Christmas, but many flats and houses will stay dark and cold.

From 2010-11 to 2017-18 the government plans to cut almost 17% from its departmental spending. ‘I’ll cut the deficit, not the NHS’, Osborne promised in 2010. Latest Treasury figures show a real expenditure decrease in spending on the NHS of £800m between 2009-10 and 2011-12. Although, like the NHS, school spending is supposedly protected from the cuts, in the Autumn Statement Osborne directed more money for academies and Free Schools and said the government would end national pay scales and national bargaining for schoolteachers. The intention is to introduce performance related pay and drive down teachers’ wages.

Wherever you look the warning signs are flashing: manufacturing output down 2.1% for year ending in October 2012; the trade deficit up to £3.6bn in October up from £2.5bn in September 2012; UK GDP still 3.1% below its 2008 peak and the OBR cutting its estimated 0.8% GDP growth for this year to a 0.1% contraction – and this what the Chancellor calls healing. The OBR predicts that the median wage in 2014 will be 7.4% lower than in 2008. The attack on living standards required to sustain capitalism is reaching up the social ladder and dragging millions more people down into insecurity, anxiety and poverty. The same gloomy outlook is spread across the capitalist world. Resistance will not come from within Parliament - it must begin with us, the people, mobilising on the streets in our own defence, beginning to organise.

Trevor Rayne