Cuts bite deep in poverty Britain

Fight Racism! Fight Imperialism! 240 August/September 2014

In the United Kingdom, the seventh richest country in the world, 3.5 million children – nearly a third of all children – live in poverty,1 a figure expected to rise by another million over the next six years. Up to a million people have needed emergency handouts from food banks in the last year, while 28% of all adults say they regularly skimp on food so that others in their households can eat. These stark facts, highlighted in a recent Oxfam report,2 reflect the growing destitution imposed on the working class by the Coalition government. Like the four horsemen of a capitalist apocalypse, hunger, poverty, debt and insecurity stalk the land. Cat Wiener reports

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Fight all benefit cuts /FRFI! 239 Jun/Jul 2014

Fight Racism! Fight Imperialism! 239 June/July 2014

The ConDem coalition’s onslaught on the unemployed and those on welfare benefits shows no sign of letting up. Immediately following the introduction of Claimant Commitment in April, the government announced that daily signing-on will be required for workers unemployed for two years or more, and that anybody who is unemployed may face sanctions if they do not accept a zero-hours contract. The only purpose of daily signing-on is punishment: there is no extra money for those who have to get public transport to their local Jobcentre. The lie behind government policy is the notion that unemployment is the fault of the unemployed, and they need to be pilloried or whipped to get back to work. MARK MONCADA reports.

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Bedroom tax - Fight to the finish /FRFI! 239 Jun/Jul 2014

Fight Racism! Fight Imperialism! 239 June/July 2014

The bedroom tax is not working – even by the government’s own criteria. It was supposed to free up social housing properties for overcrowded households. But most overcrowded social housing is in London where the number of tenants affected by the bedroom tax is far fewer than in the north of the country and the midlands. The tax was supposed to save £500m on housing benefit spending a year, but the figure is nonsense because so many tenants have had to downsize into the private sector where rents are much higher, and many more have had to be supported by discretionary housing payments. ROBERT CLOUGH reports.

Despite the appalling impact of the tax, especially on disabled people, struggles against it across the country are at present small-scale. One of the most active is South Wirral Campaign against the Bedroom Tax which has organised pickets, marches and public meetings since it was set up in April 2013 and repeatedly challenged local MPs and Labour councillors to act against the bedroom tax – to no avail. The campaign has also supported tenant appeals against the bedroom tax, and has won six out of eight benefit tribunals over the issue of bedroom size.

At a public meeting in Birkenhead On 19 May it launched a ‘1,000 appeals over bedroom size’ campaign across Wirral. Campaign co-ordinator and FRFI supporter Robert Claridge explains: ‘There are about 3,600 tenants paying the bedroom tax across Wirral. Of those, we estimate that 2,000 are paying the tax on box-rooms – rooms of less than 70sqft. We want to get as many tenants as possible to appeal on room size, not just because they will stand a chance of winning, but because we want to make the bedroom tax unworkable. 1,000 appeals may sound fanciful, but tenants have nothing to lose by appealing, and it is a necessary step in getting more collective and active involvement in defeating the bedroom tax.’

South Wirral Campaign recently won a significant tribunal for a Liverpool tenant. The judge agreed with the Campaign’s submission that a bedroom of less than 70sqft is unsuitable to accommodate an adult, and further that such a room would present a Category 1 Hazard under the Health and Safety Rating System (HHSRS) that accompanied the 2004 Housing Act if it were to be used as a bedroom. Tellingly, the judge added that the council ‘is not entitled, as the enforcement authority for housing safety, to ignore other housing overcrowding legislation and housing guidance issued by the DWP, in applying the Housing Benefit Regulations 2006.’

This makes the decision extremely important. The bedroom tax was always a brutal and vindictive attack on poor and disabled people. It was also a means to destabilise the finances of housing associations to open them up for further concentration and privatisation. Now it is being used to frustrate any basic housing standards for tenants and for the working class as a whole. Councils have a statutory duty to enforce the provisions of the 2004 Housing Act, and many do so for Houses in Multiple Occupation (HMOs). But there they draw the line: while agreeing that 70sqft is the minimum for bedrooms in HMOs, councils claim that HHSRS does not apply to social housing. This is rubbish, and the judge is saying so very clearly. This means that the fight against the bedroom tax must also become a fight for basic housing standards for the working class. 70sqft just allows a single bed, a small wardrobe and a small chest of drawers, an absolute minimum for bedroom furniture.

Robert urges other campaigns to follow suit: ‘There are about 525,000 tenants paying the bedroom tax across the country. Maybe 40% are paying it on box rooms. We can clog up the system with appeals, we can get tenants, their families and friends involved in collective resistance. Our next planned activity in Wirral will be a mass handing in of appeal letters – we already have over 50. Actions like this can raise the profile of the campaign and persuade others that it is better to stand and fight than to do nothing.’

Focus E15 campaign - Focus on the future /FRFI! 239 Jun/Jul 2014

Fight Racism! Fight Imperialism! 239 June/July 2014

‘The campaign has grown majorly and we have noticed it isn’t just mothers being affected. We have decided to widen the campaign for everyone. We are introducing our new name – Focus on the Future. We are fighting for everybody with housing problems and offer our full support. We will fight for as long as it takes to stop the privatisation of London and stop social cleansing. We are fighting for social housing for all, a home that everyone can afford, where they feel comfortable and have the support network that we all need!’

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Budget games: Political spin masks bleak reality / FRFI 238 April/May 2014

Fight Racism! Fight Imperialism! 238 April/May 2014

Budget day allows Chancellor George Osborne to take to the parliamentary stage for an uninterrupted hour to deliver his political agenda. After four years of preaching the need for unremitting austerity to revive the economy, in this, his fifth Budget, the time had come to retune his message in preparation for the general election just over a year away. He is after all a very rich boy determined to continue his chosen hobby of parliamentary politics, while pretending to run the British economy. DAVID YAFFE reports.

At the end of his speech Osborne declared: ‘We’re building a resilient economy. This is a Budget for the makers, the doers, and the savers.’ This is far from the truth. As Mark Carney, the Governor of the Bank of England and an Osborne appointee, said in mid-February, the economic recovery is ‘neither balanced nor sustainable’. Osborne is clearly aware of this bleak situation as he said in his speech: ‘We’re putting Britain right. But the job is far from done. Our country still borrows too much. We still don’t invest enough, export enough or save enough.’ The Budget did little to change this.

What the Budget was primarily concerned to do was to target the votes of older people, from relatively prosperous pensioners to defecting Tory voters attracted by the ‘populism’ of the United Kingdom Independence Party (UKIP) of Nigel Farage. This was the intent behind the radical changes to savings and pensions in the Budget.

Those who are more likely to vote were intended to be the main beneficiaries of the very limited payouts from this Budget. At the last general election in 2010 some 76% of the over 65s voted, compared with 44% of the under 25s. 58% of UKIP voters, according to the polls, are over 55. However UKIP voters are generally not very well off. In the Budget there was a patronising attempt to appeal to ‘hardworking people’, not only supporters of UKIP but also Labour voters in less prosperous areas of the country. Measures such as the halving of the bingo tax from 20% to 10%, the penny off the price of beer and the freezing of other alcohol duties were designed to this end. Osborne remarkably even visited a bingo hall in Cardiff a week after the Budget. The utter contempt these rich boys have for the working class was displayed by the Tory chairman Grant Shapps who tweeted a picture after the Budget: ‘Bingo. Cutting the Bingo tax and beer duty: To help hardworking people do more of the things they enjoy.’ He asked his followers to re-tweet it, ‘to spread the word’.

Main Budget measures
Public finances are in a dreadful state, exacerbated by the savage austerity programmes of this reactionary government. Osborne has little room to manoeuvre and almost nothing to give away. The Budget was fiscally neutral, taking as much as it gave. Scarce resources are being used to target potential Tory voters and to give tax breaks to businesses in yet another attempt to stimulate capital investment. Austerity will continue for the vast majority of working people into the foreseeable future. The Financial Times described the measures in the Budget as ‘high in political resonance and low in fiscal cost’.

The radical changes to savings and pensions will benefit a fairly restricted number of relatively well-off middle-aged and elderly people. Few people can save £15,000 a year, the new ISA (tax free saving) allowance, raised from £11,520 in the current year. New National Savings pensioner bonds will be introduced, which allow up to £10,000 to be invested at higher interest rates than currently available, but there will be a limited supply. Those taking a gamble on premium bonds can invest substantially more, with the maximum permitted holding being raised by steps from £30,000 to £50,000. These measures will have no impact on the 8 million households that have no savings at all. However, every one of the top 10 locations for savings has a Tory MP.

The decision to allow those reaching retirement age to draw down their funds as required instead of buying an annuity (which provides a regular income for the rest of your life) is a popular measure given the very low annuity rates and the deep distrust of pension providers and insurers. It may be popular but it is very risky and could have long-term consequences that have been ignored by a government concerned only with the coming general election. At present 90% of the 400,000 savers who retire each year buy annuities worth in total around £14bn. A Financial Times poll after the Budget showed just 4.5% would now buy an annuity against 42% who would take out their total fund. The National Association of Pension Funds is concerned: ‘A number of people will run through their pension pots far too quickly…We fear these reforms, without careful scrutiny, will leave a large swathe of people vulnerable to poverty in old age.’ Other critics believe that those with large pension assets will invest them in property, so strengthening the buy-to-let property boom and accelerating the rise of house prices. The Pensions Minister Steve Webb told the BBC he was ‘relaxed’ about how people spend their money: ‘If people do buy a Lamborghini but know that they'll end up just living on the state pension, that becomes their choice’. His stand was supported by the government. What fantasy world do these government ministers live in? A Lamborghini sports car costs around £150,000.

Under pressure from the Liberal Democrats, the personal tax allowance will be raised to £10,500 in April 2015. This will give back very little to most tax payers. Fiscal drag has meant that the 40% tax threshold has dropped in real terms and an extra 1.4 million people have joined that bracket since the coalition came into office. There are now 4.4 million taxpayers in the 40% band. Despite pleas from the Tory right Osborne has not found the funds to raise the threshold in line with inflation for what are potential Tory voters.

To further stimulate investment and exports, the Budget doubled the annual business investment allowance against corporation tax to £500,000 and extended this to the end of 2015, after which it would normally fall back to £25,000. It also doubled lending under the export finance scheme to £3bn and cut the interest rate on that lending by a third. Osborne announced measures to cap the carbon price floor, a tax on electricity generated from fossil fuels, at £18 per tonne. The carbon floor price, introduced last year, was intended to rise annually in order to encourage manufacturers to switch to greener fuels. It will cost around £7bn over the four years 2016-2020 and save medium size manufacturers some £50,000 on their annual energy bill, and households around £15. Priorities do change for this government. Once promising to create the ‘greenest government ever’ it is now getting ‘rid of all the green crap’ (both statements attributed to Prime Minister Cameron).

Finally the Budget promises no end to austerity for the working class. The chancellor was directing his remarks to Labour when he said: ‘Securing Britain’s economic future means there will have to be more hard decisions; more cuts. The question for the British people is: who has the credibility to deliver them?’ Central to this strategy is a ‘welfare cap’ that would put a limit on welfare spending. It will be set at £119bn in 2015-16 rising with inflation to £127bn in 2018. The ‘welfare cap’ includes housing and disability benefits as well as tax credits, but excludes state pensions and pensioner benefits as well as the Jobseeker’s Allowance. A Commons vote was tabled to establish this measure. Labour accepted this challenge with alacrity and Ed Miliband and Ed Balls led their troops to vote with the government in favour of this savage attack on the poorest sections of the working class.

A bleak economic future
Osborne boasts of taking difficult decisions, which are achieving the largest reduction in both the headline and the structural deficits of any major advanced economy in the world. ‘Before we came to office’, he said, ‘the deficit was 11%. This year [the Office of Budget Responsibility (OBR) says] it will be 6.6%. Next year, 5.5% – down a half. Then it will fall to 4.2%, 2.4% and reach 0.8% in 2017-18. In 2018-19, they are forecasting no deficit at all – instead, at plus 0.2%, a small surplus.’ He does not tell us that his targets set in previous Budgets have not been met and have been delayed by over two years. Total debt is forecast to peak at 78.7% of GDP in 2015-16, two years later and higher than his June 2010 forecast of 70.3% for 2013-14.

Recent analysis of these statistics has raised important questions about the overall performance. The OBR has argued that although the headline borrowing is down once you take into account the unexpected upswing in the economic cycle – higher than expected growth and rising employment – borrowing figures are actually worse. So the OBR’s estimates of the underlying deficit have deteriorated as it has become more pessimistic about the economy’s capacity for a prolonged period of recovery. It has been estimated that there is a further £20bn black hole in public finances.

Economic growth is forecast to reach 2.7% in 2014, but with that growth driven by debt-fuelled consumer spending and inflated house prices, nothing has been done to improve the potential output of the economy. The stronger demand has not improved the underlying supply (productive) potential. The fall in unemployment has its counterpart in the stagnating productivity of the British economy. Spare capacity is falling too quickly and limiting the growth prospects for the economy. If this continues Britain will enter an unsustainable and inflationary boom.

‘Rebalancing’ the economy towards exports and investments has failed. Trade is not expected to contribute to growth for the next five years. As a percentage of GDP, the last two quarters of 2013 have produced the largest balance of payments quarterly deficits in the history of the UK, at 5.6% and 5.4% of GDP respectively. Most of the decline arises from the falling income of UK overseas assets compared with the income from foreign owned assets in the UK. The financial services sector continues to play a central and dominant role in the parasitic British economy. It is significant that the bank levy was not raised in the Budget for the first time since it was introduced four years ago. ‘Deleveraging’ is failing, with households almost as indebted as they were in 2008 when boom turned to bust. The OBR predicts that in 2018 the ratio of the gross household debt to income will spring back to its crisis peak of 170%.

The prospects for the working class are bleaker still. Real wages have been falling since 2010 and are 6% below their pre-crisis peak. They have been falling for 44 out of the 45 months the coalition has been in office. On current plans, public spending in 2018 is to be cut to its lowest share of national income since 1948. On this measure only a third of spending cuts have been implemented so far. If these plans are not stopped there will be more devastating cuts in our public services and savage falls in living standards for millions of working class people. We have no choice now but to organise to stop this.

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  1. Criminalising the destitute
  2. Zero-hours contracts: the face of casualisation
  3. New Poor Laws - Poverty, Insecurity, Hunger
  4. Determined Focus E15 mothers fight to stay in Newham
  5. Marching against the bedroom tax in South London
  6. Fighting the bedroom tax in Newcastle
  7. Fighting the bedroom tax - Loophole gives hope to tenants
  8. War on the working class and another irrelevant election
  9. Home care workers: marginalised and exploited / FRFI 236 Dec 2013/Jan 2014
  10. Focus E15 Mothers - ‘No room at the inn’ says Newham Labour council / FRFI 236 Dec 2013/Jan 2014
  11. No option but resistance / FRFI 236 Dec 2013/Jan 2014
  12. Newcastle Labour Council cuts: 8 million more reasons to break with Labour and build a new movement
  13. Fighting the bedroom tax in south London/FRFI 235 Oct/Nov 2013
  14. No to Newham’s social cleansing Defend the Focus E15 Mothers!/FRFI 235 Oct/Nov 2013
  15. Organise to fight the cuts!/FRFI 235 Oct/Nov 2013
  16. Axe the bedroom tax Can’t pay – won’t pay!/FRFI 235 Oct/Nov 2013
  17. Atos fails the test /FRFI 234 Aug/Sep 2013
  18. Benefit cuts - No refuge from violence /FRFI 234 Aug/Sep 2013
  19. Newcastle: Building resistance to the bedroom tax/FRFI 234 Aug/Sep 2013
  20. Overall benefit cap is social cleansing/FRFI 234 Aug/Sep 2013
  21. Tories dismantle welfare benefits - Labour promises the same
  22. Lessons of the Poll Tax/ FRFI 233 Jun/Jul 2013
  23. Fighting the Bedroom Tax in Newcastle: building resistance/ FRFI 233 Jun/Jul 2013
  24. Build resistance - Fight the cuts/ FRFI 233 Jun/Jul 2013
  25. Defend the Counihans! Fight evictions in Brent!/ FRFI 233 Jun/Jul 2013