Class War On All Fronts

The government’s autumn statement on 5 December 2012 will mark a vicious extension to its assault on the working class. Having announced in March 2012 that it would seek to cut a further £10bn from state welfare on top of the £18bn already planned, the measures it is now considering include:

  • Stopping Housing Benefit for under-25s, affecting 385,000 people;
  • Limiting child-related benefits for unemployed people to their first two children, affecting 310,000 families;
  • Freezing benefits for two years from April 2013.

This is a savage attack, coming as it does on top of the third round of council cuts, cuts in housing benefit for those in social housing, and the introduction of the Welfare Benefits Act, all effective from April 2013. Robert Clough reports.

Council cuts

Throughout the country councils are now finalising plans for a third year of cuts in jobs and services. The average cut for the three years is £160 per head in the 50 worst-hit councils where the average child poverty rate is around a third. 43 of these are run by Labour. The 50 least-affected councils will suffer a total cut of £16 per head. 42 of them are Tory and on average have a 10% child poverty rate. It is the poorest councils which are being hit worst by the 28% cut in central government support over the three-year period. As each year passes the impact of the cuts grows more severe: Sure Start services reduced to nothing, libraries and day centres closed, charges for meals on wheels going up and up, respite care facilities slashed. However rich or poor the council, it is the working class, and working class women in particular, who bear the brunt both in terms of service cuts and job losses.


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Stand with DPAC!

As the deadly attack on disability benefits continues, with several thousand sick and/or disabled people a year dying within six weeks of having their entitlement to benefits stopped, the need for unity in action of all against the Department for Work and Pensions (DWP) and Atos is vital. No one would disagree with this, but it begs the question, on what basis and in whose interests? This has become a burning political question given that a clear division has emerged between sections of Disabled People against the Cuts (DPAC), which has been organising militant direct actions, and the union primarily organising within DWP and Atos, the Public and Commercial Services union (PCS). The issue is, should the fight against Work Capability Assessments, against Atos and the DWP, be led by those who suffer the consequences, or by the union organising those who are implementing the cuts?


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Hands off George Square!

The Glasgow Defence Campaign (GDC) has set up a new campaign in opposition to Glasgow City Council’s latest efforts to cleanse the city of anything resembling active opposition to its corrupt rule. Announcing a £15m redevelopment of George Square, Labour council leader Gordon Matheson trumpeted: ‘I want to give the people of Glasgow the square they deserve.’ The suited gangsters of the local Labour party have shown repeatedly what they think the people of Glasgow deserve – corruption, the selling-off of public services and deepening inequality.


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Brent Council have reinstated Housing Benefit for the Counihan Family – 26 Nov 2012

The Counihan- Family Campaign (CSFC) has won the first victory in its battle with Brent Labour Council. On 26 November the council was forced to reinstate the Counihans’ Housing Benefit, in the face of a militant campaign in support of the family in Kilburn and beyond.

Brent Council withdrew Housing Benefit (HB) from the family when they declared they has made themselves ‘intentionally homeless’ in April 2012. Brent had refused to take any responsibility for the family, although Isabel and the 5 children were all born and raised in Brent, and Anthony is a bus driver working at Cricklewood Garage. 


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TUC demobilising opposition to austerity – 20 Oct 2012

On 20 October, up to 100,000 people marched through central London in the TUC’s March for the Alternative. The protest was no more than half the size of the demonstration the TUC called in March 2011, a protest which was accompanied by widespread direct action including the occupation of Fortnum and Masons. The TUC had worked hard to prevent any repetition, cooperating closely with the Metropolitan Police in its control centre, and beforehand, handing over the names of known activists presumably in the hope that they would be subject to preventative arrest. As a consequence, there was only one instance of direct action, when members of Disabled People against the Cuts (DPAC) blockaded Hyde Park corner for a short time, swiftly supported by an FRFI contingent. This year’s event had hardly any mention in the following day’s press. The calls for the TUC to organise a general strike that are being made by organisations of the social democratic opportunist left merely cover up for trade union inaction and opposition to independent action by those who do want to fight, particularly disabled people.


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War on the working class

During the three months to June 2012 the British economy contracted by 0.5%, with manufacturing falling by 0.9%. Now deep in a double-dip recession, the economy is currently smaller than it was in May 2010, and 4.3% below the early 2008 peak. Only Italy of the world’s leading G8 capitalist economies is performing worse. At the beginning of September, the OECD slashed an earlier forecast of 0.5% growth for 2012 to a 0.7% contraction. In November 2011 it had predicted 0.9% growth. Robert Clough reports


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End war on welfare! Take action against Atos!

Picket of Atos office in Glasgow

Atos is a gigantic French multinational firm specialising in the provision of management and IT services, boasting annual revenue of €85bn and 74,000 employees in 48 countries. In Britain, more than £3bn worth of public services have been outsourced to Atos across ten government departments.


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Austerity in Britain: undermining resistance

With 80% of the Coalition’s proposed public sector spending cuts yet to be implemented, the 20% that are in place are causing misery for millions of working class people. Tens of thousands are being evicted from homes across the country as housing benefit caps are implemented making their existing accommodation unaffordable. Raising the threshold for eligibility for Working Tax Credit from 16 hours to 24 hours work per week will cost 200,000 of the poorest families up to £3,900 a year. Council services for the disabled, for children and the elderly have been slashed; overall 400,000 public sector jobs have disappeared over the past two years. Median household incomes have fallen by 6.4% over the last two years and will fall by 0.6% this coming year, 1.5% for the poorest 20% of the population (Institute for Fiscal Studies, IFS). Robert Clough reports.


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Fight the Cuts

Fight the Cuts

The ruling class has unleashed a ruthless ideological assault on the working class. It has resurrected the Victorian distinction between the ‘deserving’ and ‘undeserving’ poor with a vengeance. Its purpose is to divide the working class in order to make it pay as a whole for Britain’s ballooning national debt, and its principal weapon is the Welfare Reform Bill currently going through parliament. Amongst the many vicious proposals in this Bill is one to cap total household benefits at £500 per week, £26,000 a year, no matter how many children there may be. Their populist argument is that people on benefits should not get more than this, approximately the median individual wage. Yet, if this becomes law, tens of thousands of people will be forced out of their homes in London and other high-cost areas simply because the housing benefit they receive will come close to the new limit, leaving nothing for them to live on, particularly if they are disabled. It will also mean that when people lose their jobs, they stand a good chance of being made homeless and their children forced to move school as well. It is a new form of social cleansing. Robert Clough reports.


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Public sector pensions: trade unions start to capitulate

Public sector pensions:  trade unions start to capitulate

A week, Prime Minister Harold Wilson once cynically declared, is a long time in politics. It took little more than a week for TUC leaders to prepare the ground for selling out over public sector pensions following the huge strike on 30 November. Trade union leaders first agreed to postpone any further discussion of action until 10 December, and then agreed to a TUC drive to hold separate negotiations on the different NHS, local government employee, teacher and civil service pension schemes.


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OccupyLSX: resistance and the City

bwd  Set 1/2  fwd

As we go to press, the City of London Corporation is applying for a court order to evict OccupyLSX from its camp opposite the entrance to Paternoster Square by St Paul’s Cathedral. A press campaign against the occupation is now in full flow: ‘Junkie health hazard at St Paul’s’ screamed the London Evening Standard headline on 23 November. It shows the extent to which the Occupy protest has unnerved the ruling class since it set up camps in cities across the country on 15 October following the example of Occupy Wall Street in the US. Having worked hard to transfer blame for the crisis on to excessive public spending, the ruling class now faced a movement which pinned responsibility firmly back where it belonged: on to the banks and the financial sector. Barnaby Mitchel and Tom Vincent report.


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Millions on strike against pension cuts: what next?

As we go to press, millions of public sector workers are preparing to strike and demonstrate on 30 November against the ConDem Coalition’s attack on their pensions. Many of them will also be asking what next? Ballots of GMB, Unison, Unite and other trade unions have shown large majorities in favour of industrial action. Yet there is no indication from trade union leaders as to what further action they will be calling for. With unfulfilled union promises of a spring of discontent, then of a summer of discontent, and then of an autumn of discontent, are there any real signs that they are now going to organise a winter of discontent? TUC general secretary Brendan Barber told us back in March that the ‘phoney war is over’; all we will have seen by December, nearly nine months after that declaration, are two public sector one-day strikes. This is not going to strike fear into the ruling class.


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N30 in Newcastle


In Newcastleupon Tyne FRFI supporters joined the 22 picket lines across the city from the early morning. A key picket line was held at the Royal Victoria Infirmary (RVI) Hospital including staff from RCN, Unison, GMB and UNITE unions. Nurses, physiotherapists, support workers, administrators and porters stood shoulder to shoulder, protesting against the attacks on NHS pensions and the privatisation of the NHS. Linda Hobson, critical care nurse at the RVI informed us ‘We shouldn't have to bear the brunt of the banking crisis with a 50% increase in our contribution rates, and none of that extra money going back into the pension scheme. In critical care we work 12 and a half hour rotational night and day shifts. It's hard.  To expect us to do these shifts at the age of 67 just seems unfair.’

FRFI supporters also joined UCU pickets at Durham University with ‘Durham Defend Higher Education’ who have been campaigning locally to take action against public funding cuts to higher education and privatisation.


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Royal Holloway University occupation – 2 Dec 2011

Royal Holloway UniversityOn Wednesday 30 November, students, at Royal Holloway University of London, including supporters of ‘Fight Racism! Fight Imperialism!’, occupied the administrative centre of the university in solidarity with the N30 strikes and in protest against budget cuts being imposed by the university management.

Throughout the year there has been dialogue between the local UCU branch and the senior management over the planned redundancies of 22 members of teaching staff and a major restructuring of various courses, including the removal of Italian as a course and major attacks on the Classics and Philosophy Department.


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Electricians Protest against Balfour Beatty and Join LSX Occupation - 19 Oct 2011

This week Fight Racism! Fight Imperialism! again supported the electricians taking principled unofficial action against the companies trying to pull out of the JIB pay and conditions agreement.

On the morning of Wednesday 18 October, we were outside Balfour Beatty's site at Blackfriars, with over 200 electricians and mounting a picketline at the staff entrances. This included blocking the lorry entrance on the bridge. A large placard marked 'closed' was held up at the main entrance and attempts were made to stop workers entering, explaining that this was a picket line. The police escorted people in if they made it through the crowd. Those going in got jeered. Many of them then stood on the building above looking out at the demonstration and the electricians spoke to them urging them to join the demonstration.


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Support the electricians! Down with deskilling and privatisation!

Wednesday 12 October, Fight Racism! Fight Imperialism! joined London electricians and supporters' for the weekly demonstration against the construction companies who are planning to withdraw from the Electrical and Mechanical National Working Agreements (JIB, Joint Industry Board) to drive down conditions and pay. The demonstrators met at the Tate Modern site in Southwark and marched over the bridge to Blackfriars to the Balfour Beatty site, occupying the road outside St Paul's cathedral and keeping the police on their toes.


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Victory for Democratic Rights as HSBC3 Exonerated!

The convictions of Mark Pearson and Patrick Reay - who were arrested for protesting against public sector cuts and tax dodging banks and companies in December 2010 - were overturned on Wednesday 28 September 2011 after a two day appeal at Newcastle Crown Court. The success of the appeal is a victory for the democratic right to protest in Newcastle and shows that it is always worthwhile challenging political policing.


Stop Political Policing!

The arrests and charges of the HSBC 3 were politically motivated, designed to intimidate protesters, and restrict future protests against the cuts and austerity measures.  As John Pilger said in his solidarity statement, ‘The arrests of Patrick, Mark and Toby starkly represent the most disturbing trend in Britain — the rise of an openly political police... At worst, the police can kill with impunity, it seems, and increasingly they arrest and prosecute arbitrarily those whose dissent which marks the line between democracy and a state of fear and compliance’.


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Real resistance not empty gestures

The working class faces massive attacks on its jobs, its living standards and its services. What is needed is resistance on the same scale: a militant movement based not just on those sections of the working class whose jobs and pensions are at risk, but including all those whose benefits are being slashed and who are losing the vital public services on which they depend. In the face of this challenge, the response of the trade unions has been woefully inadequate for all their fiery talk. In the run-up to the 26 March TUC demonstration against the ConDem government cuts, General Secretary Brendan Barber spoke of the ‘end of the Phoney War’. At the demonstration itself, Unite’s Len McCluskey declared: ‘We’re not prepared to stand idly by and let them dismantle our society… This is only the start. We need a plan of resistance including coordinated strike action,’ while Communication Workers’ Union leader Billy Hayes said: ‘We will be defined not by what we say from this platform but by what we do. If we have to fight, so be it.’


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Healthcare under attack in Newcastle


In Newcastle, the government’s widely ridiculed ‘listening exercise’ on the Health and Social Care Bill means little to people who are already finding it difficult to access essential healthcare services. The city centre walk-in centre, which last year treated 19,591 patients, and employed 26 staff, closed in May. The service was funded by the Department of Health, but delivered by private provider Care UK, with a contract value of £7 million. Figures on exactly how much Care UK made from the centre are not available as they are deemed ‘commercially confidential’, but overall the company draws 96% of its income from NHS contracts. In January 2010 company Chairman John Nash was exposed for donating £21,000 to the office of now-Health Secretary Andrew Lansley, and the company is doing very nicely out of privatisation. Recent contracts include a £53 million contract to deliver services to prisoners and young offenders. The reason given for the closure of the walk-in centre in Newcastle was ‘cost-effectiveness’. The closure of a centre treating thousands of patients has been dismissed offhand: ‘we felt that the existing GP practices and NHS walk-in centres that are now available across the city provide a level of service that meets the needs of people’ (Dr Mike Guy, Medical Director NHS North of Tyne).  The fact that patients will have to travel further to visit a walk-in centre, or book appointments with increasingly oversubscribed GPs, is dismissed as irrelevant in the face of ‘considerable cost pressure which would need to be found from another service area’.


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Profiteering and Abuse in Care – Demand Decent Services as a Right! - 10 Jun 2011


On 10 June Southern Cross Healthcare, the largest provider of residential care in Britain, announced that it will ‘surrender control’ of 132 of its 754 care homes, handing over the homes and their residents to landlords to deal with as they see fit. The company’s financial crisis threaten the security of the company’s 31,000 vulnerable residents. It is the consequence of a trend which has seen care providers bought up by private equity companies seeking a quick profit. In it we can see what will happen if the ConDem Coalition succeed in breaking up the NHS.


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Government targets disabled and elderly people for cuts

On 12 March, thousands of disabled people – already one of the poorest sectors in society – joined the Hardest Hit demonstration in London. Alongside families, carers and supporters they marched through London to oppose savage cuts in benefits and social services of up to £9bn over the next four years. Among the Coalition government’s attacks on disabled people are the following.

Employment and Support Allowance: Up to three million people who previously received Incapacity Benefit and Income Support are being forced to undergo periodic medical tests to decide if they are entitled to Employment Support Allowance (ESA). The tests, administered by private company Atos Origin, on an £80 million government contract, decide whether those of working age are ‘fit to work’. The assessments have been criticised by a number of charities including the Citizens Advice Bureau as ‘flawed’ and ‘inadequate’, saying that assessors regularly report ‘incorrectly what the claimant has said about their own conditions’. 69% of decisions force claimants off ESA and onto the lower Jobseeker’s Allowance, or off benefits altogether. Yet, between October 2008 and February 2010, almost 40% of these decisions were overturned on appeal. One shocking example concerned a woman with terminal cancer who was awarded zero points for ESA.


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Fight the cuts - save the NHS

Up and down the country there is mounting fury at the proposed destruction of the NHS and the cuts. The seeds of resistance are being sown. Pensioners and disabled people create chaos in Oxford Circus in London protesting against council cuts. The call by UK Uncut to ‘turn the banks into hospitals’ mobilises hundreds to occupy banks in city centres. People are looking for ways to fight back and are responding with the most creative actions. While new paths forward are being opened up, there are those who would like us to hold on to tried and failed strategies. In Spain, tens of thousands of young people served time on these forces of the past as they turned the city squares into popular assemblies and defied police attempts to disperse them. This is the kind of inspiration we need as we face up to the ruthless British ruling class.

As we go to press, public sector unions including the National Union of Teachers, Association of Teachers and Lecturers, the Public and Civil Servants (PCS) and the University and College Union (UCU) are now balloting for action over attacks on staff pension schemes with a possible co-ordinated strike on 30 June involving 800,000 workers. They are protesting against ConDem coalition plans that public sector workers should pay more towards their pensions, work for longer, but receive less when they retire.


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Campaign to save Glasgow care centre confronts Labour council

Photo: Campaigners from the Save the Accord centre campaign and Fight Racism! Fight Imperialism! march together on May Day in Glasgow.

In Dalmarnock, a working class community in the East End of Glasgow, opposition to vicious Labour council cuts is being led by the campaign to 'Save the Accord Centre'. The Accord centre, which provides specialist support and care for more than 120 adults with severe learning difficulties, is to be demolished in order to build a car park for the 2014 Commonwealth Games.


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HSBC 3 update - setback for anti-cuts movement as Mark and Patrick found guilty on police evidence

john_pilgerFinancial appeal to support right to protest

After a two day trial, 28 – 29 March 2011, two of the HSBC 3, Mark and Patrick, were found guilty and heavy fines totaling £760 were imposed. The charges against Toby, the third defendant, were dropped before the case began - a significant victory for the campaign.

The HSBC 3 were arrested on 18 December 2010 outside a branch of HSBC in Newcastle. They were taking part in a demonstration against cuts to education and other public services as part of a UK Uncut national day of action. See:

In the trial five police witnesses provided the judge with all the evidence he wanted to hear, while the strong defence was ignored.

Mark was found guilty of breaking the conditions imposed upon a demonstration, despite the fact he was using a megaphone at the time the conditions were supposedly given. The judge ruled it was within Mark’s power to have heard the conditions.


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Fighting the cuts: trade unions set to continue phoney war

Writing in The Guardian on 11 March, TUC General Secretary Brendan Barber declared ‘the phoney war is over’. So does this mean that the trade unions are about to unleash waves of industrial action in order to defeat the cuts? Absolutely not. This would mean confronting the anti-trade union laws, threatening the colossal assets of trade unions such as Unite or Unison. Indeed, Barber was keen to point out that ‘the days of protests being solely about unions going on strike are over’ as if we have seen any significant actions since the 1984/85 miners’ strike. No, Barber wants to see a role for ‘peaceful civil disobedience’ – but one does that does not jeopardise the financial position of the unions, and certainly not ‘anything that gives rise to violence of any sort’. Robert Clough reports.


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Pensions: assault on the working class

The massive state transfer of funds to save western banks means that ruling classes in the imperialist states are attacking pensions in order to thrust the burden of the crisis onto the working class. On 10 March, the ConDem coalition announced the extension of the average working life by raising the retirement age. This change takes place on top of a massive assault on day-to-day working conditions and living standards. James Martin reports.

As long as they can get away with it, the ruling class will abandon retired workers to their own fate, including those better-off workers who have been employed in the state sector. British imperialism is in crisis, and it can no longer agree to what are insultingly called ‘gold-plated’ pensions by the bourgeois media.


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Councils agree savage cuts – fightback begins

With the ConDem decision to cut central government funding for local authorities by 26% over four years, proposals for huge cuts in local services were inevitable. Councils in more affluent areas, mainly in the south of England, suffer less from this reduction because they get a much higher proportion of their income from local business rates and council tax than do the mostly Labour-dominated councils in poorer, more working class areas such as parts of central London and the north of England. Yet not a single Labour-run council has stepped out of line and refused to implement cuts to services on which working class people and especially the elderly and disabled depend.


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Bankers in command as austerity hits home

In a moment of remarkable frankness, Mervyn King, Governor of the Bank of England, said that government spending cuts are the fault of the City of London and expressed his surprise that this had not generated more public anger. On 1 March 2011 he told the Treasury Select Committee that: ‘The price of this financial crisis is being borne by people who absolutely did not cause it…Now is the period when the cost is being paid, I’m surprised that the degree of public anger has not been greater than it has.’ The billions spent bailing out the banks and the consequent public spending cuts, he said, were the fault of the financial services sector.

These are strong words coming from such an establishment figure. Like the August 2009 comments of Lord Turner, head of the Financial Services Authority, on the ‘social uselessness’ of some banking activities and the destabilising role of the City of London, they were simply ignored or rapidly dismissed. Neither of these City gentlemen can accept that the uncontrolled and speculative activities of the financial services sector in the main imperialist countries are necessary features of a parasitic and decaying capitalist system of which British capitalism is the prime example. The primary concern for any British government, whether Labour, Tory or LibDem, must be that the City of London remains a dominant centre of world finance, the financial arm of British imperialism.1 David Yaffe reports.


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Manchester: Labour hypocrites unleash savage cuts

Nowhere is the hypocrisy of the Labour Party more striking than in the ‘Labour stronghold’ of Manchester, a city already rife with unemployment and extreme inequalities of wealth. In the next three years the Council will implement cuts of £280 million. We can expect none of this to come from the pay packets of its rich friends.

On 9 March a packed public gallery shouted ‘Liars!’, ‘Cowards!’ and chanted ‘No votes for cuts!’ as all 62 Labour councillors voted through Manchester City Council’s budget cuts. The meeting had to be suspended twice due to loud heckling. Council leader Sir Richard Leese shed crocodile tears while voting the cuts through, saying, ‘There is something very wrong in the morality of this government. These are ideological cuts; they are too fast, too deep and fundamentally wrong’, complaining of ‘the unfairness of the government’s financial grant settlement for Manchester.’ The Con-Dem government has given Manchester a 15% cut in its Council grant for the coming year, yet the Labour Council will cut services by 25%, claiming that a 17% cut in its workforce of 2,000 people, is needed to make savings of £110 million over the next year and £170 million in 2012/13. Thirty six Sure Start children’s centres will be closed or privatised; five libraries will close along with all public toilets except one. There will be redundancies in refuse services and no free car parking on Sundays.


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Education plans unfit for the purpose of education

Education Secretary Michael Gove has not completed his austerity plans for the future of the statutory sector of education which is the period of compulsory school attendance from 4 to 16 years old. However, it is already possible to see some of the tricks that will be used to take finances out of schools. The ConDem government has boasted that the schools’ resource budget which covers the day-to-day costs of educating pupils will rise by 0.1%. In fact, the predicted rise by 2.7% in the number of pupils in school in Britain over the next year will mean current spending per pupil will be cut by 2.25%.


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The decline of state welfare

Fight Racism! Fight Imperialism! 117 Feb/March 1994

The future of the ‘welfare state’ now dominates the political agenda. The government is conducting a ‘thorough review’ to determine the degree and extent of the cutbacks it can justify without harming its electoral base and increasing divisions within its own party. That this review is being led by Portillo, the leader of the most reactionary monetarist wing of the Tory party has already caused confusion and discord in the government.

The Labour Party, too, is conducting its own review of the ‘welfare state’. It set up a Commission of Social Justice under the Institute for Public Policy Research (IPPR) to discover ‘a vision of social and economic progress as coherent and compelling for the beginning of the 21st century as Beveridge’s was for the second half of the 20th’.1 Whatever they discover, if they are permitted to discover anything, will have to be circumscribed by the Labour Party’s overriding concern to win back the votes of higher paid worker’s and sections of the middle class who defected to the Tories at the last four elections. There will be, no doubt, a great deal of soul searching but definitely no ‘coherent or compelling vision’, which would call for much higher taxes on middle class voters. Already there has been talk of ending universal benefits and ‘targeting’ the poor by Labour Party ‘new realists’.

Various arguments have been put forward to explain the crisis of the ‘welfare state’.

(i) A ‘global industrial revolution’ is taking place and economic developments, are out of control of national governments.

(ii) A much greater percentage of the population past retirement age has placed burdens on state welfare which it cannot meet – the so called ‘demographic time-bomb’.

(iii) Family structure has dramatically changed; the majority of women now work and a large increase in lone-parent families, usually headed by the mother has placed much greater demands on state spending.

While all describe some of the real changes which have taken place since the end of the Second World War none of them begin to explain the real crisis of welfare which has confronted the major capitalist nations from the mid-1970s.

It is certainly the case that ‘welfare spending cannot keep pace with the effects of economic failure – mass unemployment, low pay and poverty’ (IPPR 1 p1). The issue is whether growing unemployment, low pay and poverty are endemic to capitalism or merely the results of economic mismanagement.

The Labour Party view in the IPPR pamphlets, while acknowledging the deep structural problems facing British capitalism, is that new policies and a new political consensus can be found to restructure British capitalism and sustain state welfare – that is the presumption behind the Commission.

The Marxist view is very different. It has been put very succinctly in a pamphlet by Ernie Trory:2 ‘There will be no true welfare state in this country until we end the system of exploitation for profit that leads only to overproduction, unemployment and war.’ Workers have to fight ‘every inch of the way ... for better welfare services’ but it should be seen as a part of the process by which the working class learns to organise politically to overthrow capitalism and build socialism. ‘There can be no such thing as a welfare state under capitalism. The welfare state is, in fact, the socialist state’ (T p19-21).

State welfare

Trory is correct to say that when we refer to the ‘welfare state’ under capitalism we are, in fact, talking of state welfare in the form of social services such as education, health, housing, and social security dispensed and administered by the state either centrally or through local authorities. It is essentially the system of ‘Social Insurance and Allied Services’ investigated by a committee headed by the Liberal William Beveridge (1942), incorporated in a Tory White Paper (1944) and brought into being by the government in power after the war, Labour (Trory p6). While these measures were forced on the capitalist system because of the political crisis after the war, it was the unique circumstances in the post-war period which allowed them to be sustained in Britain until the middle of the 1970s.

After the Second World War Britain was still a major industrial power with a strong manufacturing base. It was a major imperialist power with access to the protected markets of the British Empire and the flow of super-profits from its overseas investments. The world economy was relatively stable under the hegemony of US imperialism. The latter became the international banker for the rest of the capitalist world. Its loans and investments became the driving force behind the post-war boom.

Today the situation is very different. Britain’s manufacturing base has been devastated. There are now only 4.4 million employed in manufacturing compared with 8.8 million in 1965. US economic domination has ended. The world economy is becoming increasingly unstable. International rivalries are increasing, trade wars are becoming more likely as the world economic crisis forces the major capitalist blocs to fight each other over profitable markets and investment outlets throughout the world. The European Community itself faces pressures that could split it apart. This is the context in which Britain, a rapidly declining imperialist power, has to solve the crisis of its economy and state welfare.

State welfare is financed out of national insurance payments and general taxation. It was the price the capitalist class had to pay for social stability and the political integration of the working class in the post war period. Trory calls it a social wage, an addition to the money wage of workers. This is a little misleading as very little of this expenditure contributes to the value of labour power of productive workers.3 Nevertheless, however you regard it, it is, in the main, a deduction from the mass of profits in the hands of private capital arising from the exploitation of the working class. That is why the state tries to keep this expenditure down to the politically acceptable minimum. It will also try and devise taxation policies to reduce the net money wage of workers and redistribute wealth back to the capitalist class. Workers, on the other hand, will fight for real net wage increases to stop this happening.

The higher paid workers and the middle classes will, in the main, have much greater tax deductions from their gross wages than the lower paid. As a result there is some redistribution of net benefits to the poorer sections of the working class. This is confirmed by a recent study of the mid-1980s which shows that while most income groups receive almost equal gross benefits from state welfare, the bottom five income groups receive more than they contribute and the top four pay more than they receive with the sixth breaking even. On average three quarters of what the ‘welfare state’ does smoothes out income over a lifetime - a ‘savings bank’ effect - and one quarter is redistributed from better off workers to poorer ones.4

As long as sufficient profits are produced to return an adequate rate of profit on capital invested and to finance state welfare then the social democratic consensus of the post war years could be maintained. It was possible to guarantee the relatively privileged conditions of higher paid workers and the middle classes whilst sustaining adequate living standards for the mass of the working class. However as soon as the rate of profit began to fall – an inevitable consequence of the process of capital accumulation - then the consensus began to break apart. Unemployment and poverty started to grow. And at the very moment when increased state spending was needed, state spending was blamed for the crisis. The myths of Keynesianism were exposed. In the mid-1970s the Labour Party set monetary targets and cut state spending. It was to little avail. The low paid workers fought back and the ‘winter of discontent’ drove the higher paid skilled workers and the middle classes into the embrace of the Tory Party. These more privileged layers of the working class and middle classes put their own material interests before those of growing numbers of low paid workers and the poor. On four consecutive occasions they chose to vote for the party that made a virtue of slashing state spending and lowering taxes under the cover of ‘sound finances’.

The laws governing the development of the capitalist system of production, however, dramatically swept aside the ‘sound finances’ of the Tory monetarists, just as they had done with Keynesian demand management. It is ironic that today many previously well-paid workers who deserted to the Tories face higher taxes, lower living standards, the ever growing threat of unemployment and poverty with increasingly inadequate public services, while state spending and taxation are at a higher level than when the Tory Party was elected in 1979.

Capitalist Britain – 12 million in poverty

Beveridge made the assumption that governments would be committed to maintaining high employment – under 8.5 per cent unemployment in the 1942 Report, and no more than 3 per cent in his 1944 Report Full employment in a free society (p160) – with unemployment over six months a rare thing. Since 1981 the official unemployment rate for men has been above 8.5 per cent. The real rate has certainly been much higher. The communist member of Parliament Willie Gallacher said at the time of Beveridge’s Report that the proposed scheme would fall to pieces with mass unemployment (Trory p10). Gallacher was right.

At the time of the Beveridge Report less than 10 per cent of the population were over 65. In 1991 pensioners made up 16.5 per cent of the population, by 2041 they will make up 24 per cent. Do we face a so-called ‘demographic time-bomb’?

If the earnings link were restored – pensions rising with average earnings rather than the much lower prices – and taking into account the rise in the number of pensioners, the additional cost by 2030 to be found from taxation and/or national insurance would be about 2.3 per cent of GDP. This is no greater than the effect of the recession on welfare spending over the past three years (TFOW p78). The ‘demographic time-bomb’ argument is little more than a cover for capital’s real intent to impoverish those it has no further use for.

With pensions increasing only with prices since 1982 the state pension reached a peak of 46.5 per cent of average income in 1983. By 1992 it was lower than it had been in 1948. At present it is worth 15 per cent of average gross male earnings – the lowest since such figures have been calculated (since 1971) (TFOW pp51-2). This process is not sustainable. A social system which cannot guarantee a decent and secure old age to pensioners has outlived its social usefulness.

Capitalist Britain has 12 million people living in poverty – 22 per cent of the population. One-sixth of the population rely totally on income support, which is below the level regarded as ‘modest but adequate’ to live on (TFOW p46). Unemployment benefit and state pensions are lower in relation to general living standards than they were in 1948, while there has been a massive redistribution of income from the poor to the rich.

Under the cover of improving the efficiency of public services, corruption and fraud have become regular features of public life with the privatisation of state services and the introduction of competitive tendering. Large sums of taxpayer’s money are handed to those companies which can get in on the act. ‘The contracting-out of public services to private firms is likely to trigger an explosion of fraud and corruption’ warns the top accountants Peak Marwick. And the Commons Public Accounts Committee tells us that millions of pounds of public money have been lost in waste and fraud. There is not only a decline in the quality of public services but also in the conditions and wages of the workers providing the services as companies which win competitive bids make unprecedented profits.

Fifty years ago the communist Willie Gallacher said that the only foundation for a welfare state is a socialist one. ‘The right to exploit people for profit cannot be tolerated if there is to be social security’ (Trory p10). Fifty years of state welfare under capitalism have proved him right!

David Yaffe


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