Osborne’s Spending Review and Autumn Statement - On with the show...

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‘Mr Speaker, when I presented my first Spending Review in 2010 and set this country on the path of living within its means, our opponents claimed that growth would be choked off, a million jobs would be lost and that inequality would rise. Every single one of those predictions have proved to be completely wrong.’
Chancellor of the Exchequer, Autumn Statement, 25 November 2015

The British Parliament has always had an ambiguous relationship to lying. Calling a fellow MP ‘a liar’ leads to immediate eviction, but lying was simply frowned on. Today, lying is the tool of choice when it comes to any government statement. The most slavish sections of the British lackey press, like the Telegraph, greeted Chancellor George Osborne’s Autumn Statement and Spending Review with the headline ‘End of Austerity’. Nothing could be further from the truth: the Conservative Party is on course to move Britain from being, in their words, a ‘high welfare, low wage economy’ to a ‘lower welfare, higher wage economy’. The ‘higher wage economy’ is Osborne’s ‘Nirvana’ of the national living wage at a paltry £7.20 an hour from next year and the chimera of unbridled economic growth that is impossible.

The Review included a major U-turn on cuts to working tax credits. For the last six months, since the cuts were first announced in the July post-election budget, the poorest working families in Britain have been worrying about what would happen to them if tax credits were massively cut in April 2016 as promised. Following an unprecedented House of Lords rebellion in October (convention holds that they should not interfere in financial policy) which defeated the Chancellor, it became clear even to Osborne that the proposal, supposedly crucial to the promised £12bn cuts in the welfare bill, would have to be reviewed. Osborne said the Lords had behaved in an unconstitutional way and would be ‘dealt with’, but, despite bullish statements from No 10 that ‘the policy is the policy, it is not going to change’, polls showed that the policy was unpopular with voters and Tory MPs in marginal seats began to panic. It was left to Osborne to call in the Office for Budget Responsibility, like ancient soothsayers, to recast the figures until a more favourable outcome was achieved. As the economist JK Galbraith once quipped: ‘The only function of economic forecasting is to make astrology look respectable’. Lo and behold, an extra £27bn was conjured up to allow the self-styled ‘listening’ Chancellor to reverse his plans.

The U-turn, however, is cosmetic, as Osborne knows. Tax credits will be replaced by Universal Credit and housing benefit is being cut. As the Institute of Fiscal Studies (IFS) was quick to point out, low-paid households will be considerably worse off by the next election. IFS researcher Andrew Hood showed that 2.6 million working families will be an average of £1,600 a year worse off than under the current system. Osborne has not lost sight of his destination – the ‘low-welfare, high-wage economy’. What is more, the promised economic growth could easily turn to dust.

In a welter of other proposals, all heading in the same direction, Osborne outlined massive cuts in government programmes and public spending, but gave little detail of how the targets will be achieved. Health (see page 5) and education are supposedly ring-fenced; existing pensioners – held to be safe Tory voters – have been protected. That does not prevent ‘adjustments’ in education and health spending where student nurses, for instance, will no longer receive grants but will have to take out loans to fund their training. ‘Unaffordable’ maintenance grants for the poorest students were abolished in the last budget and now existing student loan repayments from 2012 have been retrospectively increased. Students across the board are being forced to spend their future wages to finance their education. As is appropriate for an imperialist country in crisis, spending on the apparatus of repression (military and counter-terrorism, MI5 and MI6 budgets) is to increase and Osborne promised not to cut the police budget.

Lavish promises to build more houses (‘we are the builders’) will amount to nothing for the low-paid majority for whom decent housing will still be unaffordable (see pages 1 and 4). It is ironic that what this government calls ‘prison reform’ consists of bragging about the closure and sale of Victorian prisons so that new houses can be built in their place. ‘Mr Speaker, by selling these old prisons we will create more space for housing in our inner-cities.’ We await the return to the real world when the bill-boards for luxury housing appear on the sites of Holloway and Pentonville prisons.

Local government is to be stripped bare. It is planned that all schools will become Academies outside local government control. Under the heading of devolution, the uniform business rate will be abolished, so that councils can keep all revenue. On the other hand the local government grant will be abolished. Councils will be reliant on attracting businesses to their areas: if there are no businesses, there will be no money. The catastrophe of regional deprivation that is already a marked feature of the British economy will be entrenched. Rich boroughs will get richer; business interests will determine everything and local democracy will become even more an empty shell.

Osborne reckons that local government is ‘sitting on assets worth a quarter of a trillion pounds’. These can now be sold with local government keeping 100% of the receipts. What an incentive for local councils, Labour councils included, that have presided over massive cuts in public services without a whimper, to sell off the libraries, swimming pools, schools, nurseries, local amenities and offices they have closed down. Local councils will also have the chance to raise council tax by 2% to fund social care – hard luck for deprived areas and deprived citizens where council tax revenue is low.

Where is the opposition to this renewed, malicious and cynical attack on working class people? Not in Parliament. Shadow Chancellor John McDonnell simply failed to perform. But many Labour MPs support Osborne’s economic programme simply because they think it is a vote winner. Following Labour’s election defeat, Harriet Harman, acting leader, announced that Labour would not oppose Conservative policies such as the 1% cap on public-sector pay rises for four years and the reduced benefit cap of £20,000 (£23,000 in London), would abstain on the welfare reform bill and would not reject the two-child limit on tax credits. This is indicative of Labour’s internal crisis – winning power is more important than any principle. This crisis has deepened with Corbyn’s election as leader. With Labour MPs concentrating on internecine squabbling, opposition to Osborne’s Spending Review has been muted. They were rather more upset, though, by the Chancellor’s later announcement that the so-called ‘Short money’ (public money that funds the activities of opposition parties) will be cut by 19% – the Labour Party receives about £6 million a year. This will be intolerable.

Carol Brickley

Fight Racism! Fight Imperialism! 248 December 2015/January 2016