Austerity for the working class
On 20 October 2010, the ConDem government announced its Comprehensive Spending Review, confirming plans to cut public spending by £81bn over four years in order, they claim, to solve the economic crisis. The spending review followed on from the emergency budget in June which slashed welfare benefits by £11bn. It promised the loss of at least 500,000 public sector jobs, average cuts in government spending of 19%, a further £7bn cuts in welfare and an increased retirement age to 66 by 2020. Additional measures include an increase of VAT to 20% from January 2011 and further attacks on social housing and education. Put together these represent a massive attack on the standard of living of the working class.
The cuts
(Current spending includes salaries, school text books, consumables etc; capital spending includes assets like buildings, roads etc.)
Business, innovation and skills: current spending cut 25%; capital spending cut 52%. 24 quangos to be axed along with the Train to Gain programme. University teaching budget to be cut by 80% overall, and further education by 25%. Alongside this a massive increase in student fees is proposed (see pages 8 and 9).
Communities and local government: Local government spending cut 27%; capital spending down by 45% overall. Communities current spending cut 51%; capital spending cut 74%. Overall councils’ budgets will fall by 7.1% each year. Funding for social housing to be cut by more than 60% (see below).
Culture, media and sport: current spending cut 24%; capital spending cut 32%.
Defence: current spending cut 7.5%; capital spending cut 7.5%. 17,000 job cuts in the armed forces, 25,000 civilian jobs to go. No real cuts in weapons of mass destruction.
Education: current spending cut 3.4%; capital spending cut 60%. Capital spending cuts will hit school buildings projects. Education Maintenance Allowance (means-tested) for students staying in education aged 16-19 is to be replaced by a system of ‘targeted’ help, meaning that only the most disadvantaged will get grants and the cut-off point for eligibility can be lowered.
Energy and climate change: current spending cut 18%; capital spending cut up to 41%.
Environment, food and rural affairs: current spending cut 29%; capital spending cut 34%.
Foreign Office: current spending cut 24%, capital spending cut 55%.
Health: current spending rise 1.3%; capital spending down 17%. The NHS will see a budget rise of 0.4% over four years, but there will be £20bn ‘efficiency and productivity savings’ over the same period (see p2).
Justice: current spending cut 23%; capital spending cut 50%. Some new prison plans have been axed, and 3,000 fewer prison places are planned by 2015. Massive cuts are planned for legal aid, removing access to justice for millions of people who need legal advice and help.
Scotland/Wales/North of Ireland: all grants will be substantially cut over the next four years: Scotland 6.8%; Wales 7.5%; North of Ireland 6.9%.
Transport: current spending cut 21%; capital spending cut 11%. Rise in rail fares 3% above inflation.
Treasury: current spending cut 33%; capital spending cut 30%. Bank Levy to be made permanent. Enhanced compensation package for Equitable Life policyholders.
Work and pensions: rise in pension age to 66 by 2020 for men and women. Reform of public sector pensions to save £18bn by 2015 with larger contributions from workers. Child benefit cut for higher earners to save £2.5bn. Overall a further £7bn welfare benefit cuts on top of the £11bn already announced (see FRFI 217 October/November 2010, ‘Benefit cuts: them and us’), including a 12-month limit on the payment of Employment and Support Allowance (formerly Incapacity Benefit). 10% cut in council tax benefit budget. Further restrictions on housing benefit (see below).
‘Fairness’
Once again Chancellor Osborne claimed that the cuts are ‘fair’ and progressive, ie, that the poorest were protected and that key areas like school spending were safe. Immediately the Institute of Fiscal Studies (IFS) announced that the exact opposite is the case: the poorest will be hit hardest, especially families with children. Contrary to Osborne’s claims that a £2.5bn ‘pupil premium’ will protect core school spending, the IFS argues that this will not compensate for rising school numbers and other cuts in the education budget, which will result in funding reductions for 60% of primary school pupils and 87% of secondary school pupils.
The ConDems argue that if the rise in taxes for the highest paid introduced by the last Labour government, and the cut in Child Benefit for households where a taxpayer earns more than £40,000 announced as part of the spending review, are included, this shifts the burden of cuts to the richest 2%. Using gobbledygook reserved especially for bamboozling the public, Prime Minister Cameron argued that fairness is ‘about asking how much people give as well as how much people get’. As we reported in the last issue of FRFI (October/November 2010 ‘Paying for the Crisis’) the main net beneficiaries of public services are working households with children, in the bottom half of the income scale, who receive more than half their income from the state annually (on average a net £9,109), and around 80% of retired households. Even before the details of the spending review were announced, the TUC argued that the UK’s poorest 10% would be hit 13 times harder than the richest 10%. Lone parents and single pensioners would be the social groups to lose most. The cuts in the public sector deficit proposed by both Labour and the ConDems clearly target the poorest sections of the working class, hitting families where it hurts them most in relation to housing, jobs, health and education.
Contempt for the working class
This attack is not the unfortunate outcome of necessary ‘housekeeping’ to keep the British economy afloat, nor is it the unhappy effect of the Chancellor’s bad arithmetic. Gaffes and hasty interventions by a succession of zealots in the government ranks have revealed the contempt and hatred for poor people that underlies ConDem thinking. Chancellor Osborne started the ball rolling with his promise to reduce the number of people who make the ‘lifestyle choice’ of living on benefits. He was followed by a coven of Conservative councillors, particularly from rich London boroughs, who could not wait to rid their boroughs of the poorest. Iain Duncan Smith, Work and Pensions Secretary, defended benefit cuts with an exhortation to the unemployed to ‘get on a bus’ to find work. This will be especially useful for the disabled people newly deprived of benefits who are unable to ‘get on their bikes’ to look for work as recommended by Norman Tebbit in 1981.
Worse was to follow. Lord Young, Tory enterprise advisor, Thatcherite and millionaire businessman, claimed that most Britons (especially himself?) had ‘never had it so good’ in this ‘so-called’ recession. Over dinner at a posh London restaurant he suggested to the Daily Telegraph that: ‘the cuts just take state spending levels back to what they were in 2007 – a time when people were not short of money … Now, I don’t remember in 2007 being short of money or the government being short of money.’ So embarrassing were his remarks that Prime Minister Cameron forced him to make a ‘lifestyle choice’ and quit, but he is unlikely to have to join the bus queue or downsize his living accommodation.
In the wake of an announcement of 20 new Tory peers on 19 November, the newly-to-be-ennobled Howard Flight was forced to apologise for commenting to the London Evening Standard that the cuts in Child Benefit for high-rate tax payers would ‘discourage the middle classes from breeding because it’s jolly expensive. For those on benefits, there is every incentive’. Surely his worst nightmare!
‘The rich man in his castle, the poor man at his gate…’
What is clear is that the ConDem Coalition is taking the opportunity of this crisis to destroy the welfare state, and these loose cannons are simply the scum rising to the surface of a heady ideological offensive against the so-called undeserving poor. Readers of FRFI will know that the coalition is not alone in this ideological attack. The targeting of benefit claimants was a central feature of Labour government policy from 1997 onwards, and many of the ConDem cuts were first proposed by them. Ed Miliband, Labour’s new leader, was quick to sign up to the planned restructuring of the welfare system which will see total benefits for claimants capped, assuring middle class voters that Labour is just as ‘hacked off’ by ‘work-shy benefit claimants’ as they are.
It is in the area of housing that the attack on the poor has been sharpest. On top of the plans to cap Local Housing Allowance for housing benefit (HB) claimants in the private sector and cut HB for the long-term unemployed – moves that will, according to Shelter, make most two-bedroomed flats in London unaffordable for HB claimants – the Coalition has announced plans to remove security of tenure for council and housing association tenants, increase rents in the social sector and prevent single people under 35 from claiming HB for more than one room. Changes to the way council tax benefit is financed will give local councils an incentive to drive poor people out of their areas. In the context of the scandalous, government-imposed, worsening shortage of social housing, more ‘flexibility’ in the allocation of social housing will allow discrimination against immigrants and asylum seekers.
Explaining the cuts to the chairs of the House of Commons select committees on 17 November, Cameron argued that slashing housing benefit was necessary to avoid social unrest in middle class areas where they are jealous of their neighbours claiming HB. For ConDem supporters, apparently, the welfare system is not an assurance for all against poverty and destitution, but an instrument for ensuring that the poor stay in their place – preferably several miles from where the rich live.
Them or us?
A magnificent conjuring trick has been performed: the crisis which first manifested itself in 2007 and required a massive government bail-out of the banks and overall rescue plan to the tune of more than £850bn, has, in the space of three years, been turned into a crisis of public debt which, the government argues, can only be solved by a period of austerity for everyone except the bankers, the City dealers and their rich coterie. Despite many half promises and speculations that the City of London’s activities would be regulated to prevent any future crash, the banks and the dealers have emerged unregulated, with vast growing profits and bloated bonuses as big as they ever were. Even the much-vaunted Bank Levy, made permanent by the spending review, is a drop in the ocean that will leave some banks paying less tax, not more.
Have no illusions. British imperialism requires that the interests of the financial sector – the City of London, the banks and the dealers – be protected. This is the key to capitalism’s continued existence. That is the simple and only reason why the ConDem coalition is slashing public spending and attacking the living standards of the majority. The attack will be deepened and expanded to as many sections of the population as necessary to solve the crisis. The middle class will not be exempt. There will be no relief through changing the government from Tory to LibDem, or from ConDem to Labour. Reforming the voting system will not make a difference. Any political party that signs up to run the British imperialist state will have the same priorities. So much is clear to see from the ‘transformation’ of the lying Liberal Democrats from a party that promised to protect the poor, enshrine civil liberties, abolish student fees and much else, to full-blooded supporters of slash and burn. That is why the Labour Party is a loyal opposition that will not oppose the cuts: it knows that in government it would do the same.
The only way to stop the war that is being waged on working class people, poor people, vulnerable people, disabled people, homeless people and their families is to destroy the system that requires this assault and replace it with a system that values human beings – socialism. We must destroy British imperialism before it destroys us.
Carol Brickley
FRFI 218 December 2010/January 2011
