Tag Archives: George Osborne

Osborne’s budget: revenge of trickledown economics

George Osborne’s budget shows that we are not ‘all in it together’, writes Eddie Ford (first published in the Weekly Worker)

Budgets ain’t what they used to be. Once upon a time the chancellor and his colleagues were expected to maintain a state of strict purdah. Every chance meeting between a treasury official and a journalist had to be formally reported during the weeks before the statement. Hugh Dalton, the Labour chancellor, was forced to resign in 1947 because, whilst walking to the House of Commons to give the autumn budget address, he made an off-the-cuff remark to a journalist hinting at some of the tax changes to be made – which were then printed in the early edition of the evening papers before he even had time to complete his speech and while the stock markets were still open. Scandal. Dalton resigned.

Whether sadly or not, those days are almost certainly long gone. Pre-budget leaking is now a long established political pastime, almost an obligatory ritual. This year though the numbers of leaks was unprecedented. But the reason for that is fairly obvious: the scramble for credit within the coalition government, as Liberal Democrats and Tories both try to show their supporters they are fighting their corners. The Liberal Democrats want to prove that they are not Tories and the Tories want to prove that they are not Liberal Democrats. Also, when it comes to anything that might potentially impact upon the wealthy, the Tories find leaking a useful way of discovering what their backers think – not least those individuals who donate so generously to the Conservative Party.


George Osborne’s budget was essentially one for the wealthy – hardly astonishing, given that over 20 cabinet members are millionaires. The basic assumption was that those at the top of society are the wealth-creators and hence need to be incentivised – lots of carrots – to encourage them to create yet more ‘wealth’ (ie, make larger profits and grow even richer). Given this grotesque premise, tax cuts – personal and corporate – are a vital necessity if we are to unleash a wave of entrepreneurship that will in turn create jobs for those languishing at the bottom.

Meanwhile, the working class and the poor find themselves at the wrong end of below-inflation increases to the minimum wage, less generous tax credits, regional differentials in public sector pay, and so on. In other words, the budget saw the unwelcome return – or revenge – of trickle-down economics. Not that it had ever gone away, of course.

The budget flagship, at least for the Tories, was the reduction in the top-rate of tax from 50p to 45p – so party time for Britain’s richest 300,000 households. Indeed, it would have been further reduced to 40p if Osborne had got his way – he told the treasury select committee on March 27 that he had not assigned a “special status” to the 45p rate, which would be kept under “review”. But the idea was blocked by David Cameron and Nick Clegg, the latter saying he would only accept a 40p rate if a ‘mansion tax’ on properties worth more than £2 million was introduced – something rejected out of hand by the prime minister. Cameron likes to look after his buddies.

Osborne disingenuously argued that the 50p rate had “distorted” the economy by “encouraging” tax avoidance. Presumably the poor, downtrodden super-rich had no choice but to employ armies of extremely well remunerated accountants and financial advisers to exploit every tax loophole (but it hurt them to do so). Osborne surely missed an opportunity to develop this logic to its fullest extent and declare that from now onwards the rich would not have to pay any income tax at all. That way, no more ‘distortions’ would be introduced into the economy and the rich could finally enjoy guilt-free sleep.

Cutting the top rate of tax down to 45p, Osborne argued, would only cost the exchequer £100 million – given that the current rate “raises at most a fraction of what we were told” and, in fact, “may raise nothing at all”. But a recent HMRC report he referenced indicated that the 50p tax rate raised £1 billion in its first year (2010-11) – far less than the £2.6 billion originally predicted, admittedly, but this was mainly due to people ‘forestalling’; that is, being paid early ahead of the introduction of the 50p rate in April 2010 in order to avoid paying it. But “nothing at all”?

Further defending top-rate reduction before the treasury select committee, Osborne posited that “dynamic modelling” suggested the 45p rate was likely to lead to a smaller loss of revenue than retaining the current rate. His calculation is based on the economic model known as the Laffer Curve, which hypothesises that under a 0% rate no tax is paid and at 100% no tax is paid either because no-one will bother working: therefore the trick is to locate a midway point that will optimise income.

According to basic arithmetic, the cost of cutting the top rate will be £3 billion in the first year, rising to £4 billion by 2016-17. But Osborne would have us believe that the net cost would fall to just £100 million or so thanks to the extra revenue from wealthier people working harder and harder – by the sweat of their brow – and gratefully bringing ‘home’ their monies stashed away offshore now that we have a “competitive top rate of tax”. Voodoo economics, UK-style. Straining credibility even further, Osborne asserted that, taking into account such calculations, the rich (people like himself, for instance) would end up paying five times more tax as a result of all the measures taken in the budget. Naturally, the chancellor said that his budget was “unashamedly” pro-business and would help the country “earn its way in the world”.

Another major plank of the budget was the imposition of a 7% stamp duty on properties worth more than £2 million – with immediate effect. Currently the tax is levied at 5% for all properties over £1million. Additionally, the duty on residential properties over £2 million which were purchased via an offshore company would increase from a paltry 0.5% to 15% – leading some to describe it, approvingly or not, as a “workable” mansion tax. Yet, obviously, this new rate would only affect a small number of properties, owned by the likes of Sir Mick Jagger and Ringo Starr – or Russian oligarchs.

For example, the latest statistics from the Land Registry showed that in November 2011 there were 121 homes sold for more than £2 million in England and Wales – accounting for just 0.2% of the 57,967 homes sold that month. Under the current system, if all those people paid stamp duty – a highly unlikely eventuality – it would raise £142.2 million. At 7% it would raise to £198.8 million, an additional £56.8 million. Not exactly staggering amounts of money. In reality, it is extremely doubtful whether the treasury will be able to collect the extra stamp duty from the Russian oligarchs, oil sheikhs, bankers, private consultants, rock stars Hollywood actors, footballers, etc – famous for their creativity when it comes to avoiding tax.

And, of course, what the chancellor takes from the rich with one hand he gives back with another. Hence on page 63 of the red book he sneaked in an inheritance tax exemption for non-domiciled individuals. Presently, a taxpayer domiciled in the UK can transfer their entire £325,000 inheritance tax allowance to their spouse if they are also based in Britain. This figure is reduced to £55,000 if a UK taxpayer makes a transfer to a spouse who is not domiciled in the UK. Osborne said he would increase this, though has so far declined to set a figure.

‘Granny tax’

Just about the biggest budget fuss has been over the so-called ‘granny tax’. Citing the need to “simplify” pensions, Osborne intends to freeze age-related allowances (ie, the amount of income that is tax-free) for half of Britain’s pensioners by the end of the parliament. The treasury says this will bring an extra 230,000 into the income tax system, saving the government £1 billion by 2015.

Currently, the allowance is £8,105 for those under 65 (changing to £9,205 in the 2013-14 financial year), £10,500 for those aged 65 to 74, and £10,660 for those aged 75 and over. However, this ‘extra’ allowance is gradually withdrawn from those pensioners with a taxable income of between £24,000 and £29,000 – about 10% of all pensioners – and anyone with an income of more than £100,000 has all their personal allowance gradually withdrawn regardless of age.

Practically meaning that from now on anyone turning 65 after April 5 2013 will get the same personal allowance as the under-65s, but someone who turns 65 just before the same date will still get the £10,500 personal allowance. As for people on the basic state pension and pension credit (some 50% of all pensioners), they do not earn enough to pay income tax, so will be unaffected by the changes. They constitute about 50% of pensioners. Therefore that leaves a middle stratum of pensioners whose income is likely to be made up of a combination of state and private pensions, as well as some money in savings accounts – the near mythological decent, hard-working, ‘responsible’ pensioners who have ‘done the right thing’ all their lives. Prudently saved a bit each month and loyally voted Tory each election – possibly. This large grouping might well feel the tax goalposts have suddenly been moved, leaving them with less than they might have expected. The treasury’s own statistics show that, taking inflation into account, Osborne’s measures will leave 4.41 million people worse off by an average of £83 a year come 2013-14.

Under the budget we can see that we are not “all in this together” – always a cynical lie. While the top 10% of earners and the super-rich with their Mayfair pads will certainly gain, the poorest will lose the most. A living insult to the unemployed, disabled, poor pensioners and the 200,000 part-time workers, who are having their tax credits snatched away this April. That is when the qualification threshold is raised from 16 hours to 24 hours – at a time when the bosses are slashing employees’ hours due to the economic environment. Resulting in a grim situation where low-income families with parents in part-time work, more often than not because they could not find full-time employment, could lose nearly £4,000 per year. How are they in the same boat as Elton John or, for that matter, everyone sat round the cabinet table?

The entire budget is a monument to the government’s blatant failure to deliver its central promise. The coalition commitment to getting rid of the deficit within its first term was premised on a 2%-3% growth rate, but that now looks like a fantasy figure. The recession in the US and Europe, combined with the government’s own suicidal austerity programme, has seen government spending increase, as it forks out ever more money in the form of unemployment benefit, housing benefit, etc (even after the cuts in these areas).

Bluntly, it is almost a statistical fluke that the UK is not technically in recession. Outside of Osborne’s fiscal Alice in Wonderland, the prospects for the economy are bleak – something confirmed by figures published by the Office for National Statistics on March 28. The economy contracted by 0.3% between October and December last year, more than the 0.2% drop previously estimated by the ONS and other economists. That left growth for the year as a whole at just 0.7% – down on the 0.8% originally pencilled in. Furthermore, the ONS said real household disposable incomes in 2011 as a whole fell 1.2%, the biggest drop since 1977.

Not exactly a sign of roaring success, George.



Pension con job

Working life should end in material comfort, demands James Turley

As the furore over George Osborne’s bloodthirsty ‘emergency budget’ continues, a clear area of controversy is the proposed rise in the state pension age.

Gordon Brown’s Labour government had already projected an increase, to be implemented over the years 2024-46, of the official retirement age to 68 for both men and women. Towards this end, from April this year the retirement age for women has been raised from 60 to 61 and was due to reach the male age of 65 in 2020. This is nominally in line with the demographic trends of an ageing population. Now work and pensions secretary Iain Duncan Smith, in line with the desire to decimate Britain’s public spending, has sped up the timetable – men will see their retirement age increase from 65 to 66 in 2016.

So, though this particular change will only come into play after the end of this government, it is clear that the political establishment as a whole is engaged in a rolling back of the welfare state. To state the obvious, the raising of the pension age is not just an attack on the elderly, but an attack on people who are now young too (there is, after all, talk going around of pushing the retirement age up to 70 in the years ahead). And, alas, this is only part of the story.

As a ‘sweetener’, the ruling coalition has agreed to restore the earnings link to the state pension. This is certainly a demand that peppers any number of left reformist programmes. The economic situation, however, basically renders it a dead letter. Real wages are likely to fall – which means that the existing link to inflation will cover any increase in wages anyway. But state pensioners are at least no worse off than they were under the old regime – the basic rate will rise by the largest of earnings, prices or a 2.5% minimum.

At the moment, the grand total for a single person is a whopping £97.65 per week – so far short of a living income, it is closer to an insult than a pension. With prices increasing by 3.7% or 5.3%, depending on which measure you use (wonder which one Osborne has in mind), this figure will in practice stagnate until the much-anticipated economic recovery – and that is before you take into account the rise in VAT. The utterly tokenistic character of concessions ‘won’ by Nick Clegg and his Liberal Democrat colleagues from biliously Tory policies is plain to all – their poll ratings are already dropping rapidly, and there are the first signs of disquiet on the Lib Dem benches in the Commons as well.

Labour, of course, is in the business of scoring the political open goals – with such socialist firebrands as, er, Yvette Cooper attacking cuts “nastier” than those of Maggie Thatcher. This level of mendacity really does give the luxury of opposition a bad name – not only are the Tories simply building on decades of damage, including under Labour, when it comes to pensions; but Labour promised more severe cuts than the Thatcher years in the leaders’ debates! Surely Cooper should be congratulating Osborne for fulfilling New Labour policy?

Alongside the matter of pensions is the related question of the compulsory retirement age. The coalition wants to effectively abolish it – people, it is argued, should be free to stay in work with all the usual legal protections until they see fit to leave. Indeed, there is nothing particularly progressive about forcing people to retire – for many employers, it has been used to conveniently get rid of people in jobs where it is generally possible to work into old age (for instance, academics: left intellectuals Terry Eagleton and Sheila Rowbotham were summarily ditched by Manchester University during a cost-cutting drive two years ago).

But again, the context of the change reveals it as something of a con job. Part of the impetus behind the present round of auto-cannibalistic cuts (not the only part) is to clear out concessions to the working class. Raising the retirement age makes people more reliant on their employers, rather than less – a 65-year-old is unlikely to want to live off a state pension and whatever benefits he or she can cobble together, and the door is open for employers to cajole workers to work until they drop. People should have the right, but more importantly the material ability, to retire when they are ready.

More broadly in contemporary culture, capitalists expect ever more work out of us. The advent of mobile phones and electronic communications means that once time-consuming tasks are done in seconds – but Marx reminds us that no ‘labour-saving’ device ever saved a minute’s labour, and the consequence is that work increasingly seems never to stop – it continues long after nominal working hours are over. For some capitalists, it is convenient to be able to curtail working life – for others, it will be convenient to extend it.

One need only re-examine Marx’s writing on the struggle over the working day to find out what lurks behind the benevolent gift of the option of more years of work – in the 19th century, bourgeois ideologues wasted no time opposing limits to the working day as infringements of the ‘freedom’ of workers to work as much as they pleased. At its most obscene, this situation meant that children were claimed to be free and happy volunteers to 14-hour stints in a flax mill.

Contrary to the caricatures peddled by some at the loopier end of anarchism, Marxists do not valorise ‘good, honest work’ in any way. We do not think there is any virtue in working yourself to death – labour is there to reproduce life, not the other way round. That is not the state of affairs under capitalism. The ageing population is not, as it is sometimes implied to be, a ‘demographic time bomb’ of some sort, and we are thereby heading for a situation where there are simply too few people in work to support the total population. The productivity of labour has tended to increase, albeit in a pattern that suits the ruling class; there is more than enough production to go around.

Capitalism simply undoes all those technical advances by squandering the material wealth it produces – and the wealth it inherits from nature. It is the worst of all possible worlds – quite apart from pensioners, whose removal from the workplace is partly a matter of the individual’s life cycle, capitalism demands unemployment – but those in employment have to work themselves to the bone to compensate; meanwhile, waste and duplication of effort abounds in the anarchy of the marketplace.

The flagrant irrationality of all this is concealed and compounded by ideology – the dour ethics of Calvinist Christianity have long been noted to underwrite in some sense the expansion of industrial capitalism, but there are no end of alternatives, religious or secular, to this masochistic dogma. Self-help manuals abound to inculcate the personal habits of non-specific ‘successful’ people, and all remind the reader that genius is 10% inspiration, 90% perspiration (a rather generous assessment of the usefulness of such tomes). We are persistently told Horatio Alger stories – Alger peddled endless novels to the American public in the late 19th century charting the rise of humble urchins to a comfortably inane bourgeois existence. It was all there for the taking – provided you worked to a lunatic intensity.

As a result of all this, the matter of pensions has to tie in with the issue of work as such. Retirement proves such a vexed issue only because, for the majority of people, it is something they come very much to look forward to. In the 1990s, American journalist Barbara Ehrenreich spent a year, in the manner of George Orwell, living close to the breadline in mundane unskilled jobs, producing a book – Nickel and dimed – about the experience. Her point was that this work is precisely ‘mind-numbing’ – it eats up the time and energy necessary to read, to socialise, to think. Paul Lafargue, son-in-law of Marx, went further in his short essay, ‘The right to be lazy’: “In capitalist society work is the cause of all intellectual degeneracy.”

We need to propose a radically different kind of working life – one where more people work substantially fewer hours (for a start, the working week should be reduced to a 35 hour maximum); one where people are free to spend time out of work to study, whether vocationally or not; one where there is – heaven forbid – the opportunity for people simply to relax. Jobs themselves should not be designed to squeeze every last drop of sweat from workers, but to produce in line with what society democratically decides it needs – and wherever possible to be genuinely fulfilling activities in their own right.

Working life should end in material comfort. The age of retirement should be lowered to 60 (55 for those in unpleasant or dangerous occupations). But this should be voluntary – there should be no compulsory retirement on the basis of age. Pensioners should receive an income based not on what capital claims it can afford, linked to inflation or anything else, but what they actually require to live well – materially and culturally. Pensions need to be set at the level of the minimum wage, which itself needs to be raised substantially to reflect the true value of labour-power.

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Osborne budget: war on the working class

The ‘nasty medicine’ served up by George Osborne and the coalition government will provoke resistance and pull the Labour Party to the left, predicts Eddie Ford

When the capitalist economic-financial system went into near global meltdown, and catastrophe was only narrowly averted by frantic and massive state intervention, it was always going to be the working class that would have to pay the price. We would have to carry the can, not the capitalists and bankers – the supposed masters of the universe – who lost control of their system. Well, we are now getting our first glimpses of what the new age of austerity will be like – when, to use the words of David Cameron, the “rubber really hits the road”.

So this week chancellor George Osborne delivered his first ever budget, widely described as a “defining moment” for the new coalition government and the country as a whole. He was the man, of course, who last year hypocritically declared that “we are all in this together” – unless you happen to be wealthy, that is. Like the 23 cabinet ministers who have assets and investments worth more than £1 million, who will hardly have to apply for a crisis loan from social security. Naturally, Osborne’s “tough but fair” budget was anything but “fair” – representing an assault, albeit just the initial wave, on the jobs and living standards of the working class. Yes, the age of austerity is going to be extraordinarily nasty.

As predicted, the budget delivered an aggressive mix of anti-working class spending cuts and tax increases – all with the aim of ‘balancing the books’ by 2016. Hence, as from next January the main rate of VAT will rise from 17.5% to 20% – which, of course, will clobber ordinary workers and the poor, as will the £11 billion cut in overall welfare spending. This will include measures to freeze child benefit for three years, and curtail disability living allowance. Particularly vicious are a raft of proposals to crack down on housing benefit. Quite vindictively, after April 2013 the unemployed will see their benefit cut by 10% after 12 months of claiming Jobseekers Allowance – presumably on the basis that if you make the lazy bastards suffer even more, threaten them with potential homelessness, then that will ‘incentivise’ them to get off their backsides and find a (non-existent) job. Housing benefit will also be cut for people who are in larger homes than their family size officially “warrants”.

Furthermore, from next year – excluding the state pension and pension credit – benefits, tax credits and public service pensions will rise in line with the consumer price index rather than the retail price index, which is generally higher. There will be a two-year pay freeze for public sector workers earning over £21,000, even if last year Osborne was talking about making it £18,000 – presumably a Liberal Democrat-brokered ‘compromise’. The government will “accelerate” the increase in state pension age to 66 and Osborne also revealed – a real sting in the tail – that all government departments apart from health and international aid, which are ring-fenced, will face an average 25% cut in their budgets over the course of the parliament, the exact details to be determined by a sweeping “spending review” in the autumn.

George Osborne stated that the UK “can look to a brighter future”, thanks to the budget, while even less convincingly the Liberal Democrat chief secretary to the treasury, Danny Alexander, declared that proposals his party had previously denounced with righteous fury as a “Tory VAT bombshell” were a “necessary” response to the “big gap” in public finances the new government had inherited. Similarly, Vince Cable said his party had helped secure some “very big and progressive steps”, such as raising tax thresholds for the lowest-paid and a £150 annual rise in child tax credits for the poorest families.

So, Lib Dem emollients and flummery aside – we have the expected cuts, cuts, cuts. But communists have to ask the basic question, why are they doing this? Indeed, some elements within the establishment think that an austerity drive under today’s concrete conditions is tantamount to madness. After all, the UK has only just come out of recession officially – though more on a statistical technicality than in substance. The UK’s ‘growth’ barely registers, having expanded at an average rate of 0.30% in the last quarter. In fact, according to the Global Economics Research unit, this “upturn in production may be short-lived, as it was the result of inventory adjustments and a rise in exports prompted by the weak pound”. That is, rather than “trying to increase market share by lowering foreign currency prices”, exporters instead “have been rebuilding their profit margins” and this – in connection with “weak growth” in Europe, which imports 50% of UK products – “may sooner or later erase the advantage of a lower exchange rate”. Furthermore, as a result of the cuts, VAT increase, etc announced in the budget, “we should anticipate an additional drop in consumer spending, which in turn may make companies postpone investments and hiring and slow down the recovery”.[1]

Hence, it fundamentally goes against all post-war bourgeois orthodoxy – Keynesian economics, in a nutshell – to cut rather than spend when attempting to crawl out of a recessionary hole. A state in debt is not the same as an individual in debt – quite the opposite. Rather states need urgently to spend, spend, spend in order to stimulate demand and avoid an even deeper recession: keep on spending, keep on investing, so they can eventually recover. And capitalist states have always borrowed to finance their spending and generate economic growth.

However, the Osborne budget signals the opposite approach – to drive down spending and dampen demand. To sit in your hole and just keep digging. So a sharp rise in the number of unemployed therefore means more spending on unemployment benefit and social security – money straight down the drain, in that respect. The unemployed have less ready cash, so obviously spend less. Therefore demand drops, which in turn means there is less incentive for capital to invest in production. The UK could spiral down into the much feared double-dip recession, making George Osborne’s “tough” budget an exercise in suicide economics. And, of course, we have seen intimations of this downward spiral in Europe – not just in semi-basket-case economies like Greece or Portugal, but in a ‘powerhouse’ like Germany, which is now experiencing its own austerity drive.

In fact the budget was driven far more by a political agenda than an economic one. Clearly, the coalition government – and those it represents – sees a golden opportunity to roll back the welfare state and tilt the balance of class forces in favour of capital, the ‘deficit crisis’ making a perfect excuse for such an offensive. Hence, except for some paltry concessions here and there to those sections of the working class deemed to be the ‘worthy poor’, what we are confronted with is a naked attempt to shift the deficit burden onto the backs of the working class by ruthlessly driving down living standards. Work longer for less, retire later and poorer – if you have a job at all, of course, as it is an absolute certainty that unemployment will sharply shoot up as a direct consequence of the approach outlined by Osborne.

Which will please The Times, to name but one rightwing rag. Last week it implored Osborne to restore the UK’s “credibility with the markets” – by “going further” and “faster” with regards to cuts, meaning that the chancellor “needs to be ambitious with the nasty medicine he offers”. For the Times, this logically meant that the “greater part of the burden” has to come from “spending cuts”, not rises in taxation – therefore “tough action” is required on public sector pay, pensions and benefits, as part of the endeavour to “scale back the middle class welfare state” and set the UK on the glorious path to a “low tax economy”.[2] Sections of the ruling class resent spending money on the working class and have said enough is enough. Osborne’s budget represents this declaration of war, this desire for red-in-tooth-and-claw class revenge.

Now, the same Times editorial noted what it called Labour’s “raucous opposition to everything” – ie, to the budget cuts in particular. Of course, when in government, the Labour Party was committed – to all intents and purposes – to the same basic programme as outlined by George Osborne. But, now enjoying the ‘luxury of opposition’, the Labour leadership is making loud anti-cuts noises. Thus Harriet Harman, acting Labour leader, described the budget as “reckless” – it would stifle economic growth, “throw people out of work” and “hit hardest those who can least afford it”. Just as angrily, John Prescott condemned ex-Labour cabinet minister John Hutton – appointed by the coalition government to head a commission into public sector pensions – for being a “collaborator”.

Indeed, senior Labour figures are now talking left. The language of resistance. Militancy. Even a whiff of political cordite in the air. Leadership candidate Ed Balls, speaking on the BBC’s Andrew Marr show, condemned “the callousness of the cuts which are being proposed” and the “unfairness” of the VAT rise, as well as the undermining of the recovery and jobs. Balls also slammed Osborne for turning to the likes of Norman Lamont, Geoffrey Howe, Nigel Lawson – “the people who gave us the deflation and the unemployment of the 1980s”.[3]

Needless to say, union leaders have reacted with anger. Unison general secretary Dave Prentis accused the coalition government of “declaring war” on public services, to the extent that the budget would “raise the spectre of breadline Britain” in some parts of the country. Public sector workers, Prentis spat, “will be shocked and angry that they are the innocent victims of job cuts and pay freezes”. Prentis is quite right, of course. In reaction, it is inevitable there will be mass fightbacks, including strikes and demonstrations – with left bureaucrats like Prentis, Derek Simpson, Tony Woodley, Mark Serwotka, etc making fiery speeches from the podium denouncing the manifold evils of the Con-Lib government. And, of course, they could well be sharing a platform with the likes of Ed Balls, Harriet Harman and the Milibands – all presenting a new-found left face to the working class.

Herein lies the danger. If form is anything to go by, the comrades in the Socialist Party in England Wales and the Socialist Workers Party, for example, will act as loyal lieutenants of the trade union bureaucracy – which will lend them a spurious legitimacy. Which, of course, was precisely why the SWP’s May 22 invasion of the talks between British Airways and Unite negotiators was such a spectacular, and idiotic, own goal. How did such a stunt – which saw a furious Tony Woodley shouting at the comrades – further the SWP’s self-professed project of forming a ‘united front’ with brothers Prentis, Woodley, Simpson, etc?

It is not the role of the left to simply constitute itself as an adjunct of the union bureaucracy – no mater how left it might be posing at any one time. Nor is it our role just to be the most militant proponents of strike action – strikes in and of themselves are not enough – no matter how much we communists fight to build, support and give them direction. Look at Greece: call the general strike, then what? No, we need a strategy leading to an alternative society. First and foremost we need to fight for the only political vehicle that can take us there – a united Communist Party, guided by a principled Marxist programme.

As we have seen in the Netherlands and Belgium – which disastrously is on the verge of breaking apart – so far it has been the far right which has benefited from the economic crisis. But with the correct tactics and strategy – the right programme – it can be the revolutionary left in Britain and elsewhere which can take leadership of the struggles.

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  1. www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=GBP
  2. The Times June 19.
  3. For the full transcript, see news.bbc.co.uk/1/hi/programmes/andrew_marr_show/8750245.stm

Conservatives prepare for massive attacks on the working class

The Tory conference gave us a flavour of what a Cameron government will bring, writes Eddie Ford

Unemployed? Public sector worker? On incapacity benefit? A woman and not far off retirement age? Well, start to get seriously worried – as should many, many, others. At Bournemouth this week the Tories were red in tooth and claw, revelling in their role as the tough guys who will make the tough decisions to pull UK PLC back from the brink of calamitous debt and economic ruination. Steely-eyed supermen to the rescue of British capitalism, unafraid to cut, slash and burn. Yes, the ‘nasty party’ is back.

George Osborne

George Osborne

So hypocritically declaring that “we are all in this together”, the Tory shadow chancellor, George Osborne – the brilliant economist who virulently opposed the nationalisation of Northern Rock and attempts to lessen the impact of the financial crisis through ‘quantitative easing’ – proceeded to reveal his plans for a full-scale attack on the public sector and the ‘undeserving’ poor, such as the work-shy unemployed and the lying and lazy on incapacity benefit. Or, as the Tories like to phrase it, of course, cutting back on ‘red tape’, ‘bureaucracy’ and the ‘nanny state’.

Hence Osborne announced that a Conservative government – a very real and dreadful possibility – would impose a one-year pay freeze in 2011 for the four million public sector workers earning more than £18,000. These workers will no doubt be delighted, if not positively grateful, to learn that Osborne is doing this for their own good – as the pay freeze is the “best way to try to protect your job during this period”, he explained,  “equivalent to saving 100,000 public sector jobs”.

As for those one million public sectors workers on less than £18,000 a year, they – rejoice – would still be ‘entitled’ to a pay rise of … almost certainly bugger all. Of course, Osborne hastily added, our brave boys and girls serving in Afghanistan and elsewhere would be exempt from the pay freeze – indeed, their ‘operational allowance’ would be doubled from £2,400 a year to £4,800. So everyone join the army then?

Osborne went on to state that one of the “hard choices that could not be avoided” was raising the retirement age, arguing that Labour’s current proposals were not “ambitious enough”. Thus the Tories would lift the pension age from 65 to 66 for men, but this would not happen until “at least” 2016 – up to 10 years earlier than under Labour’s plans, which envisages the state pension age for men gradually rising from 65 to 68 between 2024 to 2046. As for women, said Osborne, it would be 2020 “at the earliest” before they see their retirement age raised to 66 as well – though a review has been promised to further examine this knotty issue, with Tory leader David Cameron reassuring us that it would “take account of the interests of women”.

Obviously, bringing the move forward in such a way would mean that many more workers, particularly those aged between 49 and 59, would have to work for an extra year before qualifying for a state pension. Some would call this nothing more than a con-trick – getting already poorly paid workers to work longer for less. But for the Tories this is a price well worth paying, claiming that their scheme to raise the retirement age would save “the country” £13 billion a year.

Playing to the populist gallery, Osborne vowed – with bloodcurdling conviction – that a Conservative government would “target” tax evasion and offshore tax havens, sternly telling the bankers that he believed in the “free market, not a free ride” (audience cheers!) – and that there would be big trouble if he discovered that taxpayers’ money was being “unreasonably diverted” into paying for “bigger pay and bonuses” for the former masters of the universe hoping to recover their position. Doubtless quaking in their boots by now, the bankers were further warned by Osborne that he “reserved the right to take further action” against them, using the tax system if necessary. How he would do this was left unexplained.

Osborne also said he would abolish the national child trust fund, as it only benefited “the rich”, and remove tax credits from families earning more than £50,000. Furthermore, a Tory government would restore the earnings link for the basic state pension in the “next parliament”; slash the cost of Whitehall bureaucracy by a third; cut government ministers’ pay by a savage 5%; reduce the overall number of Westminster MPs by 10%; close off parliament’s “unaffordable” pension scheme to new members, and naturally “protect the most vulnerable” by preserving child benefit, winter fuel payments and free TV licences for pensioners.

Of course, the grisly showpiece of the Tory conference was the grand unveiling of the “ambitious” plans to attack the sick and ill – sorry, I mean to ‘incentivise’ them into finding gainful employment. Perhaps this is what Osborne meant when he pledged a “complete change” from the last 12 years of Labour government. And what Cameron had in mind when he described the ‘anti-sick’ propositions as lying at the centre of the “new” Conservative Party project.

David Cameron

David Cameron

So it was the Tory leader himself who announced that he hopes to impose a £25-a-week benefit cut on up to 500,000 incapacity benefit claimants – talk about throwing out scraps of juicy red meat for the hungry bigots in Daily Mail-land to veraciously consume. This noble end is to be achieved by initiating a more vigorous ‘medical assessment’ process, which with total scientific objectivity will discover that these half a million indolents are indeed quite “capable of working” – what shirkers. If so, the happy souls will be shunted off incapacity benefit, which currently stands at a princely £80.90 a week, and onto jobseekers’ allowance – now worth a not-so princely £63.40 a week. Bingo, or so the Tories say, you save £600 million over the first three years and £1 billion over a five-year parliament. So there is “compassionate conservatism” for you, as we all know that the Eton-educated David Cameron could easily survive on £63.40 a week (indeed, we would fully expect him to make impressive ‘savings’ every week).

This “tough and tender” approach, so boasted the Tory leader, will form the backbone of a “big, bold, radical scheme” to get millions of people back to work. How come? Because the £600 million saved by ‘incentivising’ the sick back to the wonders of work will pay for the Tories to ditch the New Deal and erect a single one-stop shop, ‘back to work’ benefit (or ‘super-benefit’, if you like) which will include the present 2.6 million incapacity benefit claimants and lone parents. The scheme would also incorporate 100,000 additional apprenticeships, 50,000 additional training places at colleges and 50,000 “work-pairing” places for young people.

Naturally, after six months of unemployment on your Tory ‘back to work’ benefit, “work experience” and “training” will become compulsory. That is, you will have to work for your dole, being forced to participate in so-called “community work” for up to one year – at the end of which the unwilling conscripts will have to undergo a fresh reassessment and accordingly start a fresh ‘back-to-work’ cycle. Of course, in reality many if not most of these “training” centres are nothing much more than semi-militarised detention centres seemingly designed by an evil genius for the sole purpose of making  you feel worthless.

The Tories have openly admitted that their near sadistic plans for the unemployed are largely based on Australia’s various ‘work for the dole’ projects – which were first proposed by the Liberal Party in 1987, trialed in that country in 1997, then permanently enshrined in 1998. Therefore anyone unemployed for 12 months or more, and who has been judged by their ‘job network member’ as having a “pattern of work avoidance”, is referred to the ‘full-time work for the dole’ programme. Naturally, this scheme offers no additional benefit payment – forget it – but substantially increases the required total mandatory participation time to 1,100 hours, with a minimum of 50 hours per fortnight. The programme usually takes about 10 months to complete.

Needless to say, the ‘working for your dole’ programme becomes a wonderful source of cheap labour for the government and the bosses – virtual modern-day slave labour even. So during the 2000 Olympic Games all those of an eligible age who had been unemployed for three months or more and lived in Sydney were made to participate in various Olympic-related schemes and projects.

More scandalously still, in December 2002 the ‘drought force initiative’ was enacted. Prior to that, all the ‘work for the dole’ projects were supposedly meant to “directly benefit the public” – whether in the shape of community organisations or civic assets. However, the ‘drought force’ scheme expanded its remit to also include work for privately owned agricultural properties in those areas deemed to be experiencing “exceptional circumstances” (ie, drought-hit areas).

Now, thanks to the Tories, it looks like Australia may well come to the UK – and unfortunately we are not referring to the weather.

And, in true Tory style, this ‘back to work’ programme will be run largely by voluntary groups, especially “faith”-based ones, of course – that is, institutionally corrupt charities and assorted private sector outfits out to make a quick buck. To this end, treasury rules would be altered to allow the government to use “benefit savings” once someone had found work in order to pay the ‘welfare-to-work provider’ – that is, private sector providers would be given 20% initial funding for each jobless person taken, with the remainder paid by the state after the unemployed person has been in work for one year.

In other words, we see an essential return to the callous ethos of the Victorian Poor Laws – try to make life as unbearable as possible for the unemployed in order to ‘motivate’ them to accept just about any old crap job going. Once the welfare/benefits ‘safety net’ has been effectively removed, you are in a prime position to force people into the labour market under virtually the worst possible conditions imaginable – which in turn leads to a general downward pressure on pay and conditions for all workers. Welcome to the Tories’ brave new world.

For sure, unemployment will continue to rise this year and in all probability will keep on climbing in the next year. If the Tories get to implement their spending cuts blitzkrieg – delivering a short, sharp, shock to the UK economy – while at the same time withdrawing the various Keynesian monetary and fiscal stimuli, then unemployment could quite easily reach some four million or so. However, if large numbers of public sector workers are made redundant and there are indeed ‘apocalyptic’ cuts in public spending in 2010 – as many in the Conservative Party want and desire – then five million or more unemployed is not entirely inconceivable. Self-evidently, this would represent a massive attack upon our class.

Of course, in one sense the Tories have embarked on a big gamble – and in doing so have given Labour an open target. By attacking so many sections of the population, they risk aiding a Labour recovery as the election draws nearer. But they know that Labour’s programme is for cuts too, only enacted with a little less enthusiasm perhaps. Besides, the Conservatives have been reassured by recent poll findings that a clear majority of the population favours some ‘belt-tightening’ as a way of resolving the economic crisis. In the absence of a working class alternative the nationalist-inspired “we are all in it together” can have a good deal of resonance, particularly when the Tories are also seen to be making noises against such easy targets as greedy bankers and MPs on the make.

Although the signs do not look good, it is not too late for the left to get its act together in time for the general election. Both the Tories and New Labour are set on attacking our class to make us pay for the crisis of the system they both defend – a system that is clearly seen to have failed. The need for Marxism could not be more evident.