Tory Chancellor Osborne’s collection of savage spending cuts and dramatic tax changes is intended to engineer a massive transfer of wealth to shareholders, whilst condemning millions to a life of grinding poverty on reduced benefits or on the dole. Claiming that “we are all in this together” is simply a lie.
It follows the £6 billion cuts announced in the days following the election. It comes in the wake of the scrapping of 12 major capital investment projects approved by New Labour in the dying days of its period of rule. And on top of cuts made by the outgoing New Labour government in higher education.
Much worse is to come. In the public sector, reducing the budget deficit will leave most departments – apart from health and international aid – facing a 25% reduction and the certainty of huge job losses. No advanced economy has ever made such drastic spending cuts in state budgets.
Pay for public sector workers will be frozen, initially for two years. As entire services are threatened with the axe, Cameron and Co. will be ratcheting up their caring, sharing approach. They will cynically encourage redundant workers to form co-operatives of volunteers to take them on with a pittance of a contract to cover expenses.
But for the private sector, the plan is quite different. Here the overarching idea is to make Britain an attractive place to do business, boosting profits by reducing corporation tax. Each year for four years the tax rate companies pay on the profits they fail to hide abroad will be reduced by 1%, bringing the headline rate down to 24% - amongst the lowest of all the developed countries.
With some of its measures, the Coalition is trying to disarm some of its potential critics with the appearance of concern for the poorest. As part-payment for the Liberal Democrats’ participation, the income tax allowance lower limit will be raised, exempting 880,000 of the lowest earners from paying tax. But this will be more than offset by the increase to 20% in VAT from next January. With housing benefit capped and child benefit frozen, it will hit the poorest hardest.
Further assaults on living standards are already planned. In a calculated move towards a national government the Con-Lib coalition is to be extended to include New Labour’s former work and pensions secretary John Hutton who will prepare the ground for an assault on state and public sector pensions. And then, in October, Osborne will announce his review of public spending which will detail the cuts to be made, department by department.
The Coalition has embarked on a high risk, “kill or cure” programme based on figures for growth that are already under challenge and that are not possible in the context of the global crisis of capitalism. Eurozone economies are diving deeper into recession, while many German and French banks are reckoned to have solvency problems. They hold piles of Greek and Spanish government debt now worth far less than it was bought for.
This is not a government of strength but one thrown together in an emergency and which has no mandate for the unparalleled cuts it is making. The general election was a fraud because none of the major parties would come clean on what was being planned. So the electorate has every right to fight the Coalition.
Protest campaigns are already underway around the country. Trade unionists, pensioners and community groups are meeting to plan their actions to protect jobs and services. They should begin to create People’s Assemblies to co-ordinate their struggles and to plan for political and economic alternatives to a capitalist system now in profound economic and political crisis.
Unions who are opposed to the cuts will have to step up to the plate in the absence of any resistance from the Trades Union Congress. Brendan Barber, the TUC general secretary, could only say the budget was “economically dangerous and socially divisive”. He offered no challenge to the Coalition or its unacceptable budget whatsoever.
Bob Crow, general secretary of the rail union RMT, was more forthright, declaring: “There is no question that there will be widespread industrial and community resistance to the cuts agenda and RMT will be in the front line wherever people are making a stand.” This is good as far as it goes.
The RMT is part of an alliance called the Trade Union Coordinating Group, along with firefighters, civil servants, university and college teachers and other sections. The TUCG should start a campaign within the TUC to make preparations for an indefinite General Strike against the Coalition government, which is assuming the role of a dictatorship over the working population.
Resistance is not enough. The aim must be to bring down the Coalition and create a revolutionary government in its place. This is the road we have to take to prevent a social catastrophe far worse than that of the 1930s.
A World to Win
23 June 2010