Osborne declares class war

On the eve of today’s historic strike by public sector workers in defence of hard-won pensions, the unelected coalition ConDem government yesterday delivered a new, more vicious, sustained assault on living standards.

What chancellor George Osborne announced in his autumn statement was a blatant transfer of wealth from working people to the corporations and bankers who are responsible for the accelerating crisis of capitalism. In doing so, he effectively ushered in an unprecedented period of social conflict.

With imagined growth failing to materialise, the global economic crisis deteriorating rapidly, government borrowing soaring by a shock £111bn, and the credit rating agencies looking over his shoulders, breathing heavily, chancellor Osborne slashed his way through public spending.

Before the statement, ratings agency Fitch threatened that Britain's ability to absorb further economic shocks while keeping its top triple-A credit rating was "largely exhausted" unless the government took further steps to cut its deficit.

And so it has.

Public sector job losses will rise to 710,000 from an original estimate of around 400,000. Government spending will fall by 0.9 per cent in real terms for the period 2015-17. That is a bigger cut than in the period from 2011 to 2015. Public sector pay will be held well below the rate of inflation - a pay cut by another name.

The new, much bigger attack is certain to intensify the slow-burning anger over pensions that built over months into today’s strike by as many as two million trades unionists.

According to RMT transport union leader Bob Crow:

"George Osborne has ratcheted up the class war and has made it clear through his attack on pay and employment rights that he wants the workers to keep taking the hit while the rich get richer. After two years of a freeze, pay for millions of key workers will go up by 1 percent in the next two years.

With inflation over 5 percent, and the increase in pension contributions, that means nurses and the others we rely on will be around 25 percent worse off after four years of this ConDem government while top bosses pay goes up by 12 percent a year. That's a scandal."

After the statement, Fitch patted Osborne on the back, but warned further steps will be needed.

Former Conservative minister Michael Portillo also says it won’t be enough. Foreshadowing a much more brutal style of bankers’ government, like those recently installed in Greece and Italy he says:

“Britain will have to reduce welfare and public sector employment dramatically. The state will need to step back from education and health where it simply doesn’t do a good enough job. Such changes may be too draconian for a coalition, yet the public may find them too radical to accept from a single-party government. The only question, however, is whether we will tackle those big issues soon, or merely ensure prolonged stagnation by postponing the inevitable.”

The stark reality is that capitalist society can no longer sustain the public sector no matter how loud the protest. A series of general strikes in Greece have failed to stop repeated attacks on living standards demanded by the ratings agencies and imposed by the European Union, European Central Bank and the International Monetary Fund.

The conflict moved to a new stage with the sweeping away of the elected PASOK government and its replacing by a coalition (including an ultra-right party) led by an advisor to investment bank Goldman Sachs.

With the eurozone careering towards an apocalyptic collapse, the ramifications are being felt throughout the world. Late last night, ratings agency Standard and Poor downgraded the biggest banks in the US, including the Bank of America which is heavily exposed to euro loans.

The response to Osborne and the ConDems from rallies in towns and cities throughout Britain should be to support the worldwide occupy movement and form People’s Assemblies. These can become the power which will lead and shape a new democratically-owned and controlled, sustainable economic, social and political system. As someone once said, there is no alternative.

Gerry Gold

Economics editor