Wednesday, 5 December 2012

Osborne's Class War Statement


There is a bit of a change with to Gideon's autumn statement that marks a shift in the government's business-as-usal. Before, Gideon's budgets were almost solely concerned with implementing austerity, which the Tories believed would reduce the debt and the deficit. And insulating rich folks - their core support - from the effects of their policies. This, from the outset, was a class project for underlying, protecting, and reinforcing the narrow interests of finance capital at the expense of everyone else. The warnings of the Labour front bench and many others about the damage Tory austerity would inflict on the economy went unheeded. Because their policy wasn't really about economic strategy. Sure, our LibDem-supported Tory government whispered warm words about rebalancing the economy, such as growing the private at the expense of the public sector, or placing more weight on manufacturing and less on finance. But these are so much window dressing for the absence of an economic strategy. Gideon and co. really believed that by cutting the public sector and throwing tax cuts at the rich, private employers would take on more people and markets would miraculously flourish. Needless to say, it didn't and Britain is locked into a stagnant cycle of anaemic growth and shallow recession.

Therefore, what is different about today's statement is the final realisation that having a programme for capitalism instead of sections of capital might be a good idea. Hence we have Gideon's subsequent conversion to elements of 'plan B'. We've already seen the the boost to flood defences and acknowledgement of the added economic activity that spend could generate. So today the Treasury has found £1bn for roads, a billion pound loan to extend the Northern Line to Battersea, the rolling out of ultra-fast broadband in a dozen cities, a £600m fund for science, an addition of £1bn to the much-vaunted but so far invisible business bank, and commitment to maintaining the annual £33bn infrastructure investment bill. A further £1bn is being made available for new schools too, after the money was stripped out from Labour's Building Schools for the Future programme. And only then, the cash available for academies and free schools. Schools left crumbling by BSF cancellation are likely to remain that way unless they convert.

It's pretty weak stuff, but the penny of state assistance for the economy has finally dropped, so I suppose we should be grateful that industrial strategy has belatedly embedded itself in the political consensus.

Now, many commentators of all political persuasions like to moan about bank lending. Or, more accurately, the lack of it. Far be it for me to defend the banks I think it is worth stating that they are not acting irrationally. With economic uncertainty, high unemployment, the preponderance of flexible contracting, and private sector debt at ludicrous levels (mainly thanks to those city boys), you can understand why banks may be reluctant to lend. Help to change this state of affairs requires putting money in people's pockets. Once it's there, all of a sudden, budgeting for a loan or mortgage becomes a bit easier. So, superficially, the raising of the tax threshold to £9,440 from next April will put quite a bit of cash in everyone's pockets. £1,335 extra, apparently. In a transparently populist move, Gideon has also ruled out the 3p petrol duty, and train travellers can look forward to frozen ticket prices (I'll believe that one when I see it). Welcome, yes?

Taken by themselves they certainly ease the cost of living. But would it come as any surprise to learn these tax benefits for working people are being taken out of the public assistance some of our poorest people depend on? Of course not, it's the Tories after all. Jobseeker's Allowance, Employment Support Allowance, income support, and the state pension are all getting below-inflation rises for the next three years. In other words, a cut. After next April the same will be true of Housing Benefit. These measures alone (sans the budget cuts coming with Universal Credit, the new disability Personal Independent Payment benefit, the localisation of housing and council tax benefits, and the Social Fund) is projected to save £3.7bn, which will help the Treasury plug the hole left by the income tax cut.

While the working poor are bribed with tax cuts funded mainly by themselves and those unfortunate enough to have to subsist on benefits, there is a tax cut bonanza for the wealthy. As well as profiting from the basic rate threshold, Britain's hard-pressed affluent classes can look forward to a one per cent rise in the threshold they start paying the 40p tax rate at. This on top of next April's bonanza with the cut in the top rate of tax. Corporation tax is going to be cut again by a further 1% which, let's be honest, is a different name for another tax cut for the rich. And tax relief is being granted on capital equipment purchases up to the value of £250,000 - something that will benefit an estimated 99% of UK business. Gideon says it will make it easier for businesses to invest. I call it another scheme for funnelling public money into private coffers.

In sum, Gideon squeezes the poor while bribing them with their own money, and showers concession after concession on the most wealthy people in society. People just like Gideon, come to think of it. For all its forays into industrial strategy, this is a blueprint for a society disfigured by inequality and poverty. It is a statement of class war that the Tories are determined to wage on behalf of the wealthy, and one that makes their claims of 'being all in it together' sound sicker all the more they repeat it.

16 comments:

Chris said...

The Tories have committed to increase spending on capital projects but further reduce spending on revenue projects.

The distinction to be made here is that capital projects are almost wholly carried out by the private sector, while revenue is day to day public sector work. Therefore the Tories are handing public money to the private sector while at the same time drastically cutting services and benefits.

Same old Tories!

Phil said...

There's nothing wrong per se with capital spending, but it's always a question of how you go about it. What Gideon didn't go into was the detail of his new son-of-PFI scheme that will be used for public building projects like schools and FE colleges. I'm not surprised really, because new PFI is the same as old PFI.

Loz said...

A classic Tory budget, cut to the bone, give the rich lots of freebies yet somehow make it appear to be tax cut for all.

Playing with income tax is clever because those in jobs will see increases in their pay when the change comes in. They won't realise the money just goes out from elsewhere and that in the grand scheme of inflation it means nothing. What's even more clever is that people are being invited to believe that the money in their pay packets has come directly from those hoards of plasma-telly-owning benefits bingers who apparently hide warm and well fed behind closed luxury curtains in their millions across the land.

We always underestimate the Tories ability to appeal to society's basest instincts and it is this that lost Labour so many elections in the 80s and 90s. However immoral it gets, if they can convince enough of those who remain in work that they are better off than the phantom millions gorging on mythical endless benefits, they will win the next election, and probably the one after that. By then, there will be so little left to defend, it won't matter anyway.

It, of course, doesn't help matters when you have a Labour Party front bench nodding like synchronised dogs when Osborne demonises benefit claimants.

Gary Elsby said...

But the choice of Labour Councils iunder pressure from Tory Governments is what it wants to cut.

The notion of what it has to cut is a myth.

Putting a Tory Chief Executive in charge of a City and then asking him what he wishes (wants) to cut is like asking a kid if it wants some sweets.

Now add into the frame a set of failed Elected mayors (and a few mistresses) and voila-the perfect storm.

A set of closures with no hint of a willingness to divert finances to vital services.

Blame the Tories?
No, not for cutting vital services.
Blame them for being Tories, that is easy and requires no logicaL socialist thinking in the slightest.

Test your local councillor with the folowing puzzle: For every closure they wish to implement, ask them what plan B is for each closure.

If they answer: There isn't one.
Laugh.

Boffy said...

Phil,

You are right that the Liberal-Tories have pursued a policy in the interests of sections of Capital rather than Capital in General. It is Money Capital i.e. the banks, and finance houses, rather than Finance Capital (which has a special meaning in Marxist Theory), but it is also the small capitalists who make up the core membership and support for the Tories.

I'm not convinced they have yet abandoned that, though they are under pressure from the State at national and international level to do so in the interests of Big Capital. The reality of the proposals on Capital Spending is they keep talking about it, but not doing it. Things like finance for lending and so on, or the money for regional development simply does not get out into the economy. That's why Labour can keep asking how many of these projects have you done?

The fact is, as I pointed out two years ago, is that it reflects their incompetence. They backloaded the majority of the cuts - they have only implemented between 6-10% of the cuts - but from the beginning talked down the economy with ridiculous comments about Britain being in the same position as Greece!

Had they not done that, its likely they could have avoided the economy stalling. Now they have stalled the economy, with still the majority of the Cuts to be implemented!



Boffy said...

On the question of welfare Benefits, as I set out here, Marx opposed Welfarism, State Aid and other forms of Protectionism, because they hold back development of the productive forces, and undermine workers independence.

In work Benefits are in reality subsidies to bad, low paying employers, and Housing benefit is in addition a subsidy to Landlords. They are subsidies to Capital from better off workers out of their taxes.

Workers, in work should not need such additions to make up a normal wage, and employers that can't pay such a wage should go out of business. A decent level of Minimum Wage would facilitate that.

But, workers also need a high level of Benefit in conditions where they are made unemployed, so they do not get forced into low paid employment. The Capitalist State will not provide that. As marx and the First International argued, workers need to develop their own Social Insurance Scheme, to cover unemployment, sickness, and retirement.

Phil said...

It's all very well getting high and mighty Gary, but not once have you offered any sort of alternative. Despite being asked numerous times, you have avoided elaborating your plan b. Why? Because you haven't got one.

Gary Elsby said...

Looks like Cuba got it wrong then.

On the subject of the minimum wage. What if you had a Council (like Stoke) who wish to offload pensioners into the private sector, but the private sector only offer the minimum wage for the newly redundant council care workers?

(Here's the hidden Pervez bit Phil)

You inform any new bidders for old people that they will only win a contract if you offer the 'living wage' (a few bob more).

It's called conscience money but reality, it is another load of shite out of Sandwell.

One MP, one ex Mayor and two gophers, all sent to stoke to screw the natural membership.
Oops, forgot the mistresses cum cabinet members.
Who ran elections when no one did nothing, Phil?

Boffy said...

Of course Cuba got it wrong!

Chris said...

I am not sure where Boffy has got his figures from.

From the perspective of local governments the cuts have not been delayed or back loaded. The cuts are being fully implemented and are front loaded. If we refresh people’s memories the ConDem gov’t introduced budget cuts immediately in their October 2010 ‘emergency budget’. This amounted to approx 6% of cash limits and was met with universal approval from all sections of capital.

Then they introduced a planned series of cuts from 2010/11 to 2013/14. Approx 70% of the cuts fell in years 2010/11 to 2011/12. I.e they were front loaded. Another 15% were introduced in this financial year. This leaves approx 15% of the original planned cuts yet to be implemented. Again this was met with widespread approval among all sections of the capitalist class.

But, as we know, things have not gone according to plan. Firstly, the cuts have been deeper than anticipated due to demographic/legislative changes and austerity is now to be extended to who knows when. So we should expect to see cuts into 2017/2018.

To conclude, the Condems have not slowed down the cuts, just extended them and made them deeper. As Ed Balls rightly concluded, the ConDems are pursuing plan A despite everything. A clear sign that it was an ideological project from the beginning.

Phil said...

Another avalanche of cryptic craziness.

Boffy said...

The fact that the Government have only implemented a small fraction of their planned austerity measures has been widely reported. Cuts to Local Government budgets form only a small portion of the total austerity package. The bulk comes in cuts to welfare, in Tax Credits, and other such measures.

Many sections of Capital have called for a different approach, including the British Chambers of Commerce, the US Government, and State, the IMF, the OECD, Standard & Poor's etc.

The reality is that Keynesian stimulus has been implemented and is working in the inbterests of US Capital, in the UK Misean austerity is not.

Boffy said...

Just to add to the above. This is from the Wall Street Journal.

"At the moment the U.K. is less than two years into the seven year program and the vast majority of the spending cuts are yet to happen–so far only 12% have been instigated."

WSJ

Chris said...

I would like to know where the WJ got it's figures from and how the calculation was made and on what figure (original figure or revised figure). I have heard figures from 12% implemented to 50%. But no one seems to provide the evidence.

Gary Elsby said...

If Cuba gets it wrong, then how come everyone has a job, home, food and pensions?
How come they lead the world in health and literacy and export surplusses?

Boffy said...

Gary,

I went to Cuba a few years ago. Some of the better paid workes work in the tourist sector. When you get there they rush around trying to do any kind of job for you so as to earn a few bits of change. One of the things they prize the most is soap!

The standard of living is appallingly low, and the economy is very inefficient as all Stalinised economies have been. As with all the others there is widespread disguised unemployment and under employment. On top of that of course is the lack of political freedom.