All the parties agree on the need for savage cuts
Britain's public sector debt crisis has been a serious concern for the ruling class for a long time.
As elsewhere in the world, the British state has spent billions on bailing out the banking sector and trying to stabilise the financial markets, making desperate efforts to contain the fallout from the worst recession since the end of World War II. The time is now coming to pay the bill and the bourgeoisie has no choice but to turn to the class that, in fact, produces all social wealth: the working class.
The British situation in a global context
This problem is not unique to Britain. Although the crisis has hit every country with different degrees of severity, nearly every government has experienced an alarming expansion of their public debt. According to the Economist Intelligence Unit, global public debt now stands at $35 trillion, compared to $31 trillion last year (a rise of nearly 13%).
On the face of things, Britain isn't in a unique position. According to the same source, the British state owes 64.2% of GDP compared to 74.8% for France and 75% for Germany. Italy, one of the worst offenders in Europe, tops 112%! However, what does set the UK apart is the rate this debt is growing, currently expanding at over 23% per year. This rate of expansion is more than double that of France (9.8%) and Germany (6.9%). Even the profligate Italians are managing to contain their debt growth to 3% per year. By 2011, the UK's debt is projected to have overtaken Germany's and be only just behind that of France, at a staggering 93.5% of GDP.
One of the main problems for the British ruling class is that the growth of public debt is not simply the result of the credit crunch. In fact, UK debt was growing as a proportion of the economy well before the credit crunch hit. Back in 2006, the ICC pointed out that "Britain has relied on state spending and debt to sustain the economy ... engineering a soft landing rather than a sharp drop that would have had a serious impact on rates of growth. It has also created a significant number of jobs. The government claims to have kept to its ‘golden rules' but has done so by manipulating the figures. Its plans assume a decrease in the government deficit to balance it out over the cycle, but in the last 20 years there have only been four years of surplus (during the first years of the Labour government). This suggests that it will become harder for the government to continue to manage the economy as it has in recent years" (WR 301).
The bourgeoisie is quite aware that it cannot carry on like this forever. It's no longer a secret that, after the next election, no matter who wins, there will be major reductions in public sector spending. During the party political conference season there has been uninhibited relish at the prospect of massive cuts.
At the Liberal Democrat conference Vince Cable put together a provisional plan calling for £14 billion worth of cuts. Despite some high-profile ‘tax the rich' headline grabbers it is clear that the axe is going to fall heavily on public sector workers, with a freeze on pay and cuts in pensions high on the list. Moreover, it is clear that the LibDems are ready to stare down the Labour Party over the seriousness of the borrowing problem. "Cable estimates that a contraction of about 8% of GDP may be required over the next five years - higher than the government's estimate of a cut of 6.5% over eight years" (Guardian 16/9/9).
The Liberals have little chance of being in a position to implement such a programme and the other two main parties are, at the time of writing, being much less specific about exactly what they would cut. However, the aim of the current ideological offensive is not primarily for the parties to set out their election positions. Rather, it is to create the perception in the public mind (and especially the working class) that cuts are both necessary and inevitable - the only question is where the axe will fall.
This offensive also aims to conceal the fact that a massive programme of cuts has already begun. A cut to the schools budget of £2 billion has been announced and in higher education the squeeze has already begun with Universities asked to find ‘savings' of £180 million by 2012. Some institutions are reported anticipating cuts of up to 20%. The NHS, which both Labour and Conservatives have pledged to protect, has already had £500 million promised for building refurbishment withdrawn. Question marks are now hanging over the future of flagship projects like ID Cards or the replacement for Trident.
The political parties are responsible for finding the best way to present the coming austerity to the working class. This role prohibits them from being ‘honest with the electorate', but there are others who are less restrained. The accountancy firm PricewaterhouseCoopers, has warned that public spending may have to drop by up to 20%. The Centre for Economics and Business Research warns that many firms that supply the state will suffer as spending cuts bite, particularly in the pharmaceuticals, medical and defence equipment sectors. Other consultants have wheeled out long lists of businesses that will be hit by cuts in the state budget.
One of the genuine aspects of this capitalist debate is about when to cut. While some factions watching the growing deficit are haunted by fears of a ‘gilt strike' (that is, Britain reaches a point where it can no longer sell its debt), others are terrified of the impact of an early retrenchment on a fragile ‘recovery'. Many column inches have been dedicated to reminding us of the folly of the US Government in the mid-30s that pulled back public spending and tipped the economy back into Depression. The ruling class is walking a dangerous tightrope where the slightest error could send the economy plunging into the abyss.
The British bourgeoisie is faced with a decisive moment. The blows of the economic crisis have brought it face-to-face with the prospect of having to make a serious retreat on the world stage. Under Labour, the UK has been at the forefront of many of the destabilising military adventures that have punctuated the last decade. But, recently, the cracks in the façade have begun to show. The government now openly admits that the state simply cannot equip its troops to do the job - and yet, military spending is under threat of being cut even further. This will have serious implications for Britain's capacity to influence world events, which can only further reinforce the country's economic decline. As The Economist (24/7/9) points out: "Forty years ago Britain had to slash its global military presence to match its diminished economic status. Since then the defence budget has shrunk in importance while spending on domestic public services has become more prominent. A similar reckoning looms now, but in the firing line today are elements of the welfare state that have defined post-war Britain, not least the National Health Service, still loved at home if less admired elsewhere".
The working class in Britain is faced with the prospect of an avalanche of attacks. As the profits-system continues its remorseless decline, it will more and more reduce economic resources going to the exploited class. Concretely, this means the bourgeoisie has to raise the level of exploitation - this process has already begun in the so-called ‘private sector' with redundancies, wage cuts and the rest. The majority of the working class also relies upon the state for many of its other elementary needs of health and education. A significant proportion also receives income (through benefits, tax credits, etc) and/or housing from the state as well. All these elements are now under serious threat: benefits, health and education are the three largest areas of state expenditure.
Not only that, but the state is also the largest employer of workers. Like its private counterparts, the state will be compelled to raise the level of exploitation for these workers where it doesn't eliminate them from its payroll altogether. They will suffer the most direct and immediate consequences from the coming austerity but the whole class will pay the price as the ‘social wage' is slashed. But, just as we are attacked together, so too can we learn to fight back together - we must transform our unity in suffering into unity in struggle. Only then will we be able to fight back against our exploiters and destroy capitalism and end this suffering for good.Ishamael 29/9/9