Cuts: capitalism has no alternative

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At the beginning of January, outlining the coalition government’s Spending Review of 2016-17 and 2017-18, George Osborne ‘alarmed’ Iain Duncan Smith and ‘angered’ Nick Clegg by proposing that the initial £25 billion in spending reductions would include £12 billion in welfare cuts.

This in no way indicates that there are serious differences between these government politicians.  One senior government figure has described this as “a difference in narrative between George Osborne and Iain Duncan Smith who both want to cut back the welfare state … There is the lopping off narrative of George Osborne and then there is the narrative of making people less reliant on the welfare state by making work pay. But that takes a long time[1]. Nick Clegg has another narrative: while agreeing to the proposed £25 billion deficit reductions it is “lopsided and unbalanced” to take all this from spending and “the only people in society, the only section in society, which will bear the burden of further fiscal consolidation are the working-age poor”.

When we look at the reality behind these exchanges we will see that (a) all these politicians are accomplished bare-faced liars, even when they speak the language of harsh truths; (b) the cuts they envisage are every bit as vicious as described in Osborne’s announcement but will be much more widespread; and (c) the bourgeoisie and their government have no choice but to continue to attack the conditions of the working class in the defence of capitalism.

Dishonesty from all sides

Let us start with Clegg’s concern to balance benefit cuts with tax. The LibDems envisage 20% of the £25 billion will come from tax, and there is a definite proposal for a mansion tax on homes work £2million. This is nothing but a fig leaf to hide their support for the cuts, as they carefully publicise a proposal that will not impinge on the working class and the vast majority of the population, all the better to lull us into a false sense of security – and to get elected.

Iain Duncan Smith takes the medal for common or garden hypocrisy with the narrative that cutting benefit is good for you by making work pay. The only way to do that in the capitalist crisis is to cut benefits … but the majority of people receiving working age benefits are actually in work, getting working tax credits or housing benefit. Nor does he tell us where all the new jobs will come from.

If we look outside the present government to the Labour shadow chancellor, a comment by Simon Jenkins shows that there is no alternative on offer here. “Indeed, after listening to Balls evade every question put to him this week, I realised he would have done much the same as Osborne, mistakes and all. Balls never challenged Osborne’s subservience to the City and the Bank. He never questioned the liquidity squeeze or demanded risks be taken with inflation.”[2]

Harsh realities of the cuts

The political parties have no basic differences when it comes to attacking working class living standards, especially those of the most vulnerable sectors, such as the young and the pensioners. Take the removal of housing benefit from young people under 25. In large cities such as London it is usually not possible to obtain independent housing on a single average wage so those unable to live with parents, even among the employed, will be forced into appalling crowding or homelessness. The overall cost of housing benefit to those under 25 is currently £1.8 billion according to the Department of Work and Pension figure, but the measure will only save about half that, while those with children or fleeing domestic violence are exempted. The ‘balancing’ measure to means test social housing for those on £60,000 to £70,000 a year might save £40-£76million (see Guardian article, note 1). The article quotes a Whitehall source saying “It is laughable that you can get anywhere near £12bn in cuts this way”.

If we look at the figures of what Osborne’s policies will save we can see that he hasn’t told us the half or even the 90% of where £12 billion will be saved from benefits, let alone the full £25 billion is coming from. The blighted perspectives for young people today are real enough, but we should realise that if we accept the chancellor’s logic the attacks will have to encompass the whole working class: “Even for a budget as large as welfare, £12bn is not a trivial sum. It is the equivalent of freezing the value of all working-age welfare benefits for five years.[3] In particular we can already see that the new rules for Universal Credit, which will cover tax credit and housing benefit in future, are making it impossible for many of those relying on housing benefit to get rented accommodation at all.

Except for pensioners – surely they’ll be OK with the Cameron’s promise of a ‘triple lock’ on the state pension to rise with the higher of prices, pay or 2.5%? Pensions are, in reality, also under attack, chiefly through the rise in the pension age. And the triple lock will not change a situation in which those reliant on the state pension are condemned to a life of poverty: the basic state pension of £110.15 a week, plus £200 winter fuel allowance, works out to less than £6,000 a year or about half the pay for a 40 hour week on the minimum wage. Like pensions, even the areas of the economy that are ‘protected’ or ‘ring fenced’ such as health or education are inadequate and feeling the squeeze.

With capitalism caught in an irresolvable crisis of overproduction, each business and each national economy is fighting to gain a share of a market that is too narrow to keep them all going. It is not a question of more or less state, but of how the state will manage to attack the living standards of the working class to make its economy more competitive. For workers it is a question of recognising that the whole working class is under attack and that we can only resist together. 

Melmoth/Alex  11.1.14



[1]. http://www.theguardian.com/politics/2014/jan/06/cabinet-split-george-osborne-welfare-cuts

 

[2]. http://www.theguardian.com/commentisfree/2014/jan/07/george-osborne-talks-tough-acts-labour-chancellor

 

[3]. http://www.theguardian.com/politics/2014/jan/06/george-osborne-engineering-role-state