Austerity and poverty: Not just Brexit, Not just the Tories

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Britain is seven years into a prolonged period of fiscal consolidation, in which constraints on public spending have been the central feature and are set to continue for some years to come. According to figures supplied by the Institute for Fiscal Studies, “post 2010 ‘austerity’ is on course to be the longest pause in real-term spending growth on record.” This already demonstrates that the austerity faced by the working class in Britain today is not just a result of instability in the economy caused by Brexit[1]. In fact the ruling class always has a contingent excuse for any worsening in the economy, so that the last decade of austerity has been presented as the ‘recovery’ phase from the credit crunch of 2008. In this article we will show how today’s austerity measures are nothing but the continuation and worsening of a policy that has been carried out by politicians of left and right over five decades in order for the capitalist class respond to the historic crisis in their system. And this has been an international phenomenon.

The reality of the present attacks

The fact that the NHS would face a bed crisis this winter was well known in September, with NHS England noting hospitals planned to open 3,000 and free up a similar number to cope. However a BMA report shows that roughly 150,000 beds have been lost over the last 30 years, roughly half of them the general and acute beds needed for emergency admissions[2]. The Nuffield foundation estimates that spending on the NHS needs to grow by 4.3% a year to cope with an ageing population till 2022/3, but based on figures supplied by the ONS (Office for National Statistics) it will only grow by 0.7%, and in the coming year, 2018/9, it will grow only 0.4%. Of course, a cash-starved NHS also means attacks on the workers in it, who have not only been expected to do more with less, but are also among the 1.3 million public sector workers subject to a pay freeze or 1% cap since 2010 – a severe pay cut in real terms. The chancellor announced last November that this would be ended for nurses only.

The current government was elected on a manifesto that pledged to cut £12 billion from the welfare bill. Freezing working-age benefits until 2020, originally announced in 2015, will save an estimated £4.2 billion or 6%. The IFS (Institute for Fiscal Studies) estimate this will put 470,000 more people into poverty. But the government is also making cuts elsewhere to achieve its target reduction. Bringing support for individuals on ESA (for the sick) into line with the JSA rate (for the unemployed) which applies to all new claimants from April 2017 is expected to save £640 million by 2020–21. These days our rulers like to call this a ‘reform’, which is exactly the opposite from the reforms which the working class could fight for in the 19th Century, measures that improved conditions for the whole working class such as the 10 hour day and then the 8 hour day. The latest such measure is Universal Credit, which is being rolled out to replace working age means-tested benefits, both for those in and out of work, including those on low incomes with families, the sick, unemployed and carers. This comes with a 4 week delay in payment and the possibility of imposing tough sanctions, or cuts in payment, for those deemed not to be trying hard enough. Cuts to the family element, no longer paid beyond the second child, will make more savings. These welfare cuts “contribute to an outlook for income growth over the next four years that sharply increases inequality. The combination of plateauing employment growth, a renewed pay squeeze across the economy and sharp benefit cuts create the prospect of falling incomes in the bottom half of the distribution and the biggest rise in inequality since the final Thatcher term.[3]

One indication of how the crisis of capitalism is hitting an area is unemployment – capital can only make a profit by exploiting workers, so the unemployed mean lost profit. If you look at the official unemployment figures based on those claiming jobseeker benefits you would be led to think it had fallen to 785,000 or 4.3%, better than at any time since the 1970s. However, if you add in those who are seeking and available for work and those parked on incapacity benefits the number rises to 2.3 million[4], with the young particularly badly hit. Also we know that many jobs today are low paid, precarious and often zero hours contracts, so that those in work can be little or no better of than the unemployed. Unemployment started to rise at the end of the post-war boom in the late 1960s, but really took off at the end of the 70s (when it rose to around a million under a Labour government) rising to more than 3 million in the 80s (under the Thatcher government). At that stage the figures were massaged when millions were pushed onto incapacity benefit, a tactic that continues to be used today.

We see cuts in services, such as the NHS, pay frozen or below inflation rises, benefits frozen or cut, persistent unemployment, and insecure jobs, which overall adds up not just to an increase in inequality but specifically a decrease in the share of wealth going to the working class.

Austerity, the response to the economic crisis by governments of left and right

As we have seen, austerity did not start with Brexit, nor with this Tory government, the previous coalition, or even Margaret Thatcher. It was the response of capital from the very start of the world economic crisis at the end of the 1960s, and included the ‘Social Contract’ brought in by a Labour government in the 1970s to limit wage rises at a time of high inflation. With each new development in the crisis there have been new austerity measures and a great deal of continuity between governments at this level. So the Blair government was elected in 1997 on a promise of keeping to the spending plans of the previous Tory government, and brought in various attacks that were often called “Tory cuts” by those who wanted to pretend that a Labour Party could or should behave differently in office. However the Blair and Brown governments attacked the NHS, causing job losses in the interest of efficiency, and cuts in beds as we have seen, and also brought in benefits cuts described as the ‘New Deal’.

In the run up to the 2010 election, the Conservatives promised more of the same.

“In addition, Labour's flagship ‘New Deal' back to work programme is to be scrapped by the Tories and replaced with more ‘personalised' help, which will include benefit cuts for those unwilling to take part in whatever spurious training they are made to undergo. On the other hand, Labour has said that ‘People out of work for more than six months who have turned down work experience, support or training will be required to take a work placement as a condition of receiving their benefits.’ It's not for nothing that the Work and Pensions Secretary, Yvette Cooper, noted (apparently without any sense of irony) that the Tories ‘are simply rehashing Labour policies...’..”[5]

This continuity is no accident: it is because both parties hold office in a capitalist state, one which works in the ‘interests of the nation’, i.e. the ruling class. This remains true despite democratic elections, and also when governments spout a left wing rhetoric. So we should not be fooled into thinking that the Labour Party led by an old left wing ‘rebel’ would be any different, as we saw last June when it refused to rule out freezing benefits, because it was important to overcome the state debt, but promised to keep defence spending at 2%.[6] “Ooooh Jeremy Corbyn” leading the Labour Party would be no better than the similarly radical-sounding Syriza government in Greece which in 2015 went ahead with the very austerity measures that had been rejected by a referendum it called.

The working class cannot defend its conditions by relying on any elected government, whatever it promises, nor on any union or campaign, but only on its own struggle, its unity, and its solidarity. 

M and A, 2.2.18



[1] This doesn’t mean of course that Brexit won’t bring further and deeper problems for the British economy when it finally arrives. See for example https://www.theguardian.com/politics/2018/jan/30/key-questions-latest-leaked-brexit-forecasts. We will return to this question in a future article. 

[2] file:///C:/Users/WINDOW~1/AppData/Local/Temp/NHS-bed-occupancy-report-feb2017-England.pdf

[3] http://www.resolutionfoundation.org/app/uploads/2017/07/Austerity-v2.pdf

[4] https://www.theguardian.com/business/2017/oct/29/sparkling-jobless-figures-mask-real-picture-uk-economy-unemployed

[5] ‘2010: workers face sweeping cuts’ in WR 330, http://en.internationalism.org/worldrevolution/200912/3378/2010-workers-face-sweeping-cuts

[6] See ‘Hard times bring increased illusions in Labour Party’ in WR 377, http://en.internationalism.org/icconline/201706/14333/hard-times-bring-increased-illusions-labour-party