Public spending cuts: “only the first step” towards pauperisation

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The announcement of £6.24 billion worth of public spending cuts from the Coalition Government on 24th May is, according to them, "only the first step". In reality, this new round of cuts is in perfect continuity with plans already drawn up by the Labour government which had pledged £11 billion "efficiency savings" in the pre-Budget report.

Last year, the NHS also was told it would have to deliver between £15 and £20 billion in "efficiency savings". This is what the "protection" of NHS budgets, vaunted by David Cameron seems to amount to: no additional cuts, for now at least.

In education, the dire financial status of the Further Education sector has been revealed in a new report that at least 50 FE colleges face closure in the next three years. The Labour government had already cut £200 million from adult education and the Higher Education sector has endured cuts of £573 million. The cuts announced by the new government include £670 million off the Education Department's budget and £836 million from the Department of Business, Innovation and Skills (which is a key channel of University funding).

Local government will suffer almost as badly with cuts of more than £2 billion: "a £1.2bn reduction in local authority grants, £270m cuts in regional development agency spending, £268m by "cutting waste and inefficiencies" in the communities department and £230m from private finance initiatives and other savings. Of the £1.2bn cuts to councils' grants, £362m will come from the communities department, £311m from education, £309m from transport, £8m from environment, food and rural affairs, and £175m from other Whitehall grants"[1].  This will have a drastic impact on local services and almost certainly see an increase in efforts by councils to raise local revenue through council tax and other avenues.

The impact of all this on unemployment will be dramatic. "The government's planned spending squeeze will throw 750,000 public sector workers on to the dole queue and push unemployment close to 3 million for the first time since the early 1990s, a respected thinktank warns today.

In a stark assessment of the human impact of the cuts the coalition says are required to tackle the ballooning deficit, the Chartered Institute of Personnel and Development, says unemployment will rise to a peak of 2.95 million in the second half of 2012 and remain near that level until 2015, the entire period of the coalition government"[2].

Welfare Cuts

The welfare budget alone costs the British state nearly £87.7 billion a year. Most of this is used to support people who produce absolutely nothing for capitalism: the unemployed, the sick and disabled (which often include workers forced onto this benefit to hide the unemployment figures). Statutory sick pay (money paid directly to sick workers or claimed back from the state by companies with their own sick pay scheme) alone costs £65 million.

Iain Duncan-Smith has already started talking tough on welfare. The 2.65 million people on incapacity benefit are going to face reassessments - this was already being carried out by the previous government but the new administration is attempting to speed up the pace from 10,000 to 30,000 per week.

The size of the problem is enormous, of course, with over 5 million "parked" on out-of-work benefits; and Duncan-Smith is perfectly correct to point out that there is little income difference between a minimum wage job and a life on benefits. The irony, of course, is that far from choosing the easy life of benefits, hundreds of thousands simply have no choice because jobs don't exist in their area.

There is much talk about cutting "welfare for the wealthy", so-called middle-class families that apparently cream off a large proportion of things like child tax credits. This all sounds good in theory until you realise the people being targeted are families earning around £30,000 a year, i.e. almost any family with more than one earner.

As for pensions, in continuation with previous government policy, the pension age will be raised, but again the rise will be accelerated. In addition, there is now serious talk of the pension age being raised to 70.

The Campaigns on Public Sector Pay

It is clear that an assault on public sector pay will be a significant component of the attacks. There have been ideological campaigns against "gold-plated" public sector pension for years - as pension benefits in the private sector have been rapidly eroded, the media has presented public sector workers as an isolated and intransigently greedy group for managing to hang onto theirs.  All public-sector workers earning more than £18,000 per annum are already targeted for a pay freeze next year and some commentators suspect that pay-curbs will be imposed for a far longer period in the forthcoming Emergency Budget.

Since the election, the ruling class has launched a very clever campaign by exposing the extremely high salaries that people such as University vice-chancellors, the heads of the various quangos, etc. have been receiving. Of course, these state functionaries have nothing to do with the vast majority of public sector workers many of whom are the lowest paid workers in the country - rather they are part of the ruling class itself. But the aim of the campaign is to reinforce the general idea of the public sector being too expensive and somehow privileged when compared to the long-suffering private sector. By generating a sense of moral outrage at the public sector "fat cats", the ruling class is creating an ideological atmosphere which will enable attacks on all state workers (the largest single group of workers in the country).

Worse to Come

It is clear that the coalition government intends to carry on the general policy of cuts begun by their Labour predecessors. It is evident then that although the language has changed - ministers now talk openly about "cuts" - the reality of austerity has not. And, with the budget deficit currently standing at a staggering £156 billion, it is clear that more and more savage cuts are on the horizon.

The ruling class has tried its best to present the coming misery as inevitable. The economic crisis is presented as some kind of natural disaster, although the previous government is of course blamed for adopting the wrong policies to deal with it. Thus the unprecedented assault on living standards is portrayed as the "cleanup operation" necessary to get us back to normality. From the point of view of capitalism, this is essentially true. Capitalists have no real control over the wider economy which imposes its blind laws upon them as much as anyone else. Nonetheless, they are determined to defend the system which grants them their power and privilege.

The coming austerity is the result of that defence. Capitalism has no other purpose that to make profit and all capitalist crises are essentially crises of profitability. Essentially, this means that its exploitation of the working class is no longer sufficient to satisfy its profit requirements. In order to remedy this, capital tries to seize an increasing proportion of the total value created in production from the working class - concretely, this means a reduction in wages while those who cannot be successfully exploited are laid off.

Wages don't just include a worker's take-home pay - they also include all sorts of other benefits: pensions, healthcare, etc. In some countries these are provided directly by the employer, while in others, such as Britain, they are provided collectively by the state. Regardless of the method of this provision, all these "benefits" represent value that goes to the worker and not the capitalist.

Workers have a choice; we can submit to capitalism's efforts to save itself at our expense and condemn ourselves and our children to plummet into unprecedented levels of poverty and barbarity. Or, we can resist the sacrifices demanded by our capitalist masters until we reach a point where will be able to replace the drive for profit with a society focussed on the satisfaction of human need.   

Ishamael 8/6/10



[1]  http://www.guardian.co.uk/society/2010/may/24/cuts-local-government-loses-2bn

[2]  http://www.guardian.co.uk/politics/2010/jun/10/spending-cuts-public-sector-staff-thinktank