Chancellor’s careful but relentless development of austerity

The chancellor’s public spending review at the end of June announced that austerity will continue well into the next parliament, to the tune of £11.5bn worth of cuts in 2015/16. And since Ed Balls, Labour’s shadow chancellor, has promised to match the government’s current spending plans after the next election, we should be in no doubt that it will. In that sense the result of the election will be completely meaningless for the working class. We should not forget that the one promise carried out to the letter by the 1997 Blair government was to stick to the spending limits imposed by the previous administration, and that in 2010 the only issue at stake on spending was how quickly austerity should be imposed, with the majority of the coalition’s first cuts having already been announced by the Brown government.

It is one of the ironies of the spending review that when so much of the pain is directed towards benefits, George Osborne should claim that the well-off will suffer most. Next year the chancellor will announce a 5 year benefit cap, excluding pensions. Welfare payments will be harder to claim - for instance anyone losing a job will have to wait 7 days before claiming jobseekers allowance. This will be particularly hard on those on the lowest pay scales or in precarious work. This 7 day wait will save £245m, a very modest amount compared to the £11.5 billion which will be spent on more frequent surveillance of the unemployed (meetings every week instead of less frequently, compulsory English lessons, etc). Ed Balls, by contrast, claims that he would like to spend the money on providing a job for every young unemployed person. While Osborne is reminding us that the point of laying workers off is to save capital the cost of maintaining them at all, it seems Balls wants us to forget that the whole point of capital employing anyone, young or old, is to extract surplus value, to make a profit.

Public sector workers are also going to suffer from the spending plans: pay will continue to be curbed, pay progression seniority payments ended, and 144,000 can expect to lose their jobs. While the NHS and schools will not have their cash budgets cut, this has to be seen in the context of growing need. Health needs (so-called ‘demand’) increases 4% a year due to demographic changes and innovation. £3bn of the health budget will be shared with local authority social care, and we know how squeezed the local authorities are. Hospital stays and admissions are being cut. Whole layers of health service workers are employed or incentivised to keep people out of hospital as much as possible – while, of course, remaining responsible for admitting them to hospital when necessary. Others have the job of cutting the prescription budgets. At the same time, previous levels of social care - put in place when the economy was short of labour and women and immigrants were being encouraged into the workforce (in the 50s and 60s particularly) - are being dismantled or charged to the recipients, with much more responsibility falling on the relatives whether or not they are capable of taking it on.

How long will these cuts go on?

The UK economy, regardless of quibbles about single, double or triple dip recession, remains to recover from the 2007/8 recession, with GDP still 3 or 4% below the previous peak. This creates a problem for an economy trying to reduce the proportion of direct state spending – from 46% to 40% as Osborne intends – and pay back debts that were greatly increased at the time of the banking crisis. Hence the IMF reminder earlier in the year that this will not be achieved without growth. This puts any state on the horns of a dilemma, with the need to both rein in spending and ease up the availability of money to encourage growth. It’s a bit like walking in two opposite directions at once. It was left to Danny Alexander to announce the bulk of the capital spending plans for road and rail, housing and schools, while day to day spending is restricted. How well this spending will encourage growth in the medium term we will wait and see. More roads suggest a promising growth in CO2 emissions at any rate.

Other spending beneficiaries give us more idea of what the state intends. Extra spending for spying suggests an interest in both internal and external security – fundamentally to further Britain’s imperialist interests abroad and to maintain social order at home. Ring-fencing overseas aid also suggests the importance of pursuing the national interest abroad – and in a way less likely to cause unpopularity at home than foreign military adventures such as Iraq.

The latest scapegoats

A few years ago it was the bankers that were blamed for the crisis, pilloried by press and politicians alike for their excessive pay and bonuses. Now it seems it is the unemployed and benefit claimants who are responsible for the national debt. The bankers provided a good scapegoat for the crises, particularly when it took the form of the credit crunch. They had the advantage of being rich, and right at the centre of the storm, as well as distracting us from asking questions about the nature and role of capitalism itself. But the demonisation of the unemployed, and the lowest paid and most precarious workers who also rely on benefits such as tax credit or housing benefit, has a longer term aim in persuading us to accept attacks on these benefits, with their horrendous effects on the quality of life of an important part of the working class.

The ruling class are playing up any kind of division they are able to impose on the working class, not only between the ‘hard working’ and the ‘skivers’ (i.e. employed and unemployed), but also between public and private sector employees. This divide is important when the state is involved in attacking the pay and conditions of those employed in the public sector, particularly those usually held in high esteem such as teachers and nurses. Hence the media attention to scandals in hospital care, undercover reporters sent to see what abuses they can detect and film. But not a word on the cuts and increasing demands that make humane care so difficult.

These campaigns tell us much of the direction of the austerity measures the ruling class is bringing in, centralised through its state. That they are cautious, that they prepare each attack with a campaign of vilification, shows just how much they are aware of the possibility of working class resistance to further austerity.  

Alex 13/7/13