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- Financial Times
- 33 per cent had an application for finance declined
- 436 A 0.5 per cent land value tax instead of the regressive council tax ( REVENUE £25 billion a year) 437
- 440 Moreover, although 12,000 people joined the Labour Party in the week after the local and general elections 441
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Source: TUC, 2010b The highest number of homeless people in Britain for more than 30 years In his Budget, the Chancellor imposed caps on housing benefit of £400 a week on any property with four or more bedrooms, and £250 a week for a two bedroom home. The Chancellor also decided that instead of people on benefit being able to claim rent of up to half of the local market average rent, they will instead be only able to claim up to one third of the local market average rent. And unemployed people who claim Job Seeker’s Allowance for 12 months will also see their housing benefit fall by 10 per cent under the controversial plans. The result of the introduction of caps on housing benefit and the ruling that people will only be able to claim up to one third of the local market average is that thousands of lower income families will not be able to afford to live in many parts of London – such as Islington, Camden and Southwark – and the south east. More than 750,000 people are at risk of losing their homes in London and the south east because of caps being introduced on housing benefit from April next year, according to the National Housing Federation (NHF), whose research shows that 425,000 people in London are at risk of losing their home, while 326,250 people in the south east are at risk of losing theirs. It added that the impact of the housing benefit cuts was likely to lead to the highest number of people ending up homeless in Britain for more than thirty years. While many people will look to move to cheaper accommodation, there will not be enough housing in parts of London and the south east within the cap levels to go around. Many others will quickly fall into arrears and be evicted. In some cases, local authorities may be legally obliged to house those evicted – with some ending up in expensive bed and breakfast properties. In other cases, councils may not have to re-house them and they could end up on the streets. There are currently around 140,000 people homeless in Britain, which is down from a peak of 174,503 people in 2003 – the highest figure since modern records on homelessness began in 1980. The NHF believes that the combined effect of the Government’s raft of proposed changes to housing benefit will lead to at least 200,000 people being at risk of becoming homeless. David Orr, NHF chief executive, said: If the Government presses ahead and introduces harsh housing benefit cuts more than 750,000 people would be at risk of losing their home. The housing benefit caps could see poorer people effectively forced out of wealthier areas, and ghettoised into poorer neighbourhoods. Some people affected by housing benefit caps may successfully find a home in cheaper areas, but many will end up in expensive bed and breakfast accommodation, while thousands will simply become homeless. Unless ministers urgently reconsider these punitive housing benefit cuts, we may see more people sleeping rough than at any stage during the last thirty years. An independent poverty commission should quickly be established to assess the impact cuts to housing benefits will have on the poorest. For many people, particularly those with disabilities, moving could be an enormous upheaval. It will also disrupt the education of thousands of children. The resulting impact on people’s lives would be huge – as would the cost to the taxpayer.379 A two-year pay freeze across the whole of the public sector These cuts will also slash Whitehall grants to local government, freeze Council Tax (for one year from April 2011, with the option to extend the programme during 2012/13.and impose severe restrictions on public sector pay. Around 80 per of the chancellor’s debt reduction plans will be funded by public spending cuts, while a further 20 will come from a series of tax rises – including the hike in VAT from 17.5 per cent to 20 per cent. Adding a series of further efficiency demands to his pre-Budget savings targets. Osborne said non ring-fenced Whitehall budgets – including the Department of Communities and Local Government, which pays grants to councils – now faced ‘an average real [terms] cut of 25 per cent over four years’. A large chunk of these cuts will be funded by a two-year pay freeze across the whole of the public sector. However, the 1.7 million staff earning less than £21,000 annually will receive a flat-rate £250 pay increase for the next two years. Though, as the government subsequently confirmed, part-time workers will not get the £250 payment if their pro-rata salary exceeds the £21,000 limit; that is, they have also had their pay frozen.380 The highest earners in the public sector, including council chief executives and service directors, will also have their salaries restricted to 20 times the annual wage of their lowest paid staff.381 More than twice the real cuts of the first Thatcherites and deeper than in Greece The budget, as Michael Burke notes, will be 'worse than the Thatcherism which inspired it' because: After 10 years in office the first Thatcherites had reduced total managed expenditure (TME) by 5.9 per cent of GDP, or by £83 billion in contemporary prices. The coalition’s aim is to reduce TME by 7.7 per cent of GDP in 6 years, a real cut of £108 billion. Even this understates the case since there are already cuts being enacted in this year of £8.9 billion, for a total of £117 billion. But there is an important point glossed over in the official presentation of the Budget, which is that TME includes debt interest payments, which are clearly not government spending that provides services or creates jobs. These interest payments rise sharply over that 6-year period, by £36.6 billion, so that the actual cuts to services, benefits, pay and jobs will be £145 billion, or 10.3 per cent of GDP. By contrast...Thatcher's...real cuts to government spending therefore amounted to 4.7 per cent of GDP or £66 billion in current terms over 10 years. Osborne, Cameron, Clegg and Cable are planning cuts of £145 billion or 10.3 per cent of GDP over 6 years. This is more than twice the real cuts of the first Thatcherites, and will feel even worse. No wonder the Financial Times believes the Budget is ‘risky’.382 The Chancellor proposes to reduce total expenditure from 47.3 per cent of GDP in 2010-11 to 40.9 per cent of GDP in 2014-15 and 39.8 per cent in 2015-16. Moreover, as the Oxford University Centre for Business Taxation also notes, the previous New Labour government 'already intended to cut spending faster than the Thatcher government in the 1980s'; and the 'deeper cuts announced' by the Con-LibDem government 'exceed those identified by the Greek government, which faces a much greater fiscal crisis'.383 The chances of a double-blip recession have increased The needs of British finance capital are surveyed each quarter by the accountants Deloitte: who describe their survey as 'the only' one 'of major corporate users of capital that gauges attitudes to valuations, risk and financing'.384 The clearly stated view of Chief Financial Officers (CFOs) in Deloitte's first quarter 2010 survey just before the General Election was that fiscal consolidation (i.e. cuts P.L.) is essential. In that Survey 85 per cent of respondents said that deficit reduction should be the new government's top priority.385 Yet, according to Deloitte's 2010 second quarter survey, in Britain's leading companies: CFOs have edged up the probability they assign to a 'double dip' from 33 per cent in the first quarter to 38 per cent today. Recent volatility in financial markets and concerns about fiscal tightening at home and abroad are clearly weighing on CFO sentiment....Two thirds expect tighter fiscal control to have negative effects on their company in the short term while 69 per cent foresee few or no direct long term benefits....The latest CFO survey shows a decline in financial optimism with the balance of respondents reporting greater optimism dropping from 40 per cent to 24 per cent, the lowest reading in a year and the second consecutive quarterly decline....Two thirds expect...negative effects...particularly relating to concerns about reduced consumer spending and job losses in the public sector.386 Similarly, the Markit/CIPS purchasing managers' index (PIM) June 2010 survey – a monthly snapshot of the service sector, which accounts for three-quarters of the British economy – recorded the largest drop in business expectations in 14 years: that Lena Komileva, an economist at Tullett Preborn, said "is the beginning of a W-shaped curve scenario as the survey clearly shows the recovery momentum has peaked....which brings forward the chances of a double-blip recession."387 The Building Schools for the Future programme was terminated on 5 July 2010 – axing 715 projects worth £55 billion.388 The shares of RM – which provides IT and software such as interactive whiteboards lost seven BSF projects worth a total of £200 million – immediately fell 9p to 153p, a drop of nearly six per cent; and those in the social housing maintenance group Connaught dived after it warned that the Chancellor's emergency budget would hit profits as councils postponed capital expenditure plans.389 Begbies Traynor, the insolvency practioner, estimates that as many as 50,000 construction, IT and other companies reliant on public-sector contracts are struggling. Ric Traynor, executive chair of Begbies, said: "We are concerned that the levels of business distress will increase again, potentially from the first half of 2011, once the full effects of the coalition government's fiscal tightening measures impact the economy".390 But overall outsourcing firms stand to gain as Whitehall seeks economies by contacting out services to cheaper private-sector providers. However, among the losers are construction and manufacturing firms. The Construction Products Association states that capital spending, which will fall to just 1.25 per cent of GDP, will hold back the pace of the economic recovery. In total Capital investment will be cut by £100 billion over the next five years....In 2014/15, capital spending will have fallen by a third since 2009/10. At this level it will be very difficult to maintain the built environment of this country in its current condition.391 Construction and civil engineering firms such as Costain, Balfour Beatty and Waites, manufacturers such as Corus, the steel firm owned by Tata of India, and the glass maker Pilkington will be hit as the government cuts back on projects involving hospitals, prisons, schools, social housing and local authority buildings. Carillion is therefore scaling back its school and hospital building activities in favour of pursuing more support service contacts. Instead of building roads, Carillion chief executive John McDonough is bidding for work to maintain them, such as a 25-year contact in Sheffield worth £1 billion. "The opportunities in these areas are enormous", according to McDonough, who cites street lighting and building maintenance, which are still largely done in-house: but are "not their core business".392 Official forecasts that the private sector will generate two million jobs by 2015 grow more implausible David Frost, of the British Chamber of Commerce – who doubts the official forecasts that the private sector will generate two million jobs by 2015 to offset job losses in the public sector – said: "To attain this target, the government will need to rethink its strategy, creating an economy with emphasis on exports and manufacturing".393 Simon Jenkins, moreover, who thinks that cuts in 'core' public spending are 'necessary', now considers that 'the hope that the private sector will compensate for the cuts by increasing output and jobs is more implausible by the day'. Alistair Darling hurled billions of pounds at bank balance sheets to bail out their losses and increase 'money supply', while claiming all the time that he was boosting lending to private businesses. He knew this was not happening because he spent much time complaining that banks were indeed not lending. By July of last year, loans to businesses were the lowest since records began.394 Yet a survey of 899 company directors by the Institute of Directors carried out at the beginning of June 2010 showed that of the 39 per cent which applied for finance in the time period 1 January 2010-June 2010, 33 per cent had an application for finance declined by a bank. In addition, 37 per cent stated that they had noticed an increase in the amount of security being requested against any lending that their organisation sought395: which, as Simon Jenkins notes is 'a sure sign that banks are battened down for a return of recession – while using the Darling subsidies to guard themselves against bad debts'. Politicians 'now associate with bankers obsessed with the security of bonds, and therefore with budgetary asceticism'. In this respect: Osborne is no different from Darling. Both ignore Keynes's simple insight that businessmen will not invest and the economy will not grow if there is no consumer demand for products. Osborne needs a plan B to combat a resumed recession. At the moment he plans to take spending power from both the private and the public sector. It is an almighty gamble....In the long term the coalition government must bring the budget into balance; but the least plausible way of doing it is to starve the economy of money in the short term. Osborne should postpone the rise in VAT.396 The existing VAT rate at 17.5 per cent is the third lowest rate for the 27 member states in the EU; and the new rate of 20 per cent is exactly equal to the EU average.397 Why a government that represents the capitalist class as a whole – and monopoly and finance capital in particular – is willing to sacrifice sections of that class Why then, as Burke asks, 'would a government that clearly represents the interests of business and the rich, more accurately the capitalist class as a whole, be willing to sacrifice large chunks of that class, many of whom will be bankrupted by these extraordinarily large cuts?' His answer is that: Labour’s share rises during recessions. This is not because pay or jobs increase – the opposite is the case. It is, as the Bank of England puts it, because the fall in labour income is less rapid than the fall in profits’ share of national income arising from the fall in output...this government...does this not by promoting growth as there is no guarantee that the profits’ share of national income will rise. Instead, it sets about an assault on the wages and social wages of all workers, and cuts taxes for businesses. By this means it can aid the resumption of the long-run trend rise in the profit share. This is what...seasoned Thatcherite Alan Budd described as engineering a ‘crisis of capitalism which re-recreated a reserve army of labour and has allowed the capitalists to make high profits ever since'...Osborne said in his Budget Statement that reducing corporate tax rates to 24 per cent would advertise that Britain was ‘Open for Business’....It advertises that Britain will be a low-tax, low-wage, low-growth, low-skill and low- investment economy...398 Health – neither "ring fenced" or liberated In July 2010 –prior October 2010 Comprehensive Spending Review – cabinet ministers were ordered to plan for unprecedented cuts of 40 per cent in their budgets. Education and defence had to plan cuts to budgets of 10 per cent at best and 20 per cent at worst over four years. All other departments – including the Home Office, the Department for Work and Pensions and the Department for Transport – had to produce plans showing the impact of cuts of 25 per cent, and at worst 40 per cent. In addition, all departments were asked to show how they would slash day-to-day administration costs, excluding salaries, by 33 per cent at the lower end and 50 per cent at the higher end. The only departments not included in the Treasury trawl were international development and health – "ring fenced" for the current parliament. 399 Yet in England – under the July 2010 Liberating the NHS White Paper's proposals – the 152 primary care trusts and 10 strategic health authorities "commissioning" bodies (PCTs and SHAs) are to be scrapped altogether with the loss of tens of thousands of managerial and administrative jobs. The commissioning role is instead to be taken over by GPs, who will be obliged to participate, working through local consortia of GPs and, if necessary, forcibly incorporated into a consortium. It is clear that these consortia would need to enlist substantial additional expertise and administrative assistance, either from former PCT or SHA staff or from private-sector management consultants who in many PCTs have been playing an increasingly influential role for some time. The White Paper also makes clear that the £20 billion target for "efficiency savings" is to be achieved by 2014, two years earlier than previously planned; and that the government will reduce NHS management costs by more than 45 per cent over the next four years.400 Minnesota-based UnitedHealth is already a key adviser to primary care trusts and is running two GP practices in Derbyshire and three in London. Kingsley Manning, business development director for health at Tribal Group PLC – which in December 2009 won a contract for the nine PCTs covering four million people in the South Central SHA to provide information services for five years at a value of £20 million plus401 – says: "This white paper could amount to the denationalisation of healthcare services in England and is the most important redirection of the NHS in more than a generation, going further than any Secretary of State has gone before".402 The US private health giant Humana is also ready to cash in on government plans to open up the NHS to more private sector involvement. Lee Philips of Humana said: We have huge resources that can be put at the disposal of GPs who will have a much bigger say on where to refer patients. Humana is already a commissioning support company that offers primary care trusts a complete end-to-end service. Are we optimistic? You bet we are.403 His bullish remarks should come as no surprise. How many doctors have the time to draw up lists and keep tabs on the performance of surgeons and therapists to ensure that patients get the best deal? Not many, according to David Furness of the Social Market Foundation who says doctors will need "a great deal of organisational support". That is where companies such as Humana can play a big role. They would draw up lists of health providers, monitor their performance and manage budgets. US competitors to Humana include Aetna and United Health which are looking at plans to expand their operations in Britain following the publication of the White Paper. Other British outsourcing companies, such as Capita and Serco, are also expecting more work to come their way once the reforms are implemented. Capita's business development director, Neil Griffiths, said: We can help GPs by offering billing services, human resources, IT and administrative back-up. We could take over the management of many of the services that are currently provided by PCTs.404 Jonathan Jackson, healthcare analyst with stockbroker Killik & Co, said: Outsourcing will save government money. Typically, the private sector can provide services between 20 per cent and 30 per cent cheaper than the state. That's what all this is about.405 But the government's proposals have been heavily criticised by the health service union UNISON which claims private bodies will be tempted to feather their own nests, offering services that are most profitable, but ignoring those that yield less cash. In particular, UNISON is worried about fraud creeping into the system and points to the US where fraud costs taxpayers around $60 billion a year. The FBI recently launched a campaign against medical companies that send phoney bills or provide excessive and unnecessary treatment.406 Moreover, as information director of Health Emergency John Lister argues: The NHS itself, which currently spends £105 billion, will remain in name only as a 'brand,' transformed from a major public service into little more than a central fund drawn from general taxation. This cash mountain would be used to commission a variety of services delivered by non-NHS organisations in a competitive health-care 'market' in which a growing number of private providers, including multinational corporations, would be encouraged to operate. Continued central funding would ensure that patients would mostly not be required to pay for services at point of use, preserving the illusion of continuity of the NHS, while even more non-profit and profit-seeking providers slice off lucrative portions from the public budget.407 And: Such a massive and unprecedented squeeze on spending could only be carried through by axing tens of thousands of staff, closing beds, wards and hospitals, and massively increasing the workload of the staff remaining.408 However
Therefore, as Lister concludes: If the white paper is carried through, the new system will eviscerate the NHS, wiping out much if not all public-sector provision, and installing the untrammelled competitive market in place of any form of planning, co-operation or collaboration. It will offer a bonanza for private providers and ring the death knell for any serious attempts to implement policies aimed at reducing inequalities in health. It can and must be stopped.410 Though Lister is now "having second thoughts about whether the white paper can be implemented at all, due to the cost and resources it would take to implement it".411 Similarly, according to Steve Iliffe: Remorseless criticism from all sides might...force the Coalition to shelve the most contentious plans. The GP consortia would be at the top of the list, because the transaction costs of negotiating contracts will increase enormously if up 600 consortia have to manage budgets. Alternatively, existing Primary Care Trust staff will form ‘procurement units’ or ‘commercial support units’ and ally with GP consortia to fend off competition and minimise changes to local power structures. They may be able to keep within budget and increase productivity in their workforce without causing public outrage. Compromises would be made with other stakeholders, like Public Health specialists who want a slice of the commissioning work, and disciplines like nursing, which will want to be part of the decision-making. We should not underestimate the capacity of the NHS to resist imposed change, even if the legal framework is firmly tilted in favour of the market.412 Opportunities for the private sector "are at their highest level in two to three years" (Capita) The government's slashing of spending by town halls is likely to deliver billions of pounds of new business for private companies. Outsourcing firms are preparing for a bonanza of local authority contracts. Richard Marchant, head of local government strategic partnerships at Capita, which already works for councils in Harrow, Swindon, Southampton and Sheffield, said:
Since the general election there have also been reports that Britain’s flood defence network, including the Thames Barrier and defences on the Ouse and Severn rivers, could be sold to the private sector by the Con-Dem coalition government to cut the £713 million annual flood defence bill. The Institute of Fiscal Studies (IFS) has named Defra, which oversees the Environment Agency, as one of the departments likely to be worst hit by the spending cuts aimed at reducing the budget deficit. The IFS estimates that Defra’s £3 billion budget could be reduced by a third. Treasury proposals would allow private companies to acquire and operate the assets, with the charges passed on to consumers – either directly or through a levy on the council tax. Water companies, which ran flood defences before privatisation, could take over. The Environment Agency says more than half a million British homes remain at significant risk of flooding and the cost of protecting them will be £1billion a year by 2035. It estimates that £20 billion needs to be spent on flood defences over the next 20 years and its chief executive said last month that new sources of funding would need to be found.417 The IMF and OECD are questioning the government's cuts even though they are still 'too keen on premature deficit-cutting' (William Keegan) The International Monetary Fund (IMF) published its World Economic Outlook Update on 7 July 2010, which called into question the government's spending cuts when it stated that: 'Most advanced economies do not need to tighten before 2011, because tightening sooner could undermine the fledgling recovery, but they should not add further stimulus'.418 The IMF also predicted that following Britain's 4.0 per cent output drop in 2009 it will grow 1.2 per cent in 2010 – the second-slowest growth rate in the G7 group of advanced capitalist countries – and by 2.1 per cent in 2011 compared to the eurozone's one per cent in 2010 and 1.3 per cent in 2011. The Organisation for Economic Co-operation and Development (OECD) also published its Employment Outlook 2010 report on 7 July 2010, which states that: Even though economic growth has resumed in the United Kingdom and most other advanced economies...the economic recovery will be too muted to result in strong job creation and that unemployment is likely to recede only slowly. As a result, the UK unemployment rate is expected to remain at nearly 8 per cent at the end of 2011.419 In addition, the OECD maintains that: 'Effective re-employment assistance has prevented an even sharper increase in UK joblessness and should be reinforced even in the current context of fiscal consolidation'.420 Therefore the OECD expresses 'concern that the new Budget ends funding for two crisis measures, namely, the Future Jobs Fund and the Six Month Offer'.421 Though both the IMF and OECD, as William Keegan notes, are 'too keen on premature deficit-cutting'. And: In addition to its cavalier attitude towards public sector employment, the coalition is rather offensive in its preaching about pay. One gets the impression that a cabinet not short of millionaires has no idea how the other 99.9 per cent live.422 The Eurozone dimension Economists at the Dutch bank ING argue that, if the single currency were to collapse at the end of 2010, there would be: In 2011 a deep recession across the Eurozone...dragging down the global economy. In the Eurozone output falls range from -4 per cent in Germany to -9 per cent in Greece. Elsewhere the impact is particularly large in neighbouring European economies. Thus GDP falls 3 per cent in the UK and 5 per cent in Central and Eastern Europe. While the US would be less adversely affected, the combination of lower global growth and a strongly appreciating US dollar would see it flirting with outright recession in 2011.423 Cliffe et al merely examine the consequences of the Eurozone's disintegration. Conversely, Christopher Smallwood – in his report for Capital Economics – argues that the Eurozone's breakup would foster economic growth: because exchange-rate movements in Portugal, Ireland, Italy, Greece and Spain would restore their 'competitive edge' whereas the alternative is many years, perhaps decades, of depression and deflation.424 Moreover, a recent survey – by the Economist Intelligence Unit for RBC Capital Markets – of 440 bank chairs and chief executives found that half thought there was a greater then 50 per cent chance of one or more countries leaving the euro over the next three years, while 36 per cent saw a greater than 25 per cent probability of complete break-up.425 Advanced capitalist countries 'are repeating an economic policy out of the 1930s' (David Leonhardt) The advanced capitalist countries, as David Leonhardt points out are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s – starting to cut spending and raise taxes before a recovery is assured – and hoping today’s situation is different enough to assure a different outcome.426 From 1936 to 1938, when the Roosevelt administration believed that the Great Depression was largely over, tax increases and spending declines combined to equal 5 per cent of gross domestic product. But then European governments were raising their spending in the run-up to World War II. This time, almost the entire world will be withdrawing its stimulus at once. From 2009 to 2011, the tightening in the United States will equal 4.6 per cent of GDP, according to the IMF. In Britain, even before taking into account the recently announced budget cuts, it was set to equal 2.5 per cent. Worldwide, it will equal a little more than 2 per cent of total output. And the initial stages of our own recent crisis were more severe than the Great Depression. Global trade, industrial production and stocks all dropped more in 2008-9 than in 1929-30, as a study by Barry Eichengreen and Kevin H. O’Rourke found.427 The parallels to 1937 are therefore not reassuring: since from 1933 to 1937, the United States economy expanded more than 40 per cent, even surpassing its 1929 high. But the recovery was still not durable enough to survive Roosevelt’s spending cuts and new Social Security tax. In 1938, the economy shrank 3.4 per cent, and unemployment spiked. The spending cuts are not realistic, either economically or politically, even for neoliberals The credit rating agency Standard & Poor's (S&P's) 'provided a double blow to the chancellor when it said the economy was unlikely to grow at the pace forecast by the Office for Budget Responsibility...and expressed doubts about the coalition's willingness to stick to the drastic cuts in public spending planned for the rest of this parliament'.428 S&P's Trevor Cullinan also said: We...believe there is still a material risk that the UK's net general government debt burden may approach a level incompatible with the triple-A rating".429 Departments and local authorities, according to the National Audit Office have reported annual savings of £10 billion towards the government-wide target of savings totalling £30 billion in 2010-11 (later increased to £35 billion). This represented a saving of at least 3 per cent of departments’ expenditure at the start of the period. The required savings were removed from departments’ approved CSR07 budgets. Departments therefore needed to make cash releasing savings in order to deliver their agreed programme within approved spending plans. This does not necessarily mean a reduction in overall spending – the budgets of 11 of the 17 main departments increased in real terms between 2007-08 and 2010-11.430 The House of Commons Treasury Committee, moreover, warns that: The June 2010 Budget proposed a significant fiscal consolidation above that envisaged in the March 2010 Budget of the previous Government. There is concern that such a consolidation may come too early and cut too deeply, and as such cause the economic recovery to falter, leading to a 'double dip' recession'.431 It also warns that 'the global economic situation is fluid and fragile, and it is possible that the Chancellor may need to alter his current plans to compensate for external events'.432 And when the Committee asked the Chancellor whether there was a Plan B he replied that: 'The plan is to have confidence in the British economy and its ability to pay its way in the world'.433 But, as an editorial in The Guardian commented: Crossing, one's fingers is not a plausible strategy for the man running the British economy. Perhaps the government is preparing for another round of quantitative easing...even though there is little convincing evidence that the last round did anything more than hand money to banks to funnel into speculation and bonuses. Or perhaps the government thinks the private sector really is going to ride to the rescue. These are big gambles: if they flop, it will be the voters who lose out before Mr Osborne does.434 Conversely, as Lapavitsas et al conclude, the progressive alternative to neoliberal ruling class 'austerity' strategies in the eurozone – which impose huge costs on working people – would be to exit from it, introduce capital controls, and nationalise banks and other key areas of the economy435: as also proposed in non-eurozone advanced capitalist countries such as Britain by the Left Economics Advisory Panel and the Communist Party of Britain in its Left Wing Programme. Britain is one of the richest countries in the world, with the sixth largest economy. We CAN afford vital public services – if we tax the 10 per cent of the population who own 44 per cent of Britain’s wealth. Closing this year’s deficit (£149 billion) within five years could be done without slashing public services or raising VAT by:
The need for a complete break with New Labour's neoliberal dogma Gordon Brown ‘helped prevent a Labour meltdown with a last-minute appeal to a core vote fearful of the return of the Tories’: But Labour has lost five million votes since 1997, four million of them under Tony Blair. The largest share came from a working-class electorate New Labour insisted had nowhere else to go...438 To win these voters back therefore ‘requires a clear break with the neoliberal dogma of the New Labour years’, which ‘must be the starting point of the leadership contest that has now just begun'.439 For, as Barry Camfield asked: What will Labour do? Move to the progressive left or reinforce Blairism by trying to resurrect New Labour (David Miliband?) with its essentially career politicians, who do not ‘bleed’ for people, who do not ‘hurt’ for the injustices workers face daily, who do not even begin to understand why unions need to be free to counter-balance the huge interests of capital and the relative weakness of the individual. Let us use the coming period of opposition to renew Labour, progressive Labour, the real values of Labour, and let Britain’s Trade Union Movement be at the heart of it. We look to union leaderships to lead in this new period.440 Moreover, although 12,000 people joined the Labour Party in the week after the local and general elections441, to become the hegemonic party in national and local government it would have to elect as leader the only left candidate Diane Abbott and ditch its neoliberal policies.442 The interrelated strategies discussed in Chapter 14 are necessary to defeat the neoliberal agenda of massive public services cuts and implement the alternative socialist policies outlined in this study. Through rigorous work on the ground these strategies therefore – in Gramscian terms – aim to lay the moral, intellectual and organisational terrain for the development of a hegemonic alternative in the forthcoming period.443 Though, at a time when the banks are back to normal while the working class pays and 'class politics looks set to return', the scale of the task socialists face should not be underestimated: since John McDonnell's failure again to get 33 nominations from the 258 members of the Parliamentary Labour Party coincided with 68 per cent of the public supporting George Osborne's public spending cuts – followed by the shameful 'overwhelming support' of the TUC general council to invite Prime Minister David Cameron to its 2010 Congress.444 APPENDICES 1 New Local Government Network corporate partners
[a]In September 2008 there were 24 corporate partners—including Aim Infrastructure, HBS Business Services and Tesco, which are no longer partners. Arvato Bertelsmann and Capgemini were not partners in September 2008. [b]Partners in both years. Source: P. Latham 2003, pp. 34-35; http://www.nlgn.org.uk/public/partners/corporate-partners/ 2 New Local Government Innovation Network local authority partners
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