Chancellor Osborne’s spending plans will mean yet more austerity for the masses while the rich and big business continue to enjoy their tax cuts.
Tory and ruling class strategy is to shrink the state’s role when it comes to socially useful functions, while expanding it in all those areas that promote the interests of big business at home and overseas. At the same time, the tax burden will be transferred as much as possible from the wealthy to the rest of the population. The overall impact will be to reduce state spending as a proportion of GDP from 39.7 per cent today to 36.4 per cent by 2020 – an objective shared by no other advanced capitalist country.
This is why Osborne wants to slash funds for social care, public health, youth services, public transport, libraries, community safety, leisure centres and many other local facilities. Grants for student nurses are to be abolished, while graduate loan repayments will rise.
Yet the Chancellor can afford to gift more than £10bn in income, corporation and inheritance tax reductions to the rich and big business.
The biggest axe will fall on departmental programmes dealing with welfare, social security, public health, the environment, climate change and transport services (but with extra spending for the road construction companies).
Much is being made of Osborne’s retreat from even harsher spending cuts. The Tories are banking on higher levels of economic growth and tax revenues than anticipated in the July budget, to bring in an extra £16bn over the next three years. Apparently, it took the Office for Budget responsibility five drafts before it came up with the required growth and revenue forecast. But the wishful thinking doesn’t stop there.
The Chancellor and his OBR appointees also hope to save £17bn on debt interest in this parliament, while reaping a whopping £53bn between now and 2021 from the sale of the student loans book and state shareholdings in Lloyds, RBS and other failed private enterprises.
Should the growth or the full proceeds of privatisation not materialise – as has so often been the case – the Tories will be back for the cuts they have foregone for now. That’s if we don’t get rid of this reactionary regime in the meantime.
Although the £4.4bn U-turn on tax credit cuts is welcome, this has been forced on Osborne by the ‘popular front’ between the people and the House of Lords. Nevertheless, the changes to housing benefit and universal credit announced in July will go ahead, hitting more than three million people including the working poor, young people and the unemployed. Many in these last two categories are less likely to vote. The elderly, on the other hand, are the most active section of the public electorally. That – rather than any sense of social justice – would help explain why the state retirement pension is being protected, at least for the time being.
The extra £8.4bn for the NHS in England is nowhere near enough to offset the extra burden created by PFI charges, cuts in care for the elderly and the £22bn being extracted from the NHS in ‘efficiency savings’. This Tory government still intends to spend less on health as a proportion of GDP in 2019 than it does today, which itself is lower than in France, Germany and other developed countries.
Likewise, the £4bn pledged to build and help people buy 400,000 affordable homes by 2020 falls far short of what is needed. The CBI estimates that 960,000 new houses are required over the same period, while some of Osborne’s ‘extra money’ merely restores previous cuts in capital spending.
Many thousands of low paid or unemployed workers will still not be able to pay for a mortgage of any kind for one of Osborne’s glorified rabbit hutches that no millionaire Cabinet minister would be willing to occupy. Britain’s housing crisis will not be resolved without a massive programme of council house building to house people in genuine need. The injection of more public money into the private housing market only tends to feed its rampant corruption, profiteering and speculation.
In announcing the devolution of powers over income tax to Wales and corporation tax to the Northern Ireland Assembly at one of the lowest rates (12.5 per cent) in the world, the Chancellor has fired the starting pistol for a race to the bottom. Devolving tax-raising powers in this way to the nations and regions of Britain, including to English mayors, is a trap. It is designed to erode central mechanisms for the redistribution of public money, devolving the revenue raising burden onto local people in low income areas.
Likewise, almost halving the central grant to English local authorities by withdrawing £18bn, while allowing local authorities to raise Council Tax by 2 per cent to pay for social care, will reduce the central redistribution of funding from richer localities to poorer ones.
It’s a perverse set of priorities which ring fences colossal spending on a new generation of nuclear weapons while cutting local services and social benefits.
As Tory MP Crispin Blunt and Reuters News Agency have calculated, based on government estimates released on October 15, renewing the Trident nuclear weapons system will cost £167bn up to year 2060.
The Communist Party rejects this approach and puts forward a pro-working class, anti-austerity alternative:
- Increase the top rates of income tax for the rich.
- Levy a wealth tax on the richest 10 per cent of the population.
- Impose a ‘Robin Hood’ tax on all speculative financial and commodity transactions.
- Increase corporation tax on big business profits to German and US levels of 30-35 per cent.
- End the tax haven status of all British overseas territories and dependencies.
- Abolish Trident and cut military spending to the average level for Western Europe.
- Terminate PFI schemes and fund large public sector projects through bonds bought by the Bank of England.
These measures would raise at least £100bn extra a year. That would be more than enough to reduce the deficit, slash interest payments on government borrowing. It would also enable a left and progressive government to fund the economic growth, environmental security and social justice which would improve Britain’s public finances still further, including policies to:
- Invest much more in young people, housing, public services, R&D, new technology, sustainable non-nuclear energy and public transport.
- Restore state pensions, benefits and tax credits to their full value.
- Reverse the cuts in funding to local government, the Scottish Parliament and Welsh National Assembly.
- Raise the national minimum wage in stages to the real living wage and end the discrimination against young workers.
- Take the utilities, energy, banking, public transport, pharmaceuticals and armaments into public ownership.
Shadow Chancellor John McDonnell favours such a radical left-wing programme. So would many Labour Party members and supporters. Unfortunately, some of the fiercest opposition to most of these measures would come from inside the Parliamentary Labour Party itself.