Andrew Fisher, Coordinator of the Left Economics Advisory Panel (LEAP) (This article first appeared in the
Morning Star)
As Gordon Brown can verify, it is a fool’s game to forecast the economy. However, when in 2006 Brown as Chancellor was predicting growth as far ahead as 2011 – and an end to boom and bust – LEAP was highlighting the levels of personal debt in the UK (nearly 50% greater than in the US) and warning they were unsustainable.
Now we are in a recession that looks set to eclipse that of the early nineties and probably even that of the early-mid eighties. Unemployment has breached two million, with a consensus forming that by the end of this year it will reach three million. This same consensus expects the UK economy to contract by 4-5% in the same time period.
In response the Government has awarded lavish handouts to the banking sector without any conditionality around jobs or pay (let alone public control). It is clear that New Labour in recession operates as it did in boom time – in the interests of big business.
The effects of a recession on working people always lag behind the economic data of GDP growth. When the UK economy was notionally recovering by the mid-eighties, unemployment was reaching its peak. This highlights how we measure recession is skewed towards the dominant interests.
There are several contrasts that need to be made with that period – and, if we are to comprehend how harshly this recession will ravage working class communities, we need these contrasts to be understood. The last thirty years of neoliberal economic policy have stripped away many of the protections that still existed in the eighties.
In the workplace, trade union density has nearly halved from 55% when Thatcher came to power to just 28% today; the proportion of workers covered by collective bargaining has suffered even more gravely, down from 85% to less than 40% today. As New Labour has refused to restore trade union rights, UK workers are now the easiest to sack in western Europe. The legions of non-unionised workers who retain their jobs will also be hit with pay cuts as employers seek to insulate their profits.
Just last year Gordon Brown boasted to the CBI that we have "the most flexible labour market in Europe". So when transnational corporations are judging where to cut jobs, it is in their interests to choose UK workers who are less likely to be unionised, and where they have the lowest legal commitments to fulfil.
When these workers join the army of surplus labour in the dole queues – itself helping to further suppress wages, they will find a benefits system less generous than under Thatcher. If unemployment benefit had increased in line with earnings from 1980 it would be worth nearly £110 per week. Instead today's unemployed are expected to survive on just £60.50, or £47.95 if they are reckless enough to be under 25.
They will also be faced with an unemployment service that has shed 30,000 staff in the last five years and is insufficiently staffed to cope with the rising demand – and subject to increased conditionality, now including workfare for the long-term unemployed. While the Tebbit-era rhetoric may have been more stark, the practicalities of maintaining a claim under the New Labour regime are far harsher – and for barely half the level of benefit.
As increasing numbers find themselves jobless, or their pay frozen, they will struggle to pay housing costs. In 1980, over a third of people lived in the secure tenancies of council housing. Today it's just 10%. The rest are faced with paying a mortgage and if they fail to make the payments and are repossessed –as nearly 50,000 were last year – they will join nearly two million others on the sick joke that is council house waiting lists. For private tenants of buy-to-let landlords, tenancies are insecure as many landlords struggle to maintain their mortgages. There is little good news for first time buyers. House prices, which more than doubled between 1999 and 2007, have dropped only 15%. The chronic housing shortage is keeping prices high.
Thanks to Thatcher's break of the earnings link (maintained by Major, Blair and Brown), today's pensioners face a basic state pension worth just 14% of average male earnings. In 1979 it was worth 23%. Many of those who took out private pensions have seen its value decimated by the crashing stock market, while final salary occupational schemes are increasingly the preserve of only directors and MPs – the culprits of the destruction of UK pension security. Further cuts in occupational pensions will come as employers seek to maintain profitability.
The neoliberal dogma of the past thirty years has decimated the public services on which the poorest rely. As the poorest and most vulnerable workers face lengthy periods of unemployment the true legacy of New Labour is revealed.
The 2009 Budget will be New Labour's first during a recession. The usual environmental gimmicks and corporate tax break leaks have been touted, but for the rest its austerity, rumours of a public sector pay freeze and no increase in the minimum wage. Under the slogan
Their Crisis Not Ours, the
LRC and others will be protesting in Whitehall on Budget Day to demand 'Where's our bailout?'
Like the MacDonald government of 1931 and Callaghan in 1978-9, this Labour Government is choosing to attack working class communities to pay for a recession not of its making.
The LEAP conference on Saturday 25th April
'Capitalism Isn't Working' is an opportunity to share information and mobilise resistance against the policies that make the poorest pay.
