(This article appears in the June issue of Labour Briefing)
The Budget on 22nd April was the legacy of the flawed bank bailout plan of October 2008. As John McDonnell said at the time of Darling's bailout, "this will deepen and lengthen the recession" and "will mean increases in taxes or cuts in public services".
It didn't have to be this way. The Government could have nationalised the banks, used them to strategically invest in the economy, run them efficiently and allowed any profits to help restore government finances. Instead New Labour bailed out the banks, plunging us into massive debt, and took no direct control over them.
Now, the government is further indebting the nation by spending billions bailing out the private finance initiative schemes which Brown told us would be better value for the taxpayer.
With a national debt reaching £175 billion, the modest tax increase on the top 1 per cent of earners will raise around £5 billion to £7 billion. Not significant sums. Instead, buried deep within the Budget were £30 billion of public-sector cuts, which Darling calls "efficiency savings," and privatisations, which Darling calls "asset sales."
The £14 billion of cuts will inevitably damage services and mean job losses, further sapping demand from the economy and undermining growth. The Government is privatising revenue generating state assets to plug the budget gap they created by propping up the banks. It is slaughtering the geese that lay golden eggs (including the Royal Mint, Royal Mail, the QE2 conference centre, Ordnance Survey and the Land Registry) in lieu of the banks' debts.
Meanwhile in the real world they have done nothing to stop the recession hitting the most vulnerable people. Unemployment is now rising so fast that it might hit 3m by September and we are looking on course for 75,000 homes repossessed by the end of the year. In the first quarter of 2009 the repossession rate was 1,000 homes per week and rising – as more people slip into arrears.
Nevermind though, without any obvious government direction or noticeable sign the economy will pick up towards the end of the year and recovery will magically emerge – if you live in the surely drug-induced world of Darling and Brown. The economy will shrink at over 4% this year, possibly nearer 5% - yet Darling says 3.5%, and growing again in 2010. So Darling will be back in November 2009 at the Pre-Budget report suggesting new tax rises and new cuts.
Sadly my own union Unite seems as lost. It vacillates between endorsing BNP slogans and cuddling up to Digby Jones. The logic of this latter position is to call for the Government to subsidise companies putting workers on short-time. In return the Government gets nothing, doesn’t take a stake in return, doesn’t get a share of the profits – just subsidises wages on behalf of big business. The Woodley-Simpson-Jones tie-up is as ill-conceived as it sounds, even if the Government still had resources with which to subsidise the corporate sector.
The Budget was described by LEAP economist Graham Turner as a "do-nothing Budget". It pins all its hopes on 'recovery' yet does nothing to create one. This was the last budget that has any time to take effect before a general election – and it went with a whimper rather than a bang. So it's up to us to create that bang.
The stark reality of the economic crisis will force solutions. One will be further attacks on services, pay and a depression with all the societal ills that will unleash. The other is that the Government starts doing what it could have done 12 years ago: redistributing wealth, nationalising industry, directing investment and building a sustainable economy. It's socialism or barbarism – and all three political parties are signed up to the latter.
Showing posts with label Budget 2009. Show all posts
Showing posts with label Budget 2009. Show all posts
Tuesday, 26 May 2009
Wednesday, 22 April 2009
Budget 2009: Analysis
John McDonnell MP, LEAP Chair, warns of a package of cuts buried in the Budget and "trivial" concessions.
Graham Turner, author of The Credit Crunch, gives his take on the Budget.
Mark Serwotka warns that public services will suffer.
Richard Murphy on how the Budget fails the environment.
Jeremy Corbyn MP, writing in the Morning Star, in advance of the Budget.
Graham Turner, author of The Credit Crunch, gives his take on the Budget.
Mark Serwotka warns that public services will suffer.
Richard Murphy on how the Budget fails the environment.
Jeremy Corbyn MP, writing in the Morning Star, in advance of the Budget.
£30bn worth of cuts and privatisation, says LEAP
The 2009 Budget announced a further £9bn on public service cuts, on top of the £5bn announced in the Pre-Budget Report. The Chancellor also announced £16bn of "asset sales", which will include the privatisation of Royal Mail and the Royal Mint. This is a total of £30bn of public service cuts and privatisation.
John McDonnell MP, LEAP Chair, said:
"Buried in this Budget is a programme of public expenditure cuts and privatisations never seen before in the history of this country. It means the Government is pressing ahead with the sale of Royal Mail in the face of massive public opposition. This programme of cuts and privatisation will be made worse when the Chancellor's unsustainable growth predictions are exposed.
"Cutting and privatising jobs in the public sector will simply put more people on the dole, and runs counter to the Government's overall approach of stimulating the economy."
Andrew Fisher, LEAP co-ordinator, said:
"By pushing ahead with the privatisation of Royal Mail and the Royal Mint, Darling is putting ideology before evidence. Thatcher sold off the family silver, now Brown is selling off the family gold.
"As public businesses both Royal Mail and Royal Mint are net contributors to the public purse - and with an ever-widening deficit, the Chancellor is wrong to sell-off a valuable source of public income. Darling is slaughtering the goose that laid the golden eggs."
John McDonnell MP, LEAP Chair, said:
"Buried in this Budget is a programme of public expenditure cuts and privatisations never seen before in the history of this country. It means the Government is pressing ahead with the sale of Royal Mail in the face of massive public opposition. This programme of cuts and privatisation will be made worse when the Chancellor's unsustainable growth predictions are exposed.
"Cutting and privatising jobs in the public sector will simply put more people on the dole, and runs counter to the Government's overall approach of stimulating the economy."
Andrew Fisher, LEAP co-ordinator, said:
"By pushing ahead with the privatisation of Royal Mail and the Royal Mint, Darling is putting ideology before evidence. Thatcher sold off the family silver, now Brown is selling off the family gold.
"As public businesses both Royal Mail and Royal Mint are net contributors to the public purse - and with an ever-widening deficit, the Chancellor is wrong to sell-off a valuable source of public income. Darling is slaughtering the goose that laid the golden eggs."
Budget 2009 - Live blog
The Chancellor Alistair Darling will today unveil his Budget - New Labour's first during a recession. The Budget speech begins at 12:30pm, after Prime Minister's Questions.
At 5pm tonight, Their Crisis Not Ours! is organising a picket of HM Treasury, 1 Horseguards Road. There is then a Q&A session in Committee Room 10 of the House of Commons at 7:30pm, with panellists including John McDonnell MP (LEAP Chair), Clara Osagiede (RMT), Cllr Susan Press (LRC vice chair), and Graham Turner. Grahams grim assessment yesterday was: "whoever wins power in 2010, the UK faces a multi-year tightening of fiscal deficits even more extreme than that seen in Japan."
We'll be blogging throughout the day - reporting and responding to the announcements in the Budget:
11:30am: Excellent piece by Prof Gregor Gall on Comment is Free arguing the case for a maximum wage. As Gregor argues, "The notion of maximum wages is based on the idea that no matter what job a person does and no matter how many hours they work, there is no possible way that an individual's skill, expertise, intelligence or experience can justify the payment of 100, 200, 300 or even 400 times the wages of the lowest-paid worker in the organisation at hand."
Gregor will be speaking at the LEAP Conference 'Capitalism Isn't Working' this Saturday.
11:55am: The Tax Research blog will be also be posting throughout the day, with a focus on Tax Justice issues. They'll also be twittering too - for those who understand that . . . John Christensen from the Tax Justice Network will also be speaking at the LEAP Conference 'Capitalism Isn't Working' this Saturday.
12:30pm: And with the political Punch & judy of Prime Minister's Questions out of the way, which focused heavily on the national debt and unemployment figures (over 2.1m by end of Feb), it's the Budget . . .
12:35pm: Unemployment figures today (for the period to the end of Feb09) show unemployment has risen by 177,000 to 2.1m. At this rate, LEAP estimates unemployment will reach 3 million by the end of the Summer. Figures also showed that private sector wages had declined by 0.5% in the three months to February. John McDonnell MP, LEAP Chair, said:
"Demand is being sapped from the economy by unemployment and pay cuts. This requires a massive Government intervention in the economy to protect jobs and stimulate demand. The Government must now rule out further cuts in public sector jobs."
12:41pm: Chancellor says UK economy will contract by 3.5% this year, but will be growing again by the end of the year - with growth of 1.25% in 2010, and 3.5% in 2011.
12:45pm: The Chancellor praises Jobcentre Plus and promises additional £1.7bn funding - but will it be through private providers or the more efficient Jobcentre Plus?
12:50pm: on housing, no social conversion scheme, as we suggested. A holiday for stamp duty on properties under £175,000, more money for shared equity schemes, and the homeowner mortgage support scheme.
12:56pm: borrowing £175bn this year, 12% of GDP - in his last Budget, Brown lambasted Tories for hit hitting 8% under Major . . .
12:59pm: Tax avoidance: with at least £25bn missing per year, the Chancellor says he will close loopholes to gain another £1bn over 3 years. Not good enough.
1pm: Redistributive taxation? It's a start - Darling is raising top tax rate to 50% for those earning over £150,000 (top 1% of earners) from next year.
1:05pm: £16bn of asset sales - that' privatisation to you and me - Royal Mail and Royal Mint. Thatcher sold the family silver, Brown's flogging the family gold
1:09pm: A hint of local authorities being allowed to build homes. Is that council housing? As always, let's see the fine print first . . .
1:15pm: Warm words on green investment, but a lot of reannouncements, and the big figures are loans or guarantees.
1:22pm: And it's over . . . I was waiting for a rabbit to be pulled out of the hat . . . Let the post-mortem begin
At 5pm tonight, Their Crisis Not Ours! is organising a picket of HM Treasury, 1 Horseguards Road. There is then a Q&A session in Committee Room 10 of the House of Commons at 7:30pm, with panellists including John McDonnell MP (LEAP Chair), Clara Osagiede (RMT), Cllr Susan Press (LRC vice chair), and Graham Turner. Grahams grim assessment yesterday was: "whoever wins power in 2010, the UK faces a multi-year tightening of fiscal deficits even more extreme than that seen in Japan."
We'll be blogging throughout the day - reporting and responding to the announcements in the Budget:
11:30am: Excellent piece by Prof Gregor Gall on Comment is Free arguing the case for a maximum wage. As Gregor argues, "The notion of maximum wages is based on the idea that no matter what job a person does and no matter how many hours they work, there is no possible way that an individual's skill, expertise, intelligence or experience can justify the payment of 100, 200, 300 or even 400 times the wages of the lowest-paid worker in the organisation at hand."
Gregor will be speaking at the LEAP Conference 'Capitalism Isn't Working' this Saturday.
11:55am: The Tax Research blog will be also be posting throughout the day, with a focus on Tax Justice issues. They'll also be twittering too - for those who understand that . . . John Christensen from the Tax Justice Network will also be speaking at the LEAP Conference 'Capitalism Isn't Working' this Saturday.
12:30pm: And with the political Punch & judy of Prime Minister's Questions out of the way, which focused heavily on the national debt and unemployment figures (over 2.1m by end of Feb), it's the Budget . . .
12:35pm: Unemployment figures today (for the period to the end of Feb09) show unemployment has risen by 177,000 to 2.1m. At this rate, LEAP estimates unemployment will reach 3 million by the end of the Summer. Figures also showed that private sector wages had declined by 0.5% in the three months to February. John McDonnell MP, LEAP Chair, said:
"Demand is being sapped from the economy by unemployment and pay cuts. This requires a massive Government intervention in the economy to protect jobs and stimulate demand. The Government must now rule out further cuts in public sector jobs."
12:41pm: Chancellor says UK economy will contract by 3.5% this year, but will be growing again by the end of the year - with growth of 1.25% in 2010, and 3.5% in 2011.
12:45pm: The Chancellor praises Jobcentre Plus and promises additional £1.7bn funding - but will it be through private providers or the more efficient Jobcentre Plus?
12:50pm: on housing, no social conversion scheme, as we suggested. A holiday for stamp duty on properties under £175,000, more money for shared equity schemes, and the homeowner mortgage support scheme.
12:56pm: borrowing £175bn this year, 12% of GDP - in his last Budget, Brown lambasted Tories for hit hitting 8% under Major . . .
12:59pm: Tax avoidance: with at least £25bn missing per year, the Chancellor says he will close loopholes to gain another £1bn over 3 years. Not good enough.
1pm: Redistributive taxation? It's a start - Darling is raising top tax rate to 50% for those earning over £150,000 (top 1% of earners) from next year.
1:05pm: £16bn of asset sales - that' privatisation to you and me - Royal Mail and Royal Mint. Thatcher sold the family silver, Brown's flogging the family gold
1:09pm: A hint of local authorities being allowed to build homes. Is that council housing? As always, let's see the fine print first . . .
1:15pm: Warm words on green investment, but a lot of reannouncements, and the big figures are loans or guarantees.
1:22pm: And it's over . . . I was waiting for a rabbit to be pulled out of the hat . . . Let the post-mortem begin
Tuesday, 21 April 2009
New LEAP Red Papers - The Recession Budget
To coincide with the 2009 Budget - New Labour's first during a recession - LEAP has published its April 2009 Red Papers: The Recession Budget.
As we face the worst recession for a generation, and if Ed Balls is to be believed "more extreme and more serious than that of the 1930s", what is left in the pot for those feeling the effects of the recession: the unemployed, the repossessed, the low waged, the indebted?
It is clear that many are asking 'Where’s our bailout?', and with good reason. For years we were told there was no money to pay for student grants, to restore the pensions link with earnings, to invest in council housing or to reduce inequality. Yet when the banks collapsed through a combination of greed, incompetence and government negligence, the UK taxpayer could be indebted for decades to rescue the lame ducks of neoliberalism.
- Graham Turner on how US policy is damaging the global economy
- Professor Gregor Gall on the faux-Keynesian consensus and what socialists should be arguing for
- Jerry Jones on defending jobs and the case for direct action
- Andrew Fisher on economic insecurity and inequality in recession
- Paul Feldman & Gerry Gold on the G20 and what it should have done
- Richard Murphy on the campaign against Tax Havens post-G20
- John McDonnell on why we need to build a vision of a new economy
Download the April 2009 LEAP Red Papers 'The Recession Budget'.
Update: Read John McDonnell's article on Guardian Comment is Free.
Monday, 20 April 2009
Bailouts for the banks, Cuts for the public sector
With pre-Budget leaks suggesting £15bn of public sector cuts to be announced in Wednesday's Budget, PCS has put out the statement below:
MEDIA RELEASE
Date: 20 April 2009
For immediate use
SPENDING CUTS WILL DAMAGE SERVICES SAYS CIVIL SERVICE UNION
The Public and Commercial Services Union (PCS) warned that further spending cuts will damage services and jeopardise the delivery of government policies as it responded to today’s budget speculation that the government will cut spending by £15 billion.
The Chancellor has already announced £5 billion of so called ‘efficiency savings’ across civil service departments with speculation mounting that he will announce a further £10 billion of cuts in Wednesday’s budget.
Civil and public services have already been hit by spending cuts in real terms and ‘efficiency savings’ which have lead to over 80,000 job loses and hundreds of office closures.
Key areas such a tax, jobcentres and justice have all been affected. 25,000 jobs are to go and 200 offices to close in Her Majesty’s Revenue and Customs (HMRC) by 2011. 500 jobcentres and benefit offices have closed over the last 5 years hampering the government’s ability to respond to recession and the justice system is in danger of delays and backlogs as the Ministry of Justice faces a year on year cut to its budget in real terms.
Commenting, Mark Serwotka, PCS general secretary, said: “Further so called efficiency savings should not be at the expense of jobs and services. The government should be targeting the billions of taxpayer’s money wasted on the army of consultants. We have already seen the impact of cutting services to the bone in areas such as Jobcentres, whose tireless work has been hampered by a history of job cuts and office closures. Further spending cuts will jeopardise the delivery of frontline services which people are increasingly relying on as the recession deepens.”
Later today, when he addresses the Scottish Trades Union Congress in Perth, he is expected to add: “Politicians and commentators on the right are using emotive words such as ‘apartheid’ to sow division between hard working people in the public and private sector. Not only is it divisive, it is wrong. Low paid workers, wherever they work, are in this together, the victims of the excesses of the City and casino capitalism.
“The reality for thousands of civil and public servants across the UK, delivering services such as benefits, helping people back into work, tax credits and justice, has been job cuts, pay freezes and pay cuts in real terms. The reality for the communities they serve has been office closures and the deterioration of services.
“As the recession bites deeper and more and more people become reliant on public services, the government should halt office closures and job cuts in civil and public services. In this week’s budget the government should be talking about creating jobs across the economy and increasing the support for people hit by the recession. The government also needs to recognise the pressure that Jobcentres are under by committing extra resources and by reopening some of the 500 hundred they have closed over the last five years.”
ENDS
MEDIA RELEASE
Date: 20 April 2009
For immediate use
SPENDING CUTS WILL DAMAGE SERVICES SAYS CIVIL SERVICE UNION
The Public and Commercial Services Union (PCS) warned that further spending cuts will damage services and jeopardise the delivery of government policies as it responded to today’s budget speculation that the government will cut spending by £15 billion.
The Chancellor has already announced £5 billion of so called ‘efficiency savings’ across civil service departments with speculation mounting that he will announce a further £10 billion of cuts in Wednesday’s budget.
Civil and public services have already been hit by spending cuts in real terms and ‘efficiency savings’ which have lead to over 80,000 job loses and hundreds of office closures.
Key areas such a tax, jobcentres and justice have all been affected. 25,000 jobs are to go and 200 offices to close in Her Majesty’s Revenue and Customs (HMRC) by 2011. 500 jobcentres and benefit offices have closed over the last 5 years hampering the government’s ability to respond to recession and the justice system is in danger of delays and backlogs as the Ministry of Justice faces a year on year cut to its budget in real terms.
Commenting, Mark Serwotka, PCS general secretary, said: “Further so called efficiency savings should not be at the expense of jobs and services. The government should be targeting the billions of taxpayer’s money wasted on the army of consultants. We have already seen the impact of cutting services to the bone in areas such as Jobcentres, whose tireless work has been hampered by a history of job cuts and office closures. Further spending cuts will jeopardise the delivery of frontline services which people are increasingly relying on as the recession deepens.”
Later today, when he addresses the Scottish Trades Union Congress in Perth, he is expected to add: “Politicians and commentators on the right are using emotive words such as ‘apartheid’ to sow division between hard working people in the public and private sector. Not only is it divisive, it is wrong. Low paid workers, wherever they work, are in this together, the victims of the excesses of the City and casino capitalism.
“The reality for thousands of civil and public servants across the UK, delivering services such as benefits, helping people back into work, tax credits and justice, has been job cuts, pay freezes and pay cuts in real terms. The reality for the communities they serve has been office closures and the deterioration of services.
“As the recession bites deeper and more and more people become reliant on public services, the government should halt office closures and job cuts in civil and public services. In this week’s budget the government should be talking about creating jobs across the economy and increasing the support for people hit by the recession. The government also needs to recognise the pressure that Jobcentres are under by committing extra resources and by reopening some of the 500 hundred they have closed over the last five years.”
ENDS
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