There is an Alternative ... but a few less cuts a bit slower is not it

The UK does not have a debt crisis. Our debt is only around 60% of the annual value of the UK economy, or GDP. The UK’s debt was over 100% of GDP for every year between 1918 and 1963. The UK has £9 trillion of wealth, while our total debt is about £850 million. It’s like panicking about owing someone 95p when you have £10 in your pocket.

There is a problem that we are spending more than we are receiving in revenue. This is the deficit. No one denies there is a deficit. How to close the deficit is where we disagree.

The Tory and Lib Dem coalition says there must be savage cuts to public services and jobs. This is the same strategy that has failed in Greece and Ireland.

It’s like the medieval quacks who used to keep cutting away the infected parts of the body – and then they wondered why the patient died. The medical profession has learned to treat the problem not just to hack away. Some economists and politicians need to learn the same lesson too.

Labour has to offer an alternative to the failed policies of this Cabinet of millionaires. That alternative cannot be based on the demands of the City but on the demands of people: for jobs, decent pay, fair pensions and good public services.

Our economy has to shift away from its dangerous over-reliance on a deregulated and risky finance sector. We need state-controlled banks that act and invest in the public interest – not investing in what produces the highest returns for an already super-rich elite, but what benefits our communities.

Did we nationalise the banks in the 2008/09 bailouts or did we just privatise public money? If we allow the same bankers to run our banks and our economy again, how can we reduce inequality, how can we get investment in jobs, and how can we stop the tax avoidance schemes that deprive us of the revenue to invest in decent public services and welfare for all.

The LRC supports the ‘One Million Climate Jobs Now’ pamphlet: a costed programme to create jobs and invest in industry that can also transform our economy to environmental sustainability.

Above all we need an economy that operates in the public interest. If the mass people’s party is not in favour of this it has lost its way.

This text was prepared for the LRC's bulletin for Labour Party conference 2011.

Tax Justice - Exposing the multi-billion fraud

The Tax Justice campaign has rightly increased its prominence in the current debate about cuts - thanks mainly to the incredible work of the Tax Justice Network and also of the PCS union (which represents staff working in tax collection for HM Revenue & Customs).

The most serious estimates are that around £120 billion in tax is evaded, avoided and goes uncollected - mostly from those most able to pay; big business and wealthy individuals. This is consistent with leaked Treasury papers in 2006, which estimated the tax gap between £97-150 billion.

When the country has an annual deficit of an admittedly high £155 billion, then missing around £120 billion of tax (before we even start collecting increasing some rates) every year is substantial.

There is also a certain hypocrisy at a time of unprecedented cuts that the rich are evading and avoiding tax while the poor are getting pay freezes, benefit cuts and losing their jobs. This hypocrisy is even greater when a Cabinet of millionaires is using tax havens to avoid paying their way - as opposed in the recent Channel 4 Dispatches programme, How the Rich Beat the Taxman.

Such is the success of this campaign that every Party now at least pays lip service to tax justice - yes even the Liberal Democrats and Tories.

However, the Labour Party (well it's conference rather than shadow Cabinet so far) has gone a bit further: passing the resolution below at the 2010 conference in Manchester.

The resolution passed was a composite, but based on the draft motion circulated by the LRC, and passed by Streatham CLP, and others, much of which still remains. Sadly though, some unions were influenced by former Treasury ministers who repeated the ridiculous (HM Treasury) line that the tax gap is only £50 billion.

Nevertheless, this is a victory that we must build upon - and ensure the Labour Party starts speaking up on tax justice.

(Perhaps someone should pass them this though too - Richard Murphy's 'Why HMRC has got the tax gap wrong').

Composite 8 – Tax avoidance

Conference notes that in his speech of 17 August George Osborne, Chancellor of the Exchequer, said “anyone who is serious about tackling the nation’s debts needs to come forward with an alternative plan”.

Conference believes strongly there is a credible alternative to the Chancellor’s Budget which many economists predict will hit poorest families hardest and increase the risk of economic slowdown, higher unemployment and a potentially disastrous ‘double dip’ recession.

Conference notes the HMRC high net worth unit tasked with investigating the tax affairs of the super rich has been cut by 20% - showing this isn’t a priority for government.

Conference notes tax avoidance, tax evasion and uncollected taxes are depriving the Exchequer of up to £50 billion a year when the national deficit is £160 billion while we are faced with cuts.

Conference believes that action against tax avoidance is a crucial part of tackling the fiscal deficit and if carried out effectively would reduce the level of cuts to public spending needed to meet the government economic plans.

Conference believes that an increased commitment to public investment coupled with a focused attack on tax avoidance will do much to keep unemployment down and to tackle the deficit.

Conference notes the vigorous campaign on PubCos and Tax avoidance schemes.

Conference opposes the rise of VAT to 20% announced in June’s Budget.

Conference notes the statement in the Labour Party manifesto highlighting the importance of tackling tax avoidance.

Conference urges Labour to commit to addressing the tax gap as part of its deficit reduction strategy.

Conference calls on the Labour Party:

• Mount a campaign to highlight tax avoidance
• Campaign to end the proposed VAT rise
• Campaign for fairness and justice in the tax system as part of the alternative to the government’s cuts
• Properly pursue a global Robin Hood Tax

Conference calls on the Labour movement to work to ensure that the coalition Government takes action to reduce as far as possible the level of tax avoidance by individuals and businesses in the UK as a means of ensuring that all members of society play a part in helping to reduce the deficit.

Mover: GMB
Seconder: Streatham CLP

Osborne's class war

What Osborne unleashed on 20 October was an all out class war. It was comprehensive, as promised, and a precision assault on the working class. Let’s work through it:

Osborne pronounces his cuts will mean half a million public sector job losses, which the Chartered Institute for Personnel and Development says will be nearer 750,000. But before he does that his government is attempting to tear up the redundancy terms of civil servants, so that they can be sacked on the cheap.

For those that do remain, their pensions will be cut and he will perpetuate the lie about ‘rising’ and ‘unsustainable’ costs, when in fact the costs are falling as the Hutton report showed. Workers will also face a pay freeze for two years – a real terms cut of nearly 10%.

There is no strategy to create jobs, and rising unemployment is implicitly accepted. Since there will be a knock-on effect on the private sector from cutting public sector investment and capital spending, another million people will be out of work, and eligible for various elements of welfare.

Osborne is ahead of the game here, having now announced £18 billion of welfare cuts since June. Those still eligible to claim jobseekers allowance will face delays, a poor service and privatised contractors paid by results, profiting from your misery.

This is because the DWP is being forced to shed 15,000 jobs to help finance the new Work Programme, which will be run entirely by the private and voluntary sectors, which – DWP’s own research suggests – are less effective at supporting people into work than Jobcentre Plus staff

Then of course there’s the problem of getting to a Jobcentre since the network will be “rationalised” (i.e. cut). It will mean a bus or even train ride for many now – and the fares are about to skyrocket, as bus subsidies are cut and rail companies have been allowed to raise fares by 30% over the next four years.

There are further cuts to housing benefit and a huge hike to 80% of market rates for new social tenants (there won’t be many since the budget for new housing has been halved). Yet Osborne of course does nothing about private landlords’ inflated rent demands or investing in council housing. This is a recipe for mass homelessness. There are already 1.8 million families on council waiting lists and 100,000 families living in temporary accommodation.

For those on Incapacity Benefit, Employment and Support Allowance or Disability Living Allowance there are cuts and privatised profit-making and target-driven assessments to shift sick and disabled people onto the lower Jobseeker’s Allowance.
So Osborne is demonising those on benefits, and introducing new workfare policies, when there are already 2.5 million unemployed and less than 500,000 vacancies.

His answer is that the Big Society will step in – the social equivalent of laissez-faire – yet voluntary sector funding is being cut by central and local government and the Charity Commission (which regulates the sector) received a budget cut of 33%.

In case of any media dissent, Osborne has cut the only major not-for-profit broadcaster, the BBC, by 16%, while cutting the regulation of private media through cuts to Ofcom.

If that wasn’t enough, Osborne will also be handing over public assets like the Royal Mail, the Tote, Royal Mint, Ordnance Survey and air traffic control to his mates in the City. All of these bring in revenue to the Exchequer, and that’s why they are attractive to big business.

This government will also soon allow market rates of interest on student debt, making it attractive to the private sector, and the CSR again proposed privatising the student loan debt which will be big money once that debt amasses at £7-12,000 per year.

Osborne also announced he is giving up on child poverty – “the Spending Review has no measurable impact on child poverty over the next two years”, he proudly announced in his speech. There are currently nearly four million children living in poverty, and that will rise as more of their parents lose their jobs and have their benefits cut.

So it’s class war, all-out class war, and so to mitigate against people becoming aware of that Osborne is taking two logical steps – firstly lying about the necessity for cuts, but secondly to divide and rule: between public sector and private sector workers, and between those in work and those out of work.

There is a third step too – the devolution of many cuts to local government to implement, dividing the blame.

We therefore have to challenge each of these strands if we are to mobilise effectively. We must re-but his lies, and explain the alternatives at every opportunity: public ownership, tax justice, a wealth tax, a million climate jobs, etc. We also have to not let ourselves be divided – and say that there should be no cuts – not in welfare, public services, jobs or pensions – and no privatisation and marketisation of our public services.

The question of councils implementing the cuts needs serious discussions. In May 2011, Labour is likely to gain more councils as the backlash bites against the Tories and their Liberal lapdogs. These newly elected councillors will need to consider how they can resist the cuts. It’s a discussion that local LRCs and community anti-cuts campaign are having now.

Osborne has unleashed an all-out class war. If we are to defeat this we need to bring our trade unions and the Labour Party back into struggle – otherwise what do we replace this government with? It is not going to be easy, but there really is no alternative.

*This is the second part of an article that appears in the November 2010 issue of Labour Briefing.

Ten Days That Shook New Labour

Large numbers of workers taking spontaneous direct action have not only shocked this New Labour Government but have also disoriented some sections of the Left.

I have been off the scene largely because of the 3rd Runway announcement two weeks ago. When the Government announces that 10,000 members of your community are about to lose their homes and you are their MP you have a responsibility to focus your attention on their deep felt cares and concerns. So in the last couple of weeks I have thrown myself into organising meeting after meeting in my constituency, speaking to over 1500 people and contacting by various means nearly 20,000. Their response has been feelings of fear, insecurity, anxiety, anger and sheer determination to fight back.

It is these same feelings of insecurity, turning to anger and determination to resist that has motivated the workers involved in the strikes at the energy companies around the country. No worker can feel safe in their jobs as the recession slips into a depression. People are inevitably fearful for their futures.

They also have no confidence in the existing political structures and process being able or willing to do anything to protect them. The party that they voted into power has turned out to be the very Government that has promoted the privatisation, contracting out, outsourcing, and off-shoring, which have stripped away their basic protections at work, undermined their employment security, intensified their exploitation, cut their wages and forced them into debt dependency.

People have also learnt that working through the official structures of their trade union has been rendered largely ineffective by the persistence of Thatcher’s anti trade union laws under this Government. Increasingly they have also come t know that they cannot rely upon many of their trade union leaderships who have delivered up their unions in support of New Labour and who less than 2 years ago installed Brown as Labour leader, the evangelist for globalisation, free markets and flexible labour.

Without political representation and with limited potential to mobilise through official union channels there is no other route but to take but direct action when fear for jobs turns to anger.

Every member of the Labour and trade union movement should welcome the energy workers getting off their knees, standing up and fighting back. It's called solidarity.

In any dispute or struggle this doesn’t mean blindly accepting either the analysis or demands of those directly engaged in the dispute. It certainly doesn’t mean accepting without question the media’s representation of their demands. Disputes are at times chaotic with goals sometimes ill defined and often quickly evolving.

This latest round of disputes, like many more to come, has been about the right to work. As this latest crisis of capitalism unfolds many more workers will be demanding the right to work and we must support them.

If we are provide effective support we can learn from some of the lessons of this dispute so far.

First, as the Government has refused to abolish the anti trade union laws the lesson is that if workers are sufficiently determined they can just ignore them. Using unofficial structures has been successful in mobilising this time but by their nature they are difficult to maintain. If the TUC and the general secretaries of major unions showed the same determination and solidarity of the workers in this dispute and stood together to challenge the legal restrictions on trade union rights in Britain we could destroy them once and for all. Future disputes should be made official to bring this issue to a head.

Second, if cheap labour is being used by employers to undermine wages and conditions, its country of origin is irrelevant. Similarly, "British jobs for British workers" was designed to divide us to compete for increasingly scarce jobs, forcing down wages and eroding job security. Just as many of the stewards in this dispute have made clear, we should never allow the bosses or the media to divide us on grounds of nationality or race. Our demand is the right to work for all.

Third, because the EU legislation and court rulings associated with the open market are being used to divide worker from worker the onus is upon us to build urgently the links of solidarity with European unions to enable joint action to protect jobs, wages and conditions. Where the TUC has failed the newly formed TUCG of radical unions could succeed by launching a series of talks and measures to construct these international alliances.

Fourth, as the depression forces more workers onto the dole queue industrial action alone will not be enough to protect jobs and living standards. The question of who will pay for this crisis will be determined by the answer to the question who controls our economy. The battle for control of our economy needs to be fought out politically as well as industrially, and nationally as well as at the level of the firm and industrial sector. Our demand is for a national economic strategy aimed at protecting and creating jobs, investing in public services, ending privatisation and promoting public ownership, tackling poverty and inequality and creating a sustainable environment. The launch of the People's Charter campaign presents us with an opportunity to mobilise for this change.

Fifth, the depression is likely to present the Left with ever new situations and challenge us to respond swiftly and effectively. Very quickly we need to decide the best mechanisms for the faster flow of information and for the co-ordination of solidarity action. The TUCG, the LRC, the Convention of the Left, union broad lefts and the emerging People's Charter network of activists, all have a critical role to play. Putting this together quickly over the coming period will be a central task for us all.

Economic debate at LRC Conference 2008

At the LRC Conference two weeks ago, there was a decent debate on the economic crisis and what the left should do about it.

The three platform speeches from the session on the economic crisis are now uploaded (see panel on the left) - and I've embedded John McDonnell's speech below, but you can also watch the speeches of Icelandic MP Ogmundur Jonassen (leader of the VG Party), and Jeremy Dear (NUJ General Secretary).



The conference also passed three resolutions relating to the economic crisis.