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.

Budget article in Labour Briefing

(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.