Ireland’s already severe economic troubles just got a whole lot worse.
Its plan to reduce its budget deficit to 3% of GDP in four years by cutting spending by €7.5bn has been undermined by lower growth prospects both at home and abroad and higher debt interest costs.
So, in a warning of what is to come elsewhere, Ireland’s Fianna Fail government has DOUBLED its programme of cuts to €15bn.
And this comes only days after the UK's Lib-Tory Coalition announced the latest details of its own savage assault on the public sector intended to hit a strikingly similar target.
You can almost feel the brutal threat contained within the official Irish statement:
'The Government realises that the expenditure adjustments and revenue raising measures that must now be introduced will have an impact on the living standards of citizens. But it is neither credible nor realistic to delay these measures.'
And you can almost see the baseball bats wielded by the bailiffs sent in by the money marketeers who’ve driven up the price of borrowing for Ireland, and a long list of other highly indebted countries.
'Our obligations are clear. We must demonstrate that we are bringing sustainability to our public finances. We must stabilise our debt to GDP ratio over the period of the Plan. And we must set out our strategy for returning our economy to growth.'
Things are getting rapidly worse for the millions of ordinary people already struggling to deal with the costs of debt repayments incurred when governments decided they had no option but to bail out the bankrupt banking sector in 2007 and 2008 and issued monstrous amounts of new credit in the hope that it would stimulate a ‘recovery’.
Despite better than expected growth figures for the UK in the last half year, its economy hasn’t even recovered half of the production it lost during the first part of the dive into its worst post war recession.
Meanwhile, the world economy is heading into a renewal of decline. Look at South Africa for example. Unemployment there is growing relentlessly beyond 25%. If the workers who’ve given up looking for a non-existent job are included the figure is over 36%. Whilst carmaker Ford has used its government bailout to slash production, sell off Volvo and cut its involvement with Mazda and returned to profit, parts of America have an official unemployment rate of 20%. And one person in five out of work is the official rate for the whole of Spain.
With profit-seeking capitalist society no longer able to offer jobs to so many people – and forcing governments to slash support for the unemployed – belief in the system is being undermined. It’s no wonder that the dream weavers are hard at work spreading the myth of a ‘return to growth and prosperity’. As increasing numbers begin to realise that the game is up, the need for a society that is based on need rather than shareholder returns becomes increasingly urgent.
Cameron has just delayed the details of the growth package that was expected to follow the biggest assault on public spending since the post war creation of the welfare state. Could this be an admission that there’s nothing he can do besides opening the way for a few thousand jobs in off-shore wind turbine manufacture?
It’s high time people – workers, students, farmers, pensioners, the unemployed, communities – formed new kinds of democratic forums and began to explore how to use them to take things into their own hands. As illusions that the system can provide for people’s needs are broken up, there is nothing to lose and everything to gain.
Gerry Gold
Economics editor
http://www.aworldtowin.net/
27 October 2010
Wednesday, 27 October 2010
Saturday, 23 October 2010
Confirmed: Cuts will hit poorest hardest
Working people, the unemployed and the sick will be hit 10 times harder by spending cuts than previous Con-Dem predictions, a new TUC analysis revealed on Friday.
TUC-commissioned economists shattered myths peddled by Chancellor George Osborne and Deputy Prime Minister Nick Clegg that the spending review was about "fairness."
They revealed that the poorest 10 per cent will be hit 15 times harder than the richest 10 per cent.
The new analysis stands in stark contrast to government claims that overall the cuts would hit the worst off only five times more than the richest in society.
The TUC originally predicted in its Where The Money Goes report that cuts of 25 per cent by 2012-13 would mean that the poorest 10 per cent of households would lose around 20 per cent of their income.
But using data from the Spending Review the TUC showed that overall cuts to public spending - excluding benefits and tax credits - of £48 billion by 2014-15 will be even more regressive, partly because of deep cuts to services which are disproportionately used by the poorest households, such as social housing and social care.
TUC commissioned economist Howard Reed pointed out that if the cuts were examined by their social "function" rather than by department, the picture looks even bleaker.
"Social care will be cut by 20 per cent, social housing 24 per cent, policing 20 per cent and higher and further education 27 per cent," he said.
TUC general secretary Brendan Barber said: "Even when the effects of benefit changes are taken out of the equation, cuts to services surgically target the poorest households and leave the rich relatively untouched."
And Haringey Council leader Claire Kober warned that cuts to local budgets, services and housing allowances will make it impossible for local authorities to cope with the influx.
"We are being set up to fail," she said.
Left Economics Advisory Project co-ordinator Andrew Fisher called on the TUC to co-ordinate resistance to the coalition's "obscene attacks."
He said: "The TUC analysis of Osborne's spending review is to be congratulated and confirms what the IFS said the day before and what our instincts told us all immediately: the CSR was all-out class war.
"At the June Budget and again this week, Osborne lied to us that his cuts would be fair.
"Within a matter of hours again his lies have been irrefutably exposed."
*This article appeared in the Morning Star on Sat 23 Oct
Friday, 22 October 2010
Time to end the profit system
The Lib-Con Coalition government’s Spending Review is an attempt to rescue an already bankrupt economy. With £81bn cuts in public spending, it is the biggest and most sustained assault on the public sector since the creation of the welfare state sixty years ago.
But the reality is that despite the ruthless measures announced yesterday, the cuts will hardly make a dent on Britain’s budget deficit, which at £162 billion is the largest of the world’s major economies.
The plan is to bring government borrowing down by £149 billion in four years. This is a 19% per cent cut in real terms, as opposed to New Labour’s proposed 12 per cent. But can this gamble succeed? The very measures intended to reduce the deficit will deepen the crisis.
The one million people who will be thrown out of work and those made homeless will need some kind of support. And whilst blighting the lives of countless citizens, especially the most vulnerable, government spending will continue to rise by an additional £38 billion over the coming four years. As Chancellor Osborne announced: “total public expenditure – capital and current – over the coming years will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014-15.”
An additional £7 billion cut brings the total cut in the welfare budget to £18 billion so far. The poorest ten per cent of the population stand to lose the most. It is a monstrous bludgeon expected to achieve just a £5 billion reduction in the £43 billion per year interest payments.
The measures include:
a 30% cut in funding for local authorities
a 74% cut in the budget for house-building combined with a trebling of rents for new tenants in social housing
insecure tenancy of council house dwellers
the minimum possible increase for the NHS, that will leave health care struggling to keep up with an aging population and scientific advance
ending the universal right to Child benefits
a 3.4% real cut in education
cancellation of major infrastructure projects, like the renewal energy from the Severn Barrage
a 10% increase in rail fares
a £7 billion cut in the welfare budget
Culture Department to be cut by 42% with almost 30% cut for Arts Council
up to 30% cuts in budgets for government departments
20% cut in funding for the police
rapid acceleration in the process of adding a year to the working life of a man and six to that of a woman before they can claim a state pension
huge and damaging reductions in the settlements for Scotland, Wales and Northern Ireland.
There is certain to be much more pain as the contraction of the global capitalist economy tightens its grip. The attempt to reduce repayments to the money markets will be undermined by tax revenues falling faster as the recession turns to slump. The populist gesture of £2 billion to be raised from a permanent levy on banks will surely be passed on in the form of higher costs of borrowing.
Cuts in administration of around 30% over four years will lead to a loss of an estimated 490,000 public sector jobs, 8% of the total. The effects of the overall programme confirms consultancy PriceWaterhouseCooper’s estimate of a further 500,000 jobs evaporating in the private sector as spending is reduced and contracts are cancelled.
The Coalition has issued a sinister threat with its promise that it will always be better to be in work than on benefits. It means that they’re hard at work on schemes to reduce wages across the board. No doubt employers will be rubbing their hands at the prospect of new sources of cheap labour from the enlarged European Union and beyond.
This is only the beginning. The Spending Review spells out that the capitalist state can no longer afford to fund any of the rights or life-support benefits won by unions in a century of struggle.
The intention to reduce the wide and complex range of benefits needed by millions of people suffering the effects of three decades of profit-chasing globalisation to an all-encompassing single payment, and a time-limit on the Employment and Support Allowance reflects a profound contempt for the individuals whose needs have been assessed by cohorts of public sector workers. Capitalism in crisis wants to reduce millions of people to bottom-line cyphers of cost before trying to eliminate them altogether.
Calls outside Downing Street for “French-style” strikes are a welcome move from the total inaction of the Trade Union Congress. But even industrial action needs a political purpose. The desperate gamblers in No10 and 11 are driven by a real economic crisis of the capitalist system itself.
The solution to the debt mountain comes in the shape of action by People's Assemblies, formed locally throughout the country with a view to defending services, livelihoods, jobs, and homes. Eventually a government formed from a network of people's assemblies will need to take control of the financial sector, cancel the debts and turn it into a not-for-profit service.
The global capitalist classes are watching to see the results of Osborne’s cruel experiment. It’s time to realise that we too must enter new territory.
Gerry Gold
Economics editor, 21 October 2010
reposted from http://www.aworldtowin.net/
But the reality is that despite the ruthless measures announced yesterday, the cuts will hardly make a dent on Britain’s budget deficit, which at £162 billion is the largest of the world’s major economies.
The plan is to bring government borrowing down by £149 billion in four years. This is a 19% per cent cut in real terms, as opposed to New Labour’s proposed 12 per cent. But can this gamble succeed? The very measures intended to reduce the deficit will deepen the crisis.
The one million people who will be thrown out of work and those made homeless will need some kind of support. And whilst blighting the lives of countless citizens, especially the most vulnerable, government spending will continue to rise by an additional £38 billion over the coming four years. As Chancellor Osborne announced: “total public expenditure – capital and current – over the coming years will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014-15.”
An additional £7 billion cut brings the total cut in the welfare budget to £18 billion so far. The poorest ten per cent of the population stand to lose the most. It is a monstrous bludgeon expected to achieve just a £5 billion reduction in the £43 billion per year interest payments.
The measures include:
ending the universal right to Child benefits
There is certain to be much more pain as the contraction of the global capitalist economy tightens its grip. The attempt to reduce repayments to the money markets will be undermined by tax revenues falling faster as the recession turns to slump. The populist gesture of £2 billion to be raised from a permanent levy on banks will surely be passed on in the form of higher costs of borrowing.
Cuts in administration of around 30% over four years will lead to a loss of an estimated 490,000 public sector jobs, 8% of the total. The effects of the overall programme confirms consultancy PriceWaterhouseCooper’s estimate of a further 500,000 jobs evaporating in the private sector as spending is reduced and contracts are cancelled.
The Coalition has issued a sinister threat with its promise that it will always be better to be in work than on benefits. It means that they’re hard at work on schemes to reduce wages across the board. No doubt employers will be rubbing their hands at the prospect of new sources of cheap labour from the enlarged European Union and beyond.
This is only the beginning. The Spending Review spells out that the capitalist state can no longer afford to fund any of the rights or life-support benefits won by unions in a century of struggle.
The intention to reduce the wide and complex range of benefits needed by millions of people suffering the effects of three decades of profit-chasing globalisation to an all-encompassing single payment, and a time-limit on the Employment and Support Allowance reflects a profound contempt for the individuals whose needs have been assessed by cohorts of public sector workers. Capitalism in crisis wants to reduce millions of people to bottom-line cyphers of cost before trying to eliminate them altogether.
Calls outside Downing Street for “French-style” strikes are a welcome move from the total inaction of the Trade Union Congress. But even industrial action needs a political purpose. The desperate gamblers in No10 and 11 are driven by a real economic crisis of the capitalist system itself.
The solution to the debt mountain comes in the shape of action by People's Assemblies, formed locally throughout the country with a view to defending services, livelihoods, jobs, and homes. Eventually a government formed from a network of people's assemblies will need to take control of the financial sector, cancel the debts and turn it into a not-for-profit service.
The global capitalist classes are watching to see the results of Osborne’s cruel experiment. It’s time to realise that we too must enter new territory.
Gerry Gold
Economics editor, 21 October 2010
reposted from http://www.aworldtowin.net/
Thursday, 21 October 2010
Why trade union rights matter
Tomorrow morning (Fri 22 Oct), John McDonnell will be moving his Lawful Industrial Action Bill, which would tackle the increasing practice by employers of using minor technical errors in the balloting process - which have no material effect on the outcome - to take unions to court in order to prevent them from taking industrial action.
It would mean the repeal of one of the most pernicious pieces of Thatcher's anti-union legislation, just one of many - but it would be a step forward. The Bill itself is sponsored by a dozen Labour MPs, and was unanimously backed at TUC Congress in September.
When we look across the Channel to France, the importance of a fair legislative framework for trade unions is immediate. France has only 8% union membership in its workforce, compared with around 24% here yet their workers and unions are able to take effective action to resist attacks on their living standards.
And it's not just France, in South Africa public sector workers have won a 7.5% pay rise after 3 weeks on strike, with an 800 rand housing allowance thrown in too.
Gone are the days, as many will have seen in Made in Dagenham, when workplace votes could initiate strike action. In fact, it's fair to say the Equal Pay Act would not exist if Thatcher's anti-union laws had been in place.
In the UK the effects of the anti-union laws are clear: the value of wages has declined from nearly 65% of GDP in the mid-1970s to 55% today. Over the same period, the rate of corporate profit has increased from 13% to 21%. A large part of the reason for the global economic crisis, argues Graham Turner in his book, is the global squeeze in wages which has sapped demand out of the economy.
Whether or not John's Bill passes the first hurdle tomorrow - it needs 100 Labour MPs to attend to make sure - UK unions are going to have fight vigorously and innovatively despite the anti-union shackles around them. It's essential they do - people will suffer immensely, and the poorest most, if these cuts go through.
John McDonnell will be presenting his Bill tomorrow in Parliament from 09:30 tomorrow (Fri 22 Oct). You can watch live on the BBC Parliament Channel.
Update, Fri 22 Oct, 2:30pm: Unfortunately only 87 Labour MPs could be bothered to attend the debate and so the Lawful Industrial Action Bill fell. Very disappointing, but well done to all those who lobbied their MPs - and to those MPs who did attend and support the Bill.
Wednesday, 20 October 2010
Initial thoughts on the CSR announcement
George Osborne announced his Comprehensive Spending Review - we'll do a more considered response in time, but a few initial thoughts:
- We're told this CSR will be fair and hit the richest hardest ... he said that last time. It's not true this time either.
- The Government will invest £900 million in HMRC can bring in £7 billion in tax evasion. Spending 90p gets you £7, that's a good return on investment. There's a £120 billion tax gap - maybe invest a bit more?
- Raising the state pension age to 66 will have a disproportionate impact on the poorest who have shorter life expectancy and are less able to afford to retire early
- Osborne implied that public sector pension costs are rising. In fact the costs are falling as the Hutton report showed
- the new 'Work Programme' (workfare/welfare conditionality) will be entirely delivered by the private and voluntary sectors with payments by result (profiting from welfare) even though the DWP's own research shows Jobcentre Plus staff more effective and efficient
- The extra £7 billion cuts in welfare, on top of £11 billion announced in June, is effectively taking £1000 from 18 million people
- Another attack on housing benefit - this time people under-35 targeted, and their housing benefit will be effectively halved. Disgusting.
- Further attacks on Working Tax Credits, including reducing childcare element
- George Osborne said "the Spending Review has no measurable impact on child poverty over the next two years" as if that was something to be proud of?! Also the CSR period is 4 years so what about the last 2 years? There are over 3m children living in poverty ...
- "By cutting business taxes we are giving business the freedom to compete" - what a load of nonsense
- Administration budgets across departments will be cut by 34%, overall expenditure down 19% - 490,000 job cuts across public sector as Danny Alexander 'told' us yesterday
- Train fares will rise 3% above RPI inflation for the next 3 years - RPI is currently 4.6% - FFS nationalise!!
- He used "will be protected in cash terms" a lot - what that translates as is a real terms cut.
Tuesday, 19 October 2010
Osborne cuts 'will wreck economy'
How the Morning Star covered the publication of LEAP's dossier on Osborne.
by Roger Bagley in Parliament
Left-wing economists stripped the facade today from Chancellor George Osborne's disastrous attack on public services and the poor.
Mr Osborne's big lie that Con-Dem spending cuts are "fair" was also punctured when a bunch of 35 super-rich big business bosses signed a letter to the Daily Telegraph expressing their fulsome support for the Chancellor's policies.
On the eve of tomorrow's Comprehensive Spending Review containing further huge cuts, the Left Economics Advisory Panel (Leap) issued a dossier highlighting Mr Osborne's flawed assertions, mistakes and U-turns since his June Budget.
Leap chairman John McDonnell MP accused Mr Osborne of being "wrong time and time again."
Mr McDonnell said: "Our community is now about to be devastated by four years of cuts in valuable public services with hundreds of thousands losing their jobs as a result of his faulty economic calculations and recklessly risky policies."
The bosses of Marks and Spencer, Asda, Alliance Boots, BT, Diageo, Microsoft and GlaxoSmithKline were among 35 big business chiefs signing the Telegraph letter, which claimed it would be a "mistake" for the Chancellor to water down his cuts.
"Addressing the debt problem in a decisive way will improve business and consumer confidence," they argued.
But Leap co-ordinator Andrew Fisher accused Mr Osborne (pictured, left) of pursuing "a pessimistic strategy based on failed monetarist policies."
He added: "Fundamentally, the Osborne economic strategy is simply a Thatcherite ideology that wishes to roll back the state. Today, the small government idea is the Big Society, which is not about strengthening society, but burdening it."
The Leap dossier pointed out that cutting the public sector would not "make room" for the private sector, but would sap demand and weaken the private sector as well.
A leaked document from the Office for Budget Responsibility had recognised this by estimating that cutting 600,000 public-sector jobs would lead to a knock-on loss of 700,000 jobs in the private sector.
Leap also pointed out that, since the June Budget, leading economic forecasters had downgraded prospects for growth in the British economy.
In addition to Mr Osborne's U-turn over withdrawing child benefit from households with a higher rate taxpayer, the overall three-year freeze on child benefit would mean a 10 per cent cut in real terms.
by Roger Bagley in Parliament
Left-wing economists stripped the facade today from Chancellor George Osborne's disastrous attack on public services and the poor.
Mr Osborne's big lie that Con-Dem spending cuts are "fair" was also punctured when a bunch of 35 super-rich big business bosses signed a letter to the Daily Telegraph expressing their fulsome support for the Chancellor's policies.
On the eve of tomorrow's Comprehensive Spending Review containing further huge cuts, the Left Economics Advisory Panel (Leap) issued a dossier highlighting Mr Osborne's flawed assertions, mistakes and U-turns since his June Budget.
Leap chairman John McDonnell MP accused Mr Osborne of being "wrong time and time again."
Mr McDonnell said: "Our community is now about to be devastated by four years of cuts in valuable public services with hundreds of thousands losing their jobs as a result of his faulty economic calculations and recklessly risky policies."
The bosses of Marks and Spencer, Asda, Alliance Boots, BT, Diageo, Microsoft and GlaxoSmithKline were among 35 big business chiefs signing the Telegraph letter, which claimed it would be a "mistake" for the Chancellor to water down his cuts.
"Addressing the debt problem in a decisive way will improve business and consumer confidence," they argued.
But Leap co-ordinator Andrew Fisher accused Mr Osborne (pictured, left) of pursuing "a pessimistic strategy based on failed monetarist policies."
He added: "Fundamentally, the Osborne economic strategy is simply a Thatcherite ideology that wishes to roll back the state. Today, the small government idea is the Big Society, which is not about strengthening society, but burdening it."
The Leap dossier pointed out that cutting the public sector would not "make room" for the private sector, but would sap demand and weaken the private sector as well.
A leaked document from the Office for Budget Responsibility had recognised this by estimating that cutting 600,000 public-sector jobs would lead to a knock-on loss of 700,000 jobs in the private sector.
Leap also pointed out that, since the June Budget, leading economic forecasters had downgraded prospects for growth in the British economy.
In addition to Mr Osborne's U-turn over withdrawing child benefit from households with a higher rate taxpayer, the overall three-year freeze on child benefit would mean a 10 per cent cut in real terms.
Sunday, 17 October 2010
LEAP publishes 'Ready Reckoner' on Osborne’s economic strategy
Ahead of the Comprehensive Spending Review later this week, LEAP has published a dossier 'The Osborne Ready Reckoner' (free download) testing the statements the Chancellor of the Exchequer, George Osborne, made at the June Budget Statement.
The dossier highlights the flawed assertions, mistakes and u-turns contained within that statement and puts the arguments against the coalition government's economic strategy.
John McDonnell MP, LEAP Chair, said:
Fundamentally, the Osborne economic strategy is simply a Thatcherite ideology that wishes to ‘roll back the state’. Today the small government idea is the ‘Big Society’. This is not about strengthening society, but burdening it.
The same Party that tells us the Big Society will take on the role of the state in key areas, also tells us we are living in a ‘broken society’. The effect of the cuts planned on this scale would be, if implemented, to leave Britain with a legacy of a ‘broken government’ to match the Tories’ broken society.
Government revenues have fallen due to the recession – there are more people out of work claiming benefit and paying taxes, because there are fewer jobs. Today there are 2.5 million people unemployed and less than 500,000 vacancies.
The Tories have no strategy for job creation or economic growth – only for cutting spending down to the level of revenues from an underperforming economy. The only outcome of their pessimistic strategy is misery for millions of families.
This dossier puts the economic arguments against the Osborne strategy. Download here.
The dossier highlights the flawed assertions, mistakes and u-turns contained within that statement and puts the arguments against the coalition government's economic strategy.
John McDonnell MP, LEAP Chair, said:
"In the short space of time George Osborne has been Chancellor he has already been proved wrong time and time again.
"Our community is now about to be devastated by four years of cuts in valuable public services with hundreds of thousands losing their jobs as a result of his faulty economic calculations and recklessly risky policies."
Fundamentally, the Osborne economic strategy is simply a Thatcherite ideology that wishes to ‘roll back the state’. Today the small government idea is the ‘Big Society’. This is not about strengthening society, but burdening it.
The same Party that tells us the Big Society will take on the role of the state in key areas, also tells us we are living in a ‘broken society’. The effect of the cuts planned on this scale would be, if implemented, to leave Britain with a legacy of a ‘broken government’ to match the Tories’ broken society.
Government revenues have fallen due to the recession – there are more people out of work claiming benefit and paying taxes, because there are fewer jobs. Today there are 2.5 million people unemployed and less than 500,000 vacancies.
The Tories have no strategy for job creation or economic growth – only for cutting spending down to the level of revenues from an underperforming economy. The only outcome of their pessimistic strategy is misery for millions of families.
This dossier puts the economic arguments against the Osborne strategy. Download here.
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