By Michael Roberts
Back in early March, I posted a blog about the UK election (The British election – it’s the economy, stoopid!,
7 March 2010), in which I argued that New Labour would be defeated in
the general election expected in May. New Labour under Tony Blair and
Gordon Brown had presided over an economy that had collapsed (along
with the rest of the major capitalist economies) in the Great Recession
of 2008-9. This was despite the boast of Brown that New Labour had
ended the ‘boom and bust’ cycles visible in the UK economy under the
Tories and that Britain was “best placed” of all the major capitalist
economies to weather the economic slump.
This pathetic hubris was shown to be what it was by the ensuing
slump that led to a contraction in the UK’s national output larger than
anything seen in 60 years (as New Labour’ s Chancellor Darling
admitted). No wonder there is no way back for Gordon Brown. According
to the latest public opinion polls, with a just over a week to go
before election day, New Labour is polling about 28% of the vote, or
down to the level of defeat that it suffered in 1983 when Margaret
Thatcher was ascendant after her military ‘victory’ in the Falkland
Islands and in the recovery period directly after the economic
recession of 1980-2.
In my blog in March, I raised the issue of possible ‘hung
parliament’ where none of the major parties had an outright majority in
seats in a new parliament and would be forced to rely on the support of
another party to form a government. Then I thought that was unlikely.
Now it seems the most likely result, if the current polls are to be
believed.
How did the possibility of a hung parliament become a probability?
Never before in a British election campaign has the influence of TV
been so great. TV rules over public meetings, party leaflets and
canvassing and even over printed newspapers. Because none of the party
leaders have been prepared to face the electorate in the streets and in
public meetings open to all, but instead just conduct ‘photo
opportunities’ with the media or hold meetings stuffed and exclusive to
party members and officials, the general public does not get to
question party leaders. Only through questions delivered by TV or
radio interviews and, above all, in the three great TV ‘debates’, do
people hear the leaders’ policies put under the searchlight. So it
seems that whoever performs well on the night, rather like performers
on the X factor, gains support – and that has rewarded Nick Clegg, the
Liberal Democrat leader, at least so far.
The real positions of the parties remain obscure. But there is one
thing that New Labour, the Conservatives and the Liberal Democrats all
agree on. Public spending must be cut drastically in order to get the
public sector debt burden down to ‘manageable’ levels. Apparently,
there is no alternative, as Margaret Thatcher famously used to say.
There is no talk of why this huge debt burden has arisen in the
first place. Is it the fault of public sector workers in Greece,
Iceland, Britain, and the US? Well, it is they who are going to lose
their jobs while the services they provide to millions will be
dismantled. The government deficits and debts have arisen because the
British banking system had to be ‘bailed out’ with taxpayers money or
it would have taken capitalism down into a tailspin. The resulting
economic slump led to rising costs for unemployment and social benefits
and a collapse in tax revenues – the banks paid no tax at all and many
large UK companies also avoided any tax.
Sorry about that, the leaders say, but we’ll make sure it’ll never
happen again. In the meantime, we have to make cuts and you have to
pay. They are not telling us the truth about how large these cuts are
going to be. The politicians talked about “tough choices” – the
Conservative shadow chancellor talks about a coming “age of
austerity”. They differ merely on when they start cutting and by how
much.
The Institute of Fiscal Studies reckons that the Conservatives would
plan to cut spending by £57bn a year, in today’s money, by 2015-16. The
Liberal Democrats would cut by £51bn by 2016-17, and Labour would need
to find cuts amounting to £47bn by 2016-17. Given the protection that
Labour and the Conservatives are offering to some departments like
health or education, the cuts for other parts of spending would be even
greater than these headline figures imply.
According to the IFS, the years 2011-2015 would involve the “deepest
sustained cut to spending on public services since 1976-80″, when the
UK was forced to borrow from the IMF. The Conservatives’ plans,
starting in 2010, “imply cuts to spending on public services that have
not been delivered over any five-year period since the Second World
War.”
The IFS also confirms that tax increases over the next Parliament
would be highest under Labour: in the region of £24bn, of which £17bn
have already been announced. The Conservatives would be looking for
total tax increases of £14bn, including many of those proposed by
Labour. But the pledge to avoid Labour’s National Insurance rise, along
with other Conservative promises, will probably mean the Tories would
need to raise taxes by an extra £3.5bn over the Parliament.
So there we have it – all three parties aim to clobber our public
services and cut probably up to 500,000 public sector jobs over the
next parliament, while also raising taxes further. Whichever
combination of coalition in parliament is formed after 6 May will make
little difference.
There was and is an alternative. The banking system should be a
public service that looks after our money in deposits and provides
loans to households to purchase big ticket items and small businesses
to invest. It should not be in the role of gambling and making bets on
stocks and shares, bonds and even more exotic financial instruments
with our money in order to make huge profits for its shareholders and
grotesque bonuses for its top executives (the so-called ‘smart
people’). Public ownership of the banks under regulation and control
of elected representatives could even now turn the financial sector
into a socially useful sector of the economy. That would go a long way
in avoiding the financial crash that has led to the huge debt that the
people of Greece, Iceland and Britain, among others are now being asked
to pay.
It would also go a long way to avoiding the public spending cuts
planned by the three parties as bank profits could be diverted from
shareholders and bondholders to the government coffers. As I write,
the big UK banks are announcing their earnings for the last quarter –
they are all returning to profit and in some cases to big profits. So
are many other large corporations. This cash would go a long way to
sustaining public services without large tax rises and even reduce the
debt burden.
There is more to be said on this – but let’s stop there.
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