Posts Tagged ‘austerity’

Osborne’s made his move. Now it’s Labour’s turn

14/01/2014, 09:37:04 AM

by Jonathan Todd

We are a nation seeking to rebuild from the economic calamity of the past half decade. You might think this task merits a chancellor focused upon it. But George Osborne doesn’t look to Keynes, Friedman or other economists. He prefers his own ‘baseline theory’ of politics.

As we grasp for an economic rubber ring, we’re thrown the thin gruel of his politics. To the extent that his actions are informed by any economic strategy, it envisages a state so shrunken as to be beyond the ken of post 1945 Britain. Yet his political logic is robust enough that this troubling scenario may come to pass after May 2015.

Osborne’s theory is informed by an impeccable reading of recent general elections. It holds that oppositions never form governments unless they match the fiscal plan of incumbents. Governing parties hold the privilege of being able to set the fiscal baseline. Any departures from this baseline by oppositions will be subject to intense scrutiny. In 1992, this resulted in the Labour opposition seeming to threaten a ‘tax bombshell’, while in 2001 and 2005, it resulted in the Conservatives appearing a menace to public services.

Over the next 18 months or so, the TUC’s Duncan Weldon suspects, the implausibility of Osborne’s baseline will stretch this theory – perhaps to destruction. In this baseline, £25bn of additional spending cuts – much of them from the welfare budget – come after the next election. But, as Weldon notes, the necessity of running a surplus by 2018/19, which motivates these cuts, is not set in stone. It is a political choice. The UK will only come apart if Scotland votes for it, not if a surplus isn’t run by 2018/19.

In fact, there appears more likelihood of grim things happening if Osborne’s baseline is kept to than if it isn’t. It’s delivery – assuming no further tax rises, protection for pensioner benefits and continued ringfences for the NHS, schools and DfID – requires a much reduced role for government outside of ringfenced areas and/or further cuts for the disabled, children and the working poor.

This delivery isn’t impossible but it is likely to be brutal. Perhaps so much so as to effectively be impossible. The social strain and political pain might just be too much. Maybe Osborne knows this and has no genuine intention of seeing this through in the event of being in office after May 2015. But, in indicating that he will, he’s presented Labour with a set of unattractive options.

One such option is for Labour to accept Osborne’s baseline. In its toughest form, this would mean not only accepting £25bn of extra cuts but accepting that half of them will come from welfare payments to working age adults. This would put Labour in a position that Nick Clegg has already castigated as unfair.

It seems unlikely, therefore, that this will come to be Labour’s position. Instead, Labour might match the Liberal Democrat position: acceptance of the £25bn but rejection of the depth of cuts to working age welfare. This rejection, however, only deepens questions as to how the £25bn will be made up.

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Livingstone: still there, still up to his old tricks

18/11/2013, 10:35:00 AM

by Rob Marchant

Now, Labour Uncut has never been a fan of Gordon Brown’s decision to leave the “Golden Rule” behind and stop balancing the books over the economic cycle. He borrowed more than he should have, with the result that Britain was rather caught with its trousers around its ankles when the global financial crisis came.

But it takes a certain kind of front for a politician on his own side to call the former prime minister a coward (although marginally better, one supposes, than asking for him to be tried as war criminal).

Especially if that politician (a) still holds office at national level (albeit on Labour’s NEC and not an office elected by the general public); and (b) wouldn’t know fiscal responsibility if it jumped up and slapped him in the face with a wet kipper.

It really could only be one person, couldn’t it? Step forward, our old friend Ken Livingstone, who told the Labour Assembly Against Austerity last weekend that the raising of debt was “an act of cowardice”.

Now, let’s examine that for a second as an exercise in multiple levels of irony.

First up in the irony stakes is the issue that he was speaking at the Labour Assembly Against Austerity. Yes, the anti-austerity movement. The primary function of this body, as far as anyone can understand, is the economic equivalent of the Flat Earth Society; that of fighting of any cut of any kind.

Now, although Livingstone later implied – disingenuously – in the same speech that he is open to cuts, this goes entirely against the whole ethos of the anti-austerity movement. No-one can possibly seriously buy that argument, least of all from him.

So, the equation is pretty straightforward: if you can’t cut and you can’t raise debt, you have to raise taxes. That is the clear conclusion of this kind of policy and the modus operandi which has followed Livingstone throughout his political life.

And there’s the second irony. You can certainly say that Livingstone has always been consistent about not wanting to raise debt and securing all revenue through tax-raising, but let’s look at the facts on that.

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Ed Miliband needs to tell us what he stands for

04/06/2013, 09:55:11 AM

by Dan McCurry

So YouGov tell us that Ed Miliband is regarded as “honest but untrustworthy”? What to make of it all? I’m sure his speech on Thursday will sort out all the confusion. What I think he need is to show us what he stands for.

There has been recent comment about whether Labour should reveal it’s policies, with Alan Johnson arguing that Miliband has already “shown too much leg”. Others, including myself, argue that a lack of openness creates a lack of trust. We’re both right and wrong. The confusion is in the distinction between policy, and aims/values.

The media always demand to know what the policies are, but the public want to know what the aims and values are. Policies are a list of promises while aims and values represent what we care about and what kind of a world we want to live in. It’s our aims and values to stick up for the small guy. It’s the aims and values of the Tories to stick up for big business and lobbyists.

Both parties try to present aims and values through slogans. The Tories say “We’re all in this together”, while Labour talk of “One Nation”. The Tory slogan is better because it’s about their intention to reduce the deficit. Ours was created as an attack on Tory hypocrisy, but has since been shown to mean little else.

It seems to me that Ed Miliband is forever working on the manifesto, instead of communicating what he stands for. Welfare is an obvious example. He chose to rise to the bait when Cameron challenged him on welfare, but then failed to put a lid on things when the “bedroom tax” got out of control.

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Austerity isn’t inevitable. Labour needs to be bolder on the alternative

08/04/2013, 01:07:55 PM

by Matthew Whittley

We have grown familiar with Tory backbencher’s frustration at the reality of coalition government that prevents them from delivering the yet deeper cuts to social security that a Conservative manifesto would likely call for. So much so that it’s easy to forget just how radical this government has been on welfare. The austerity driven assault on the poor has started to gather pace, with the first raft of welfare reforms already implemented.

This month, the vital link between benefits and inflation will be broken. With inflation remaining at close to 3%, the 1% cap on the uprating of benefits will make it even harder for those families already struggling to keep pace with the rising cost of living. Furthermore, the ending of full council tax rebate is forcing two million low-income households to contribute hundreds of pounds to their council tax – a tax that, until now, they have been considered too poor to pay.

This appears to have gone largely under the radar. One cut that has attracted substantial media attention is the introduction of under-occupancy charges for 660,000 social housing tenants – what’s been dubbed the ‘bedroom tax’. Those with a spare bedroom are having to deal with cuts to their housing benefit of, on average, £56 a month. As well as reducing the housing benefit bill, the government argues that this policy has been designed to make the best use of housing stock. Unfortunately, there aren’t anywhere near enough small properties to move people into.

This is especially the case in the North. Teeside based housing association Coast and Country Housing, for example, has 1,800 tenants classed as under-occupying, but they have only two one-bed properties available to let. People are being sanctioned for not moving into smaller houses that don’t exist.

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Labour history uncut: Now that’s what I call austerity

26/03/2013, 11:03:49 PM

by Pete Goddard and Atul Hatwal

The defeat of the miners’ in June 1921 marked the end of the threat of massive industrial action. It opened the way for the government to indulge itself. With recession biting, tax revenues falling and debt rising, they doubled down on plan A – to cut, cut and cut again.

That’s Tory-Liberal coalitions for you

Now the miners had been seen off, the coalition turned to the housing problem. They decided there wasn’t one.

Existing homes were deemed already fit for heroes, and what is a “slum” anyway – just another word for ‘bijou housing with earthy charm,’ right? The massive housebuilding programme started in 1919 was abruptly stopped.

Oddly enough, as capital spending by the government was slashed, the recession just seemed to get deeper. Unemployment soared to top two million workless.

Hmm. Cuts applied, recession follows. What could the problem be?

“Squandermania,” according to the Daily Mail.  This was much like “Beatlemania”, but instead of teenage girls screaming, it was Tories and the right wing press. Tales abounded of a wasteful public sector where staff lounged on golden sofas, snacking on government-funded caviar and sipping state champagne.

The owner of the Daily Mail, Lord Rothermere went even further. He founded a new political party who, apparently keen to sound like a posse of vigilante litter pickers, were called the Anti-Waste League. They even won three by-elections in 1921.

In February 1922, eager to close off the threat from this 1920s UKIP, the coalition unveiled the Geddes axe. This was not, unfortunately for everyone, a cute photo of a baby playing heavy metal guitar, but a powerful implement for hacking at the economy.

Sir Eric Geddes was the head of a committee of businessmen who had been tasked with securing government efficiencies. Efficiencies, in this case, being a long word for cuts.

Eric Geddes: “The pound in your pocket has not been devalued. You just don’t have as many of them. Sorry.”

The Geddes axe was swung with relish across all of public sector – in today’s money £100bn was cut.

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“The Spirit of ’45” shows us there is an alternative

26/03/2013, 10:41:54 AM

by Amanda Ramsay

On Sunday I had the pleasure of watching Ken Loach’s new film The Spirit of ’45. It’s still on at cinemas across the UK and the DVD comes out on 15 April. If you do one thing this Easter weekend, it should be to see this film.

Combining archive footage and interviews with current and historic figures, we hear first-hand what life was like back then, socially and politically. The grim living conditions of the slums and unaffordable health care, with medicine and doctors out of the question for many.

Focusing on the pre-war enemies of poverty and unemployment, this documentary also points to the social changes the second world war heralded, like the whole scale need for women in the work force.

This was the beginning of a change in the order of things. Before the war everything in Britain was ‘run by rich people for rich people’, as one interviewee points out but the general election of 1945 saw Labour win a landslide majority and used this electoral might to introduce the welfare state, nationalise key industries and guarantee full employment.

A confident and ambitious Labour party brought in our much loved NHS, an ambitious housing programme, nationalised the rail system, water and energy and delivered full employment to the nation.

With energy and water bills sky high now and rail travel in the UK usually more expensive than flying to foreign lands (nearly £200 to get to London from Bristol return) Labour’s next government needs to show a similar boldness and confidence to that of the spirit of ’45.

In the face of war torn and indebted post-world war Britain, Labour had the determination and vision to take on huge infrastructure projects that have become the cornerstones of our modern British society. This is a film about the triumph of optimism over cynicism, hope over greed, collectivism over the self-obsession of the individual, that erosive Thatcherite philosophy.

Resonating with current policy debates, attacks on the welfare state, mammoth cuts, the privatisation of healthcare and threats to the NHS, this documentary explores the creation and development of social welfare institutions in the UK by the Labour government after the second world war.

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Let the bastards be bastards and builders be builders

22/02/2013, 12:09:37 PM

by Dan McCurry

What character from the history of film and literature most reminds you of an ordinary member of the Labour party?

For me, it’s Michael Palin’s character in the Life of Brian, whose job is to direct prisoners to their crucifixion. “Out of the door, line on the left, one cross each.”

This is a man who has a horrible job to do, but he’s still diligent and treats each prisoner with respect. He’s a nice guy. He cares. He’s the kind of bloke you or I might hang out with. You can easily imagine him as secretary of your local branch. If we brought a motion calling for crucifixion to be banned, the idea would be so radical that he’d initially be shocked, but once he realised that such a thing is possible he would become a passionate advocate.

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So, if Labour win the next election, where will we be in October 2015?

18/10/2012, 07:00:56 AM

by Peter Watt

On Saturday hundreds of thousands of people will be demonstrating against the cuts to the public sector being imposed by the government.

The TUC’s “we were told there was an alternative” march and rally in central London is the latest in a series of events organised against the cuts since Ed Balls unveiled his emergency budget in June.  PM Miliband faced heckling and walkouts at the TUC in early September and at the Labour party conference 100,000 protesters ringed the conference over-shadowing his Tuesday speech.

Government ministers have faced UK Uncut activists chaining themselves to their cars, bikes, houses and constituency offices as disruption and protest is maximised.  But it is the anger towards prime minster Miliband that is most palpable.  The elation of the election victory a mere four months ago must now seem a very distant memory to our beleaguered PM.

The problem seems to boil down to a sense of voters feeling let down as Labour impose their austerity package.  Of course Miliband and Balls can point to a series of speeches and announcements that they made in opposition that they say made it clear that they would need to make cuts.  As Balls said in his interview with Andrew Marr last week:

“We said it would be tough and it is, five years of failed coalition policy that delivered negligible growth means that the government books were even worse than we thought.  Of course we were always clear with people that we would need to make some cuts but unfortunately in reality this means that we have a much tougher job on our hands than even we realised.”

But it appears that voters were not as clear about the Labour party’s intentions as Miliband and Balls now claim that they were.

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Labour needs to be honest about tough spending choices in the NHS

19/07/2012, 07:00:28 AM

by Peter Watt

It has been a particularly tough few months in the NHS.  Setting aside the impact of the NHS and Social Care Act (2012), the impact of the freezing of budgets is being well and truly felt.  Every week sees another story of a hospital or a patient group in crisis or expressing concern.

July seems to have been particularly difficult.  Early in the month we saw the South London Healthcare NHS Trust being put into administration.  The Trust consists of three hospitals – Princess Royal in Orpington, Queen Mary’s in Sidcup and the Queen Elizabeth in Woolwich and serves more than one million people.

And then this week the South West Pay, Terms and Conditions Consortium, a group of 19 hospitals in the south west, were shown to be planning to cut the pay and conditions of up to 60,000 staff in order to balance tight budgets.  The headlines all warned of doctors and nurses being sacked and of pay and conditions being cut.  I had a special interest as one of the hospitals in the consortium, Poole, was where I nursed and I still have friends there.

According to their project initiation document, the consortium has come together in order to:

“…assist Trusts across the South West in modernising  pay, terms and conditions to ensure that they  are ‘fit for purpose’ going forward.”

In other words they are hoping to challenge national pay and conditions for their staff as a way of bearing down on their staffing costs.  Specifically they are exploring a number of options such as reducing anti-social hour’s payments, some degree of reward for performance for incremental progression, reducing holiday entitlement, increasing hours and reductions in pay for staff on over £21,000.

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Sunday review: The election of Francois Hollande

13/05/2012, 07:00:53 AM

by Anthony Painter

Last Sunday, France elected a technocratic centrist. He tips slightly to the left of the centrist band but not far. He’ll shift the debate at the EU level about emphasising growth but expect incremental rather than seismic change. He’s really just a French version of Mario Monti only with a democratic mandate. The problem is that it is not at all clear that is who the French thought they were electing. They think they voted against austerity but they did anything but.

Hollande’s election slogan was ‘le change, c’est maintenant.’ More accurately, it will largely be a case of plus ça change, plus c’est la même chose – domestically at least. Hollande’s fiscal consolidation plans track Sarkozy’s for the first year then deviate slightly, returning the French budget to fiscal balance a year later. The major flaw in his economic programme is the lack of any determination to reform France’s labour markets. It has some of the heaviest regulation and highest unit costs in the EU. The best performers in Europe on unemployment are those with moderate regulation (lightly regulated countries such as the UK perform less well than the moderate group). France’s regulation is a drag on growth and employment – as is that of Spain – but these are structural concerns whereas there is an immediate issue with demand.

Overall though, his plans are largely sensible. He plans to cut small business tax, enable the state to employ the young unemployed and create a national investment bank. He intends to decentralise the French state. Any European moderate will be completely relaxed about all of this – indeed, they would applaud it. The problem was not in the programme, it was in the rhetoric. On Sunday, Hollande declared:

“In all the capitals… there are people who, thanks to us, are hoping, are looking to us, and want to reject austerity.”

The simple fact is that austerity has become defined in a very broad manner across the EU. It now basically means public spending cuts and tax increases. The bar is set very low and this narrows room for political manoeuvre. Europe’s voters (including in the UK) are being told by political leaders on the left that the choice is either growth or austerity. Would you like to chew on mud or munch a tarte tatin? I’ll have the tarte tatin please.

The problem is that, unfortunately, in this convulsive and volatile world, someone has sprinkled the tarte tatin with mud. And we’re very hungry. What to do?

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