Details of chancellor Alistair Darling’s budget amount to a restatement of war on the working class.
The day after the budget Darling conceded that if Labour is re-elected, cuts would be “tougher and deeper” than those carried out by Margaret Thatcher.
Labour’s plans to slash spending in 2011 and 2012 will be the first time public services have seen two consecutive years of cuts since 1954-58.
“We’ve never had anything like this since the 1950s. And then it was entirely due to cuts in defence spending,” said Martin Weale, director of the National Institute of Economic and Social Research.
The government plans to freeze overall spending in real terms between 2011-12 and 2013-14, but because of debt repayment and other items, the money for public services will be squeezed.
The Institute for Fiscal Studies estimates that the government plans to cut departmental spending by 3.1 percent a year between 2011-12 to 2014-15. That’s a cumulative total of nearly 12 percent, or £46 billion. In departments such as transport, housing and universities the cuts could be up to 24 percent.
As Martin Wolf of the Financial Times commented, “However much Labour may wish to hide the fact, if it wins the election it will take a torch to public spending… This would be Labour versus the public sector—a political bloodbath.”
So Darling wasn’t lying when he said the cuts would be worse than the “Iron Lady”. They would be even greater than those driven through by chancellor Denis Healey and the Labour government in 1976-79.
The 2011-15 cuts will be made worse because the government is going to hand money earmarked for public services to private companies. It confirmed last week that the costs of projects built under the Private Finance Initiative has topped £200 billion.
The cash will be paid out over the next
25 years to cover the capital cost and services of the projects, with annual payments set to peak at just over £10 billion a year in 2017.
That will mean more scandals like the present one at Bart’s hospital in London where the Trust is building a 1,000-bed new PFI complex at a cost of £1 billion. Health authorities plan to close 234 beds before the building is even completed. Yet the full costs of building and maintenance will still have to be paid to private firms on a 1,000 bed hospital.
In the 1920s it was the “independent” committee of businessmen under Sir Eric Geddes that laid down the plan to cut central government spending 25 percent.
In the 1970s it was outside intervention by the International Monetary Fund (IMF), focusing the pressures of the world market, that was the cue for Labour to savage the public sector.
This time round it might be the European Union.
The deal which the EU agreed last week to bailout Greece “as a last resort” imposes the most intense discipline on Greek workers. And the IMF would be part of advancing money for Greece, with funds dependent on the sort of structural adjustment that was visited on the Global South in the 1970s and 1980s.
The bosses’ future for Greece is written in the experience of other EU countries, like Hungary and Latvia, who received IMF funds in 2008-09.
In Latvia public sector pay is down 45 percent in a year, and private sector salaries have fallen between 5 percent and 30 percent over the last 18 months. Unemployment is 23 percent.
When we talk of “an avalanche of cuts” after the election, it’s figures like those in this weeks budget we should bear in mind. They are the stated, public face of Labour. If they could get away with worse cuts, they would. And of course the Tories have promised to move to ram through cuts “further and faster” than Labour.
For the working class the future is either a severe fall in living standards, a bonfire of public services and blighted future for young people—or a fightback.
That’s why the class battles now, which shape the terrain for the future after the election, are so vital.