Socialist Worker

The budget deficit - an excuse for the Tories to take revenge on workers

Issue No. 2212

“The corollary of the big society is the smaller state. If you talk about the small state, people think you’re Attila the Hun. If you talk about the big society, people think you’re Mother Teresa.”

So said Tory right wing backbencher David Davis during a business lunch on Thursday of last week. He was also overheard describing the Conservative-Liberal government as the “Brokeback coalition”—a reference to Ang Lee’s moving film, Brokeback Mountain, about a gay love affair.

Davis’s remarks dramatise the disaffection felt by the Thatcherite right about David Cameron’s concessions to Nick Clegg and the Liberal Democrats. But they also draw attention to the ideological heart of the coalition.

Davis dismissed Cameron’s “Big Society” as “a Blairite dressing” for shrinking the state. What he inadvertently underlined was the extent to which Cameron, and chancellor George Osborne, are committed to a Thatcherite economic agenda.

Osborne tends to present his harsh budget of 22 June as dictated by economic necessity. If he hadn’t shown determination to cut the budget deficit—the difference between government spending and tax revenues—financial markets would have dumped British treasury bonds and pushed sterling through the floor.

But this is nonsense. One consequence of the eurozone crisis was to send investors running for cover by buying what they regard as safe government bonds, notably those of the United States, Germany—and Britain.

Moreover, Osborne is cutting government spending by far more than the pro-austerity consensus that swept through Europe in recent months is demanding.

Even New Labour’s planned cuts would have cut Britain’s budget deficit from 5.3 percent of national income in 2009-10 to 1.6 percent in 2014-15—well below the European Union ceiling of 3 percent.

Budget surplus

The additional cuts imposed by Osborne are forecast to produce a budget surplus of 0.3 percent of national income by 2014-15. The Treasury is demanding that departments submit plans for cutting their spending by up to 40 percent.

As two researchers at the Institute for Fiscal Studies put it, “essentially, the plans laid out by the coalition government imply the longest and deepest sustained period of cuts to public service spending since at least the Second World War.

“It is clear that this will reduce the quantity or quality of public services available.”

Why is the coalition doing more than it claims is “necessary”? The simplest answer is, I think, also the true one: because this is what it wants to do.

Even the Cameron wing of the Tory Party remains, in economics, Thatcherite. The state was massively reorganised and restructured under Margaret Thatcher. But she dramatically failed to reduce its economic weight.

In 1979-80, when Thatcher took office, public spending took up 44.6 percent of national income. By 1989-90, at the end of her premiership, it had fallen to 39.2 percent, still nearly two fifths of output. In 2009-10, public spending’s share had risen to 47.9 percent, to a significant extent because of the impact of the economic crisis.

The Tories believe they have a historic opportunity to achieve what Thatcher failed to do. There’s also an element of class revenge involved—of hatred of the public sector workers who, the right wing media fantasise, flourished under New Labour. This is reflected, for example, in the denunciations of civil servants’ “gold-plated” pensions.

The internal divisions reflected in Davis’s remarks aren’t to do with economic policy. They are about the so-called “social liberalism” that Cameron has pursued to soften the Tories’ image and make them more attractive to voters in the centre. The coalition with the Liberals is more a symbol than the cause of these differences.

But the Tories are united in wanting drastically to reduce the size of the state—at the expense of the working class people who in various ways depend on it. We need to be as united in resisting them.

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Alex Callinicos
Tue 27 Jul 2010, 17:54 BST
Issue No. 2212
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