Socialist Worker

They’re out to tear down the welfare state

The vicious cuts the Tories set out in their "spending review" last week mean the destruction of our public services, writes Simon Basketter. Every working class person will lose huge amounts—while the rich get off scot free

Issue No. 2225

Press baron Rupert Murdoch congratulated the government on its spending review at the inaugural Baroness Thatcher lecture last week. Murdoch said, “Like the lady, the coalition must not be for turning.” It was appropriate in many ways.

Under Margaret Thatcher, the Tories and the bosses attempted to brutally restructure British capitalism in the interests of the untrammelled pursuit of profit.

George Osborne’s spending review was more of the same, under the guise of “balancing the books”.

Osborne attempted to frame the exercise in the simplest of terms: “We are going to ensure, like every solvent household in the country, that what we buy we can afford—that the bills we incur we have the income to meet.”

That was a favourite trick of Thatcher’s—to use the common sense of household budgeting to make vicious cuts seem both necessary and inevitable.

The Conservative project is to dismantle the welfare state—or, as Osborne put it, to “reshape” public services.

His idea of reshaping is to get rid of at least half a million public sector jobs, and probably closer to three quarters of a million. Knock-on effects mean at least half a million private sector workers will follow them.

Contrary to Osborne’s claims that those with the “broadest shoulders will bear the burden”, his own figures show that the poor will be hit twice as hard as the rich.

For people on benefits and those already in poverty, life will get much harder. Disabled and ill people will have money snatched away. Benefit cuts mean that 18 million households will be at least £1,000 worse off each year.

Attacks on housing benefits will drive many from their homes. Workers will be forced to work for longer for their pensions, and will pay in more but get less when they retire.

The way the overall package of restructuring will work can be seen in education. Children will be left in crumbling school buildings, with 40,000 fewer teachers.

And working class young people won’t be able to get into college or university. The Tories are slashing the funding for universities by 40 percent, just to make sure there aren’t enough places for people to get into even if they can borrow enough to do so.

At the same time, they are abolishing college students’ Education Maintenance Allowance, which pays up to £30 a week to teenagers in poorer households to stay in education. Cutting it will discourage poor people from staying in school after 16, pushing them onto the dole instead.

That brings us to benefits. People who are the most vulnerable are to be the hardest hit.

After months of rhetorical attacks on “benefit scroungers”, the government has cut benefits by £7 billion a year—on top of the £11 billion a year it cut earlier this year.

This exposes the plain nastiness of the public school boys’ view of the poor.

A key part of it is to get people off benefits. All the sums in the spending review are based on large numbers of people being refused benefits they are currently entitled to.

But for all the “getting people back to work” spin, Osborne restricted the working tax credit, a benefit that is meant to make it pay to work.

And the biggest cuts of all fall on benefits for the seriously ill and disabled people—it is spite, plain and simple.

Osborne comes out with endless nonsense about future generations not having to pay back the country’s debts, “saving our children from the burden of rising national debt”—yet he is slashing payments that help working parents pay for their childcare.

Local government cuts will mean creches and after school clubs are all but abolished. Osborne has deliberately chosen to make poor families and children pay.

By moving the largest part of the cuts to local councils he is hoping to divert attention from himself and spread the cuts as widely as possible into every aspect of public services.

The Tories are smashing up our welfare state because they want ordinary people to pay for the crisis instead of the rich. Their cuts are a choice.

The truth is that there is no need to cut any job or service. Even if cuts were necessary, there are plenty of other ways to raise cash.

The richest 1,000 people in Britain have £336 billion and they are getting richer all the time—their wealth rose by £77 billion last year.

The government could raise money by increasing corporation tax and taxing the super-rich. Yet Osborne has promised to cut corporation tax every year that the Tories are in office.

Over £125 billion is lost every year because the rich avoid or evade paying tax—or don’t have it collected.

Mobile phone firm Vodafone avoided paying £6 billion in tax by using entirely legal “creative” accounting. Instead of taking that cash away from Vodafone, the government takes £7 billion from hundreds of thousands of the poorest people on benefits.

The same applies to the Tories’ bank levy, supposedly brought in to show that “we’re all in it together”.

Banks that we have already bailed out with over £1 trillion will pay us back at a rate of £2.5 billion a year.

It sounds alright, until you realise three things. One, this is an increase from 0.04 percent of the banks’ profits to just 0.07 percent.

Two, it is less than the same bankers will pay out in bonuses to themselves this year.

And three, because of Osborne’s cuts in corporation tax, the banks will end up with more money, not less, out of the deal. “All in this together”, indeed.

This is what the Tories’ “national interest” means. The poor subsidise the rich. The public sector is closed down to encourage the pursuit of profit. And those at the bottom of society are beaten into submission with job cuts and the removal of essential services.


How liar Osborne cooked the books

Part of the Tories’ ideological attack on the welfare state is to confuse people with endless numbers—millions and billions, percentages of percentages.

The deficit is a huge number, so we need to cut some other phone-number amount to balance the books.

In fact the spending review was based on lies—and a lot of smoke and mirrors.

Every figure that could be made to look better by being announced as a percentage, or that looked better as a one-year figure rather than a four-year amount, was shown that way.

In fact, every trick in the accounts book was used to confuse us.

Osborne claimed that the spending review was “progressive”—but even the neoliberal Institute of Fiscal Studies said it hit the poorest hardest.

The figures produced by the Treasury for who is worse off simply excluded the benefit cuts that hit the poor the most.

The Tories also claimed that a £10 a week public services cut would be twice as tough for a household on an average of £48,000 as it would for a household on an average of £19,000.

As one Financial Times journalist put it, “I’m quite impressed by the chutzpah of the ridiculous distributional analysis. According to [the Treasury’s] bonkers maths, a millionaire who loses their only state service—child benefit—does the worst of all. Insane.”

“Cash protection” is a trick repeated across several policy areas. Osborne said that “SureStart services will be protected in cash terms”. But there is a 9 percent cut in real terms. By keeping the amount spent the same but ignoring inflation, cuts simply “disappear”.

There are other scams. Some 4,200 health visitors are being moved from the health budget to the SureStart budget—in effect cutting that much from the SureStart budget.

The Tories claim they are not cutting the NHS—but some £2.5 billion was cut this year between June and now—before the pledge to protect it begins. And the supposed “ringfence” around the health service has also been breached by transferring other services onto the NHS budget.

Osborne claimed that £1 billion of social care spending will be moved from councils to the NHS, “so that elderly people do not continue to fall through the crack between two systems.”

But this is political sleight of hand: squeezing the NHS even though its funding appears to stay the same.

Every one of these confusions are deliberate. They are designed to hide the simple reality—billions of pounds is being stolen from ordinary people and transferred to the rich.


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