Socialist Worker

Every penny has strings attached

Issue No. 1809

A 'SPENDING spree' which will transform public services. That's how most of the media cheered chancellor Gordon Brown's spending review this week. They hailed education as the big winner, along with the NHS where extra money had been announced in the budget earlier this year. Housing and transport, they told us, will get extra too.

Yet this money is less than the government claims, and will still leave Britain's public services massively underfunded. The money is also tied to a programme of pushing selection in schools and privatisation across public services. Billions more will be spent on preparing for war after Brown unveiled the biggest increase in 'defence' spending for more than 20 years.

Brown's three-year plan will raise public spending from the miserable depths it has been at since New Labour was first elected in 1997.

But Britain's public spending will still be a much smaller proportion of national wealth than in the rest of Europe.

The business paper the Financial Times noted, 'Government spending will be lower than the previous Conservative governments achieved in all but four of their 18 years in office.'

Still not enough

PUBLIC SPENDING is to rise from 39.8 percent of national wealth to 41.8 percent by 2005-6. The reputable Institute for Fiscal Studies says, 'This will still be lower than the average of 44 percent of national income that was spent publicly over the 18 years from 1979-80 to 1996-7.

'UK public spending will still be relatively low by international standards.' Across the European Union the average proportion of national income spent publicly is now 47 percent-already 6 percent higher than Britain will have at the end of Brown's three-year plan.

Taking the PPP

THE NEW money for transport is tied to the expansion of disastrous Public-Private Partnership (PPP) projects. The government is pressing ahead with the world's biggest PPP deal on London Underground.

Amey is one the companies lined up to take over part of London Underground. Its shares have slumped by over 70 percent in value over the last few months. The firm is losing £1 million a month. It will be looking to pump money out of the public purse to bolster its profits and share price. Other key companies involved in PPP and PFI schemes, such as Capita, Serco, Jarvis, Interserve, and WS Atkins have also seen their share prices slide. They will be looking to public money to make up the shortfall.

A report by the official watchdog the National Audit Office last week called the government's whole approach into question. It studied 121 PFI projects and found that in one in five there had been serious problems about service delivery. The deals had turned out to be much worse value than claimed when the contracts were signed.

Plenty for war

THE MILITARY budget is to receive the largest sustained increase since the Falklands War 20 years ago. Over the next three years New Labour will pump another £3.5 billion into war spending, bringing the annual total to a staggering £32.8 billion. That doesn't even include extra spending added for specific wars.

Brown announced there would be a £500 million boost simply to cover the cost of the slaughter carried out by the British forces in Afghanistan.

Double counting

THE 'EXTRA' money promised by Gordon Brown this week for the NHS has already been announced. This will see health spending projected to rise to just over £100 billion by 2008. This is well short of the £184 billion which the government's own Wanless report said was necessary.

Extra funds are based on greater use of the private sector, PFI and the return of the Tories' internal market in health. Competition between trusts will see money following patients and hospitals disciplined through 'payment by results'. The effect will be to reward private hospitals and to create a two-tier health service.

Pittance to live on

A GOVERNMENT report last week exposed the reality of low pay in Britain. Many in the media talk of 'average' pay being around £20,000 or more. This figure is distorted by the small number of people on very high salaries. A report by the Department of Trade and Industry used a far more sensible way of calculating 'average' pay.

It looked at what is called the 'median' pay, the level which half of people are above and half below. Average income for men in Britain, before tax and including any benefits, is £271 a week, or £14,000 a year. The average for women is much lower.

Women's average income in Britain is just £133 a week-under £7,000 a year. The government made one thing very clear this week. Not a penny of the extra money will go to tackling low pay.

Education is not a winner

EDUCATION is supposed to the big winner in the spending review. There were headlines about a £50,000 extra grant to every secondary school in Britain and £10,000 for primaries. Education spending is set to rise.

But Brown's extra money will see Britain only more or less match today's average education spending as a share of national income across the European Union. The Secondary Heads Association says it would take a rise in spending of 7 percent of national income to deal with existing problems, such as the backlog of repairs and lack of equipment.

The three-year plan will take education spending back to 5.5 percent of national income-exactly what it was under Margaret Thatcher in 1980-1.

Drive to select

THE EXTRA money for schools is tied to a big expansion of selection in schools, and a drive to open schools further to private businesses. The cornerstone of the government's policy is to massively expand the number of 'specialist' schools.

Specialist is New Labour code for 'selective'. This will create an elite of schools which get extra money and pick and choose their pupils. Others will be cast aside as 'failing' and become second class schools. Specialist schools get money denied to others. They can qualify for a one-off grant of £100,000 and also get £133 a year for every pupil.

These schools are allowed to select up to 10 percent of their intake. They also have to make a deal with a private company to get £50,000 sponsorship money to qualify for specialist status. This opens the door to further privatisation or US-style company sponsorship schemes.

The latest 'specialisms' the government is encouraging schools to apply for include 'business and enterprise'. The government also plans to create a minority of 'advanced' schools in each area which will have appointed 'super-heads'. This will further encourage a two-tier system.

291,000 childcare places, not 1 million

GORDON Brown promised that the government would provide more childcare. But New Labour's record shows that the reality does not match the government's rhetoric. There are 25 percent fewer childminders nationally than three years ago. The government claims that it has created one million new childcare places since 1997.

The real increase, after nursery closures are taken into account, is 291,000, not a million, and most of these are part time. Most places are in school-based nurseries which typically provide just 2.5 hours care a day, not enough for someone who wants to work or go to college. British parents also pay the highest childcare costs in Europe-on average £120 a week for a two year old.

The government is wedded to the private sector running nurseries. So those that do open are in richer areas where parents can pay. The majority of children are left to rot.

No council housing

THE government claimed to have earmarked up to £1.4 billion for extra housing spending. The details of how the money will be used were due to be unveiled on Thursday. The money was unlikely to go towards allowing local councils to build decent, affordable homes.

Much of it will go to housing associations and other housing companies as part of the drive to privatise council housing.

Oil profits

THE government is to scrap the North Sea royalty tax on oil and gas fields. This will be worth £200 million to the oil and gas companies.

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Article information

Sat 20 Jul 2002, 00:00 BST
Issue No. 1809
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