Recovery for rich, more cuts for poor

Submitted by Matthew on 11 December, 2013 - 12:20

“Even more austerity than we’d expected” was the verdict from the mainstream, conservative-minded Institute for Fiscal Studies on the government’s Autumn Statement of 5 December.

“The rich”, said the IFS, are “likely to do better than the poor between 2011-12 and 2015-16”.

The aim of the government’s cuts was always to use the crisis to shift the balance of forces in society heavily in favour of the rich, and against the working class, and so to ensure high profits in an eventual recovery.

Chancellor George Osborne says the recovery is now underway. Evidence is very patchy so far, but possibly he is right. Every capitalist slump, unless the working class is able to use it to overthrow capitalism, eventually creates conditions for some capitalist recovery.

But, encouraged by his ability to defeat resistance to cuts since 2010, Osborne now says that public spending cuts will continue. Before they were explained as necessary because of economic crisis. Now they are to continue in recovery.

According to IFS analysis, Osborne’s plans mean not only continued cuts, but cuts at an “accelerated rate”.

Osborne’s plans announced already had cut spending on public services by 8% since 2010. Continued roll-out of those plans already announced means another 20% cuts in the next few years. Now Osborne plans to add more.

If he gets his way, spending on public services will fall to a smaller share of economic output than since before 1948 — that is, since before the National Health Service started, and before more than a small proportion of working-class kids stayed at school beyond 14.

The state pension age will rise quicker, although experts warn that two-thirds of us will have some limiting disability by the time we reach the new pension age of 68 (soon to rise to 69 and beyond).

More young people will have their benefits cuts if they do not do “workfare”. Universal Credit, when finally introduced, will be frozen for two years while prices rise.

The government will legislate for a “cap” on welfare spending, which would force automatic cuts in benefits in future crises when unemployment surges again.

Osborne had some “giveaways to middle-income households and small businesses”, as the IFS puts it. He hopes through them to solidify Tory support before the 2015 general election.

He promised transferable tax allowances for married couples; free school meals for the first years in primary school; cuts in business rates; a continued freeze in fuel duty; financial juggling to get a £50 cut in average annual household energy bills without hurting the energy companies’ profits.

The IFS also found that shadow chancellor Ed Balls’s estimate of a 6% cut in average living standards since 2010 is “pretty consistent with” estimates from data other than and better than what Balls used.

On top of that, tax and benefit changes leave the poorest 20% over 4% worse off than we were in 2010. Some sections of the worse-off, like disabled people and those subject to the bedroom tax, have been hit much harder than 4%.

On two issues, but only two issues so far, battle by trade unions and community campaigns has pushed the Labour leaders into promises of action by a Labour government after 2015: to abolish the bedroom tax, and repeal the Health and Social Care Act.

We need discussion and decisions about other demands on which to focus effort. The list should be open-ended: victory on each demand should encourage us to go for others, right up to fully socialist demands. But the first thing is to start.

The economic recovery, small though it is, means it will be a bit easier to win demands. Let’s start demanding.

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