Thursday, 2 June 2011

The true scale of the cuts and the fight to stop them

Of the £80 billion a year cut from public spending since last June, £18 billion directly affects welfare, the biggest cut since the 1920s. Few areas, including education, are left unaffected. The cuts fall into two main categories: those that directly affect people’s incomes and those that affect the services they rely on. Included in the first category is the decision to link benefits and taxes to the Consumer Price Index (CPI), which excludes housing costs and council tax, instead of the currently used Retail Price Index, which does include these factors. Since the CPI underestimates the real cost of living for most working class people, it is, as the IFS points out, “effectively an across the board cut to all benefits received by working-age adults”, and as such, a direct assault on the living standards of the poorest people in Britain.

On top of this there are the planned cuts in welfare benefits, again specifically targeted at the poorest and most vulnerable. The biggest losers here will be people with disabilities. Currently 2.6 million people claim incapacity benefit, 40 percent of them on account of mental health problems. The government intends to move 1.5 million of them onto the new Employment Support Allowance (ESA), paid at a much lower rate, via a test of their capacity to work. If after a year on ESA they have still not found work, despite the “assistance” provided by private agencies such as the hated Atos Healthcare to which the government has outsourced this task, they will be moved onto Jobseeker’s Allowance of £65 a week.
Cuts in housing benefit will also have a massive impact on the poor, projected to amount to £1.8 billion by 2014. According to the government’s own survey, the changes will mean that more than three quarters of a million households will lose an average of £9 a week while bigger families will lose an average of £74 a week. Nor will the changes only affect unemployed people. Some 680,000 working households also claim housing benefit, 14 percent of the total housing benefit caseload. As housing charity Shelter’s chief executive Campbell Robb pointed out, such losses represent “huge amounts” to some of the poorest people in Britain.
Finally, there are the cuts to local authority spending. Research commissioned by the TUC has shown that Britain’s poorest 10 percent will be hit 13 times harder by cuts to services than the richest 10 percent. The research shows that the bottom tenth of the population, who depend much more on publicly provided services, will suffer reductions in services equivalent to 20 percent of their household income, while the richest tenth will lose the equivalent of just 1.5 percent through cuts that the government plans to implement by 2013. Across the income distribution, the poorer the household, the more they will lose.

Privatisating welfare
The restructuring of welfare services will involve a massive extension of privatisation. Involving the private sector in the provision of public services is, of course, hardly new. The Public/Private Partnerships promoted by Tony Blair and Gordon Brown were a barely-disguised version of the Private Finance Initiative first introduced by the Conservative governments of the 1990s. What is different this time round, however, is the sheer scale of the proposed privatisations. The proposals of the Browne Report, most of which have been accepted by the government, will essentially transform the nature and role of English universities. As Stefan Collini has argued, what Browne is proposing is that “we should no longer think of higher education as the provision of a public good, articulated through educational judgment and largely financed by public funds… Instead, we should think of it as a lightly regulated market in which consumer demand, in the form of student choice, is sovereign in determining what is offered by service providers (ie universities)”.

Similarly, health minister Andrew Lansley’s bill to place NHS commissioning in the hands of GP practices, which will be required to purchase services from “any willing provider”, will take privatisation of the NHS to new depths. As columnist Polly Toynbee has argued, the introduction of unfettered price competition at a time when the NHS is already experiencing cuts of 4 percent “will leave the NHS open to challenge and undercutting from any private company offering temporary loss-leaders. The destabilising effect on financially fragile hospitals will be devastating”.

Privatising everything
The White Paper on welfare reform will mean that no area of the public sector, other than the security services and courts, will be safe from privatisation. According to David Cameron, writing in the Daily Telegraph: “This is a transformation: instead of having to justify why it makes sense to introduce competition in some public services, as we are now doing with schools and in the NHS, the state will have to justify why it should ever operate a monopoly”. Everything, in other words, will be up for grabs. Councils, like GP practices, will be forced to accept tenders from the lowest bidders, on past experience likely to be multinationals such as Cordia, Capita and Serco, as long as they promise to “protect quality”. In reality, not only will quality of service be one of the first victims of these changes as private firms and charities compete to cut costs and drive down the wages and conditions of their staff, but so too will local democracy. For once these commercial contracts are in place, neither councils nor local people will have any control over them, making a mockery of the Tories’ much-vaunted concern for “localism” and “empowering communities”.

The Big Society
Both localism and empowered communities are, of course, key elements of the rhetoric of the Big Society, the ideological framework within which much of this change is taking place. The main reason for the failure of the Big Society is that, despite Cameron’s protests to the contrary, most people see it simply as a big con and a cover for the cuts. That does not mean the coalition will drop the idea. The emphasis on “localism and “shifting responsibility” from the state to communities and individuals is likely to remain a central theme of coalition social policy, reflected for example in the social care policy of personalisation, a policy pioneered by New Labour involving the promotion of direct payments and individual budgets as an alternative to state-provided services. This is because there is a serious ideological intent behind the rhetoric of the Big Society. Under the veil of attacking “welfare dependency”, the coalition is seeking to engineer a “culture shift” whereby people no longer look to the state when they become unemployed, ill, disabled or old but rely instead on family, friends and an often mythical “community”. In that sense, it’s an attempt to turn the clock back to the period before the welfare state, to the days when the minutes of Victorian charities such as the Charity Organisation Society in London could record that “when an applicant is truly starving he may be given a piece of bread if he eats it in the presence of the giver”.

The balance of forces
Whether the government can succeed in this objective is, of course, a whole other question. In part, this will depend on the strength and determination of the coalition, in part on the forces of opposition ranged against it. In relation to the first aspect, there is growing concern on the right about the coalition’s apparent willingness to retreat at the first hint of opposition, examples including the government's humiliating climbdowns over the proposed privatisations of Britain’s forests and the Blood Service. Clearly, unlike Margaret Thatcher’s, this is a government which is for turning.

In relation to the second aspect, given that for more than a decade Blair and Brown encouraged greater private sector involvement in public services, introduced welfare to work policies and in 2010 made it clear that if elected they would also implement massive cuts, the response of the New Labour leadership to the biggest assault on welfare since the Second World War has been predictably defensive and pitiful. Shadow secretary for work and pensions Liam Byrne, for example, welcomed Ian Duncan Smith’s welfare reforms as “sensible”, complaining only that the coalition wasn’t doing enough to create new jobs. Despite that, the absence of a credible left alternative means that the Labour Party will benefit both electorally and in terms of membership at the growing popular anger at the coalition’s attacks.

It is that growing popular anger, however, rather than the feeble response of the Labour front bench, that is causing most concern to the ruling class. As the British Social Attitudes Survey Series has shown year after year, whatever their deficiencies, the welfare state and the NHS in particular hold a special place in the affections and folk memory of the British working class. Cameron and Clegg have launched a full-frontal assault on every aspect of that welfare state. Hence the concern expressed by one leading Tory: “When I heard that we were starting on health reform, I knew how Hitler’s generals felt when they heard he was invading Russia”.

They have cause to be worried. The coalition’s attempts to shift the costs of the banking crisis onto the poorest sections of British society, and in the process divide and scapegoat those who depend on welfare benefits, have already provoked resistance. They have revitalised the disability movement and have led to the creation of militant new organisations such as Disabled People against Cuts and the Black Triangle Campaign, both of which have shown a willingness to engage in direct action. There have been huge protests in defence of education that have united school, college and university students and staff. There have been militant protests outside town halls across much of Britain and the beginnings of a revival of organisation among health workers. The energy and militancy of these struggles stand in marked contrast to the cowardice and passivity of much of the leadership of the official trade union movement, despite the fantastic 500,000-strong TUC-organised demonstration in London on March 26. But there is still everything to play for. The next big test will come on June 30 when up to 800,000 trade unionists across the country could be taking co-ordinated strike action. This must be just the prelude to a much bigger wave of mass strikes in the autumn when NUT, ATL, UCU and PCS unions could be joined by unions such as CWU, FBU, Unite and Unison, possibly leading to a general strike.

The weakness of the coalition on the one hand and the willingness of millions of working class people on the other to fight, if given a lead, to defend a welfare system that offers them and their families at least some protection against the hazards of life under capitalism mean that Cameron and Clegg’s attempt to privatise welfare may yet prove to be their poll tax, the rock on which the coalition founders.

This is based on an article in International Socialism journal by Iain Ferguson. Read it here.

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