British government announces unprecedented social cuts

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British government announces unprecedented social cuts
By Ann Talbot
21 October 2010

The Conservative-Liberal Democrat government’s autumn spending review has
introduced the most savage package of public spending cuts ever seen in Britain.
Half a million public-sector jobs will be lost as £83 billion, or $128 billion,
is cut from the budget. Another half million private-sector jobs will go as a
result.

Spending for welfare benefits will be slashed by a total of £18 billion between
the cuts contained in the spending review and those already made in the
emergency budget earlier this year.

The military faces an 8 percent average cut in spending, as major programmes are
slashed or postponed under the Strategic Defence Review.

These cuts come on top of the plans inherited from the previous Labour
government. Even before the election, the National Health Service was planning
to cut ￡20 billion under Labour spending plans.

The coalition government aims to sharply reduce Britain’s £109 billion deficit
($172 billion) within the next four years. At 11 percent of gross domestic
product (GDP), this is one of the highest deficits among OECD countries and the
second highest in Europe, after Ireland. Britain’s total net debt reached 64.6
percent of GDP, or £952 billion in September. The government borrowed more than
£16 billion last month alone. This is the highest September figure on record.

These record levels of debt have put the government under pressure from what the
Financial Times dubs “bond vigilantes”—major investors who sell treasury bonds
to force governments to slash public spending. Greece, Ireland, Portugal and
Spain have all come under this type of market pressure and have responded with
harsh austerity programmes. Britain’s austerity package is proportionately
tougher than any of these, but the bond markets and sterling only held stable
after Wednesday’s announcement.

So much of the plan had been leaked in advance that the markets were not
surprised by the measures and had already factored in this level of spending
cuts. Traders are now concerned that the speed of the cuts that Chancellor
George Osborne has announced may precipitate another recession in Britain.

The average level of cuts is 19 percent across all government departments. But
some departments will face much deeper reductions.

The Home Office is to reduce its spending by 23 percent and the Foreign Office
by 24 percent. Local authorities will experience a 28 percent cut in the funding
they receive from the central government. Universities face a 40 percent cut.
The government will reduce the amount it pays per student by £9,000. The
Department for Culture, Media and Sport will implement a 41 percent cut. The
budget for social housing will be cut by 60 percent.

Housing is one of the worst hit sectors. New social housing tenants will have to
pay much higher rents, which will rise to 80 percent of market levels. They will
have only short-term tenancies rather than the security of tenure that current
residents enjoy. Vulnerable low income people in need of housing will be forced
into the private rented sector or face homelessness. Cuts in housing benefit,
which allows those with low incomes to rent accommodation, will threaten many
tenants with eviction.

The disabled face savage cuts. The Employment and Support Allowance, which
assists those who are unable to work because of physical or mental disability,
will now be limited to one year. After that, the disabled will be forced to
accept work under the same terms as the able-bodied unemployed. Disabled people
who currently receive help with mobility costs will lose this allowance if they
are in residential care. Many will find themselves effectively imprisoned in
their homes.

Senior citizens will be hit by changes in disability benefits and the increase
in the pensionable age from 65 to 66 by 2020. Cuts in local authority spending
will hit all disabled and elderly people who depend on council-run services such
as transport, day centres, home-based and residential care.

The government claimed that its cuts package would be “fair” and that the burden
would be shared by all sections of society. In fact, early calculations based on
Treasury figures indicate that the poorest 10 percent of society will be hit
hardest by the spending review. The bulk of the cuts will fall on low- and
middle-income people. The Institute for Fiscal Studies branded the spending
review as “regressive” because the poorest half of society would bear most of
the burden.

Schools have been promised a 0.1 percent increase in funding. But the increase
will go only to some schools and will have to cover the cost of rising pupil
numbers. Most of the so-called extra money will come from savings made elsewhere
in the education budget.

An estimated 40,000 teachers are expected to lose their jobs, according to
official figures. Funding for 16 to 19-year-olds will be cut. They will lose the
Education Maintenance Allowance, which was designed to encourage them to stay in
school or vocational training. Both young people and children will suffer from
cuts in local authority-funded youth clubs, play schemes, and psychological and
social support.

Journalists have likened the government’s policies to those of the 1920s and
others to the austerity measures of the post-war Labour government as it
struggled to pay off the debts Britain had incurred in World War II. In reality,
neither comparison is apt, because the 1945 Labour government created the
welfare state at the same time as it imposed fiscal austerity, and in the
pre-World War II period the modern welfare state did not yet exist.

Chancellor Osborne’s spending review is an attempt to roll back social gains
built up in Britain over the entire period of the Twentieth Century. The
measures he announced seek not merely to reduce public spending, but to
dismantle the welfare state.

The government has seized the opportunity presented by the financial crisis to
engage in a major piece of social engineering that will turn back the clock. The
aim of the spending review is to institutionalise and cement in place the gross
levels of inequality that have developed over the last three decades. It
expresses the economic and social interests of the financial aristocracy that
now dominates politics in Britain and globally.

If the scale of the cuts outlined in the spending review is historically
unprecedented, the same must be said of the response from the Labour Party and
trade unions. Only between 500 and 2,000 people took part in a union-organised
demonstration outside Parliament yesterday. A few similar low-key demonstrations
are planned up and down the country in the coming weeks.

Ed Miliband, the Labour Party leader, did not even take part in the
demonstrations, breaking a promise to do so. Labour spokesmen have insisted that
that the opposition supports the objective of cutting welfare, with Shadow
Chancellor Alan Johnson accepting the denial of benefits to disabled people
under the Disability Living Allowance scheme and the clawing back of £2.4
billion in child tax credits from poor working families.

Former Labour Chancellor Alistair Darling was already committed to making deeper
cuts in public spending than those made by Margaret Thatcher in the 1980s. If
Labour had won the election, it would have cut at least 20 percent from every
department of government.

While the austerity measures of the 1920s led ultimately to the general strike
of 1926 and a crisis of rule in Britain, the trade unions are determined that
nothing of the kind should happen in response to the coalition government’s
attacks on the jobs and living standards of working people.

Lord Fowler, who under Margaret Thatcher was secretary of state for health and
social security, and later employment secretary, has warned of union unrest. “We
are in for a turbulent period of demonstrations, protests and industrial
action”, he said. But the trade unions have not made any such threats.

The union leaders do not dispute the need to cut a budget deficit that was
incurred by bailing out the banks and fighting a decade-long war in Iraq and
Afghanistan, fearing only that cuts made too quickly threaten a recession.

Opposition to the spending review cannot come through either the Labour Party or
the trade unions. Resistance will only be possible by a rebellion against
organisations dedicated to the suppression of the class struggle.

http://wsws.org/articles/2010/oct2010/brit-o21.shtml

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