Autumn Statement u-turns: austerity can be defeated

Osborne Spending Review climb-down shows austerity can be defeated

U-turns show Tory weakness but sadistic austerity is still on

Paul Callanan

In his autumn spending review on 25 November, Tory chancellor George Osborne announced the government’s first U-turns since it won its slim majority in May.

In the review he announced that the government has scrapped plans to abolish tax credits and to cut police funding. Osborne claims this was due to an unexpected £27 billion windfall as a result of low debt interest payments and projected higher tax receipts.

The reality is that these U-turns were forced on the government by the strength of public opinion. In the case of tax credits huge anger was generated over the fact that millions of working families would be losing over £1,000 a year. The climb-down was finally forced when the House of Lords threw it out.

These defeats inflicted on the government have led many commentators to claim that this statement heralds the end of austerity. Unfortunately this is not the case. There is still plenty of pain to be inflicted on working class people to make this an economic manifesto befitting of a Tory prime minister in waiting.

The NHS, already ravaged by privatisation and austerity, is being forced to find £22 billion worth of ‘savings’, ie cuts.

A number of government departments will have to find a further £21.5 billion in ‘savings’. This means more cuts to the civil service and local government services. So the spending review doles out more pain for those reliant on the jobs and services provided by the public sector.

Gifts for landlords, misery for renters

On the face of it Osborne’s offer to allow councils to keep all the proceeds from business rates may seem generous. But the central government grant that goes to local councils will be scrapped, leaving local councils with a £4.1 billion funding shortfall over the next four years.

Local services are already at breaking point having seen their funding cut by 40% over the past five years. Some council leaders are warning that even if they close every local library, children’s centre, park and museum they will not be able to plug this gap.
This shortfall is after taking into account Osborne giving permission for councils to increase council tax bills by up to 2% – more pain – to help cover social care costs.

Unpluggable holes make councils key battleground

In the coming weeks and months details of swingeing local government cuts budgets will come to light. Council cuts could become the biggest battleground against the Tories’ austerity onslaught. It’s clear that we are not going to save services being lost now by waiting for a Labour government to come to power in 2020. By then, under the current attacks, there will be little left of council services to save.

The unions that organise in local government have to be prepared to lead the fight by taking strike action. This needs to be done in tandem with mobilising the local communities that rely on the services.

For their part, Labour controlled councils can no longer wring their hands and talk of how bad it is that they are being forced into this by the Tory government. They need to join this fightback by setting no-cuts ‘people’s budgets’, using council reserves and borrowing powers initially to help fund them, while helping to build strong local campaigns to demand the funding necessary from the government.

The review also delivered more frustration and anger for ‘generation rent’. While rents continue to rocket, the government has introduced a further cap on housing benefit. Benefits for social tenants will now be capped at the same rate as those in the private sector.

In response to the housing crisis, the government will hand billions of pounds to its private developer mates.

This will pay for an insufficient 400,000 new homes – most of which will be high-end developments that would have been built anyway as investment opportunities for super-rich landlords.

The very few extra ‘affordable’ homes will not be affordable for the overwhelming majority because they will go on sale at the inflated rates of the UK property market. In fact, housing associations – which build the majority of cheaper homes – will lose nearly half their funding.

All in all, with the economy growing at over 2% a year at present, many media commentators think things seem to be rubbing along nicely for Osborne. But the Institute for Fiscal studies says that he only has a 50/50 shot of hitting his target of a budget surplus by 2020.

Currently, overall public spending is increasing, while ‘unprotected’ services fall into dysfunctionality or non-existence.

Economic instability

The Tories’ plans could also be derailed by potential economic storms ahead. Britain’s much vaunted economic recovery actually amounted to an anaemic 0.5% growth in the third quarter.

This government has boasted time and again of a jobs recovery that is the result of their economic policy. Yet just one in 40 jobs created since the crisis began in 2007/08 is full time. Also, the OBR has revised down projected growth in average earnings by 0.2% for 2016.

A massive fall in the oil price could throw the world economy into turmoil. As a result the price of goods and properties could plummet. While temporarily this would be good for consumers it could see the development of a deflationary cycle and another round of closures and job losses on high streets.

It is clear that this is a weak government whose numbers simply don’t add up. The defeats it has suffered over tax credits and police cuts show that it can be defeated.

The trade unions should coordinate action against austerity. A 24-hour general strike could be the start of this. Such action would bring the country to a standstill and demonstrate who really runs society and produces wealth. It’s not the Tories and their big business fanboys but ordinary working class people.

This action would also have the potential to bring in behind it all those who rely on national and local services, including the unemployed, people with disabilities, students etc.

An organised mass movement could bring this Tory government and its austerity down. We must not and cannot wait until 2020.

This version of this article was first posted on the Socialist Party website on 27 November 2015 and may vary slightly from the version subsequently printed in The Socialist.