Socialist Party documents

Perspectives for Britain and the world 2009

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Housing crisis - effects on living standards

The housing sector - the bedrock of the so-called 'post-wealth effect' - is plunging and house prices could fall by 40%-50%.

In its wake, estate agents, surveyors and builders face a dismal future. Excluding the Second World War when few houses were constructed, the number of houses built is at its lowest since 1924, when there were 87,000 housing starts during a period of severe recession.

Office construction is likely to plunge by over 20% and the consequence of all this could be 250,000 workers whose jobs are linked to the building industry put out of work.

The Olympic village is projected as Britain's 'Hoover Dam', which was a product of Roosevelt's 'New Deal of the 1930s.

But this promise will no more be achieved than was the claim that Greece would reap similar rewards from their Olympic Games in 2004.

Optimists say that the price of houses in 2007 in Britain could be reached again by 2023!

There are two million households in Britain that are experiencing 'negative equity', with half a million behind with their mortgage payments.

House repossessions continue apace despite the measures of Brown for a two-year delay in paying 'interest' on mortgages where householders are unemployed.

At the very best, this will only slow down repossessions. The Socialist Party will oppose any attempt to evict workers from their homes because they have been plunged into economic circumstances - the crisis of capitalism - not of their making.

The bankers have been bailed out; home owners must receive the same help. This is only possible by nationalising the banking sector, not in the manner of Northern Rock but with workers' control and management.

Cheap mortgages and, in some cases, voluntarily substituting mortgages for rent are the ways out, rather than the prospect of 'tent cities' on the outskirts of British cities, which are a real possibility if the housing meltdown continues.

It was not for nothing that a commentator recently warned that if the financial system was not 'bailed out' then "London could look like Mogadishu".

In reality, swathes of London and other cities in Britain have elements of 'Mogadishu' present already.

The whirlpool of social decay - inevitable on the basis of economic downturn - this time will draw in sections of the middle class.

This will be a much more generalised crisis - touching all corners of Britain more than anything that has gone previously.

In the 1980s, it was largely the North, Midlands, Scotland and Wales that were devastated by the crisis of 1979-82, reinforced by the ravages of Thatcherism.

The crisis of the early 1990s similarly drew in home owners, particularly in the Home Counties. This time, because of the severe impact on services, it is more likely that London and the Home Counties - East Anglia, the south-east and the south-west - as well as the traditional industrial regions, will be affected.

No corner of Britain will remain untouched although some regions will be more severely affected than others.

Nor will there be an easy escape route from the economic blight, as was possible for some workers at least in the past.

In the 1930s, unemployed workers - miners, etc. - could escape to the burgeoning car industries of the Midlands and the South-East, which were not as badly affected as the North, Scotland, etc.

The dream of a comfortable retirement in Spain has also disappeared in the rubble of the housing collapse there, comparable to Ireland in its seriousness.

The implosion of the pound against the euro in one fell swoop has cut the income of those reliant on pensions and benefits calculated in Sterling.

Nor will 'internal migration', workers escaping a 'broken society' like the inner cities towards the south-west or East Anglia be a solution.

These areas, profoundly affected by rural poverty and with house prices comparable to London, will be drawn into the vortex of this economic crisis.

In fact, these areas, very favourable even now to the message of the Socialist Party, will prove to be vital areas of struggle, as will be the Eastern Region.

The British economy is faced with a spiral of decline in the short term and a drawn-out organic crisis of capitalism in the medium to long term.

Just as in a period of upswing one factor interacts with another in a capitalist economy in a 'positive' fashion, the reverse is the case in a downwards spiral, triggering a series of crises in the economy, in the state finances and the currency.

In the kind of situation we have now, the process, at least in the short term, is unstoppable. It is much as if the crew of the Titanic, seeing the iceberg looming, could do nothing to prevent a collision.

Their only task was to rescue some, mostly in first class and very, very few from 'below deck'.

The prospect of mass unemployment has already had an economic effect. Most estimates say that unemployment could increase by 1.7 million to 3 million within 12 months. This could be an economic shock the likes of which has not been seen since the 1980s and the Tory slump of the early 1990s.

Coming after 15 years of consecutive quarterly growth, with a generation unprepared for this, the reaction is incalculable.

Already, the previously heroic British consumers are 'shopped out', more prepared to tighten their belts, at least to trim their 2 trillion debt than engage in further lavish expenditure.

It will be life's little 'luxuries' such as a visit to the hairdressers that will be the likeliest to suffer first, followed by a severe trimming of 'extravagant' supermarket meals.

Pubs are reporting a rate of 300 closures a month, with one pub landlord engaging in a 'grave-in', sleeping in a coffin after the announcement of the closure of his pub! Swathes of Britain threaten to become 'pub deserts', like Sweden, with all the 'deleterious' consequences that flow from this.

Football clubs, particularly in the Premier League, like banks are 'overleveraged' and could suffer the same fate.

West Ham United Football Club - whose club song is appropriately 'I'm Forever Blowing Bubbles' - could be the first to suffer the fall-out from the Icelandic banking meltdown, as its banker-owner seeks to disengage.

Others could share their fate. But football and sport in general, like the theatre and cinema, have a twofold character in capitalist society.

On the one side, it is interwoven into the lives of the working class, even in this era of globalisation when football teams have become detached from their roots.

At the same time, it can act as a colossal safety valve in channelling the energies of the working class away from social protest.

Sometimes, however, it can intersect with protest and point up the class divide in capitalist society.

It is for this reason that the bourgeois, in the teeth of the terrible depression of the 1930s, poured billions of dollars into the 'dream factory' of Hollywood, with the likes of Fred Astaire and Ginger Rogers providing the 'glamour' as a temporary escape route for millions faced with the daily grind of poverty and joblessness.

The contraction in the football 'industry' will result in the savaging of costs and bloated wages. Gone with this, hopefully, will be the virtual monopoly in televised sport of the 'dirty digger', Rupert Murdoch.

Effects on middle class and workers

The dire prospects facing British capitalism are summed up by the slashing of interest rates: by 1.5% in November 2008, followed by another 1% in December and a further 0.5% in January 2009.

The November reduction by the Bank of England was the biggest single cut since the founding of the Bank in 1694, that is more than three centuries ago, and the 1.5% interest rate set in January is the also the lowest figure ever.

British capitalism will pay a huge price in this crisis with the eating away of their social reserves and the effects it will have, not just on the working class but, increasingly, on sections of the middle class as well.

Solicitors will join architects, shopkeepers and others in the 'tertiary' sector as they are thrown out of work.

This will represent a further 'proletarianisation' of the upper sections of the working class and the lower layers of the middle class, with many really experiencing for the first time the effects of economic recession.

The working class, historically - particularly industrial workers like builders - is used to tightening its belt a notch or two when faced with this kind of situation.

However, the British working class, particularly its new generation, has not experienced anything like what we are witnessing at the present time.

This could also be the first time for big sections of the middle class to experience this. The bedrock of 'tolerance' and 'moderation' in normal periods, they can be driven 'mad' by a sudden plunge into joblessness and poverty.

They could then embrace the most 'extreme' political ideas and philosophies. In the first instance, they normally look towards the organised labour movement, if one exists. However, the danger inherent in the present situation is that their first port of call could be the far right, prospects for which we will deal with later.

New Labour attacks the poor

For the most deprived sections of the working class, a bleak and terrible future lies in wait for them.

The vilification of the poor, which is now a constant theme of the capitalists and their hirelings in the media, as well as the three main capitalist parties, has been taken to new depths in the recent period.

They say it is the 'underclass' wedded to benefits at the expense of workers which is responsible for Britain's ills, not the misrule of capitalism and their system.

This is the mantra, in effect, of the unholy alliance of Murdoch and the Daily Mail with New Labour, the Tories and the 'Liberal' Democrats.

This is typified by the unspeakable New Labour government minister James Purnell. Inconveniently for this cabal, recent reports have shown that poverty in Britain is already amongst the worst in Europe.

The level of poverty is the seventh highest, and only Portugal and Poland treat their poor worse than Britain.

Moreover, the anti-poverty programmes of New Labour, according to another report, have been almost completely nullified by this crisis already, which is a further demonstration of the ultimate ineffectiveness of reformism.

Also, inconveniently for the 'anti-poor' brigade, most of the poor in Britain are working for minimal, slave labour rates.

This alone is a devastating criticism of capitalism and of the official trade union leadership. During a 'boom' - an economic 'super-cycle', we were told - the bosses have pocketed colossal profits while the wages of big sections of the working class have stood still.

Indeed, the last 20 years of 'boom' have been aptly described as a 'silent recession' in which the average median household income has stood still.

The process of the casualisation of the labour force, the substitution of high-paid industrial jobs by low-paid employment, part-time jobs in place of full-time employment, has taken its toll.

For instance, of the workers made redundant at Rover in Longbridge in 2005, amongst those who found subsequent employment, two thirds are on lower wages, many significantly so, while one third is 'better off'.

The perniciousness of Purnell's approach, fully backed by the Brown government, is highlighted by the attacks on lone parents.

Until now, they have not been compelled to work until their children reach the age of 16. Now, all lone parents with a child over 12 years old will be compelled to work on pain of having their benefits curtailed or completely withdrawn.

Eventually all lone parents with a child of 7 or over will face these attacks. The government is also proposing that lone parents with children over one year old will have to 'prepare' for work or face attacks on their benefits.

Others want to go further than Purnell: "Both Mr [Frank] Field [the Labour MP] and Iain Duncan Smith, the former Tory leader, Britain's two most prominent thinkers [?] on welfare reform, maintain that there should be a limit on the number of children single mothers have on the state." [Sunday Times, 7 December 2008.] Benefit applicants will now even be compelled to face lie detector tests!

There is already a serious social crisis affecting Britain's children - arising from previous policy disasters of Tory and Labour governments - and these measures, if implemented, could considerably extend 'dysfunctional' families, with children left to care for themselves at a tender age with little or no parental involvement.

The Public and Commercial Services Union (PCS) has pointed out: "Many of the plans were unacceptable when they were first published and the worsening economic situation should lead to a fundamental rethink." Even private firms brought in to find work for those on benefits have protested that in the worst economic situation seen in Britain for 70 years, they are expected to find twice as many jobs as before.

Mark Serwotka was correct in stating that, taken together, the proposals of the government represent the attempt to virtually abolish the welfare state, the inheritance of past struggles of the working class.

It threatens to ignite a similar uprising - riots on the scale of Greece - to those which the poor and the unemployed greeted the impositions of the National Government in the 1930s.

Housing benefit, affecting four million of the poorest people, is also to be cut, according to the 'small print' in the recent 'pre-budget report'.

The system will be changed to a 'local housing allowance', which will not be enough to cover the full rent.

Shelter warns that this is likely to mean many tenants will be forced into low-rent, poorer areas with fewer available jobs, which will reinforce divisions and lead to the 'ghettoisation' of the poor.

There is undoubtedly an element of propaganda in the stance of Purnell. It will be impossible to impose all the promised attacks but a hostile atmosphere, followed by some repressive acts, will be sought and introduced by the government and its agencies.

We have a responsibility of defending the poor and significant sections of the working class who could be affected by these measures.

The incontrovertible fact is that there will be a remorseless increase in unemployment with consequent cuts in the living standards of the working class.

Neo-liberal attacks to continue

The discrediting of deregulated capitalism, the intervention of the state to save the system, does not mean the abandonment of neoliberalism.

Under the cover of the crisis, privatisation is resorted to when the bourgeois and the government believe they can get away with it.

Witness the attempt to carry through the part-privatisation of Royal Mail now. Moreover, the government has plans to slash even further the workforce in the civil service; in the tax offices, at a time when tax evasion by the rich has reached record proportions, over three thousand jobs are likely to go unless there is union resistance.

In the Ministry of Justice, 10,000 jobs are scheduled to be 'shed'.

The government is likely to adopt a two-sided approach towards state spending. On the one hand, they have thrown money at the bankers and will continue to dole out subsidies to the business class.

They will do 'what it takes' to try and keep down and massage the unemployment figures. On the other hand, as in the 1930s, they will seek to slash state spending, for instance on the civil service, on education and local government.

Digby Jones, ex-leader of the CBI and former 'New Labour' minister, has called for the sacking of half of all civil servants! The slash and burn programme of cuts in local services in the Wirral is also a sign of what is to come for councils throughout the country.

Therefore a ferocious defensive battle, not just of unions but also of communities, is likely in these key fields, in which we have to intervene.

Our record in the Liverpool council battle and the poll tax struggle provides examples of what can be done.

Yet it has been the public sector that has provided most of the jobs since New Labour has been in office.

New jobs for women in particular made up an important component of growth in public sector jobs with 1.07 million additional jobs taken by women between 1998 and 2006.

A majority of jobs for which men were hired were still in the private sector. But the contrast between the feeble efforts of the private sector - during a boom it must be remembered - in decisive areas of Britain is clear.

For instance, between 1998 and 2006, there was a 29% increase in predominantly public sector jobs in Scotland.

In the same period only a 3% increase was created in the private sector. In East Anglia, a 'growth' area, public sector jobs increased by 27% but increased by only 4% in the private sector.

This pattern is repeated throughout every area of Britain. Yet the government and particularly the Tories threaten to savagely curtail employment in the public sector.

The atmosphere of insecurity for the poorest and vulnerable is best described by Marx in the Communist Manifesto: "All that is solid melts into air." Even Woolworth's, a seemingly permanent feature - in its day the 'Poundshop' for the working class and the poor - is going to the wall with the loss of 30,000 jobs.

Generations of schoolchildren were threatened that unless they studied and acquired a skill, "you will end up working in Woolies"! In the new, harsh economic environment, such a fate can be looked on as almost a utopia!

We, the labour movement, the working class, the Socialist Party, refuse to accept the arguments that the 'pain' arising from this crisis must be carried predominantly by the working class and the poor.

Trotsky's demand in the Transitional Programme for 'Work or full maintenance', perhaps now expressed best in the phrase 'useful work or a living income', should be propagated by us with a campaign for it to be accepted in the labour movement.

In addition to this, we have the bounden duty to raise the idea that the youth must be saved from the living death of unemployment: "No return to the 1930s!" Virtually nobody under the age of 35 has any experience of substantial levels of unemployment, particularly the kind of soul-destroying long-term unemployment that could take hold in Britain and throughout the capitalist world in the next period.

That is why our initiative of a campaign for jobs for youth is vital in this period. (More of this in the Organisation Resolution.)

Under cover of this attack on welfare, the bosses, with the Confederation of British Industry (CBI) in the vanguard, also intend a savage assault on pensions.

This will involve a further drive to lengthen the working age of the average worker to a minimum of 65 for all men and women inclusive, combined with the further attempt to extend it further to 70.

The inexorable David Blunkett - incredibly pictured in parts of the media as a 'working-class hero' - has openly suggested that "people are living too long".

Everyone should be compelled to work until they are 75 and receive no pensions until their life savings have run out.

The miserable treatment of the old in Britain is highlighted by the state pension, the lowest in the advanced industrial countries of Western Europe.

Added to this is the devastating effect of the old living in residential homes, charged astronomical rents and finding all their sacrifices on the altar of the 'property-owning democracy', owning a home, evaporating because of these payments.

In particular, final salary pension schemes face a further assault in the next period. Even civil servants, who have benefited by the principled stand of the PCS, with our comrades in the lead, will face further challenges from the Brown government and any other future capitalist government.

This promises to be a ferocious set-piece battle between the public-sector unions on one side and the government and employers on the other who wish to roll back further the 'frontiers of the state', while welcoming its extension to the bankers and the rich.

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