Savage cuts in progress

The economic crisis of capitalism is leading to draconian cuts in public funding for all sorts of essential services – cuts that will only deepen the crisis and lead inevitably to the demand for more and more cuts in years to come.

People with a gallows sense of humour will have enjoyed the valedictory speech of Sir Richard Lambert, the outgoing director of the Confederation of British Industry (and former editor of the Financial Times, no less).

After announcing that business supported the government’s “ruthless” approach to spending cuts, he then went on to lambaste it for cutting in such a way as to take demand out of the economy “apparently careless of the damage that they might do to business and to job creation”! (Quoted in ‘Outgoing CBI chief slams government growth strategy’ by Larry Elliott, The Guardian, 25 January 2011)

The Saudi Arab News website quoted him as saying: “It’s not enough just to slam on the spending brakes. Measures that cut spending but killed demand would actually make matters worse.” Sir Richard obviously believes that you can have your cake and eat it … perhaps that’s why he’s been persuaded to retire! If you drastically reduce both public spending and the income of most of the population – to the rapturous applause of British industry, apparently – of course you take demand out of the economy – how could it be otherwise?!

For the rest of us, the cuts are not funny at all. Reduction of demand of necessity worsens the economic crisis that we are experiencing, because, whether bourgeois financial pundits care to recognise it or not, it is a crisis of overproduction, ie, a crisis caused by the fact that people and governments are so impoverished that they cannot buy the masses of goods and services that capitalist enterprises have the capacity to churn out, and which they need to be able to sell if they are going to avoid bankruptcy.

It is therefore crushingly obvious that if you impoverish people still further, you are going to make the crisis even worse. In fact, capitalist economic crises have their own momentum, and this one will, until it bottoms out of its own accord, continue to get worse, whatever policies various government adopt to try to overcome it. In the meantime, the working masses have to suffer.

According to Robert Winnett, “Disposable household income has been hit by sharp increases in the cost of food, fuel and tax, coupled with restricted wage rises for most workers. Last year, take-home pay fell by about 12 percent, official figures showed, and the trend was expected to continue in 2011.” (‘Bank of England chief Mervyn King: standard of living to plunge at fastest rate since 1920s’, Daily Telegraph, 25 January 2011)

This fall in income expresses itself as a fall in demand in the economy, and the result has been that official figures released in January “showed that gross domestic product fell by 0.5 percent during the final three months last year”. Economists had already been feeling gloomy as a result of forecasts that expected GDP to have risen by only 0.5 percent! As it is, we are only a quarter away from an inevitable ‘double-dip recession’.

Looking at some of the costs in human terms, rather than dry economic statistics, we can see the devastation that capitalist economic crisis wreaks in its insane advance.

• The BBC is to lose 600 jobs at its World Service, half of them in the English language section, which is going to have to cut out programmes such as Outlook and Newshour. The Serbian, Albanian and Portuguese-for-Africa services will close completely, along with a couple of other (currently unspecified) foreign language services. Some other foreign-language services will survive only on the internet, and cuts are expected elsewhere in the corporation too.

• Our libraries are “living on borrowed time”, according to Robert Colville. Oxfordshire county council, for instance, is proposing to axe 20 of its 43 libraries, and across the country over 400 libraries face closure, including 130 in London alone. (Daily Telegraph, 21 January 2011)

While electronics are rapidly taking over from the printed page, especially for research purposes, it is still the case that libraries perform a major social function in providing leisure reading material to millions of people, in educating children, in providing free study space for people from homes that are not conducive to study, in providing online access to people who cannot afford to have their own computers, etc, etc. For millions of people, life without their library is going to be very much poorer.

• Jobcentre Plus is to lose 9,300 jobs by March 2013. These are the people whose job it is to get people back to work. At first glance this seems absurd, when, according to the Chartered Institute of Personnel and Development, unemployment is expected to reach a 17-year high of 9 percent (up from 7.9 percent), ie, 2.7 million people on the dole. However, if there are no jobs to get people back to, it does seem obvious to cut Jobcentres – but what an admission of defeat!

• Homecare for elderly dementia sufferers, already desperately inadequate, is likely to be cut still further. This will inevitably mean that ever larger numbers of sufferers will end up in council care homes, which, although extremely inadequate in many cases, are nevertheless infinitely more expensive than supporting care for the elderly in their own homes.

• The frail and elderly are generally seen as a soft touch for cuts. A study by Age UK found that inflation alone is leaving over-55s £600 worse off, and over-75s £700 worse off every year. Quite apart from inflation, pensioners are expected by the Institute of Fiscal Studies to be £391 a year worse off in 2013 than they were last year, and £529 worse off in 2015.

Pensioners are supposed to count themselves lucky, as the projected figures of overall average annual loss for households generally are £836 worse off in 2013 and £1,166 worse off in 2015, when compared to 2010.

• British forests are to be “thrown on the mercy of the open market. It has already been agreed that 15 percent of our publicly owned forests will be sold; if the Coalition succeeds in selling the remaining 85 percent, it will be the biggest change in land ownership since the second world war … Britain [which now has forest cover of 9 percent of land, the highest since 1750] will never reach the European average, of 44 percent cover, but we should certainly be aspiring to increase, or at the very least preserve, the nation’s forests. David Cameron promised to make his government the greenest ever … we worry that this is not the best way to go about it.” (‘England’s forests are a national treasure that must be protected’, Daily Telegraph, 23 January 2011)

• Coastguard stations are to be cut, and Search and Rescue services currently provided by RAF and Royal Navy helicopter crews are to be privatised. Bearing in mind that the RNLI operates from coastguard stations, and that last year its lifeboats launched 9,223 times, rescuing 8,235 people and saving 33 lives, it is self evident that lives will be put at risk.

In fact, under current proposals, the present 19 stations will be reduced to eight, of which only three will be left in the whole of Britain which operate round the clock. If a ship runs into serious trouble in British waters after these cuts, the ability of the UK to avert disaster will be severely compromised. Prince William is apparently lobbying to try to stop the proposals going ahead.

• And finally, as our television screens were filled with pictures of the disastrous floods in Brisbane, Geoffrey Lean told us that “Half of the housing built in Britain since the second world war has been put up on flood plains, with councils and ministers merrily disregarding official warnings so as to wave the developments through … To make matters worse, only about half our flood defences are in good condition and – though ministers say that minimising inundations is an ‘absolute priority’ … a House of Commons select committee found last month that Environment Secretary Caroline Spelman was cutting spending on them by 17 percent, leading potentially life-saving schemes to be postponed, even though they provide £8 in benefits for every £1 spent.” (‘We’re letting our flood defences down’, Daily Telegraph, 15 January 2011)

All this is only a fraction of what is being destroyed – and, of course, the destruction process is only just beginning. Meanwhile, the spending cuts will make the crisis worse. Sovereign default on the part of the UK and the imposition of a Structural Adjustment Programme dictated by the IMF that wipes out most of what remains of health, education and welfare spending is entirely possible in the years to come.

The only way out of recurring capitalist crises is the overthrow of capitalism itself.

> Industry matters- The cuts – December 2010

> Cuts presage fast growing homelessness among the poor – October 2010

> The truth about Labour- war crimes pay cuts and privatization – June 2008