Wednesday, June 23, 2010


Wading through the treacle of Coalition claims and media endorsement, we must bear in mind three truths about George Osborne's emergency budget:

1. It was not necessary to slash and burn to preserve Britain's economy. Much of the deficit does not need to be paid back for decades, and Britain's massive deficit has been caused by the recession, not a "bloated public sector" or out-of-control spending. Many businesses will have been forced to borrow as their income is held back by the recession. These loans will not mature for several years, and no business in its right mind would pay in full before it needed to, especially if consumers are still not spending money. Yet this is exactly what Osborne has done with the country's finances.

2. These measures will not wipe out the deficit. The Coalition has nodded to Canada in the early 1990s, or Ireland in the last couple of years, or Greece in the last couple of months to justify public spending cuts. Yet none of these comparisons stand up to scrutiny.

Canada succeeded in balancing its books not by cutting public services, but because a period of sustained economic growth rapidly increased tax revenues paid to the government. It is extremely doubtful whether public service cuts (which were almost as savage as Osborne's) made any impact on the deficit at all.

The Irish assault on welfare is more recent, but it has not lifted Ireland out of recession. Public services - especially education and transport - have been hammered, but in 2009 (the year after the cuts were implemented) the economy shrank, tax revenues fell and unemployment grew. The deficit remains as high as when Ireland entered recession.

The Greek comparison is the most specious of all. The Greek debt is very different to Britain's in that, under the terms under which money was borrowed, it has to be paid back much more quickly. Lenders have been spooked by the Greek government's rush to austerity - it has cut too much, too soon, and (again) tax revenues have plummeted as a result. Osborne's budget actually makes a Greek-style crisis more likely than it was before.

3. Virtually all of this budget's measures are unfair and regressive. The increase in income tax allowance may benefit some of the lowest-paid, but this is negated by the increase in VAT to 20%. The 25% cuts in non-ringfenced departments will force up to a million people into unemployment (according to the Tory-aligned thinktank Reform), and will wipe out services used by the most vulnerable (including those provided by the private and voluntary sectors). This will, in turn, lead to private-sector redundancies (since people will have less money to spend), decrease tax revenues and increase the welfare bill (the new economics foundation suggests that for every public sector worker made redundant, the Treasury will make a net saving of less than £2,000 a year).

The assault on benefits has shocked even those who were prepared for the worst. People on Disability Living Allowance (which, as its name suggests, is not so much a "benefit" as a mere recognition that the cost of living is higher for disabled people) will be reassessed and, in many cases, stripped of their £50 per week.

Through reforms to Housing Benefit, the government wants make cuts of £1.8bn per year by the end of this Parliament. Osborne claimed that HB was "out of control," and used a claim of £104,000 per year to prove why the system was "in dire need of reform." This was perhaps the single most mendacious argument the Chancellor made: the homelessness charity Shelter has said that the only households eligible for this sort of sum would be a family of two adults living with an elderly relative and six children under 16 paying full market rent on a large property in inner-city London. If anybody can find a single example of this situation, I will be extremely surprised. It is a sham argument, used to back up a horrible policy.

The rich, meanwhile, will be rubbing their hands. Corporation tax is down; tax for small businesses is also down; capital gains tax stays the same for all but the highest earners; the banks are hardly touched.

The majority of people in Britain will suffer as a result of this Budget, and the poor will suffer the most. It is unnecessary, it is harmful to economic growth, it will not reduce the deficit, it is ideologically driven, and it is a direct attack on the poor. It is a convenient tool for doing what the Tories have wanted to do for years: dismantle the welfare state, strengthen capital, emasculate workers, and force people who cannot work into dismally low-paid jobs. Time will tell how long Liberal Democrat politicians, who have saved this budget from unilateral incredibility, can keep their noses pegged and their tongues held. Either way, it is up to politicians, workers and consumers to say what the media refuses to admit: that George Osborne's Budget is politically unacceptable.

Monday, June 21, 2010


Two instructive letters, dispelling the myths around so-called "gold-plated" public sector pensions:

We hear too often about the long-term cost of public sector pension schemes as if they are a time bomb ready to explode at the heart of the public finances. Thankfully, in its report last week, the government's own Office for Budget Responsibility exposed the future costs of public sector pensions to be steady, predictable and sustainable.

Despite its portrayal as a tax-guzzling monster, the NHS pension scheme actually hands billions of pounds over to the taxpayer each year. More is paid into the fund than is paid out to pensioners, and all that surplus goes to the Treasury. Your report also repeats the deputy prime minister's accusation that public sector pensions are unreformed. Yet the NHS pension scheme has been reformed. The contributions made by NHS workers such as midwives have risen, as has the retirement age, and the taxpayers' contribution has been capped – if the scheme ever needs more money either NHS employees have to pay more or benefits have to be cut.

Let's look at the reality of a "gold-plated" pension. Take the average pension for a female NHS worker – it is just £5,000. The median pension for women on an NHS pension is much less. In fact, half of all women pensioners who have worked in the NHS get a pension of less than £3,500 per year. If that's a gold-plated pension it must have been made by Gerald Ratner.

Jon Skewes

Director of Employment Relations and Development, Royal College of Midwives

• My story may help provide some balance to the attacks on public sector pensions. I have worked for just shy of 40 years in universities. I am 61 and about to retire, having taken voluntary severance. I was both a head of department and head of school. A friend of mine is nine years younger and designs computer programmes for a well-known bank. He too has been offered voluntary severance. If he gets it, he will receive three times his £100,000 salary, ie £300,000. My severance is one-tenth of that sum and I will need to receive my pension for 22 years before I overtake my friend's amount! It is also worth noting that my pension is not typical of the public sector, being more generous than most.

Phil Lee

Southport, Merseyside


As the British Con-Dem government proceeds with its savagery of the public sector, hell-bent on driving the country into an Indian summer of industrial unrest, daily reports appear of historic strikes in China.

At the beginning of the month, textile workers in Pingdingshan on 65 cents an hour entered their third week of action; workers at Foxxconn, traumatised by the recent wave of suicides, also struck and gained and 30% (and subsequently 70%) increase in pay. Days later, 1,700 Honda workers - mainly women - downed tools and formed their own union to oppose the official state union (which routinely supports the owners of production against labour); workers in Shenzhen, Kunshan and X'ian also walked out en masse. And last week, following a strike by Toyota workers, the Chinese Premier made a rare admission that perhaps China had not been looking after its workers as well as it could. That is a formidable understatement - China's rapid economic growth has depended on paying workers peanuts to produce cheap goods for the global market.

There has always been intermittent industrial unrest in China, but these strikes appear historic for three reasons. Firstly, as Mark Thomas explains, "unlike in previous disputes, the strikers don’t wear masks to avoid retribution." This is open defiance on a huge scale - the very confrontations the CCP has feared would materialise since the beginning of the global credit crunch. Secondly, the strikes are successful - individually they have increased workers' salaries, but collectively they have generated a momentum which the government cannot ignore. Thirdly, and most importantly for a world that has depended on China's export economy, the strikes may lead to a restructuring of China's economy. Conservatively, this will mean a shift towards production for a domestic market, with the requisite increases in standards of living. More radically, it may mean a wholly more confident and militant working class, newly aware of their own power and importance, and increasingly confident at negotiating a fairer deal and a new direction for China.

Saturday, June 19, 2010


From Unite against Fascism:

Residents, local trade unionists, community groups and councillors have backed a rally and demo against the racist English Defence League in Tower Hamlets, east London.

Sunday 20 June
Assemble 12.30pm, Stepney Green Park,
march to Altab Ali Park, Whitechapel

Here is the joint statement, backed by local councillors, campaigners, trade unionists and community groups:

The English Defence League is a violent, bigoted organisation and an embarrassment to our country. They should be condemned everywhere, but will be particularly unwelcome if they come to Tower Hamlets.

Most people in the East End live in peace and mutual respect for neighbours, regardless of their faith or skin colour.

As residents and workers in the borough, we will not tolerate attempts to divide us or stir up hatred. The real enemies of Tower Hamlets are poverty and inequality, not Islam.

At Cable Street in 1936 the people of the East End united to block the way to Mosley’s fascist blackshirts. We stand ready to do the same to the EDL. This will be a peaceful protest to celebrate our diversity.

Monday, June 14, 2010


Few songs make me retch up my lunch, but Eliza Doolittle's "Skinny Genes" did - and I hadn't even eaten any lunch. Curses on her and her sick choreographers - but thankfully someone very close to me is on hand to lance the boil. See here for Ms King's razing analysis at the Samosa.

Wednesday, June 09, 2010


A riddle:

Adam Crozier has departed Royal Mail and has been hung and drawn for his troubles. 380 of his employees have the task of chopping his body into 380 pieces. One employee gets Crozier's earlobe, another a rib, another a finger, and so on, until each employee has a piece of Crozier to do with as he wishes.

If each employee chooses to sell his piece of Crozier on the open market, how much money will he earn?

The answer is exactly the same as he earns from working for Royal Mail for a year. It would take the average Royal Mail worker 380 years to earn what Adam Crozier earned last year.

Ah yes, the free marketeers protest, but the market demands that we pay him £3.5m a year. But just as recently so many others have, Roy Mayall reveals this appeal to the market for what it is:

It’s a self-perpetuating system. The ‘best management talent’ employ ‘the best management talent’ in order to ensure that ‘the best management talent’ are always in control.

As for that old ‘marketplace’ excuse, I think we’ve all see through that by now. These bloated wages are not imposed by some outside force, but by themselves. The marketplace is the euphemism by which these huge disparities of income can be spun. Executive pay is on the rise while our wages are being squeezed and the service is being run down.