As we are told everyday there I no money left so we must cut cut and cut some more by Tory and labour MP’s alike. Even labours too far too fast line would still ensure huge cuts to the public sector The PCS union has the right idea in smashing the myths about the cuts and the recession.
From 1918 to 1961 the UK national debt was over 100% of GDP. During that period the government introduced the welfare state, the NHS, state pensions, comprehensive education, built millions of council houses, and nationalized a range of industries. The public sector grew and there was economic growth.
Today, the coalition government wants to turn back the clock. It is set on dismantling the NHS and comprehensive education, and it is attacking the welfare state. It is not doing this because the country is on the verge of economic collapse, it is doing it because it is ideologically opposed to public services and the welfare state, and committed to handing over more of our public assets to big business.
Cutting public sector jobs will increase unemployment. This would mean increased costs for government in benefit payments and lost tax revenue. If people’s incomes are taken away or cut through pay freezes they will spend less. Fewer consumers spending means cuts in the private sector, and lower VAT revenues.
Internal analysis by HM Treasury proves this to be the case. Leaked documents estimated that over the next six years700,000 public sector jobs would be cut, and many more private sector jobs would also be lost – based on the current government’s policies.
Job cuts are therefore counterproductive. Mass job cuts would worsen the economic situation by reducing demand in the economy, and providing less tax revenue.
The government claims it can make cuts of between 25% and 40%, and still “protect frontline public services”. This is impossible – not just because ‘frontline services’ are being cut, but because services rely on ‘back office’ support staff. For example, cutting support staff like NHS cleaners has meant an increase in healthcare acquired infections, costing the NHS £1 billion. All public services require tax revenues to fund them, yet HM Revenue & Customs has cut 25,000 staff in recent years, which has led to uncollected tax at record levels and a growing tax gap.
The impact is likely to be highly divisive too. There is evidence of this already in the UK. In areas where public sector workers have already been laid off, retail sales have fallen faster than the UK average. In nations and regions where public sector workers make up a high proportion of the workforce, major public sector cuts could destroy local economies. Any attack on the public sector will also disproportionately affect women, as 68% of the public sector workforce is female. The public sector also has a much better record of employing disabled workers too.
The global race to cut labour costs is central to the economic collapse we have seen around the world. Squeezed consumers are defaulting on mortgages and personal debts, and are less able to spend in the economy. In the UK, the value of wages has declined from nearly 65% of GDP in the mid-1970s to 55% today. Over the same period, the rate of corporate profit has increased from 13% to 21%. It is no coincidence that in this period trade union rights were severely restricted, large swathes of the economy privatized, markets deregulated and corporation tax slashed.
There is an urgent need to rebalance the economy in the interests of people over big business.
Investing in public services is the solution to the deficit crisis. Instead of cutting jobs, we should be creating them. Jobs are not created by bullying people on benefits into jobs that don’t exist. Instead there are several areas where public sector jobs urgently need to be created.
It has been estimated that over a million ‘climate jobs’ could be created if the government was serious about tackling both climate change and unemployment – these would include areas like housing, renewable energy and public transport investment including high speed rail, bus networks and electric car manufacture.
Today there are 1.8 million families (representing over 5 million people) on council house waiting lists. There is an urgent need to build affordable housing for these people, which would also help reduce housing benefit payments.
Addressing the ‘tax gap’ is a vital part of tackling the deficit. Figures produced for PCS by the Tax Justice Network show that £25 billion is lost annually in tax avoidance and a further £70 billion in tax evasion by large companies and wealthy individuals.
An additional £26 billion is going uncollected. Therefore PCS estimates the total annual tax gap at over £120 billion (more than three-quarters of the annual deficit!). It is not just PCS calculating this; leaked Treasury documents in 2006 estimated the tax gap at between £97 and £150 billion.
If we compare the PCS estimate of the tax gap with the DWP estimate of benefit fraud, we can see that benefit fraud is less than 1% of the total lost in the tax gap
Employing more staff at HM Revenue & Customs would enable more tax to be collected, more investigations to take place and evasion reduced. Compliance officers in HMRC bring in over £658,000 in revenue per employee.
Even If the modest Robin Hood tax which we feel would only trim the finger nails of capitalism but would be a good step forward of course – a 0.05% tax on global financial transactions – was applied to UK financial institutions it would raise an estimated £20–30bn per year. This alone would reduce the annual deficit by between 12.5% and 20%.
Alongside this it is estimated big banks and business currently sit on a figure around 750 billion This is a huge contradiction of capitalism and hits the nail on the head for me that this sys
Pounds on idol money just sitting on it as they do not see a profitable outlet at this tem if it can’t improve things for people it has become a bankrupt system and is no longer a system we can afford. A system where the wealth is concentrated in fewer and fewer hands is not a healthy system and you may even go as far as to say it’s corrupt. I wouldn’t disagree. I think capitalism has reached saturation point and few potential avenues for profit are open for it at present in Europe and the UK certainly at this present stage.
This is part of the reason why privatising the NHS is such a popular idea with big business as this could be rich picking for capitalists who can make a big profit at our expense on health care. It is already rumoured Richard Branson of Virgin is eyeing up bids for parts of our health care.
We as socialists do not accept a single cut is needed. If you do you are wrong and have been fooled into thinking some cuts are necessary. As this piece shows and other evidence is out there that does not need to be any cuts at all. Labour councils do not need to pass on the cuts they could refuse but they don’t as they like the Tories agree the need for cuts unfortunately. We disagree.
SO alongside the PCS and the RMT we are firmly against all cuts no cuts are necessary as the previous facts and figures which can be categorically backed up and verified. So where we stand against all cuts is not as nuts or as loony left as people tell me it is a logical position to take. We did not cause this crisis so why should we be made to pay for it?
There is clearly wealth and money out there and I haven’t even begun to mention Trident and the scraping of that and how much extra money that’d bring in to the public purse.
Of course these are reformist measures but even on a reformist platform you can argue there does not need to be any cuts at all. Why isn’t labour saying all this? Well for a start it agrees that ordinary working people should pay for this crisis just like the Tories and the liberals. They are bankrupt in terms of ideas and their silly line of too far and too fast is no comfort to ordinary people suffering heavily under this crisis.
It is clear to me that this will only get worse unless some big changes happen. With an economy based for people’s needs over profits of a few these can happen. But unfortunately this will not happen under the main 3 political parties who all serve their capitalist masters now.
It’s time to fight for a change. A change in society a society that is run in the interest of the majority of people. A socialist society.
With extracts taken from the PCS union