Lib-Con coalition: The ‘new way’ to introduce cuts

After the election circus we have ‘change', ‘a new way of doing politics', the coalition government, all the better to push through the austerity cuts that all major parties agreed were necessary.

This was a very eventful election, even before the resulting hung parliament: the 3 prime ministerial debates, the chancellor debate, the efforts to encourage young people to vote. There was all sorts of chatter about Nick Clegg and whether the Labour Party would be pushed into third place. On election night the pictures of hundreds of people queuing up outside polling stations for over an hour - only to be turned away when they closed at 10pm - made it look as if there was a real enthusiasm for the election like the first in post-apartheid South Africa. All this effort produced a rise in turnout to 65%, partially reversing the low levels of the last three elections, a small victory for the ruling class.

Then there were five days of negotiation to produce the Tory-LibDem coalition, the first coalition in Britain since the Second World War. Out goes the ‘third way' of the Blair years, in comes the ‘new way' of coalition and cooperation in the national interest. David Cameron finds he has friends everywhere, as when he visited Scotland and Alex Salmond of the SNP. There will even be a referendum on a new system of voting

The new government has promised fixed term parliaments. Most importantly, the coalition has promised to run for a full term, 5 years of stable government in the national interest, allowing it to make a start on cuts and austerity measures immediately without having to worry about delaying or disguising them before a new election - whether or not they can actually last the distance.

The national interest = austerity for the working class

We have a new coalition in the national interest. It has announced it will bring forward £6bn cuts in a new budget this year. This is on top of the £11bn ‘efficiency savings' already hidden in the last Labour budget. We don't know where they will fall yet, but this is much more believable than all the promises to maintain front line services. The fact is we always knew the new government would bring in austerity measures sooner or later, with cuts and tax increases, because for capitalism there is no choice. With public sector borrowing at £163.4bn, a current budget deficit £113.7bn and public sector net debt (including financial interventions) 62% of national income, austerity is the job they are elected to do. We have it on very good authority. Mervyn King, governor of the Bank of England has called the planned cuts "strong and powerful" and "sensible". The markets are showing small signs that they view the British state as a little less of a risky investment, and Richard Lambert director of the CBI notes "Business wants to see a stable government with the authority to take the tough decisions that will be required to keep the economic recovery on track and to get a grip on the fiscal deficit."

“I agree with Nick. You two make the cuts, and Labour will pretend to oppose them”

We must wait till the autumn for a full spending review to know what gets cut, but pensions are surely in the firing line with the establishment of an independent commission to review the affordability of public sector pensions. And watch out for other benefit cuts with the emphasis on ‘welfare to work', also a concern of the previous government. Unemployment has just risen to 2.51m, the highest official figure since 1994, with the prospect of rising further. The government is not short of advice: 28 economists who advise the government have suggested a rise in VAT to 20%. The Institute of Fiscal Studies has looked at what could be gained by eliminating zero rate VAT, among other measures. Meanwhile the National Institute of Economic and Social Research has estimated that the government will need to impose tax increases of the order of an extra 6p in the pound to reduce the deficit to 3% by 2020. There are predictions that National Insurance contributions for employees will go up, but not for employers. Whichever measures are taken will hit the working class hard.

It's not just in Britain. The IMF has told developed nations "it is now urgent to start putting in place measures to ensure that the increase in deficits and debts resulting from the crisis... does not lead to fiscal sustainability problems". Austerity packages have recently been announced not only in Greece but also Spain, Portugal and Rumania.

David Cameron and Nick Clegg are in office, but the overall direction of their policies does not follow from manifesto promises or voters' desire but is determined by the needs of the national economy. As such the new government represents the interests of the capitalist class as a whole, like its Labour predecessor.

Beware the Labour opposition

Meanwhile the Labour Party can make the most of its leadership election to show itself returning to its ‘core values', to overcome the fact that it ‘lost touch' with its supporters. It will be able to renew its ‘radical' image in opposition. Perhaps we will forget that Darling had announced that the next round of cuts need to be "tougher and deeper" than under Margaret Thatcher in the 1980s, that Labour-appointed management consultants recommended cutting the NHS workforce by 10%, the record number of young people out of work, the rise in the pension age... They may hope we have already forgotten or never knew about the Wilson and Callaghan governments' wage restraint, real cuts, and rising unemployment.

If we forget all this, then they can present us with a false perspective of the possibility of improvements through support for the Labour Party. But the history of the last 100 years has shown that in government the Labour Party, just like Tories and Liberals, will do exactly what is demanded by state of the capitalist economy. In opposition, Labour also has a very important role to play, making it look as though there is a real ‘alternative' within capitalism.

How can we react?

The current economic crisis, the real master of our fates, is neither a natural disaster nor the result of corruption or mismanagement by this or that individual or institution (however much that goes on). It is a sign that capitalism has no future to offer humanity but more misery.

We cannot vote it out. Nor can we just lie down and put up with what they have in store for us. Even election fever has not been able to hide widespread discontent among workers, as we can see with the disputes of BA cabin crew, rail maintenance and signal workers. With the new cuts workers can only get more angry. At present the bosses are able to keep most workers' militancy under control with a number of measures: legal injunctions used against BA and railworkers; threats and bullying as in the withdrawal of BA travel perks. The unions are also able to keep workers from getting together, as with the postal workers last year with different offices on strike at different times; and wear them down with on-off strikes and negotiations. Postal workers remain unhappy with the deal imposed on them.

The class struggle cannot stay at this level. As more attacks come in, and as they are more openly the work of the state, there will be more disputes going on at the same time, posing questions about the overall unity of the whole working class. Questions that must be answered in both more massive and united struggles and in the effort to understand the perspective capitalism has in store for us and how we can resist it, the perspective for putting an end to this capitalist system and all its misery.   WR 15/5/10