Tuesday, 23 June 2015

A full frontal attack on the working poor

During the build up to the 2015 general election the conservative & labour parties jointly agreed on a further £30billion of austerity cuts from public spending. As the only two parties in our out dated and wholly undemocratic electoral system who could lead a government, it was a cast iron guarantee even before the election that the previous coalitions program of austerity was here to stay, whatever the result of the election. Sanctioned by just 24% of the electorate, we now have a conservative majority government for the next five years. While an estimated 250,000 people demonstrated in the streets of London last Saturday against the governments’ austerity measures, minister for work & pension Ian Duncan Smith announced that plans for their pre announced £12billion of cuts to the welfare bill will be produced in the chancellor’s emergency budget on 8th July. He demonstrators declared they were sending a message to David Cameron, but clearly he was not listening and in fact had a message of his own, “austerity will continue despite your demonstrations.” Leading economists, the International Monetary Fund, the Office for Budget Responsibility, members with the conservative party and others have joined a growing chorus of pleas for a rethink, but David Cameron & Co are moving forward with their plans regardless.

All we know at the moment is that the £12billion of cuts to the welfare budget will not effect pensioners income, simply because they are more likely to vote conservative at an election. There is however widespread speculation of plans to cut working tax credits and housing benefit for young people. Despite the governments’ claims that wages are rising and having created 1,000 jobs per day over the period of the last parliament, the truth is that wages are still below their pre financial crisis peak in real terms and many of those new jobs are either part time, in zero hours contracts or self employment. The resulting low household incomes, means that the vast majority are claiming some form of tax credits to top up their low wages. Those with children will also be negatively effected under the speculated plans, which include reducing child tax credit payments back to their 2003 levels. The Institute for Fiscal Studies have calculated the move would reduce entitlement for 3.7million low income families by £1,400 per year, while saving £5billion from the welfare bill. David Cameron has said that the UK should be paying out less in tax credits and that companies should pay workers higher salaries instead. I agree with him, but he should not be cutting benefits from low income families unless or until higher wages are actually being paid.

According to the campaign group End Child Poverty, there are 4million children living in poverty in Britain. That equates to 1 in 3 children and is among the highest rate in the industrialised world. If our government go ahead as planned with their cuts to in work benefits including working tax credits, there were be an additional 600,000 children living in poverty by 2020. Last week, David Cameron very publicly called on world leaders to unite in order to eradicate child poverty by 2030, but in this case actions speak louder than words. Parents are already being forced to get into more debt in order to meet the basic needs of feeding their children and keeping a roof over their heads. These planned cuts to in work benefits will effect millions more people and leading economists have already warned of increasing personal debt and the possibilities of a personal debt crisis such as the one seen in 2008. Our government, the vast right wing media and right wing think tanks such as the IFS and Taxpayers Alliance are alienating sections of our communities by attacking them and spreading their lies about the importance of reducing the budget deficit and our national debt. In truth, none of these measures are about reducing the deficit, they are an ideologically driven agenda and all out assault on the poorest, disabled people and those least able to defend themselves.

If the government did genuinely want to help and reward working people and children out of poverty, there are a number of alternatives ways to do this. Raising the national minimum wage to a living wage and properly enforcing it is one such approach and would mean that the need for in work benefits would be vastly reduced overnight. But in doing so, the government would have to make a much more concerted effort in enforcing the national minimum wage. Since the then new labour government in 1999 introduced it, there has not been a single prosecution of an employer for not paying it. An adequate system of initial financial penalty and eventual criminal prosecution must be introduced to enforce the national minimum wage. The government seems to have paid equally scant regard to the young people who will be effected by the suggestions it plans to cut their housing benefit payments. What will happen to the young people who for whatever reason cannot live with their parents and therefore need to have a place of their own, but cannot afford the rent? No consideration has been given to where these young people are going to live. The more democratic option would be for our government to enforce a cap on the outrageous rents being charged by private landlords.

Another way to reduce poverty and eventually our welfare bill would be to invest in building more social housing. Through a scheme championed by fair tax campaigner and economist Richard Murphy the chancellor could use a new program of quantative easing to build the homes we so desperately need. As was done with the banks between 2009-11, the bank of England could release perhaps up to £50billion per year into the housing economy in a huge house building program. In simple terms, quantative easing is effectively the bank of England printing free money and therefore would not increase the national debt. As Murphy suggests, we could call this program green quantative easing and make the houses being built the most environmentally possible, thereby reducing energy bills for their inhabitants and helping the government to reach it’s targets for carbon emission reductions. The new house building program would create new jobs, meaning higher household incomes, increased tax revenues for the government, better standards of living and millions of children being lifted out of poverty. People would have more disposable income, meaning more spending in the high street, which will help other businesses and the treasury from the increased spending. All of these steps would help give our economy a much needed boost.

However as David Cameron & Co demonstrated last Saturday, they are not interested in listening to calls from the those they were elected to serve and will carry on regardless with their neoliberal thinking and ideologically driven agenda regardless of what the people say. The labour party are equally committed to austerity, although a slightly lighter version than the tories and have proven themselves to be totally incapable of either holding the government to account, or offering an opposing argument in any meaningful way. While I am a strong supporter of Jeremy Corbyn’s policies and ideas, I can’t see him and his supporters being able to realise the reform of British politics that we need and bring a more democratic and fairer society to Britain. There is simply too much opposition to this kind of politics in our current system. We must tear down the British state and rebuild it from scratch and the only way I know of doing this is to create a new constitution, written by the people, for the people. Let us come together and create the kind of British society we want to live in.

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