Budget 2013: Millions Suffer, Millionaires Laughing

UK Chancellor George Osborne took today waved a red box full of broken promises at the country’s 99%.   Here are some key points of the budget and the litany of failures to date which have made the rich richer by making the poor poorer.

Cleaning up the Mess Left by Labour

 

There was a mess left by Labour; but it wasn’t too many nurses and teachers, decent pensions and pay for public sector workers or a welfare state that took care of those in need.  The mess left by Labour was a deregulated financial market, a bloated banking sector, an unprecedented erosion of our civil liberties, illegal foreign invasions, and costly privatisations of our public services to profit making private providers.

This was the mess that led us to a crisis of the banking sector, and an over indebted public purse which snapped with the Bankers Bailout.  The Coalition government has not put a single piece of legislation, regulation or measure in place to alleviate those concerns.  Quite the opposite, they have followed the trend at a gallop.  This is what makes this not simply a financial crisis, but a crisis of democracy.  We have no advocates.

The Impact of the Financial Crisis

 

In the bailout of 2008/9, the UK government had to guarantee funding to the banking sector, of 101% of GDP.  That is, the UK diverted over £2trn of tax payer money from public expenditure, to a handful of banks.

This is equivalent to almost 3 times its entire annual budget;  twenty years of NHS spending (£106.7bn a year); forty years of education spending (£48.2bn); or five hundred years of job seekers allowance (£4.9bn a year).

The world’s second richest man, Warren Buffet warned us in 2003 that the derivatives market was ‘devised by madmen’ and a ‘weapon of mass destruction’ and we have only seen the first blast in this debt apocalypse.

The news that should have us all worried is: the derivatives market contains $700trn of these debts yet to implode.

Global GDP stands at $69.4trn a year.  This means that (primarily) Wall Street and the City of London have run up phantom paper debts of more than ten times of the annual earnings of the entire planet.

Not only can the Bankers not pay it back, the combined earning power of the earth could not pay it back in less than ten years if every last cent of our productive power went solely to pay off this debt.

It is important to note that this debt wasn’t used to invest, it wasn’t used to build roads or schools or hospitals, or create breakthroughs in science and technology or feed the poor.  This debt was invented purely to make a small pool of people filthy rich.  It was made because banks realised they could effectively print their own money, by creating debt.

Instead of stopping this madness by jailing those responsible and regulating the derivatives market into extinction – the Chancellor has imposed cuts on public services, public pay and pensions, and social security. Meanwhile, he was over in Brussels fighting for the bankers to keep their inordinate bonuses.

Osborne’s Broken Promises

The UK Chancellor’s central promise to the UK was that the pain of austerity was worth it.  It was supposed to be a few years of necessary pain while he balanced the books. In his 2001 budget he promised that the “deficit will be eliminated by 2014-15, with a projected surplus of 0.4 per cent of GDP in that year, rising to 0.8 per cent of GDP in 2015-16”.  This means that next year, we should have been looking at the end of Austerity, no deficit, and a return to business as usual.  However, every single forecast for growth, borrowing and the deficit he and his Office of Budget Responsibility have had to be revised later, and never in the right direction.  This is about as far wrong as can be. In fact, Osborne is utterly at sea.

Growth by 2013:

Promised in 2010: 7%

Reality in 2013: 1%

Public Borrowing

                                                2010/11       2011/2     2012/3     2014/5    2016/7 

Promised in 2010:                 £146bn        £122bn      £102bn       £76bn       £53bn

Reality in 2013:                     £140bn         £126bn       £114bn       £108bn     £97bn

Total Overspend:             £86bn

 Deficit

                                                2010/11      2011/2        2012/13   2014/15   2016/7 

Promised in 2010:                       7.1%         5.8%            4.5%            2.7%            1.2%

Reality in 2013:                           12%            8.3%            7.4%            6.8%          5.9%

Despite the dismal nature of these figures, they still allowed Osborne to make the claim that, albeit the slowest recovery of all time, it was still technically a recovery.  The numbers were moving in the right direction. Were they? No.  Two tricks have been used to achieve these numbers.

In 2011/12 borrowing actually rose in the year 2012/13, but this was buried in the OBR figures and the bottom of a table.  The government also took the dramatic step of, when realising it was going to borrow more this year than last, simply slashed a series of payments (without telling us whic, in full) of government departments.  We know already one of these payments was our United Nations subscription. There are rumours that others include NHS operations and services.

Thanks to all this, by 2018 the UK National Debt will be double what it was when the Coalition took power, and our welfare state, wages, employment terms and conditions, education and health systems will be eviscerated.

The Cost of Austerity

 

No one signed up for an economic plan which would crush UK economic growth, while showing only marginal improvements if at all in the structural deficit and borrowing.  The deal was: painful austerity programme in return for a four year plan that would balance the books.

However, this was never about austerity.  It was about cutting taxes for corporations and wealthy individuals, and cutting services for the public.

Corporation Tax has been cut from 28% to 20%. The Top Rate of Tax has been cut by 5% – meaning that someone earning £1million a year will be saving £107,500 a year.

At the same time, public sector workers (nurses, street cleaners, teachers, scientists) have had their pay restricted to a 1% rise each year.  With inflation at almost 3% this amounts to a real terms wage cut of 2% for the last three years.  But it didn’t end there.

The cut in Council Tax Benefit (which supports the same groups) rolled out this April will mean rise of up to 333% in council tax bills.

Thirty disabled people have killed themselves, and 32 have died every week while undergoing to stressful ATOS fitness for work tests over the last three years.  Every single person in the country claiming disability/sickness related benefits has been forced through a computer based assessment process which has seen.

Workfare has been imposed which has severed the tradition of a contribution based social security system.  Workfare means despite a person’s contributions, they are forced to work full time for months at a time for corporations in order to receive the social security payment they are already entitled to.  If they refuse, they lose their benefit.

The Health & Social Care Act has effectively privatised half of the National Health Service, whilst new competition regulations going live in April open the service up to the highest bidders to take over.

Every day there is another cut, another service lost, another horror story – and so we came to the Budget 2013.

The Botched Budget of 2013

 

This Budget took an hour to deliver.  It is not often I find myself in agreement with Labour Leader Ed Miliband, but today I did.  Osborne joined twitter this morning and Miliband suggested he might just as well have tweeted us all the following:

“Growth down, borrowing up, families hit, and millionaires laughing all the way to the bank #downgradedchancellor”

Two positive things happened:

The personal tax allowance was lifted to £10,000, this means people can earn up to £10k before they are taxed on their earnings.

Victims of the Equitable Life scandal prior to 1992 are going to be compensated…although most have already died.

The rest was a relentless nonsense of the same measures that got us where we are today, with warning shots of the next steps of bogus Austerity.

Mortgage Guarantee

The government has decided that the tax payer is now going to underwrite £130bn in mortgages in an effort to promote home ownership.  This is madness.  The banks won’t lend unless the tax payer acts as guarantor?  We’ve already given them £2trn to protect them against losses in the Financial Crisis, and now we’re guaranteeing future losses if when the housing bubble pops. I thought these people were supposed to be capitalists?

Annually Managed Expenditure

Spending which cannot reasonably be managed by a government in three year cycle’s falls into this category.  Items include social security (the cost of unemployment), public sector pension spending, tax credits, Common Agricultural Policy payments and other items. The Chancellor announced that the government will be placing an arbitrary limit on this spending as part of the spending round later in the year. While only a line of this budget, this is likely the issue to watch as is likely to herald a serious attack on the welfare state in May.

Energy

More bad news for anyone who cares about the environment (and anyone who doesn’t as the damage will impact you regardless of your opinion on it).

The Chancellor also announced a massive tax break for shale gas exploration in the UK.  Osborne used his Autumn Statement last year to announce the UK government was lifting it’s moratorium on the use of hydraulic fracturing (Fracking) to extract shale gas.  The moratorium has been put in place after Fracking giant Cuadrilla caused minor earthquakes in Blackpool and research by three independent groups on behalf of DECC confirmed further seismic events could not be ruled out if Fracking progressed.  Fracking, is a highly water intensive process which mixes noxious, carcinogenic toxins with soil and water tables, and caused 11 earthquakes in Ohio alone last year.  It is a dirty, inefficient and dangerous development.  Thanks to the Coalition Government, Cuadrilla and the Frackers are back in the game in Britain.

This forms another dirty energy pillar of the government’s ecologically insane energy policy.  The government has approved a new nuclear power station at Hinkley Point in Somerset, as part of a plan for a further 11 stations in coming years.  Germany and Japan are placing a moratorium on this highly dangerous and expensive method of boiling water – whilst this government plough on full steam ahead. Furthermore, a new fleet of up to twenty high polluting gas fired power stations has been approved by this government alongside Palm Oil power plants which cause deforestation of the rainforest, death and injure of protected species and displace indigenous communities.

Hard Working Families

Osborne branded this budget as being designed for people who work hard and want to get on in life; the aspiration nation.  It is extreme irony that on the same day, jobs figures showed a rise in unemployment.

Long term youth unemployment shot up, revealing nearly 1m people between 16 and 24 years old have been out of work for over a year.  The figures also showed a sharp rise in out of work women, as austerity hits the structures that create equality of opportunity to work.

Osborne was kind enough to drop a penny off the price of a pint of beer, though.  Good job, because we are going to need to drink a lot to numb the pain of this budget.

Take Action

Petition to Stop the NHS Competition Regulations

Boycott Workfare – make a stand against forced labour

UK Uncut – make a stand against tax evaders

Disabled People Against Cuts – inspiring and kick ass campaign group of disabled people for disabled people.