Friday, 14 May 2010

An Alliance For Reaction- The ConDem Coalition Agreement

by Michael Burke

It is rare in British politics for the main political parties to spell out what they actually intend to do in office. Even now on the pressing issue of the economy in the document outlining the basis of the agreement between the Tory and the LibDem parties there is very little detail about where the threatened spending cuts will be made. However the document itself should be studied closely by all those who want to resist the political and economic attacks that are planned on workers, the poor and lowly-paid as well as on their organisations.

It should also be studied by all those seeking to build an alliance to reverse those attacks and the lessons that can be learnt.

Two-Pronged Attack

The agreement amounts to an attack on the living standards of workers and the poor, but also a political attack on its institutions. Combining the two maximises the potential impact of both.

Some of the key economic measures are listed below:
• a significantly accelerated reduction in the deficit over the course of a Parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes
  • an emergency budget within 50 days of the signing of the agreement with cuts of £6 billion to in the financial year 2010-11
  • compulsory work programmes for the unemployed
  • an independent commission to review the long term affordability of public sector pensions
  • a £10,000 personal tax threshold, to be financed by a increase in employees National Insurance, not employers NI
  • an annual limit on the number of non-EU economic migrants admitted into the UK to live and work
  • agree to phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66
  • receipt of benefits for those able to work should be conditional on the willingness to work

SEB has previously shown how, through the effect of the multiplier attached to government spending the cuts will prove highly damaging to the economy, in this case reducing growth by over £11bn and therefore leading to a net deterioration in government finances of £2.3bn.

However, this is just the tip of the iceberg, with an ‘accelerated reduction in the deficit’ mainly relying on spending cuts being the Tory plans. The Institute for Fiscal Studies calculates that their cuts amount to £64bn. This amounts to a ferocious assault on public spending, a cumulative reduction in GDP of 9.3 per cent, far greater than the recession just ended.

The point of the cuts is not to improve the economy or even to close the deficit. Those countries which have recently adopted similar measures, like Greece and Ireland, have seen their economies deteriorate and their deficits widen. The same is true of the most recent British experience. Thatcher’s huge cuts in public spending did not lead either to reduced deficits or borrowing, as the chart below from the Treasury’s databank shows. They didn’t even lead to a reduction in public spending- as even some Thatcherites have pointed out. This is because pushing people out of work reduces taxes and increases welfare payments – even when those payments are being reduced.



Instead the purpose of the cuts is to produce a long-term reduction in the share of national income attributable to labour, and to increase the share of income that goes to capital. The fall in working class living standards will not reduce the deficit, but it will increase the living standards of the rich.

This is highlighted by one of the key proposals fought for by the LibDems, the introduction of a £10,000 threshold for personal income tax. This seems an attractive policy aimed at helping the poor, and will be promoted as such. But the IFS has pointed out that the very poorest will, on average be just over £1 a week better off, while the top 80-90% of earners will be over £20 pounds a week better off. Worse, it is to be financed by a hike in National Insurance contributions for employees but not employers.



There are widespread expectations of significant resistance to draconian cuts in services, pay, jobs, pensions and welfare entitlements. It may be that a fixed 5-year term agreed between the ConDems is to guarantee they both stick the course, and prolong the administration to the last possible date to reap the benefit of any eventual economic recovery.

For the Tories and Liberal Democrats it is therefore vital that resistance to these cuts is minimized, both industrially and politically. With breath-taking hypocrisy, the parties of Ashcroft and Michael Brown say they seek to remove big money from politics.

“We also agree to pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics.” By this, of course they mean removing or drastically reducing trade union funding to the Labour Party. This is likely to be accompanied by legislation to outlaw strikes in ‘key’ areas of the public sector.

Such measures must be opposed by every wing of the labour and trade union movements, as well as by every democrat. Without these organisations, working people would be defenceless against all such further attacks, and the political landscape transformed entirely.

Democracy

There are also wider lessons to be drawn. The leadership of the Tory party has displayed the utmost tactical and organisational flexibility in order to prosecute ruthlessly the interests of its class. Those close to Cameron hope that he has indeed transformed the British political scene for a generation or more, having “wiped out the anti-Tory majority at a stroke.”

That is not true currently outside England, and it remains to be seen whether that will be the case in aggregate in Britain as a whole. But the ConDems are not simply trusting to economic recovery and short memories in 2015.

In addition to a frontal assault on the organisations of the working class there are a series of populist measures designed to bolster support. The proposed Freedom or Great Repeal Bill will have a strong resonance, by abolishing ID cards, extending freedom of information, protecting trial by jury and circumscribing anti-terror legislation. It remains to be seen how thoroughly these commitments will be enacted. And there is a host of other repressive legislation that will be untouched- but the bulk of it will have been enacted by Labour. But there is no doubt that it will be attractive because it is somewhat less authoritarian than Labour has been. In addition, a PR-elected upper chamber, voting reform and further devolution for Wales are all popular and democratic measures that Labour should have espoused. They maybe further supported economically by taxes on banks, and venture capital funds and demagogic claims about clamping down on tax avoidance. Targets are promised for increased net lending to small businesses. Even if City lobbying prevents any or all of these, the coalition government will be able to pose as the champion of popular policies which were aimed at reversing Labour measures.

There is therefore nothing inevitable in Labour winning the next election, especially starting from 29% in the polls. In any event, those in the firing line cannot wait while Labour ‘regroups’. To reclaim office Labour will also need to display a comparable degree of flexibility to that of the Tories. As well as opposing the attacks on working people, it will need to adopt a more progressive stance on civil liberties and democracy, the national question, the issues of racism, Islamophobia and women’s rights. It will also have to reverse course on the disastrous series of wars it has prosecuted.

SEB was not surprised by Cameron’s poor showing in the election. But he has reacted to the fall in direct support for the Tory party by decisive action to transform the situation in the interests of the class he represents. Labour must respond in kind.

Saturday, 8 May 2010

Trends in the British general election are no 'surprise' Part 2 - by John Ross

The outcome of the vote in the British general election corresponds to the trends analysed on this blog before it - as the figures below confirm.

That it was possible to foresee these trends beforehand demonstrates that the results of the election appear 'surprising' or 'confused' only if a wrong analysis of the situation had been made - although such mistakes were made by many commentators, which led them to take it for granted for two years that the Tories would stroll to victory.

The real trends of the 2010 vote also have important features, in particular regarding the Tories and the Liberal Democrats, differing from the analysis still being presented after the election in sections of the media - these commentators are repeating the mistakes in analysis they made before the election. This article therefore looks at the real trends in the voting, why it was possible to foresee them, and what is their dynamic.

The election was the expression of long term trends

This blog noted before the election that the reason many commentators expressed 'surprise' about the trends during the British general election campaign was that these were often presented as though they were a consequence of unanticipated short term events in the election such as the introduction of TV debates between the party leaders. Such a view was wrong. The only serious uncertainty at the election was the rather lottery like way in which the undemocratic features of the British voting system would allocate seats in parliament. The trends of support for the parties in the election were the logical continuation of long term social electoral trends.


The Tories


The way in which the trends in the results of the 2010 general election continue long term processes may be seen first in Figure 1 which shows the analysis of the Tory vote first presented by the present author in the book Thatcher and Friends and updated to include the result of the 2010 election as indicated by the BBC this morning - the final few results to declare will not shift the figures significantly.

It shows that while naturally there have been short term oscillations from election to election, which help produce individual Tory victories or defeats, the steady downward trend of support for the Conservative Party is entirely clear.

Tory support in the 2010 election was simply the latest oscillation within this declining fundamental trend and reveals that the decline in Tory social support has now reached the point where they are unable to form a majority government.

Figure 1

10 05 07 Tory Vote


The Conservative vote has fallen progressively from its highest ever level, of 60.7% in 1931, to its post-World War II peak of 49.6% in 1955, to 41.9% the last time it won a majority of seats in an election in 1992, to 32.3% at the general election 2005.

Typically the Conservative vote, each time the party won a general election, was lower than at the one it won previously, and each time it lost an election its vote fell to a lower level than the previous defeat.

The result of the Tories at the 2010 election, at 37% of the vote, is 4.9% below the level they received the last time they were the largest party and therefore is clearly an oscillation within this fundamental declining trend.

Liberal Democrats

Turning to the Liberal Democrats a number of commentators have been misled by the Liberal Democrats poor showing in terms of seats at this election into believing that Liberal Democrat support had somehow declined. This is false - as may be seen from Figure 2.

In reality the 23% of the vote secured by the Liberal Democrats at this election is the highest achieved by the Liberals alone since World War II and is only a small margin behind the 25.4% achieved in alliance with the SDP in 1983. The fundamental trend of rising Liberal support for the last fifty years is clear from Figure 2. The Liberal Democrats were robbed by the electoral system. Their actual vote rose compared to the last election and its upward underlying trend was clear.

Figure 2

10 05 07 Liberal Vote

Labour

The Labour vote, at 29% at this election on current projections, was also a logical continuation of its previous long term trend - as may be seen in Figure 3.

Labour's long term electoral support rose to a peak of slightly less than 50% in 1945-66 and then, with a temporary sharp depression in the 1970s and early 1980s, it has declined. Even in the 1997 landslide Labour only received 43.2%.

Conservative unpopularity, not high support for New Labour is why the Labour party was in office from 1997 onwards.The present decline continues that underlying trend.

Figure 3

10 05 07 Labourl Vote

Conclusion

The outcome of the 2010 general election was therefore the expression of profound and long term social processes - the long term decline of the social base of Tory support, the fact that Liberal Democrat support has been on a rising trend, the inability of Labour to raise its vote. These processes will therefore not be halted by whatever are the immediate steps after the election and whoever immediately forms the government.

If, as appears most likely immediately after the election, the Tories are able to temporarily form a minority government due to 'tolerance' by the Liberal Democrats, this will not stop the trend of Tory decline. As the Liberal Democrats would be tying themselves to a 'sinking ship', and in the middle of an economic crisis, it is likely this would lead to a downward oscillation of the Liberal Democrats and a revival of Labour.

Britain is therefore still heading to a new political era of proportional representation and coalition government.

The apparent 'confusion' coming from the 2010 general election were due to it being part of the break up of the old system. Because these processes are so deep and so powerful a minority Tory government will be incapable of halting them.

Britain is heading to a new political system.

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This article originally appeared on the blog Key Trends in Globalisation.