George Osborne’s vicious summer budget

Austerity is set to deepen yet again, and the rise in poverty we have seen so far is only the beginning of what’s in store for Britain’s workers as the crisis of capitalism demands ever-bigger lumps of our flesh.

Proletarian writers

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Proletarian writers

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On 8 July, Chancellor George Osborne issued the first fully Conservative budget for nearly 20 years, after May’s general election saw the end of the Tory coalition with the Liberal Democrats. Not surprisingly, Osborne utilised this platform in full in pursuit of his bid to become the next Prime Minister, highlighted by the supposed ‘sweeteners’ offered to the working class in the form of incremental and minor increases in the minimum wage and the income tax allowance.

These skin-deep policies, however, are drowned in the harsh reality of a series of measures designed to help the rich consolidate their wealth whilst subjugating the poorest workers to a life of social deprivation and injustice – not least through the £12bn of welfare cuts and some punitive assaults on the rights and living standards of Britain’s youth, for whom the chancellor seems to harbour a particular antipathy and malice.

Welfare destruction

One way or another, the £12bn cut to the welfare state will hit every working-class family in the country. £1.5bn of this is proposed to be found in a new benefits cap, which reduces the maximum entitlement by almost a quarter to a maximum of £20,000 per household per year. Additionally, all benefits, excluding those for maternity, paternity and disability, will be frozen for the next four years, whilst 18-21 year olds will see their housing benefit entitlements abolished – an entitlement that the homeless charity Shelter calls “a vital lifeline that stands between them [young people] and the streets”. (‘Slipping through the safety net’, April 2015)

Child tax credits are also set to be limited to two children only – something that will condemn millions of working-class children to a life of poverty and deprivation. Needless to say, not one of the parasites in the Palace of Westminster, from any of the bourgeois parties, would allow their own children to endure the squalor to which they would all happily consign the children of the working class.

Certainly, the pitiful bribes offered to the working class in this latest budget cannot hide the gaping wounds that will be inflicted over the next five years, with the proposed increases to the minimum wage and income tax allowances falling well short of accounting for the planned losses.

The National ‘Living Wage’, as it has been cynically rebranded, proposes an increase to £7.20 per hour for a 25-year old, with an outlook of reaching the princely sum of £9.00 by 2020 (quite possibly a decrease allowing for inflation!)

Yet the calculation from the Living Wage Foundation itself deemed that the real minimum living wage in 2014 already stood at £9.15 in London and £7.85 nationwide. This ‘living wage’ is actually the bare minimum necessary for a worker to continue working, meaning that millions of families are not receiving what they need, even if they are in work. By 2020, with prices rising disproportionately to wages, not a single working-class family will be in any better a situation in real terms – the small increase in income tax allowance notwithstanding – and many will be considerably worse off as the gap between their income and the cost of living continues to expand.

Given that the justification for all this austerity is the reduction of the deficit, one can’t help but wonder how these measures are expected to achieve that end. The present government is clearly hell-bent on creating a low-tax, low-wage economy (as opposed to Labour’s low-wage, high-tax model), but, as wages decline, the government’s ability to collect taxes will also decline – a situation that can only be compounded by the increase in corporate tax breaks.

So where is the money to come from that will pay off government (formerly bank) debt and thereby reduce the deficit?

Housing profiteers and corporate robbery

At the forefront of the budget was Osborne’s pledge to comparatively better-off workers of a raise in the inheritance allowance to £1 million. This move is meant to cement the sense of ‘I’m alright, Jack’ attainment that some sections of workers in London and the South East may be feeling after many houses have doubled, tripled or even quadrupled in value over the course of recent property-speculation booms. As a result of this meteoric inflation, a large number of families who may still be quite cash poor now find themselves in the position of being officially ‘worth’ over a million.

Meanwhile, the crisis that inflated rents and house prices have created for increasing numbers of young (and many not-so-young) people looking for somewhere to live is deepening by the day in the South East. And, of course, what went up could also very conceivably come down. Those who have managed to buy are now saddled with mind-boggling levels of debt, which they try to console themselves is an ‘investment’, but which may well be transformed into to negative equity at some point in the future when the bubble bursts and prices ‘adjust downwards’.

Osborne’s new tax-free inheritance allowance, while having no effect on the majority of debt-ridden workers, is meant to make the lucky few who have accidentally found themselves on the winning end of this merry-go-round forget about the fate of the not-so-lucky many, encouraging them to feel that since their own children (or grandchildren) might obtain a certain level of security when their home is eventually passed on, perhaps there is no need to question the (clearly insane) status quo that leaves everyone else’s children and grandchildren to the mercy of the slum landlords and housing profiteers.

Meanwhile, the biggest winners are Britain’s corporations, with corporation tax being cut down to 18 percent. Britain’s existing figure of 20 percent, already the lowest of any G20 economy, was previously generally considered as the absolute bottom line, but now the plan is to reduce it to 19 percent by 2017 and 18 percent by 2020 so as to ‘boost competiveness’ – or, in other words, to favour big businesses that operate by keeping the people down.

It seems, then, that the government’s promise to start clamping down on tax avoidance is there to conceal a reality of simply demanding far less tax from corporations in the first place – thereby saving them the troublesome work of setting up accounts or companies in offshore tax havens so as to max out their superprofits.

This is even more evident when one factors in the now £200,000 ‘investment allowance for business’ – a measure that will have no positive impact on small businesses but favours only the monopolies.

Attacking the young

Whilst Osborne’s vicious budget hits all working people hard, by far his most savage assaults have been reserved for the youth.

As documented in the Shelter publication cited above, the abolition of housing benefit for 18-21-year olds will inevitably lead to a rise in homelessness and poverty to the levels last seen in the 1980s. Shelter documented that, rather than creating a smooth transition from school to work, as presented by the government, the measures will actually “increase the barriers to employment, education or training by removing access to a stable home”.

Yet since the report’s publication in April, the government has predictably taken not the slightest notice, and pressed forward with its assault on the younger generation.

Measures have also been outlined that will make training, apprenticeship or work placements mandatory for 18-21-year olds who are out of work for more than six months, backed up by the planned creation of three million apprenticeships. Yet whilst the government blows its own trumpet for supposedly ‘helping’ the younger generation, it has in fact merely created three million non-jobs in its pursuit of not so much a ‘low-wage’ as a ‘no-wage’ economy.

Pay taken home under these schemes falls severely short of a living wage of any kind, with full-time weekly hours usually paid at around the £100 mark. Meanwhile, in many cases, the ‘skills’ supposedly being acquired are of little or no use. Rather than promoting scientific and technological training, many of these young people are being driven towards the service sector that has engulfed what little of the job market remains.

The reason is simply that there is an unwillingness to invest now for the future, and profits need to be made immediately. Big businesses do not have the time to wait for positively life-changing ideas, and in most cases disregard them due to their being considered unprofitable. The concept of science and technology being used for the good of humanity is completely absent from the calculations of crisis-ridden capitalism in its decadent imperialist phase.

Even at the higher end of education, students who are still eligible for them are set to lose their ‘education maintenance allowances’ in favour of the further extension of a loan-based system, designed to both restore tertiary education as a preserve of the elite and to extract every possible penny from those from less-privileged backgrounds.

No future under capitalism

Changes in rules governing access to pensions (described as ‘freedoms’ by the government, but which actually make it harder to make any kind of a secure plan for the future (all the more important now that the state pension has been reduced to below-poverty levels), and the alteration to employers’ National Insurance (NI) contributions (paying nothing for longer) only further demonstrate the anti-worker direction that our ruling class is so ruthlessly pursuing as the crisis erodes its profit-taking opportunities.

Ultimately, what the working people of Britain need is control of their own wealth and a decent future for our children, not the destruction of living standards and the yawning chasm between rich and poor. The fact is that no capitalist state can possibly cater for the needs of the masses – and at a time of crisis like the present, this fact becomes blindingly obvious.

As this latest budget demonstrates, it is only the children of the super-rich – the major property owners, managing directors, major shareholders and ‘banksters’ – who have any prosperity or security – and these are founded on and sustained by the blood money of imperialist superprofits.

Workers do not need slightly less unliveable benefits or a slightly lower level of taxation; we need and deserve secure, meaningful, properly-paid work, along with good-quality, secure housing, free education at all levels, comprehensive health care, free nurseries and crèches, high-quality communal kitchens serving nutritious food, and leisure time in which to access to culture, sports and other pursuits that create the basis of a truly civilised life.[a name=”_GoBack”>[/a]

Workers create society’s wealth; we should not have to beg for hand-outs to keep the wolf from the door. Our demands will be perfectly possible to achievable once society’s resources are taken into common ownership and used for the benefit of all. But that will not happen until we organise ourselves to take over the reins of power and build a new, socialist society.

The days when we allow ourselves to be exploited and paid a pittance so that a tiny minority can grow fat by living on our backs must be brought to an end. The latest budget is further proof that the ruling class at a time of capitalist crisis cannot but act to pass the burden of that crisis onto the poorest and most vulnerable in society. That is why communists demand not merely reforms that leave the system intact – not merely slightly ‘fairer’ wages – but an end to the wages system.