George Osborne was yesterday forced to retreat on plans to cut tax credits, due to overwhelming opposition. This backtrack by the Tory Chancellor exposes the weakness of the government, and is a foretaste of the turbulent period ahead in Britain as the Tories attempt to push through their programme of austerity.
Despite his best efforts to save face, the reality is that George Osborne was forced to retreat in yesterday’s Autumn Statement on his planned cuts to tax credits, due to overwhelming opposition from all angles. This backtrack by the Tory Chancellor exposes the weakness of the government, and is a foretaste of the turbulent period ahead in Britain as Osborne, Cameron, and co. attempt to push through their programme of austerity.
“This was no mealy-mouthed retreat: this was a full-throated bellow of surrender, a near-total capitulation,” the Financial Times (25th November 2015) bluntly stated. “Indeed Mr Osborne spent much of this statement climbing out of the political traps he had built for others and then fallen into over the past year.”
A cut too far
Osborne’s earlier attempt to cut tax credits had provoked an almighty response. Tax credits have become a vital lifeline for almost five million families in Britain’s low-wage economy – a state subsidy to boost big businesses profits – and the Tories’ plans to take this crutch away was a step too far for many.
Images of a woman – a former Tory voter, no less – brought to tears of anger on Question Time, accusing the Conservative panellist and her colleagues of lying, were a stark reminder of the social ramifications of austerity. The cuts required by capitalism are so deep that even traditional Tory supporters are having second thoughts about which party to vote for. The current attacks on junior doctors are another clear example of the same process: as the true scale of the cuts begins to bite, even those who once considered themselves to be part of a protected, educated middle class are coming to realise that there will be no escape from the impacts of austerity.
The new Labour opposition of Corbyn and McDonnell piled on the pressure in Parliament, and even Conservative MPs began to question Osborne’s decision. Finally, it was the vote in the House of Lords to delay the tax credit cuts that signalled the death knell of this hated Tory policy. The fact that Tory MPs and unelected peers had come out against these measures is yet another sign of the cracks in the establishment that are opening up as the economic foundations and social fabric in society are torn apart by the crisis of capitalism.
Every silver lining has a cloud
Despite the good news of the tax credit cut retreat, the rest of Osborne’s Autumn Statement was laden with attacks on workers, the youth, and the poor. Make no mistake about it: this was very much an Austerity Statement, with plans to turn a £74bn deficit into a £10bn surplus over the next five years, cutting the state budget from its 2010 figure of 45% of GDP to 36% by 2020.
The planned tax credit cuts might have been scrapped, but this announcement was only a sleight of hand to distract from the £21.5bn in cuts to government departments and the £12bn that will be slashed from the welfare bill. As those on housing benefit heard news of further attacks, parasitic landlords and millionaire property developers were rubbing their hands with glee and popping open the champagne in response to the news provided by their reliable representative, the Tory Chancellor.
The Queen, meanwhile, will have been pleased to hear that she is one of the few lucky people in Britain – along with MPs – to receive a pay rise, with Her Majesty set to gain 7% more than last year thanks to bumper profits from the Crown Estate.
In short, it was another typical Tory budget statement, filled with austerity and cuts for the 99%, alongside gifts and handouts for the 1%. Another fine display by this government of the rich, for the rich, by the rich.
Storm clouds on the horizon
In an attempt to appear magnanimous, Osborne claimed yesterday that his U-turn on tax credits was thanks to a change in the forecasts from the Office for Budget Responsibility (OBR), who allowed the Chancellor to pull a £27bn rabbit out of the hat with improved estimates for future tax receipts and lower debt repayments. Nevertheless, the reversal is an embarrassing climb-down for Cameron and Osborne, and will rightly be seen by those fighting the cuts as an indication of the Tories’ weakness.
Many commentators have described Osborne as “the lucky Chancellor” for having been gifted this wiggle room by the OBR. Any hubris now on Osborne’s part, however, would be very much misplaced. Rather than smugly welcoming the OBR’s forecasts about the future growth and strength in the British economy, the Tory Chancellor might instead want to focus his attention on the perilous warning signs that are flashing across the dashboard of the world economy.
From China and the emerging economies to the fractious Eurozone and Middle East: across the globe, all the signposts are pointing towards the imminent danger of a new world slump – a perspective shared by the Marxists and the more serious, far-sighted bourgeois analysts. Such a crisis – even deeper than the last – would quickly drag down every country, including Britain. In such a scenario, all the best laid plans of the Tories would quickly go awry, thrown into the dustbin in favour of even more severe and brutal cuts in a futile attempt to restore economic equilibrium.
The perspective, therefore, is not for “light at the end of the tunnel”, but of storm clouds and mighty class struggles on the horizon as austerity begins to cut to the very flesh and bones of society. In such a period, socialist ideas will be back on the agenda, as workers and youth search for a genuine alternative to this future of endless austerity under capitalism.
“On Wednesday, Mr Osborne changed his mind, and not subtly,” writes Janan Ganesh in the Financial Times (25th November 2015), discussing the implications of Osborne’s U-turn.
“This was a climbdown in broad daylight by someone who has explored all other options and found them wanting…
“The real worry for Mr Osborne, the government and the cause of fiscal sanity is the message he may have just sent out to opponents of cuts: if you push us hard enough, we will relent…
“If Britons absorbed austerity with surprising forbearance, summoning no serious protests or civil disorder, it was partly because they sensed it was inevitable. That sense will fade if the government has many more moments such as Wednesday. Stubborn commitment to a policy in the face of opposition is masochistic, but weakness is provocative…It is now the People v George Osborne.”
It is vital now that the labour movement responds to this display of weakness on the part of Cameron and Osborne by going on the offensive, driving a wedge into these cracks that have been exposed. Never has there been a better time for the trade union leaders to call a general strike, with the aim of bringing down the Tory government.
Unfortunately, the ability for Corbyn and McDonnell to take advantage of this opportunity is hampered by their need to constantly fend off attacks from the Fifth Column of Blairite MPs within their own party. Lest we not forget that 21 Labour MPs refused to vote against the Tory fiscal charter of permanent austerity, whilst only months ago 184 Labour MPs helped the Tory welfare bill pass by abstaining. Now, with an anti-austerity leader at the helm, a cabal of right-wing MPs have made it their overriding mission to expend all their energy not on fighting the Tories, but on undermining and destabilising Corbyn.
If the Corbyn-led Labour Party is to mount an effective challenge against the Tories and their austerity, it must be united around a genuine anti-austerity programme of its own – a programme that has a clear mandate, given Corbyn’s landslide victory in the Labour leadership election. Those Labour MPs that refuse to support Corbyn in fighting for this programme, instead spending their time attacking the new Labour leadership, must be told in no uncertain terms by Labour members to either shut up or get out.
Fight austerity with socialist policies!
At the same time, we must reply to Ganesh and his comments above from the Financial Times, and state clearly: under capitalism, there is no alternative but austerity. Osborne’s temporary retreat, whilst a sign of weakness, does not signify that the cuts are in any way “ideological”. Under the hammer blows of the crisis, the Tories will be forced to come back to the table with even more brutal attacks against the working class and the poor.
Similarly, a future Corbyn Labour government – if it does not break with capitalism and its logic of crisis and austerity – will also be forced to carry out deep cuts. Nowhere is this necessity of austerity shown more starkly than in Greece, where even the “radical left” government of SYRIZA reneged on all its promises in the space of just six months. The result: a so-called “Left” government that is now carrying out even worse austerity than its Greek Tory predecessors.
Corbyn and the other leaders of the labour movement must learn the lessons from Greece and fight the Tories and their austerity with socialist policies. As long as we remain with a system of profit and competition, with the fulfilment of society’s needs left to the anarchy of the market, there can be no future for the 99%. Only with the socialist transformation of society can there be a way out of this impasse of capitalist crisis.