The energy scandal and the profiteering of the six giant companies – which control 98% of the market – really highlights the choices between heating and eating that increasing millions of people have to face. Darrall Cozens looks at this “new normality” under capitalism for ordinary working class families.
The energy scandal and the profiteering of the six giant companies – which control 98% of the market – really highlights the choices between heating and eating that increasing millions of people have to face.
We know from recent government announcements that “austerity”, or cuts in living standards and public services for millions of working class people, will last until 2020 at least or until the annual budget is in balance. Yet despite all the cuts so far the annual deficit has only been reduced from £170bn to £120bn. So now we know what is in store for us.
This is the new normality for working class families. While those at the top of society, the bankers, financiers, and CEOs of large corporations, continue to enjoy multi-million pound salaries and bonuses, we face at least another decade of cuts without even the hope that our sacrifices will be rewarded.
For many the present is bad enough. The future will be even worse. According to the Child Poverty Action Group 3.5 million children, some 27% of all children, live in poverty. In some wards it is 50-70%. In the 1960s the figure was two million. 63% of these children have one parent or carer in work.
Under current government policies the figure will rise to 4.7m by 2020. Oxfam says that 13m people, one in five of the population, live below the poverty line. This line is 60% of average earnings. 7m of these are in working families. So poverty is mainly caused by poverty wages.
Even the government’s own Money Advice Service states that 9m people have serious debt problems and 4m of these have been in this position for longer than a year. In some cities the situation is drastic. The figure for Hull is 43% of the population, for Manchester, Nottingham, Knowsley and Liverpool the figure is over 40%.
And now people are faced with rising energy bills, while at the same time 5m households are in fuel poverty, where fuel costs take up more than 10% of income. For the poorest 10%, energy costs are more than 20% of income.
And it will get worse. The government has recently given three overseas companies the contract to build a new nuclear plant at Hinckley Point with a government subsidy of £16bn; a subsidy that is now being investigated by the EU. The contract says there will be a minimum price guarantee of £92.50 per Megawatthour (MWH), which is almost double the present price of around £50. The contract also has an in-built inflation clause. By 2023 the price will be at least £121 per MWH. What a condemnation of capitalism!
The provision of energy for homes can only be guaranteed if the companies that have the contract to build the plant are bribed with taxpayers’ money and guaranteed selling prices that will in turn guarantee profits.
This new normality under the guise of austerity means falling living standards for the majority, cuts in public services and precarious, short-term, zero hours working conditions. It also means attacks on workers’ rights.
For example, at Grangemouth in Scotland workers were forced to agree to a three-year wage freeze, a three-year no strike deal, giving up their final salary pension scheme and an end to full time trade union representation on site, in order to save jobs. When the contract was signed, job losses were announced.
Under this new normality the share of wealth that is produced by labour has gone down from 65% of GDP to 53% over the past 30 years. How have workers managed to cope? By borrowing. They did it in the lead up to the crash of 2008 and they are doing it now. The Bank of England states that personal borrowing, including mortgages and unsecured loans, stands at £1.43 trillion, the same level as September 2008 when the crash happened. The government is cutting its spending to reduce its deficit. At the same time it is making it easier for people to build up private debt. The present “boom” is built on a housing bubble and consumer credit. It is a recipe for another crash and further public spending cuts.
This is the future for us if we don’t put an end to capitalism. At the present time firefighters are taking action to defend their pensions. Their slogan is, “We save people, not banks”. We have austerity as the banking crisis triggered the economic crisis. So the basic question is this. If we did not cause the crisis, why should we pay for it? Why should we suffer cuts so that the rich and powerful continue to rake it in?
The energy companies should be nationalised under workers control and management with compensation paid on the basis of proven need. But to really plan the growth of the economy and the just distribution of the wealth that the labour of working class people produces, we must also nationalise banking and finance and the rest of the giant corporations that dominate the economy. Only then can we begin to build the basis of a new society that will abolish austerity and guarantee a secure future for all.