The Con-Dem coalition has launched an all-out assault on the public sector and the welfare state in the name of reducing the budget deficit. What will be the impact of these austerity measures? Judith Orr looks at the risk of a double dip recession - and the possibilities of resistance.
It started with the banks going bust and ended up with closing playgrounds. Or as Tory education secretary Michael Gove put it, "Play has to make its contribution to tackling the deficit." Today the economic crisis is being played out in the lives and meagre budgets of millions of ordinary people in Britain as the sheer scale of attacks planned by the government starts to become concrete.
There is a daily battle over interpretation of the dramatic events of the last two years. The government's narrative is that Labour's profligate spending on the public sector has created an unacceptable level of debt in Britain's economy.
This debt, so they claim, must now be repaid by making cuts of up to 40 percent (and in some cases more) in targeted areas of public spending - a figure essentially plucked from the air. We are constantly told that such cuts are "unavoidable" and are the only way to cut the deficit, a goal that has become the government's mantra.
Every day there are new leaks or pronouncements detailing what is going to be cut. These have been accompanied by a sustained government propaganda campaign to put the public sector in the dock as being wasteful, unfair and unaffordable. This characterising of the public sector as an unproductive burden on society is a shameful dismissal of the essential social and economic contribution made by millions of public sector workers.
The Con-Dem coalition has passed its watershed moment of 100 days boasting of its achievements. Nick Clegg told us it was going to bring fairness and increased social mobility to British society while still concentrating on bringing the deficit down. This is despite every indicator showing that the poorest will suffer the most from the austerity programme that is being imposed. What Clegg won't admit is that the Tories' project is about far more than merely bringing down the deficit. The Tories have made their intentions clear - their aim is nothing less than the complete slaughter of social provision and the very basis of the welfare state in Britain. Universal benefits, council housing, support for people with disabilities and subsidised child care are all fair game.
The wider mission of the government was exposed by an exchange at one of David Cameron's "meet the people" events, PM Direct. A firefighter pointed to cuts in the fire service that meant lives were being lost. She asked, "Will you give me a pledge today that when these austere times are over, and you have the money back in the bank or you're balancing your books, that you will look at anything that is cut during this period and go back and get those fire engines back in the places they are needed to support the public?"
Cameron's reply was essentially no: "I think we should be trying to avoid that approach." He made his intentions clear: the cuts are permanent; they are part of a long term plan. The government are making cuts in jobs and public services because they want to, because crisis or not that is their project.
The Tories want to completely restructure British capitalism and transform the nature of the British state. The basic expectations of mutual support that people have of the social democratic state established in the aftermath of the Second World War are to be smashed if they have their way.
This is why we have to go beyond merely a discussion of cuts and whether they will be effective in putting the economy back on track. Firstly because "back on track" on their terms simply means restoring profits to bosses and bankers, not ensuring the vulnerable have the networks of support they need and deserve, or that every young person receives a decent education, or that every older person has a good pension and long retirement. They want us to share the pain during the bad times but workers never get a rightful share in the good times when the system is booming.
Secondly, the Tories want to use the crisis and the drive to reduce the deficit as an opportunity and shift the balance of power in society sharply in favour of capital. They want to take advantage of the fact that there is some sort of consensus about the need for some level of cuts and use it to drive through a thoroughly Thatcherite programme.
They may keep repeating the phrase "We are all in this together", but no one believes it. Inflation is on the rise, food prices are going up at the same time as wages are frozen or cut back, and jobs are going.
Meanwhile, back in the City, profits are up and bonuses are back. Median pay for the highest paid directors in the FTSE 100 has risen from around £2.5 million to £3 million in the last year, and the typical bonus earned in the past year was about 120 percent of salary. The executive pay specialists Hewitt New Bridge Street attributed this to what they describe as the "unexpected rate of improvement in economic conditions throughout the year".
The dark days of 2008, when bankers brought the system to the brink of catastrophe, appear, for them at least, to be a distant bad memory and now the debts they amassed are our problem. As Financial Times columnist Philip Stephens wrote, "Families are paying the bankers' bills through rising taxes, shabbier public services and higher unemployment."
The scale and speed of the cuts - and their potential to cause the economy another heart attack - has even divided the ruling class.
Mervyn King, governor of the Bank of England, revised down his economic outlook last month and revealed his wariness about the future in his assessment that Britain was going to go through a "choppy recovery". This was because, he explained, of "the softening of confidence, the persistence of tight credit conditions and the faster fiscal consolidation". The implication is that if the government hadn't gone for harsh and immediate austerity the recovery might have been more stable.
The Financial Times only recently ran a heated weeklong debate on the whole question of "cutting versus stimulus". Even the IMF has stated that, "Most advanced economies do not need to tighten before 2011 because tightening sooner could undermine the fledgling recovery."
The concern about the impact of harsh austerity measures is obvious. If you cut services it means fewer jobs, which means less spending power. If you also cut welfare precisely when more people might need it that both cuts people's ability to survive and limits spending power. All this has an impact on everyone else who would normally sell things to workers, whether it's a new kitchen or cinema tickets, this in turn will lead to fewer jobs and even less spending power and so on.
But in Cameron's narrative, increasingly becoming a fairy tale, the private sector will bounce back lean and healthy and provide the jobs that have been lost in the public sector, and in some cases provide the services that state-employed workers used to provide.
This overlooks the fact that there is no crude division between public and private sector jobs, partly because of years of privatisation. Over a third of public services are now provided by the private or voluntary sector. This means many of the public sector cuts will have an immediate impact on private sector jobs. For example, the 40 percent cut in the Central Office of Information, the body which co-ordinates government marketing and advertising spending, has a knock-on effect on private advertising firms. The cancellation of new school and hospital projects immediately has an impact on the building trade.
But the main problem with the Tory tale is the lack of evidence that the private sector is dynamic and vibrant and about to emerge out of the crisis, phoenix-like, poised to rapidly expand and provide hundreds of thousands of jobs. There simply isn't any. Instead there are plenty of signs that the opposite could occur, a second and deeper recession - the dreaded double dip.
Both boom and bust
No economist, politician or commentator is ruling out the possibility of a collapse into a second, potentially worse, recession. Economic predictions are constantly being challenged and some are so loose as to be pointless. The Financial Times recently pointed out that "using past forecast errors as a guide, the new UK Office of Budget Responsibility sees an 80 percent chance that the British economy will grow between a negative 0.4 percent and a positive 4.7 percent in 2011, a range so wide it encompasses both boom and bust".
Vince Cable has been quoted as saying the chances of a double dip are around 50/50 - hardly reassuring when the stakes are so high and people are being asked to sacrifice so much. But of course even the term "double dip" assumes that we are climbing out of the first one, an assumption that many economists challenge.
Internationally the picture is uneven, both in terms of the severity of the impact of the crisis and in the responses to it. Credit rating agencies have assumed a position of complete power. The impact of losing triple A status can add millions to interest payments on national debts so they can call the shots and demand austerity measures in return for credit.
In the US, as more money is pumped into the fragile economy, unemployment is still running at almost 10 percent. The number of "99ers" has risen to over a million - these are people who have used up the 99 weeks of unemployment benefit they are entitled to and have no income at all.
In Europe only Germany has seen strong growth. This is because of the level of exports, especially to China. But this is a situation which may not be sustainable as China tries to rein in its own economy. Ultimately it is difficult for any national economy to decouple from the impact of the recession and so a generalised attempt to drive down workers' living standards looks set to continue.
The battle we face takes place on several fronts: economic, political and ideological. The ideological debate about social provision is not a new one. Margaret Thatcher started the propaganda war, then Tony Blair and New Labour enthusiastically carried it on. But what we are seeing now could mean a qualitative shift. The fact that Cameron feels he is able to question people's right to live in a council home for the whole of their life shows how far the ground has shifted.
Thatcher changed the law so people could buy their council homes, at knock-down prices, thus taking publicly owned assets and putting them into individuals' private pockets. New Labour were terrified of reversing the right to buy, believing it to be a vote winner. But not only did they not stop the sell-off of council housing, they made it illegal for councils to use the income to build more public housing. As the pool of council housing shrank it came to be seen as a last resort for the poverty stricken, for families in crisis rather than a stable, efficient and just way for people to put a roof over their heads. Similarly Blair's government encouraged people to believe that private financing deals were the only way to get funding for new hospitals or schools. Consistently the private sector has been portrayed as dynamic and efficient, and the only way to cut costs.
Excuse for cuts
Socialists have always challenged this ideological drift. For us the public spending deficit is not a justification for cuts, but merely a convenient excuse. When the welfare state was established the economy was on its knees after six devastating years of war. The level of debt in the British economy stood at an astonishing 200 percent of GDP, which makes today's situation look positively rosy. This high level of debt was carried all the way through the 1950s yet it didn't stop the system expanding in a long boom and seeing up to 300,000 council houses built a year during much of that decade.
After the war, which had seen the state play a role in every part of people's lives to maximise the war effort, people were convinced that state provision and planning were the fairest way to organise society in peacetime too. There was a popular mood of expectation that society was going to give everyone a chance and support would be available for all those who needed it. Most significant was the establishment of the National Health Service - for the first time millions of working class people could visit the doctor or dentist without anxiety about whether they could pay the bill.
Today the mood of anxiety about the future in Britain runs deep. There is a profound sense that nothing is going to be the same again, that future generations are going to be paying the price for the system's failures for years to come. Yet as always this mood is riven with contradictions, possibilities and problems.
But we also have to look to the contradictions on their side. The government is attempting to do something even Thatcher didn't try, a generalised offensive against the whole of the working class and the poor. It is a high-stakes strategy. Cameron should remember that Thatcher pushed too far when she brought in the poll tax and it eventually brought her down. This government is not all-powerful. Its vulnerability was exposed last month when Cameron did such a swift U-turn on the proposal to cut milk for the under-fives that a minister was still defending it on live television as Cameron ruled it out.
So Cameron may want to carry on Thatcher's legacy and slash social provision but he knows there remains deep bitterness among millions in Britain about Thatcher and all she stood for. The stopping of free milk for primary school children became the symbol of her disdain for the welfare of some of the most vulnerable in society. Cameron realised that he could not risk such a potent connection to the Thatcher years.
Inside the coalition cracks are already emerging. The Liberal Democrats are facing a backlash both inside their party and among the wider electorate which could have a long-term impact on their chances of electoral victory in the future.
Remember the whipping up of support for the Lib Dems among disillusioned Labour Party supporters during the election campaign. After the first leaders' debate the opinion pages were swooning over Nick Clegg's performance. Many hitherto Labour voters declared that the Lib Dems were the radical alterative, seen as being to the left of Labour on some touchstone issues. Much was made of their commitment to the environment and civil liberties - according to the spin they were going to reshape the traditional two-party political debate.
In the end their election result fell well short of the pumped-up expectations, disappointing all those who hoped for a breakthrough. Instead of reshaping anything they are now holding up a plain, old-fashioned, rabidly anti working class Tory government, which ironically may ensure they never taste power again.
The opinion polls reveal the trouble they are in. One showed that four in ten Liberal Democrat voters would not have backed the party in the May general election if they had known the party would enter a coalition with the Conservatives. Peter Kellner of YouGov points out that of those who voted Lib Dem on 6 May, just 46 percent would vote for the party if an election were held now. Overall Lib Dem support is down by one third since the election. BBC2's Newsnight found that 37 percent of Lib Dem voters asked said they felt their party was being dishonest about cuts and 53 percent believed their party's identity was weakened in the coalition.
Voters who voted Lib Dem to keep the Tories out are finding it galling to see Lib Dems like Vince Cable morph into cheerleaders for Tory policies.
The immediate beneficiary of this disillusionment with the Lib Dems has been the Labour Party, which has experienced a revival since the last days of the general election campaign. Since the election there has been a 6 percent rise in its overall membership. During the joint press conference where Nick Clegg and David Cameron announced the coalition, the party's Twitter feed announced "unprecedented numbers of people joining the Labour Party. 1 every 15 seconds at the moment." Thousands now have joined Labour, some are rejoining, some are from the Liberals and others are joining fresh.
Back to Labour
Many supporters came back to Labour despite its record on neoliberal policies and the war in Iraq because the Tories became seen as the main enemy when it came to a decision of whose side you were on. Regular readers of this magazine will remember the debate about this possibility in the months leading up to polling day.
With the resignation of Gordon Brown, Labour had a real chance to draw a line under its 13 years in government and define a new political agenda. Instead Labour are not providing a lead in opposition to the attacks and you see a leadership election dominated by the ideas of New Labour. Diane Abbott is the best candidate. It is a sign of the weakness of the Labour left Abbott only got on the ticket so that the election could be presented as a genuine debate in the organisation. This was an opportunity to put forward a progressive agenda and revitalise the left. Even some of her closest supporters admit that so far she has failed to do this.
Sections of the left say they are experiencing a resurgence since the general election. For instance, shortly after the election the Labour Representation Committee (LRC) held what they said was their largest conference for many years and a number of key student activists have joined Labour. How significant this development may be remains to be seen. But it is worth noting that the LRC meeting claimed to be 300 strong, a decent meeting but a long way from the heights of Bennism, when Tony Benn could draw 1,000-strong crowds at Labour Party meetings across Britain.
Now they are in opposition many of us on the left are encouraged to see numbers of Labour MPs, councillors and local activists joining campaigns against Tory cuts. While we shouldn't forget the betrayals of the last 13 years of Labour in office we want to work together to build the biggest coalitions against the cuts. "The year ahead promises to see the coalition tested in a cauldron of unpopularity," wrote Philip Stephens in the Financial Times. If the Tories are to drive through the level of cuts they are talking about they can't avoid being brutal and - however they spin it - that won't be popular. It is one thing for people to accept in the abstract that public spending needs trimming; it is quite another when cuts become concrete, and this is when people respond.
The response will not automatically be that of resistance. It can become a question of calling for others to take the pain: cut that old people's lunch club, not our playground, or cut those useless workers, not us.
What is needed is united working class resistance, and on one level the possibilities for such a response look bleak. The majority of the trade union leadership might as well have left the field of battle. The TUC has ruled out calling a national demonstration against the cuts until March 2011. Derek Simpson, joint general secretary of the Unite union, defended this by claiming the government would like the unions to talk about a winter of discontent as it would "move the whole emphasis to union militancy and away from the cuts".
Yet many workers would love to see the agenda changed from nightly news announcements of the next attack on our living standards to some solid plans from trade union leaders about how we could resist. Some union leaders, such as Bob Crow and Mark Serwotka, are arguing for this approach. They have been pushing hard for the TUC to call a national demonstration or action to mobilise the labour movement against the austerity plans now and not to wait.
One argument used to defend delaying action is that many of the cuts will have been experienced by next year and that there will be greater anger and the potential for a larger mobilisation. But the experience of successful cuts being implemented can turn anger and bitterness into demoralisation. It is a myth that those suffering the most hardship automatically want to fight. Six months of cuts is a long time.
Simpson also claims that British workers are by nature not militant: "I don't think that's the nature of the British public - we don't have the volatile nature of the French or the Greeks." Apart from the offensive assertion that people's behaviour is defined by their racial origin the idea that only the "hot-blooded Europeans" take to the streets is the oldest cliche in the "why we can't fight handbook".
But even when there is a willingness to fight, union leaders have thrown away the opportunity to push the bosses back. Last month workers at the British Airports Authority (BAA) won a vote for strike action over pay. A strike would have closed down six airports on the August bank holiday - a prospect which struck fear into the employer. Unite negotiated a doubling of the workers' annual pay rise from 1 to 2 percent. But when inflation is running at 5 percent it is still effectively a pay cut. They could have won so much more and if the Unite union leaders had brought the struggles of BAA workers together with the British Airways cabin crew the union would have had the airline bosses over a barrel.
Working class anger and a mood to fight cannot be sealed in a bottle, ready to be unleashed when union leaders choose. Flashpoints can happen in the most unpredictable places. We must never underestimate the impact of even small examples of resistance. Two years ago the labour movement was electrified by the occupations of the Visteon and Vestas factories. Those struggles showed that when any section of workers say enough is enough and take action there is within it the possibility, the germ of something greater. Whether it is about pensions, redundancy pay or a bullying boss, socialists can build the traditions of solidarity with other workers and fight for the greatest possible unity across the working class.
There are a number of initiatives and organisations attempting to bring people together to resist the attacks. There will be protests around the country on the day the government announces the details of its spending review on Wednesday 20 October and the Scottish TUC has called a demonstration against cuts in Edinburgh on 23 October, the first Saturday after the spending review. The National Shop Stewards Network has called a lobby of the TUC conference in Manchester on Sunday 12 September and there is going to be a march against cuts in education on Wednesday 10 November, called jointly by the National Union of Students and the lecturers' UCU union.
Resistance is possible
Most importantly, the Right to Work campaign has called a national protest outside the Tory party conference in Birmingham on Sunday 3 October. This can act as a beacon of opposition for workers across the country, showing that the cuts are not the inevitable, unstoppable future and that resistance is possible.
Right now we have an opportunity to build the sort of response that can halt the attacks. We have to strive to build struggles that can unite workers and service users, private and public, employed and unemployed, pensioners and students and British-born workers with migrant workers in their common cause.
When the banks collapsed and billions were poured into their coffers to keep them afloat the very nature of the free market and the capitalist system itself was questioned. It was exposed as unstable, inefficient and reliant on public money to survive. Today history is being rewritten and once again we are being told that the market is our saviour and there is no alternative to a world driven by profit.
The Greek working class has shown us there is an alternative. By putting militant working class action on the world stage it showed the potential to challenge the priorities of the bosses and bankers.