I have added a link (see useful links) to the PCS Union's "Campaigns" tab at a contributor's request. It contains a lot of useful information, particularly the page entitled "there is an alternative".
The PCS is the main union for public sector workers and therefore could be accused of being biased in favour of the public sector. Equally, it is likely to be very knowledgeable about this sector too! As with anything you read I think it is very important to be objective and to recognise bias as well as knowledge where it may exist.
There are some very useful statistical facts in the PCS document and it offers a knowledgeable opposition to the government line that it is a duty rather than a choice to make the cuts in the way they are making them. The principles of objective analysis should be applied to anything we are told by the Government, or politicians, too. This is not about accusing them of anything, it is about recognising where biases and conflicts of interest might exist and balancing evidence for the various arguments.
Without evidence or argument how can something be considered a credible statement? Just trusting that the Government will not mislead you is pretty dangerous, especially when we have a Government which doesn't have a majority of the vote and has gained power through (legitimate) political maneouvering rather than the support of the voters. It means the government inevitably has more to prove to the people. I always try to look at context, the argument and the evidence when forming my opinion. Recognising it is an opinion is important too! One of my biggest bugbears is spouting opinion as though it is fact, although we are all guilty of this occasionally!
What I have found difficult about the Government line of "The mess we inherited has meant it is our duty to take this action so we don't end up like Greece or Ireland" is, it is an over simplification of many complicated economic issues. Nevertheless, as with anything, it is an argument which I was willing to consider.
I have asked, in person, in writing, by telephone many, many, many times for any kind of justification of this argument. I asked for justification of various points from several people - David Sudworth at Sefton Democracy Club, I have asked John Pugh, John Pugh's office workers, Tony Dawson, Tony Robertson (about Ireland), various individuals in real life and over the internet and I have never, not once, been given any justification which makes sense, despite all of these people stating it. I have never seen a good supporting argument for austerity being a duty, for austerity being the solution or for not imposing austerity causing our economy to go the way of Greece and Ireland's. I have, by contrast, seen a plethora of very convincing arguments for the opposite. That austerity is a choice and is likely to cause significant hardship for the people and damage to the economy (as seen in Ireland and Spain where austerity drives have increased the likelihood of defaulting and worsened their economic crisis). That austerity is largely "faith based economics" and that it causes the poorest to suffer the most.
Austerity is not a duty, whatever the economic situation. The fact that we are told there is no choice is almost certainly an indicator of untruth. There is always a political choice, that is why we have politicians. Sometimes it will be "Sophie's Choice" but there is always a choice. The duty is to the people, not to austerity. Perhaps it could be reasonably extrapolated that if austerity was the best choice, perhaps it would count as a duty to choose the best choice, and therefore, a duty to austerity. But the current situation, in my view, is far from that and many economists agree (300 US economists signed this pledge). The European Commission who originally asked member states to reduce their deficits in september 2010 believed austerity would not lead to growth. No-one apart from the Government is trying to portray the Austerity drive as anything other than a choice and this irritates me. If they said "we know it is hard for you, we are choosing to make the poorest pay in the short term but we think this is the best thing for the economy for x and y reason" I would have more respect for them. Saying it is a duty is just not truthful.
Clearly John Pugh, who is part of the government, is the most likely to know about the benefits of austerity and the logic behind choosing it as an economic plan. I didn't receive a response from him at all which is the most frustrating situation. I don't think it is fair to make the statements if you cannot or will not justify them with evidence, especially when you are in a position of power, but if someone does not respond (which is the most common response I have had) how can you tell whether their argument is either legitimate or not? You can't formulate a proper response, either agreement or disagreement.
One of the best debates I have read on the subject is here in New Internationalist. Some of Dan Mobley's arguments about personal debt, whilst true, are not as simple as all that. Yes, people should not have taken on unaffordable loans but the lenders were more likely to know what was really unaffordable (that is, after all, what they are paid to know) than an ordinary person who likely, stupidly, believed that if they could be lent it, it was affordable, based on the naive assumption that banks wouldn't lend to people who weren't going manage to pay it back. This initial move towards consumerism funded by a greater reliance on personal debt (initiated by the Thatcher Government) started the circle which led to the crash.
The other main contributing factor, as I see it, was the introduction of the Tax Credits system by Labour. On the face of it, a great welfare state intervention to improve child poverty and equalise income, but in economic terms a poorly thought out short-term solution to the failure of, mainly the private sector, to provide jobs which paid a living wage. This, coupled with both subsequent Conservative governmental and Labour failures to regulate a housing market which was spiralling out of control and their failures to steer our economy away from being over reliant on a risky, unstable and unregulated industry (the financial industry) sealed our fate. We are now in a situation where the vast, vast majority of people are dependent on a combination of personal debt and state subsidy in order to afford basic things like food, fuel and housing and the Private Sector is still increasingly allowed to make massive profits from cheap or free labour (apprenticeships and work placements) which is unrelated to the real cost of living and therefore the real cost of providing the labour.
Some people argue that private sector growth is fundamental to the improvement of our country's current economic situation. This might be true but then there is economic growth and economic growth and the private sector and the private sector. As I see it there is limited benefit from exponential growth exclusively amongst the super rich at the expense of the majority (like a third world economy except it is the first world who profit the most from third world poverty). I am not an economist, and therefore potentially open to much criticism for economic theorising, but the way I see it, unless the large bloated private sector multinationals share the wealth (with employees here and abroad through wages and pensions and the government through taxation) the playing fields are evened out between the cost and conditions of labour worldwide, what good does it do the country to encourage multinational companies to become even bigger?
If, as is already happening now, this large area of the private sector is keeping wages low in this country, despite having potential to increase them and relying on the state to top up wages for the majority of employees to a level where living is affordable, whilst simultaneously paying massive shareholder profits and big salaries to top employees and, paying a relatively tiny percentage of tax on their profits (as well as individuals earning large amounts paying a relatively small amount in personal taxes) at the same time as conditions are increasingly becoming unfavourable for local business communities and massively favouring multinational corporations, when public money is being put into foreign companies (Lockheed Martin to administrate census data), how exactly is the real economy benefitting?
The workers are poor so the lower and middle levels of the economy do not function, the state has an increased welfare burden and a smaller income from taxation - how is this a stable or healthy economy? Local and national business economies are stalling, how is this kind of economic growth in any way a good thing on the ground? It is in doubt whether the private sector will even achieve the growth the government want, in my opinion, but I think it is also important to consider the type of growth we might see and whether this will bring the benefits expected or needed. The last thing the public want is to grow the still unregulated banking services and big corporations, from which they do benefit little from, at the expense of public health, education, local economies, jobs and equality of wealth. That I fear is the hope of the Government's plan.
The arguments in favour of austerity are all about stability but it is hard to see how this can be achieved in reality and to me it appears there are much better ways to achieve it. A directly related maximum and minimum wage, stricter regulation of the city, a more diverse and therefore potentially stronger and more stable economy, fairer taxation, investment in public services, stable and strong employment - these seem much better ways to me.
Whatever the economic situation it can never be acceptable that the poorest are having their housing benefit cut to 30% the market rate whilst bankers and chief execs are taking home multi-million pound bonuses and pensions despite being instrumental in the crash, despite these big payments diverting vital cash that could be used to stabilise the banks. It is never acceptable that a person should be brought in to make savings that lead to redundancies and then paid hundreds of thousands of pounds but these things are common occurrences.
"We pay Big Money to get the best staff"
The Banker's argument for paying high salaries and bonuses has traditionally been that you have to pay the best to get the best... Well all I'll say on that is that the review of the crisis found that bonuses specifically incentivised the risk taking that caused the crash. This article http://makewealthhistory.org/2011/01/10/why-banking-bonuses-matter/ is pretty informative about why bankers bonuses are bad for the industry and the economy. The Banker's bonuses have been well demonstrated to have been bad for the industry and the point that they "buy the best" is far from proven in my eyes!
The "Squeezed Middle Class"
Last night there was an interesting section on Newsnight featuring the public, David Willets and John Denham dealing with the "squeezed middle classes". It however failed to get to some of the fundamental roots of the problem, I feel. The Government now seem to be at least acknowledging that they are putting deliberate pressure on the middle class although they are still denying they are also putting more pressure on the poor. I notice David Willets was effectively arguing that in order to protect the poorest the middle classes had to pay. On inspection though, how true is this?
Obviously you can tell it is my personal belief that they are putting increased pressure on the poor - reforms to the welfare systems, cutbacks in EMA, The Uniform Grant, rises in the cost of living; VAT, fuel and food rises all impact more the poorer you are. In fact one of the features of Austerity is that it makes the poor suffer. A high and rising cost of living coupled with either frozen or reduced levels of welfare affect the poorest most. A counter argument is not that the wealthy pay more actual money in tax. What is important is the percentage of income they pay in tax. Consistently there are news reports of the very wealthiest and big multinational corporations paying out million pound bonuses to staff despite having a low tax burden and then the staff in receipt of the bonus also having a low personal tax burden. This is in contrast to their smaller counterparts, small business and their employees who often work in much less favourable conditions, earn less but have a much, much higher tax burden.
The trouble was that the argument David Willets made seemed to be that the Government were going after the wealthiest, the poor would be protected and the middle would have to bear some of the costs of that. They mentioned the 50% tax rate as a measure to achieve this. At this point I wanted to rage at the TV and was completely derailed from the assignment I was trying to write!
The wealthiest, in fact the section of society which was ultimately most responsible for the crisis and the poor financial management of the country (apart from a series of Governments), DOES NOT PAY INCOME TAX on the main proportion of their income as supported by this article in the London Standard. If you want to make the richest pay a bigger share you do not do this through the income tax system. The income tax system is the system which taxes the people who are not financially secure.
It is largely the reserve of the people who are employed and pay tax through mandatory PAYE and, therefore, are a reliable source of tax revenue because they cannot easily avoid or evade tax. It is nigh on impossible to find a person who is a top earner and pays income tax because of the way our tax system is set up. It is also very dubious to say you are imposing austerity, which is designed to fund the rich at the (supposedly short-term) expense of the poor and ordinary, with a view to protecting the poorest.
If the Government want to make sure the wealthy pay the biggest share they need to look at corporation, capital gains and inheritance taxes and target them through those systems. Also look at tax evasion and tax avoidance which are often related and costs £bns every year. They need to incentivise small businesses and local business communities rather than protecting big businesses. They need to provide an alternative to reliance on financial services for the economy.
Perhaps if, as is asserted in the programme, the tax system is so inadequate the £1.2bn they plan to spend on unecessarily forcing reform in the NHS which is not wanted by a majority, widely opposed by the public and now the BMA has voted against the bill too, might be better spent on a massive top down reorganisation of HMRC to make it effective. It is ridiculous, when in government, to take the position of shrugging shoulders and saying "the current system won't allow us to do our job adequately". If that is the case, change it! The NHS works perfectly well and is not in need of reform, HMRC it would seem is so isn't it logical to spend the money there? How can we hope to achieve any kind of economic stability without an adequately performing tax system?
Some good points were made about the tax system for families being unfair and about the proposed removal of child benefit from one individual based on another's earnings and without consideration of the size of the family who are dependent on the wage. It brings me back to the most important point that modern government seems to be conveniently forgetting - means is not necessarily related to income.
Someone on a "low" wage can have quite a high disposable income if they have no expenses and a single earner family with a lot of children or an elderly relative living with them living on what is considered one high wage, is subject to high levels of taxation and has no access to any financial support is not likely to have much in terms of disposable income.
Income is not a good measure of means, or of wealth. It isn't right that someone who is paying high-rate tax should be choosing between food or heat and going without food so their children can eat. Many people can't imagine this happening when the perceived difference between their salary and a high rate tax payer's is so great but they don't acknowledge that without tax credits you get no help with childcare. This basically means both parents cannot work - the childcare is too expensive and more than the second parent would earn. People on lower incomes benefit from various schemes which people who are just over the border into complete self reliance don't, even though their actual income may only be a few thousand pounds per year more.
People often have to travel further for employment which pays well too. With increased fuel costs and specifically costs for large families rising and support falling, children in families with one parent classed as "high income" are now at risk of poverty and deprivation. In short, the idea of imposing a policy you know is unfair and doesn't do what is intended, because the system you are in charge of administrating is inadequate, is ridiculous, and the government need to be taken to task on this.
Personally we will lose £225 per month child benefit when it goes. This is around 25% of our current disposable income - money for clothes and shoes e.t.c. (taking away mortgage, bills, food and diesel) and this is before the income tax levels change and austerity really affects inflation. George Osborne is losing £5 per week and is personally avoiding millions in inheritance taxes. Whatever you think about how much we as a family need to get by, this can't be right - that the very wealthy are able to employ loopholes to avoid tax they are liable for, and lose £5 per week, whilst families like mine lose 25% of our disposable income in one fell swoop. We will manage, and I am much more concerned about the effects of constraints on welfare, particularly illness and disability and housing benefit but on this, we all need to stand together to ask, for the burden - if it the Government insist it must be shared amongst everybody, to be shared fairly with the very wealthy paying a fair proportion of their incomes too. Not through income tax and not focused solely on the easier target of those who pay PAYE and income taxes an claim welfare.
In focusing the argument on "the middle class must pay to protect the poor" they divide and conquer and divert attention from the reality, which is that if the ones who could afford it best contributed, even a fair share, it would better protect the poor.
Recently, supporters of austerity have heralded the recent growth in manufacturing as a promising sign but surely this could not be attributable to any action this Government has taken, since the majority of the effects of austerity are not yet being felt. It is a little pre-emptive to claim this as a triumph especially since the government have not yet implemented their planned growth review framework. The growth is likely to be entirely unrelated to any policy of the Coalition Government and is not necessarily an indicator that manufacturing as an industry is benefitting from coalition policy. In fact if we look at Ireland as a view of the future (as George Osborne urged us to do in 2006) their manufacturing industry seems to be suffering under austerity.
The final myth, and it is also dealt with in the PCS leaflet, is that the "mess" is Labour's fault. This defies logic and statistics, and this kind of tribalism is always off putting. The statistics are dealt with well in the leaflet which shows clearly that Government spending before the crisis, as a percentage of GDP, was lower than when labour came to power in 1997. The logic I will deal with. Yes, the Coalition inherited the economic situation but not entirely from labour ,the economy is the sum of many decades of policy. Budget management is part of the Government's day to day job, the Coalition have not suddenly had to consider the budget as is being made out. I can clearly see links in the state of the economy and influences on it that go back many decades and through many administrations. To claim it is all Labour's fault is stupid, childish and incorrect. The economy, law, policy, general government are all the sum of all that has gone before and I think it is much better to look at what happened, what went wrong and how it can be prevented or improved upon than to sit around pathetically apportioning blame as seems to be what happens in the commons generally. Sadly.
At the meeting with the Councillors, Tony Robertson kept mentioning this same old Government line and when I asked him about Ireland and how it's economy had gotten worse under austerity he did not answer. Having spent a lot of time trying to unpick the truth of the Goverment line I decided a while ago it was likely a subterfuge designed to get people to accept large cuts without a basis in real fact or supported by meaningful evidence or because the truth was that the Government were in full knowledge damaging the lives and wealth of ordinary people in order to protect the super-rich. You may disagree, my fundamental position is always that there is no one "truth" only many different opinions, what matters is the quality of each argument and the evidence to support it and what you believe.
I am yet to find convincing arguments for austerity and especially the particular kind of austerity being imposed, which outweigh the arguments against it. One thing is for sure, the "too big to fail" banks and multinationals will potentially benefit from poverty and hardship (free/cheap labour, reduced pension, wage and taxation costs, smaller risk of tribunal, fewer employee rights and employer responsibilities, cheap goods and services, reduced competition and new business opportunities) amongst the general population, in fact, on reflection this is likely what the Government mean when they talk about austerity stimulating "economic growth", they mean that the poor will be made poorer so that the super-rich don't have to pay their share. That is my view any way. Read the PCS leaflet, it is a good, precise and convincing argument, backed up with fact and educated opinion. Compare it to what you hear from the Government, which in my perception is often contradictory and unclear.
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