Guest Blogpost: Richard Lynch – No medal-winning performance from the coalition

During the past month, Britain’s sporting heroes in Team GB have taken on the world at the Olympic Games and, with performances which exceeded expectations, have delivered our biggest haul of medals for over 100 years. What a contrast with the other Team GB, the Conservative/LibDem coalition, which also promised success but has delivered a shrinking economy, increased unemployment and debt, poorer social provision and the biggest squeeze on the living standards of ordinary people in living memory!

When the coalition took office two years ago, it inherited an economy which had been hit hard by the worst global recession since the 1930s but was recovering and had been growing for five quarters. Instead of consolidating and encouraging that growth, however, it embarked on an unnecessary and unnecessarily savage austerity programme which choked off recovery, led to growth contracting over five of the following seven quarters and resulted in a return to recession.

Yet, when announcing his first budget after taking office, George Osborne said that if he didn’t introduce a harsh programme of tax increases and spending cuts, Britain would face:

‘Higher interest rates, more business failures, sharper rises in unemployment, and potentially even a catastrophic loss of confidence and the end of the recovery. We cannot let that happen. This budget is needed to deal with our country’s debts. This budget is needed to give confidence to the economy. This is an unavoidable budget.’

George Osborne at Conservative Spring Forum 20...
George Osborne at Conservative Spring Forum 2006 in Manchester. (Photo credit: Wikipedia)

Bold words but what has been the outcome? Interest rates have remained low but, as Nobel prizewinning economist Paul Krugman has pointed out, they have remained low in the USA and Japan as well, countries with higher debt levels which didn’t rush into austerity.

On the downside, however, business failures have continued, with almost 4,000 companies going under in the last quarter and retail insolvencies rising by 10.3%. Unemployment remains well above the level Osborne inherited in May 2010, over a million young people are out of work and underemployment has become a major problem with a record 1.42 million people working part time because they can’t find full-time employment. Business and consumer confidence has collapsed to levels not seen since the worst point of the original recession, we have the highest trade deficit in 15 years, national debt is rising and the economy has contracted in the last three quarters, driving us into a double dip recession for only the second time since the Second World War.

And there’s no good news on the horizon either: The Bank of England is predicting a 0.2% contraction in growth this year and probably five further years of economic pain. The National Institute of Economic and Social Research is prediction a 0.5% contraction and the IMF has stated that Britain’s economic outlook is now deteriorating faster than that of any other major economy.

When Britain was facing big economic problems in the 1970s, Dennis Healy said that the first thing to do when you found yourself in a hole was to stop digging. Another smart bloke (either Albert Einstein or Roy Keane, I can’t remember which) said that the definition of insanity was doing the same thing over and over again and expecting different results. But Osborne remains adamant that he will not change course and that there is no Plan B for the economy. Such arrogance from a chancellor and cabinet which have clearly lost the plot is now coming under increasing attack, not only from unions and political opponents but from coalition politicians (one of whom called Osborne a ‘work experience chancellor’), from business organisations and leaders and from the general public. The majority of economists who backed the austerity programme during the 2010 general election are now calling on Osborne to change course. And the IMF, which also previously backed austerity, is now urging the chancellor to think again about cutting back and to focus on growth and on ‘boosting the bargaining power of labour’ to get more demand into the economy.

It’s not as if there is a shortage of good ideas about rebuilding confidence and demand and getting the economy back on its feet again.  For example, stopping or slowing down the public sector and benefit cutbacks (even if only temporarily) would help lower the rate of unemployment, keep people paying taxes and maintain demand in the economy. Borrowing, at our famously low interest rates, to rebuild our creaking infrastructure and to build houses for people to live in, would boost employment in construction and related industries and get people spending again. Putting money back in the hands of ordinary people by cutting VAT (even if only temporarily), ending the freeze on public sector pay and even introducing quantitative easing for people, by creating money to put in the hands of the most needy rather than in the coffers of the banks, would all boost demand and encourage spending.

Indeed PPI refunds by the banks, which totalled £4.8 billion up to May, have already done more to boost the economy than the coalition, because people who have had money refunded have gone out and spent it!

The Olympics showed us that we don’t have to accept mediocrity or assume that we cannot reach new heights. We may have the fight of our lives on our hands but, as the TUC’s Frances O’Grady said, if we keep people together, build confidence and give a sense of hope and vision that things don’t have to be like this, we can build a better world. We can help win that better world by defending our rights in our workplaces and communities. But we can also help win it by mobilising now for the TUC’s national demonstration for a future that works on 20 October. It’s time to stop agonising and start organising!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

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Tory Liberal failure on the economy – Double-Dip recession

With the news that we are officially in a double-dip recession period LINK it is becoming clearer that the Tory Liberal economic policies are fundamentally flawed. Yes, they inherited a large deficit, but they also inherited a growing economy.

Cutting too far too fast has recklessly damaged the UK’s good prospects of getting our economy moving again. So far, the Tory Liberals have increased unemployment by

  1. Slashing jobs in the public sector on the unsubstantiated claim and risk that jobs will miraculously appear in the private sector to make up for the rise in unemployment in the public sector
  2. Increasing VAT which has an impact on a business’ take home profits, meaning that they have less profit available to employ people and expand
  3. The VAT rise also impacts on consumer spending and disincentivises businesses
  4. Scrapping the Future Jobs Fund which equips young people to be work ready. Indeed the long term impact of this has also been ignored by the Tory Liberals. Even if there is a lack of employment opportunities in the country, it is important that these schemes are invested in so that people are equipped with the skills they need and are work ready for when the economy does recover and there are jobs for people to go into.

Unemployment should never be a price worth paying. The immediate and long-term impact of worklessness is far worse than pursuing an aim to get rid of the deficit in four years. The Tory Liberal Government have made this their priority and ignored the impact that this damaging course has on ordinary people.

The VAT rise also had a detrimental impact on inflation. Naturally, it costs more to buy products because there is more tax paid on spending money. This leaves less disposable income to the individual and what’s more, wages are not going up with inflation. People are being squeezed with higher costs and lower income.

This brings me to my final point on the deficit, which has increased under this Tory Liberal administration – LINK

Growth is a key component to tackle the deficit. Without economic growth, it becomes difficult to address the deficit. This has been the Tory Liberal Coalition’s main failure. There is the issue of the Eurozone crisis that the right wing Government will point to. However, slashing public sector jobs with a front loaded approach and the VAT rise are policies of the Government’s own making.

The Tories are out of touch with ordinary people and their stance on the 50% tax rate at this very moment in time is testament to that. The Liberals aren’t bothered about issues such as employment, jobs, the economy, crime and the NHS – this is proven with how easily they flipped their position on these what I consider core issues. They are far more concerned with the House of Lords and the electoral system and appear more principled on these issues than ones that have a more profound impact on people.

Ed Balls on Fuel Duty and VAT

Shadow Chancellor Ed Balls has commented on what the Government can do to help families cope with financial pressures they are facing.

Revolutions in Egypt and Libya have driven up oil prices but there are four things George Osborne can do now.

While he gave banks a tax cut compared to last year, they are now going to pay £800million more than this Government was planning. He should use the extra money to reverse the VAT rise on petrol.

Secondly, he should look at April’s annual fuel duty rise. Labour often postponed planned duty rises when world oil prices were rising.

Thirdly, he must work with finance ministers globally to keep the oil supply flowing and get prices down.

Finally, he must get our economy moving and get more people in work and paying taxes.

Rt Hon Ed Balls MP

VAT rise set to cost the economy 250,000 jobs

These are Nick Clegg’s own figures which he was so keen to highlight before the May 2010 General Election. He even pulled out all the stops with this huge billboard warning against the ‘Tory VAT Bombshell’. Little did we know that a few months later, he would be patting George Osborne on the back as he announced the Tax hike.

“We will not have to raise VAT to deliver our promises. The Conservatives will. Let me repeat that: Our plans do not require a rise in VAT. The Tory plans do, they come with a secret VAT bombshell”.

(Nick Clegg, 28 April 2010)

Now the Lib Dems will be raising VAT to 20%. Ed Miliband has called this VAT rise the wrong tax at the wrong time that will hit people all the time.

Fib Dems give all politicians a bad name

Voters have always been cynical about politicians who make extravagant promises only to renege on them a few months later but never in recorded history has a party betrayed every principle it ever stood for as the Liberal Democrats have done since May 6th.

Before the election, the Lib Dems supported Labour in not wishing to cut too fast too soon for fear of a double dip recession. Now they have supported the largest cuts package in the western world. Before the election they described Tory plans to increase VAT as a ‘secret VAT bombshell’ but they have since voted to increase VAT to 20%. Before the election, they gave a commitment to universal child benefit but they have since supported scrapping child benefit for some middle income families but not others. For years, they promised to abolish tuition fees; indeed it was the subject of Sarah Teather’s maiden speech. Now they are in favour of doubling tuition fees. In March this year, Sarah Teather berated the Tories for planning to abolish subsidised rents for Council and housing association homes; now they support new council tenancies at 80% of market rents and the abolition of security of tenure for those tenants. During the election, the Lib Dem Leader Nick Clegg described the alternative vote system (AV) as “a miserable little compromise”. By September he was saying that “AV is infinitely fairer than what we have at the moment”.

Brent Council’s Labour Leader, Councillor Ann M John, OBE has compiled a brief list of Lib Dem quotes made in the run up to the May election all of which have been comprehensively disavowed in the five months since the election.

I will be publishing extracts from the list which is entitled ‘The Fib Dems in their own words’ on my blog page over the next few weeks

Councillor Ann John said:

“The Fib Dems are the harlots of British politics. They will say anything and do anything to get into government. In less than six months they have betrayed every policy they fought the election on. They give all politicians a bad name”.

 

Lib Dem Broken Promises: VAT

  • Pensioners will be hardest hit by the VAT increase to 20% in the Government’s June Budget
  • Pensioners have not been compensated for the extra costs with increases in tax allowances or benefits.
  • No one voted for this unfair VAT increase. In the election, David Cameron said: “We have absolutely no plans to raise VAT.”
  • The Lib-Dems campaigned against a VAT increase and accused the Conservatives of hiding a secret VAT bombshell.
  • The Tory-Lib-Dem unfair VAT increase to 20% is a broken promise that will hit the poorest hardest.

Source: The Labour Party