Central to the Liberal-Tory narrative has been that although the measures they are introducing are severe, they are both necessary, and also fair. Anyone with a brain knew that this narrative was hardly credible to begin with, but it was enough of a fig-leaf to enable careerist Liberals, desperate to get their grubby hands on a bit of power and kudos to justify their lash up with the Tories. It was obvious that this narrative would soon begin to unwind, and it is.
The Institute for Fiscal Studies, has today blown apart the fiction put out by the Government, that its Budget was “progressive”. The IFS has demonstrated what everybody else knew, which is that the Budget hits the poorest hardest. I haven't read the full report yet, but one account I heard on the TV last night suggested that the poorest are hit five times harder than the richest! But, what is new? There has not been a crisis that hit Capitalism in its 200 year history of such crises that was not caused by the Capitalists themselves, but which they made the workers and poor pay the price of. The Liberal-Tories have tried to counter the IFS claims by saying that it doesn't take into account the Tax and Benefit proposals that had been put forward by Labour, and which the Budget didn't reverse! Precisely, they were LABOUR proposals, and this was looking at the effects of what the Liberal-Tories were doing. But, even taking that into account, the Budget still hits the poorest hardest. The Treasury says the IFS study doesn't take account of the effects of the Budget on growth, and, therefore of employment. But, its only if you swallow the Liberal-Tory line that the Budget will enhance growth and employment that this could have a likely positive effect. In fact, as most economists have said, the consequences of the Budget are likely to be lower growth, and higher unemployment, with a consequent worse effect on the poorest. If you look at the specific measures mentioned by the Treasury in this regard in relation to National Insurance, and Corporation Tax then its hard to see how this benefits the poorest. The NI measures introduced by the Liberal-Tories do not reduce the contributions of workers only of employers. A cut in NI means that the biggest advantage to an employer is the saving they can make on higher earnings not lower earnings, so if it were to have any effect on hiring – which in current economic conditions, and the uncertainty that the Budget has created, is unlikely – it would be to encourage the hiring of more higher end workers not the poorest paid workers. And, precisely in those economic conditions, the cut in Corporation Tax – especially given the removal of incentives to reinvest profits in various Capital Allowances – is more likely to see companies using the higher after tax profits, to simply increase dividend payments, or bonuses, or other forms of high-end Executive remuneration, rather than reinvest it, or even to sit on the cash, given low interest rates. The only other use would be to finance mergers and acquisitions, and the last few weeks have seen a rash of such activity. But, such activity rather than increasing productive investment or employment, normally has the opposite effect. It means that one company buys out its opposition in the market, and takes the opportunity, thereby, to simply pick up the best bits of equipment, the best workers, and scrap the rest with a relatively reduced supply of commodities then sent to market so that prices and profits rise.
The Liberal-Tory proposals on the NHS are also coming under severe pressure. They had said that the NHS was ring-fenced against any cuts, but again anyone with a brain knew that was another fiction. The coalition agreement between the Liberals and Tories, specifically stated that there should be no big changes in the NHS structure. Neither had stood in the election on the basis of the kinds of major restructuring of the NHS that is now being proposed. The Liberal-Tories propose to scrap the Regional Health Authorities, and to hand over around £80 billion of NHS commissioning budget to GP's, by scrapping the PCT's. But, as was stated on Newsnight last night, the Liberal-Tories, who speak a lot about efficiency don't even seem to have thought out the immediate financial implications of such a move. Scrapping the PCT's will mean thousands of their administrative workers will be made redundant. That means millions of pounds paid out in redundancy payments, and, in the short term, a hit to the Treasury in lost tax, and higher Benefits. But, the GP's, who have no experience in handling such Budgets will either have to massively increase their own administrative staff to deal with this new work, or else farm it out to the private companies such as Tribal, who are eagerly awaiting this privatisation of the NHS, and the opportunity to get their hands on some of that £80 billion. Their share prices have gone up since the Tories announcements, unlike the many companies whose shares have tanked as a result of the Budget measures. From an economic efficiency perspective, only, this latter option would be better than the GP's themselves taking on this work, because at least it benefits from the savings of economies of scale, as opposed to the work being spread out amongst thousands of GP, surgeries, each replicating the activities of the others. From, the perspective of what is in the best interests of workers it most certainly is not the better option. But, if GP's did expand their administrative staff, then its likely that many of those taken on would be former PCT staff. Great for them, but from the perspective of saving public funds, how does it make sense to make thousands of people redundant and incur redundancy costs, only then for those same people to basically resume their former work, but under a different boss?
Yesterday, also saw increasing concern at the consequences of the proposals from patients like the Mother of a boy with Muscular Dystrophy, who pointed out that most GP's do not have the knowledge of such conditions to be able to organise the range of clinicians that will be needed to deal with the condition. And we have seen the consequences of this before. There will be a tendency for doctors to manage their Budget by getting rid of those patients off their books who are the costliest. Given that when it comes to Health as with everything else we most certainly are not “All in this together”, and ill-health is a corollary of low-income, then the worst hit will once again be the poorest in society, congregated in areas of deprivation, which already suffer from being unable to attract enough GP's, and other health professionals. The proposal of Nadine Dorries, put up by the Tories on Newsnight to defend this, that it will give patients more power, that they will be able to directly confront the GP, to demand the services they need is ridiculous. Firstly, if GP's do not know everything they need to know to undertake this work, then its obvious that ordinary workers as individuals do not know. And the least likely time you are going to stand up to a Doctor and do any kind of demanding, is precisely at the time when you are ill!
But, the response from Andy Burnham was pretty pathetic too. He complained, correctly, about the Liberal-Tories proposals removing accountability, but the implication of his argument, and indeed the statements he made in that regard, that there was such accountability via the PCT's and RHA's is clearly nonsense. Both were introduced from the top down by Labour, and neither have even the kind of democratic accountability that past Health oversight, which was also lacking in any kind of real democratic control, demonstrated. At the very least a democratic alternative to both the present system, and the Liberal-Tory proposals, would be that PCT's became annually, elected bodies, preferably incorporated into rejuvenated Town or Parish Councils that had increased powers and responsibilities assigned to them. But, so long as such bodies had to deal with a massive State bureaucracy entrenched in the NHS itself, and in the Department of Health, and so long as Health continues to be viewed as a commodity sold to workers in return for the payment of taxes, rather than a Use Value, produced by workers, and over which they have to have ownership and control, and so long as the production of that commodity is so heavily determined by the role of the massive companies who profit from its production – the drug companies, the health equipment companies, the construction companies that build the huge monolithic hospitals, and the IT companies who sell the huge and overly expensive computer systems to them – then even that kind of local democratic control would be overwhelmed. Nor is it likely that it would even be conceded. The trajectory has been to continually undermine and reduce the most local levels of democratic control – where the bureaucrats tend to be less powerful relative to the elected representatives – and to further centralise control in the hands of huge, professional bureaucracies.
Its not surprising that last weekend the press was full of stories about Liberal defections to Labour. Charles Kennedy, the most high-profile of those mentioned has denied the stories, but other Liberal MP's, and Peers have not denied that they have been talking to Labour. Of course, they have been having such talks. As I've pointed out previously Liberal politicians are the consummate Opportunists. Those in areas where they think the alliance with the Tories will cost them there seat, will, of course, look to get picked up by a Labour party, whose own electoralist, and opportunist politics will not baulk at picking up an extra seat now, with the prospect of retaining it at the next election, which Labour looks well placed to win, certainly better placed if the Liberals are destroyed, given that its likely that they will do a deal not to challenge their Tory allies in seats where Labour might benefit from a split vote. Incidentally, that is one reason that Ed Miliband is right that Labour should now annihilate the Liberals, and why Will Straw was wrong in his comments in Left Foot Forward. The other reason we should destroy the Liberals, is the lesson from 1983, when the role of the SDP/Liberal Alliance was a major factor in costing Labour the election, and just the simple fact that from a socialist perspective it is better to have the basic class lines as clear as possible. A Two-Party system that reflects the fact that society is divided into two main contending classes, is itself a powerful ideological weapon. The more that is blurred by the profusion of tiny parties the harder it is to convey a clear socialist message to workers.
But, whatever the Liberal MP's and Peers do, indeed whatever Labour does, it is clear that the unravelling of the Liberal-Tory narrative has already begun, and the next few weeks and months will see it unravel even more quickly. At a grass roots level the Liberals are already haemorrhaging not just members but Councillors. They are losing voters even more quickly. For my part we should take heart from that. My Dad told me when I was little that the basic tactic used by the bosses was “Divide and Rule”. We should use the divisions between the Liberals and Tories, between the Government, and the State, and with the dominant sections of Capital and present out own united front, if not yet to rule, at least for now to beat back the Libeal-Tory attacks.