Balls to make workers pay for Bank debts

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IN yesterday’s speech Labour’s Shadow Chancellor, Ed Balls, committed any future Labour government to savage attacks on all the gains of the welfare state in order to pay off the bankers’ debts.

In particular, he singled out the parents of young children for even more austerity cuts when he  announced that the next Labour government  would cap child benefit to a 1% yearly increase – way below the inflation rate – for the first two years of the next parliament, a bigger cut than even the Tories have demanded.

This would save £400 million to go towards reducing the national debt. In his own words: ‘I want to see child benefit rising again in line with inflation in the next parliament, but we will not spend money we cannot afford. So for the first two years of the next parliament we will cap the rise in child benefit at 1% . . . all the savings will go towards reducing the deficit.’

When Balls talks about reducing the budget deficit, he is talking about the gap between what the government spends and its income through taxation – to plug this gap, the government borrows money by selling bonds to investors, loans that have to be repaid in full plus interest.

This makes up the overall government debt. At the moment this debt is estimated to stand at a staggering £1.4 trillion. Given that one trillion is equal to 1,000 billion, the savings of £400 million over five years is not even a drop in the ocean.

But that is not Balls’ real purpose, it is, as he said ‘symbolic’ of the Labour leadership’s intention to demonstrate to the banks that a Labour government is prepared to make the ‘hard decisions’ necessary to keep a bankrupt capitalist system going.

The fact is that the vast bulk of this public debt was run up by the last Labour government, which borrowed an estimated £1.1 trillion to keep the banks from going under.

It will, no doubt, be a comfort to families forced to rely on the charity of food banks to feed their children to know that they are contributing in a small way to the profits and huge bonuses of the bankers.

As Balls knows full well, caps on child benefits, or indeed caps on all welfare spending, will come nowhere near defusing this debt bomb at the heart of a bankrupt British capitalist system.

The real solution as far as the capitalist class is concerned was spelt out earlier this month by the government’s Office for Budget Responsibility, which predicted that the Tories’ plans to reduce the budget deficit to zero would require a reduction of spending on public services to ‘its lowest share of GDP at least since 1948 – and on some data the lowest since 1938’.

1948 was the year the welfare state was brought in – what the OBR is saying is that to have any chance of reducing the national debt any government would have to return to conditions where the welfare state, the NHS, social security and old age pensions are smashed completely.

This is the policy which Balls is ‘symbolically’ signalling to the capitalist class that Labour is prepared to try and force onto the working class. Workers will not sit back and accept the destruction of every single gain they have made – the destruction of the NHS through privatisation and closures or starvation – as the price for keeping the banks from collapse.

Balls has knocked the ground from under those TUC leaders who have insisted that salvation for the working class lies in hoping for a Labour government.

These leaders consciously betray the working class. They must be removed and replaced with a new leadership that will mobilise the full strength of the working class by calling a general strike to kick out the government and advance, not to a treacherous reformist Labour government, completely tied to capitalism, but to a workers government that will repudiate the bankers’ debts and go forward to a planned socialist economy.