CHANCELLOR Brown, in testimony to the Treasury Select Committee, has announced that he is bending his much vaunted ‘golden rule’ – that the government must balance its expenditure with its revenues over the ‘economic cycle’.
Brown told a startled committee that the Treasury is planning to lengthen the economic cycle to nine years to avoid breaching the ‘golden rule’ on balancing the budget.
The Chancellor’s new rule is that if one cannot balance the books over the economic cycle, just add two more years to it; two years when the government’s finances were in the black, to make up the difference, and to try and postpone a settlement of accounts.
The new, revised position of the Chancellor is that the economic cycle began in 1997, not in 1999 as the Chancellor had previously declared to the House of Commons and the whole world.
Brown also announced that he was postponing the next spending review for one year, from 2006 to 2007.
The fact is that the Chancellor, who had previously sought glory as the man who had abolished the tendency of capitalism to go from boom to bust and vice versa, has been hit hard by the developing world crisis of the capitalist system, and the way that it is destroying the British capitalist economy.
Previously, the Chancellor had banked on a policy of robbing the poor to pay the rich as the way to keep British capitalism afloat.
He provided the bourgeoisie with Bank of England control over interest rates, very low taxation, a complete deregulation of the economy, the encouragement of a flexible labour force, and a 48 hour plus week. He also allowed hundreds of thousands of migrant labourers into Britain as cheap labourers on individual contracts, and he made Britain the easiest country in the ‘developed world’ for the bosses to shut down plants and move entire industries to Asia or Eastern Europe, giving many thousands of manufacturing workers the opportunity to become cheap labourers in service industries.
The battle cry of Labour Ministers was ‘Let them work in Tescos’.
For the poor there was the ruthless cutting of benefits, while 100,000 civil servants have been lined up for the sack, and 1.5 million public sector workers told that their final salary pension schemes had to go.
At the same time billions have been raised in privatisation programmes. In a perversion of the NHS, a large percentage of the NHS budget, has been handed in big contracts to private medical companies, so that they could grow out of the public purse, bringing NHS privatisation much closer.
What economy there is was encouraged by Labour’s policy for the middle class. This was borrow, borrow, borrow in order to spend, spend, spend. This put the middle class into over £1 trillion of debt to the banks, and created the biggest British trade deficit in history.
This is the economic miracle, the pack of cards that the developing word crisis is now undermining at a rapid rate, and about to crash.
The US, facing huge downward pressure on the dollar, is putting its interest rates up, while in Britain the call is to cut rates – and risk a collapse of sterling – so as to further cheapen credit, to try and boost High Street spending.
Meanwhile, unemployment is rising, government revenues are falling, basic commodity prices including oil are leaping, at the same time as North Sea oil is drying up.
Chancellor Brown’s response is to ditch his own golden rule, and postpone the spending review, to try to buy two years of time to prepare for the savage cuts programme that will have to be launched, raising taxes, further cutting benefits and sacking many more public sector workers to try and save bankrupt British capitalism.
However, the world crisis is developing so rapidly that the wolf, now at the door, will be inside the house in months, not years. This means that the trade unions must have their own crisis programme to defend the interests of the working class. There must be action to bring down the Blair government, to go forward to a workers’ government that will nationalise the banks and the major industries under workers’ control.