CHANCELLOR Darling made his pre-budget speech to the House of Commons yesterday afternoon in the form of a Labour general election manifesto.
His line was that the hardest ‘choices’ were on hand but were not immediate. Savage across the board cuts on the whole of the working class could wait till 2011-2012, allowing Labour to fight a general election, the world crisis permitting of course.
This crisis is however deepening rapidly from Dubai to Greece and Ireland and could well upset the Darling-Brown applecart even before the expected May general election.
Darling confirmed that public sector spending would grow by £31bn in 2010-11.
In his words: ‘In 2010-11 total public spending will increase by £31bn, a growth rate of 2.2 per cent in real terms, providing continuing strong support for the wider economy until the recovery is firmly established.
‘But once the recovery is secured, we must, as I made clear at the time of the Budget, reduce the rate of growth in public spending, and meet our ambitious target to halve the deficit.’
These calculations are based on his twisted illusion that the British capitalist economy, currently as dead as the dodo, will grow by 1.5 per cent in 2010-2011 and by 3.5 per cent in 2011-2012. This is despite the fact that it contracted by 4.7 per cent this year.
However Darling had to report that VAT ‘will return to 17.5 per cent on January 1 as planned, and ‘inflation will rise to 3.0 per cent.’ He tried to balance this by stating that ‘the basic state pension will not be frozen, but will rise by 2.5 per cent in April’, and that Child benefit and ‘some disability benefits’ will rise by 1.5 per cent in April.
The Labour government will carry on cutting. ‘Between 2008 and 2011, we are delivering further efficiencies worth over three per cent of total department spending per year.
‘This week, we announced our plans to deliver another round of savings, amounting to £12bn a year by 2013-14.
‘So by 2012 contributions by the state to public service pensions for teachers, local government, NHS and the civil service will be capped, saving round £1bn a year.
‘I can announce that, for the two years from 2011, we will seek to ensure that all public sector pay settlements be capped at one per cent.
However ‘As with previous pay decisions, we will recognise the special circumstances of the armed forces’, including making an extra £2.5bn available for the Afghan war.
He regaled the House of Commons on the savage cuts to come. ‘Speaker, £12bn from greater efficiency, £5bn from scaling back or cutting lower priorities, and £4.5bn from reducing the cost of public sector pay and pensions.’
He stated that: ‘As the economy recovers and the deficit reduction plan starts to take effect, then (public sector net borrowing) falls to £140bn; £117bn; and reaches £96bn in 2013-14, slightly lower than I forecast in April; before falling to £82bn in 2014-15.
‘As a share of GDP, borrowing will be: 12.6 per cent this year, 12 per cent next, then 9.1 per cent, 7.1 per cent, 5.5 per cent in 2013-14, and falls to 4.4 per cent in 2014-15.’
Net debt as a share of GDP will however increase to 65 per cent next year and 78 per cent by the end of the forecast period in 2014-15. Net debt, as a share of GDP, will begin to fall the year after that.
The developing world crisis will rip Darling’s calculations and debt mountains to pieces.
If Labour wins the next general election what is left of its caring mask will be ripped off by the crisis, and being a bankers and bosses government it will bring forward the most savage cuts in the history of British capitalism.
Labour’s pension and pay caps plan is only the semblance of what is going to be required to cut the budget deficit by £82 billion in four years, while expanding the national debt and the war in Afghanistan at the same time. The trade unions must act now to bring the Brown government down and go forward to a workers government and socialism.