BUSINESS Secretary Lord Mandelson launched a £20bn loan guarantee scheme for medium and small businesses yesterday, aimed at getting banks to lend to companies once again.
There will be £10bn for the Working Capital Scheme for banks to lend £20bn of capital to businesses with a turnover of up to £500m, 50 per cent of which will be guaranteed by the government.
Mandelson said: ‘The £10bn injection to the banks represents a guarantee to enable them to free up working capital to sustain existing loans and create new ones.’
The government is also setting up an Enterprise Guarantee Scheme as part of a package to provide £1.3bn of secured new loans of up to £1m to companies with a turnover of up to £25m.
Alongside this new government hand-out to the banks, Prime Minister Gordon Brown put Mervyn Davies, the Chairman of Standard Chartered Bank, into the House of Lords and appointed him as a minister in Mandelson’s Business Department.
As Mandelson was unveiling the £20bn loan guarantee scheme for the banks, Barclays Bank said that it is axing 2,100 jobs worldwide, including 500 in Britain. Tens of thousands of jobs are being slashed at all the major banks.
Only a short time after publicising the £20bn of government funds for the banks to provide loans to business and welcoming banker Davies into his team, Mandelson spoke to the House of Commons Business and Enterprise Select Committee.
He made clear that the government was committed to providing billions in Treasury funds to get the banks to make business loans.
Of course, the huge government debts the Brown government is piling up will be paid back out of taxes and by slashing public spending.
At the same time, at the Select Committee, Mandelson insisted that there would be no government funds for Royal Mail and that the government would proceed with plans to privatise 25-30 per cent of its activities.
Challenged by MPs, the Business Secretary said that hundreds of millions, not billions, were needed to ‘modernise’ Royal Mail. However, he insisted that there would be no funds for the postal service and that he was proceeding with privatisation plans for parts of Royal Mail. He said that part-privatisation would result in a ‘gale force of fresh air into the management and control of Royal Mail’.
What Mandelson spelled out yesterday was that the Brown government is mobilising all the resources of the capitalist state, including billions in taxpayers funds, to bail-out, subsidise and sponsor banks and big business in their desperate attempts to make profits.
To carry out this strategy the government supports big business as it throws hundreds of thousand of workers out of their jobs and it is privatising essential public services, like Royal Mail and the NHS.
The union leaders response to this onslaught yesterday was both pathetic and predictable.
After Barclays’ announcement, Derek Simpson, Unite’s Joint General Secretary appealed to Brown to intervene ‘to ensure fairness and security for banking staff’.
He and every bank worker knows that the government could have bought out and nationalised the banks for the sums of money they have handed over to the bankers. Instead they are giving the bankers a cash bonanza from the Treasury.
Mandelson’s reaffirmation of government plans to part-privatise Royal Mail evoked a similar mealy-mouthed response from the national leadership of the Communications Workers Union (CWU).
A month after the plans were announced, the CWU leaders have still not proposed any course of action to halt the government’s privatisation plans. Their campaign appears to consist solely in encouraging Labour MPs to vote against privatisation.
It is clear to hundreds of thousands of staff working in banks, manufacturing industry and public services that the only way to defend jobs, pay and services is to get the Brown government out.
For such a struggle the likes of Simpson and the CWU’s Billy Hayes will have to be removed to be replaced with a revolutionary leadership that will organise mass political strike action to bring down the government and lead the fight for a workers’ government that will nationalise the banks and major companies, get rid of capitalism and establish a socialist planned economy.
