“We want to keep Wallace and Gromit exactly where they are.”
— George Osborne, announcing a creative industries tax break in today’s (overnight Australian time) budget
David Cameron’s coalition government has brought in a risky political budget, capping off a fortnight in which the Coalition has announced or passed laws likely to further change the very nature of Britain.
The budget cuts out the top 50p tax band, while freezing pension increases until 2016, among other moves designed to free the ravenous energies of free enterprise, according to the nostrums of cutting-edge neoliberal theory. Last night, a massive bill reshaping the NHS was passed, with nearly 1000 substantive amendments, and on Monday David Cameron announced a scheme to let private combines lease whole regions of major roads, and be paid by the government for running them, maintaining and upgrading them — with the imposition of tollways on new-built roads.
The moves represent a leap forward by the Conservative Party in what one can now reasonably describe as neo-Thatcherism. Having won — though barely — an election in which it ran under the banner of “we’re all in this together”, before immediately bringing a range of swingeing cuts, and a rise in tuition fees to £9000 a year, it has now embarked on the move to privatise larger areas of everyday life. There’s no doubt that it has a mix of motives both ideological, political and not least as a fund-raiser.
That the Blue boys on the Tory benches believe in these moves is undoubted — they’re not moustache-twirling looters, but neoliberal ideologues, who see the private sector as simply better, more expressive of human being, which is either in need of liberating to express its true nature (the rich), or disciplining to reshape its bad habits back into its “true nature” (the poor). It’s a totalising belief, but you need such to still believe in privatisation in Britain, given the immense disaster of its past effects on essential infrastructure, such as railways. And, despite ample evidence that the 50p tax rate hasn’t created a wave of tax exiles, the old Laffer curve lies have been circulated afresh.
The NHS bill puts a great deal of power for patient management in the hands of GPs, while allowing for private providers to tender for a whole range of intermediate services — and for GPs to use their facilities for up to 49% provision of private services — they claim the re-organisation will increase efficiency by a third in the health sector, which is 9% of UK GDP, so that it’ll be more like the US where it’s, erm, 16% of GDP.
The roads privatisation will unleash billions in new capital development and maintenance — unless of course the companies just sit on their leaseholds, take the fee, build toll roads along previously planned connections between existing roads — such as the M6 toll road, which is designed to take the driver out of the middle of Birmingham, the second city, without having to pass through 48 kilometres of build-up. Designed, that is, in 1980, as part of the motorway network. Now it costs £5 to go almost 42 kilometres. If the railways are anything to go by, the road companies will suddenly discover that they can’t make their deal work without more toll roads, more government subsidy, lower capital investment — and the government will wear it, happy that road rage, as with rail rage, is now being directed at the companies at the coalface, rather than the state.
Looking over these paragraphs, I feel the sudden urge to say that these proposals might work, on their own narrow terms … but hell, they just don’t. Whatever the argument for selective private provision of public services, the UK experience of mass provision is that taxpayers hand Richard Branson tens upon tens of millions every year to run western Europe’s most expensive rail service, in its most densely populated large country. The Coalition’s view of the world is through a fun-house mirror.
But it’s not all ideology, of course. Having the keys to capital — the transfer of public plant and potential to the private sector — doesn’t hurt for a party that has lingered close to bankruptcy several times in the past decade or so. The Tory Party has no shortage of donors, but compared to Labour (which draws money from unions and business) its funding base can be capricious, and it needs to keep a supply of easy investments coming — i.e. stuff that’s already been made by the public sector and can be handed over. This wholesale transfer — none of which was in the party manifesto — has driven the Tories’ Lib-Dem partners to the edge of despair, but that is also part of the point of these bold moves — to put the party in an impossible position, either quitting the Coalition now, thus triggering an election in which they would be flayed alive — or gritting their teeth and having their credibility leached from them until an election three years hence, at which point they will be flayed alive.
Given the deep-seated, though now remnant, orientation towards social democracy among the British public, these large moves are a risk. Sixty seven per cent of people polled opposed the abolition of the 50% tax rate; a majority are opposed to the NHS changes, and the horror of private rail is a daily experience for millions. Given the tight margins of the current party division of seats — following the next election, Labour could make a claim for government by winning as few as 25 seats (out of 258 held in a 650-member Parliament), as long as the Tories lost 25 as well.
In recent months it has been polling ahead of the Tories (36-35), though the most recent polls gave Cameron a three-point lead, 39-36. Furthermore, the much-vaunted recovery is yet to arrive — today’s budget predictions forecast “growth” of 0.8% for this year (up from earlier forecasts of 0.7%), and 2.1% for 2013 — which must be more pious hope than prediction on the part of the Tories. Having staked its whole claim to power on getting Britain moving again, the Coalition is desperate for any signs of life. So why is Cameron, having gained power, barely, by posing as a post-Thatcherite, so willing to risk these poster-child rich kid moves?
The long answer is that Labour did so much to introduce soft privatisation, PFI, hug-a-banker sort of stuff, that it has very little basis from which to criticise these moves — which differ in quantity rather than quality from Labour’s policies. The short answer is: Ed Miliband. Though he is mildly to the left of his brother, David, Miliband cannot, or will not, project any real sense of moral passion about neo-Thatcherism — nothing that would sum up succinctly the disquiet felt by many people, by no means all of them low income or working class, about this brave new direction for Britain. Nothing made this inability clearer than a scene at yesterday’s ceremony for the Queen’s diamond jubilee, where Miliband and Cameron were sitting next to each other. Following the fawning (and in the case of speaker John Bercow, particularly bizarre) speeches, there was applause for Maj, sitting there looking grumpy. Ed Miliband then leans across and whispers to Cameron — “perhaps we should stand up?” — Cameron does and the ovation becomes a standing one. Good grief. Where’s the hate — not to Maj, but to Cameron? Where’s the teeth?
Alas, the elite now so dominate politics that it is a continuum, Hampstead to Notting Hill. In this grey, raddled, beaten-down country, there seems no place to stand and say such things. Even marginal groups such as UK Uncut seem to be running out of puff. Whether they will emerge in their millions at the ballot box to vote up a simple Labour policy of NHS change repeal, etc — even supposing this is offered — remains to be seen. The party is gambling that they won’t, and he may well be both right and Right, and Coalition leaders Bozo and Gruffnut will be staying exactly where they are.
For budget junkies, the key policies:
50p top tax rate reduced to 45p
Tax threshold up £1000, from £8000 to £9000
A 7% stamp duty tax on £2 million+ property
Corporations tax cut from 26% to 24% (and from 28% under Labour) and to 22% in 2014
Child benefit removed from households with one salary over £50,000+
Internet gambling tax of 20%
Flat-rate pension of £140, which will reduce some pensions by up to £40 a week.