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Coalition walking a tightrope

That the first serious opposition to the government’s cuts programme has come from within the Tory Party rather than from the usual quarters, reveals not only the depth of the financial crisis but mounting problems within the Coalition itself.

In office for just two months, the Lib Dem-Tory government is facing all sorts of stresses and strains and you would not put your money on it lasting the scheduled five years. The axing of the school building programme by education secretary Michael Gove has prompted a furious response from within the Coalition.

Last night, Lib Dem Scottish Secretary Michael Moore criticised Gove over the fact that the announcement on the cuts was replete with errors, leading some schools to think mistakenly they had been reprieved. Three Tory MPs have denounced Gove and one threatened to lead a march on Downing Street of parents, students and teachers!

Ian Liddell-Grainger, Tory MP for Bridgwater and West Somerset, attacked plans to halt three schools in his constituency and put three others under review. “If I have to stand outside Downing Street and say, 'Can we please have a chat?', then I am more than happy to do so," he said. Teaching unions have organised a lobby of parliament, to take place on Monday 19 July – a date which coincides with the second reading of the government's Academies bill.

The Coalition’s attack is broad-ranging and will hit every section of the community, whether they voted for the Coalition parties or not. For example, pensions minister Steve Webb is proposing that private sector pensions schemes drop inflation-proofing based on the retail prices index (RPI) and replace it with the much lower consumer prices index (CPI). A pensioner currently receiving £10,000 a year will be more than £800 a year worse off by 2016, according to one estimate.

Apparently the government is concerned that the remaining final salary scheme pensions could go belly up over the next few years and land the government with the cost of picking up the pieces. Cutting the value of pensions by adjusting them for a lower measure of inflation is the Coalition’s answer.

The Coalition is walking a financial tightrope and could fall off at any time. Debt payments alone on the national debt amount to £40 billion in 2010-11 – and are expected to rise to an astonishing £70 billion, which is about 15% of the annual state budget. The government’s own calculations about reducing the budget deficit are themselves based on wildly optimistic forecasts about economic growth.

On many measures, Britain is the most indebted country among the advanced capitalist countries. As the government admits in its latest budget report: “Between 2002 and 2007 there was a near tripling of UK bank balance sheets and the UK financial system had become one of the most highly leveraged [i.e. financed by borrowing] in the world, more so than the US.” British banks are, by the way, still desperately short of capital.

The scale of the task facing the Coalition – which wants to “rebalance” the economy in favour of the private sector – is immense and, in my view, beyond its capacity. What they are proposing could only be carried through by force. The groundswell of opposition and discontent that is already building up throughout society will undoubtedly provide us with an opportunity to defeat the Coalition. Building a network of People’s Assemblies to unite communities and plan for a socially-driven alternative to the nightmare of the capitalist financial and economic crisis is key to winning this historic battle.

Paul Feldman
Communications editor
9 July 2010

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