Ted Grant

Left must fight for socialist alternative - Cuts in health, housing and education, handouts to Leyland/BMC, Lairds/Vickers and steel bosses

Source: Militant, no. 34 (February 1968)
Transcription: Francesco 2009
Proofread: Fred 2009
Markup: Manuel 2009

Devaluation meant an attack on the standard of living. It has been followed by the “cuts” in government expenditure which will fall most heavily, as far as domestic expenditure is concerned, on the poorest sections of the population. The real cause of the crises in the British economy have been the policies of the ruling class over the last decades and the attempt to maintain their world imperialist domination.

Since the Second World War they attempted to compete with the super-powers of America and Russia in the field of armaments, and wasted the substance of the people in this futile endeavour. Apart from Russia and America they spent a greater part of the national income on “defence” than any other power: 10 percent of the national income in the immediate post-war period and 6 to 7 percent during the last 10 years. This has been one of the causes of the balance of payments crises.

Before coming to power, Harold Wilson announced a continuation of the Conservative policies of maintaining a role for British capitalism “East of Suez.” But British capitalism had not the strength to carry out this policy. In the period between the wars, the armed forces in this and other colonial areas were paid for by taxes on the colonial peoples themselves. With the national awakening and nominal “independence” of India, Malaysia and Singapore—the brunt of the cost was borne by the British.

Arms which, due to the speeding up of the technique of mass slaughter, become obsolete as soon as—or even before—they are on the production line, become ever more costly. This is one of the main causes of the crises. Up to £40,000 million has gone down the drain in this way. Even now, the “cuts” are only cuts of future expenditure. Britain will still spend more on the armed forces than any major power, apart from the two super-powers. But the policy of maintaining armed forces in the Persian Gulf and Singapore has been abandoned. £300 million a year will thus be “saved” by 1971. But the drain on the economy will still be continued.

Since the election of the Labour government, the Confederation of British Industry, the bankers and the capitalist press have been demanding “cuts” in “wasteful” government expenditure. Though Britain spends less than the other major powers on the social services, including the citadel of capitalism: the United States. It is these that have been a major target. These “sacred cows” of the labour movement, as they were sneeringly referred to, must be sliced, if “confidence” nationally and internationally in the devalued pound and the British economy were to be restored.

Having landed the labour movement in the mud, by carrying on policies dictated by these same circles, and with the balance of payments in deficit by £525 million in 1967, the programme of reforms, on which the Labour government was elected, has been largely abandoned. Family allowances will go up in April by 7/-, but the full amount will be recovered in taxes on the standard rate of income tax. The school-leaving age which was to be raised to 16 in 1971, will now be deferred to 1973. Free milk in secondary schools will no longer be provided, as from September. Some new university buildings, and colleges of further education will not be built during the year 1968-69.

From September, students grants will only be raised to cover half the increased cost of living. £39 million will be “saved” in 1968-69 and £58 million in the following year. On the health service, prescription charges are to be reintroduced at higher rates than before of 2s 6d per item. With exemptions for the chronically sick, old age pensioners, expectant mothers “only” £25 million will be saved. The other £25 million will be made up by increasing National Health Service employees’ contribution by 6d. The maximum charge for dental treatment will be increased £1 to 30s in order to save £1,500,000. Local health and welfare expenditure will be cut by an average of £5 million. A further 6d will be levied on employees and employers on National Insurance.

“Civil defence” which is a pretence in the era of the H Bomb, will be cut by £14 million in 1968-69 and £20 million in 1969-70. House building is to be cut by 16,500 in 1968 and 1969, “saving” £27 million in 1968-69 and £69 million in 1969-70. Expenditure on road building will be reduced by £53 million in 1968-69 and £69 million in 1969-70. Investment payments will be reduced by £80 million in 1968-69. By all the cuts £325 million will be “saved” in 1968-69 and £441 million in 1969-70.

Devaluation will mean rising prices and higher profits for the capitalists. At the same time attempts will be made to hold back wage increases to compensate for the increased cost of living, as with the provincial busmen.

At the same time as the programme of building 500,000 houses by 1970 is abandoned and the rents of council tenants increased. While the social services are cut, hundreds of millions of pounds will still be handed out to big business. To speed the amalgamation of yet another monopoly, BMC and Leyland (joining together to make yet another staggeringly big combine), they will receive a loan of £25 million from the government as a blessing. The Westminster and National Provincial banks are to be combined making for a big four, instead of a big five banking monopolies.

While vociferously demanding sacrifices from the people, and cuts in “consumption”—i.e. the workers’ share of the wealth that they produce—the Tories and the capitalist press, television and radio, clamour for “incentives” for big business and the higher income groups in management. A small increase in corporation tax is met with gnashing of teeth by the CBI. Suggestions of state buying of shares voluntarily, and of a ridiculously token amount, are met by threats of refusal of “co-operation” by the CBI. The cuts in the social service and government expenditure are not deemed sufficient!

Yet nowhere has it been suggested that the “sacred cow” of the interest on the national debt, incurred to pay for past and future wars, should be cut. This alone amounted in the last financial year to over £1,100 million! Twenty-six of the left wingers supporting the Tribune rebelled and abstained on the vote for the abandoning of Labour’s election programme. Howls of indignation from the right wing and from the capitalist press greeted this decision. They know that the overwhelming majority of the organised labour movement will support this stand. Demand the restoration of the cuts and let the wealthy pay!

However, the lefts have reacted to the Cabinet’s cuts much as Wilson reacted to the measures of the Tories when they were in power. While capitalism continues in existence the economy cannot function unless the capitalists are prepared to invest, and they will not be prepared to do so unless they can squeeze further surplus profits from the workers. This means allowing prices and profits to rise while freezing wages. They want government expenditure cut because it absorbs part of this surplus. Thus these cuts are necessary if private industry is to have the means of securing a greater part of the wealth produced by the workers.

Thus it is a class question and not one of stupidity or weakness on the part of the Cabinet. As nine tenths of the productive part of industry is privately owned and the lion’s share of the wealth of the country is owned by a handful, they call the tune.

The “lefts” have no realistic alternative policy except those of selective imports and controls of foreign exchange. But Britain economically is not an island but part of the world economy and subject to the world market. It is impossible to introduce import controls without reprisals and absolutely impossible to control foreign exchange, while the economy remains capitalist. The capitalists would find thousands of loopholes and black-market means of avoiding such restrictions. It would cause a terrible panic on the stock exchange, and a real crisis of “confidence”, and lead to an even greater fall of investment, and thus of production and employment.

It is not a question of “plots” by foreign or British bankers. The measures would cause chaos unless accompanied by real measures to change the society which is at the root of the problem.

Right-wingers, like Donnelly and Paget, were more interested in maintaining the position of East of Suez. Demagogically Heath and the Conservatives made great play on this question. Yet the serious journals of capitalist opinion have long been demanding the facing of the realities of capitalist Britain’s position in the modern world and not the world of the nineteenth century, which Conservative and Labour governments have vainly attempted to maintain unchanged.

Wilson, whom the press and the capitalists praised and flattered as a “real statesman” when he capitulated to Big Business and adopted Tory policies of maintaining the pound, incomes policies, stop-go economics, has been made the scapegoat by the capitalists. They have jumped on and rended the fallen idol, for carrying out their policies, which have ended disastrously. They are preparing the way, in the event of a future crisis, for panicking the people, splitting away the Labour right wing in Parliament and forming a so-called “national” government, i.e. a Tory capitalist coalition.

The whole issue has been made one of the “confidence” of those who possess the wealth nationally and internationally. As Stokes, the head of Leyland, openly remarked: “We are not in business to make cars, but to make money”. That can be said of all the capitalists. Meanwhile the monopolies and combines which control Britain have been reduced from 380 to closer to 300 monopolies: giant banks and insurance companies, which control the wealth of the country.

But there is a real question of confidence! The confidence of the organised labour movement and of the working class in the programme of socialism. Taking over the few hundred monopolies: with “selective” compensation on the basis of need: instituting a monopoly of foreign trade on this basis, would solve the problems of the economy. Producing for themselves and for the needs of the people, the working class would set to with a will. Production and living standards would leap forward. Instead of the “consumption” of the people being cut in the interests of a tiny minority, the special “interests” of the minority would be sacrificed for the benefit of the people. While supporting the left wing in their partial programme at the present time, it is only these measures which can save the working class from the recurrent crises of decaying British and world capitalism.