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Andrew Glyn

White Paper on Public Spending Offers:

Cuts in “Social Wage”

(February 1975)

From Militant, No. 245, 28 February 1975, p. 5.
Transcribed by Iain Dalton.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The White Paper on Public Expenditure up to 1978–79 gives the clearest indication so far of thoroughly capitalist economic perspective offered by the Labour Government.

The most dramatic figure is the Treasury’s estimate that, even if the economy grows at 2½% per year between 1973 and 1979, then the living standards of employed workers can only be allowed to grow at less than ½% per year.

If growth in production is less than 2½% p.a., and even the Treasury (though they “hope” growth will be faster) admits the possibility of this given “world conditions”, then a sustained fall in living standards would be necessary.

But what are the other claims on production which require living standards to grow so much slower than output as a whole? First there is the “balance of payments”. The White Paper budgets for almost one fifth of extra production to be devoted to plugging the deficit through higher exports.

Even though this would barely eliminate the “non-oil” deficit, still leaving the extra cost of oil to be dealt with later, the necessary increase in exports would certainly require further devaluation.

Capitalists hope that the extra profits from higher prices for exports, and for production sold at home will finance the 5% p.a. increase in private investment in factories, machine tools etc. which the White Paper regards as essential.

But given workers’ resistance to having their living standards eroded much of the extra cash would probably have to come through higher taxation on workers, which is then funnelled to the capitalists, through more lavish investment incentives or via the NEB.

In actual fact, nothing is included in the estimates for Labour’s nationalisation proposals on the grounds that the policies have not yet been fully worked out! While pointing out (quite correctly) that nationalising existing assets does not cost anything in terms of current production used up, the Treasury mutters darkly that the speed at which such policies can be developed “must pay full regard to general financial conditions in the country” (page 126).

Labour is, in effect, being warned by the Treasury mandarins, orthodox servants of Big Business to a man, of possible chaos in the financial markets if it carries out its programme! But the way to avoid such chaos is not to hold back on nationalisation but to extend it to the financial system itself, and to limit compensation to cases of need (for, ironically, it is extra governmental bonds issued to compensate the capitalists which are supposed to cause the chaos which the Treasury imagines would result from nationalisation!)

Set beside the planned expansion in exports and investment, at least the 2.8% p.a. growth of public expenditure on the surface looks hopeful. Obviously every socialist would welcome the fact that pensions are budgeted to rise in real terms by about 3% p.a. up to 1978. (But there is a ready made excuse for going back on this later, since the commitment is to keep pensions growing in line with real earnings which are supposed to stay nearly constant.)

But in any case, there is virtually nothing in the programme for the average employed worker. Investment in new housing and improvements are expected to fall by £230 million between 1974 and 1978; school building to fall to less than half the 1972 level, and hospital building to only three-quarters the 1972 level.

Contrast this with the rise of nearly £300m between 1974 and 1978 in defence expenditure (even after cuts); of £160m in spending on “Law, Order and Protective Services”, another £160 million in extra “incentives” to capitalists for investment in the regions, and with the tenfold increase to £310 million in the net contribution to the EEC housing budget. Even the £300 million increases in housing subsidies will be more than offset by the reduction of subsidies on food and on the huge increase in cost of products and services which workers buy from nationalised industries.

All this shows the hollowness of Len Murray’s plea that unions should not compensate for higher taxation which is “needed to pay for essential spending ... and is part of our collective living standards.” (Times, 22/1/75)

In fact, the Government has produced a thoroughly capitalist plan for the economy with take home pay and public services held down, and in many cases cut, in order to (hopefully!) permit an increase of one third in the capitalist’s rate of investment.

Only with the Labour movement in control of the economy can the real problem of sorting out priorities for future spending, between take-home pay, public services and investment be tackled in the interests of the mass of the people.

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Last updated: 8 August 2016