UK budget: cheap shots | Michael Roberts

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UK budget: cheap shots | Michael Roberts

Michael Roberts on the UK Budget which he characterises as a series of cheap shots.

Cheap shot one: cuts in the 50p tax on earnings over £150,000

Cheap shot two:  taking over the pension fund of the publicly-owned Post Office and use it to pay down government debt, while ignoring the fact that the liabilities due on the fund for future pension requirements is £10bn greater than the assets.

Cheap shot three: reorganise the NHS, the world’s most efficent and universal (and the world’s fifth largest employer with 1.7 million staff) so that the control of funds will now drift into the hands of private consultants.

On all this privatisation he makes the succinct point:

Privatisation in the UK used to be presented as an opportunity for the ordinary person to buy a share in public services.  But now the idea of ‘shareholder democracy’ has been dispensed with.  There is no attempt to hide the idea that privatisation is designed to boost private profit at the expense of public services with the mythical justification that bringing in competition is ‘more efficient’.  Tell that to railway users in Britain.  Or take the water industry, privatised by the Thatcher government in 1989.  This is what David Hall, an expert in the subject had to say in April 2008:,  “In cash terms, the average annual bill for water and sewerage rose from £120 per year in 1989 – the year of privatisation – to £294 in 2006, an increase of 245% in 17 years. In real terms, it represents a rise of 39% over and above the general rate of inflation. A breakdown of the component elements in the water bills shows that operating costs have remained roughly constant in real terms: the increase in customers’ bills is almost entirely due to the various elements associated with the capital – capital charges,  interest, and profits – which have nearly doubled, in real terms, over this period.” So the huge increase in price was all due to paying shareholders a profit and bond holders interest.  Hall estimates that if the water industry (built by public funds) had stayed in the public sector, UK household bills for water and sewerage would be 12% lower than they are.

The upshot?

“The Economist magazine has constructed a measure of the ‘lost time’ in economic fundamentals that the Great Recession has caused major economies.  Its Proust index measures the decline in GDP, consumption, stock market and house prices, wages and employment.  It found that Greece has been put back 12 years while the UK has been set back eight years, higher than the seven years for the distressed Eurozone economies of Ireland, Spain, Italy and Portugal. By the way, the US was even more damaged, having lost ten years!”

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Donagh is the editor of Irish Left Review. Contact Donagh through email: dublinopinionAtgmail.com