Commission and Cameron wedded to cuts

March for the Alternative

Amidst the fallout over Cameron’s decision to walk out of EU negotiations to deal with the economic crises, one point has been missing from from much of the coverage – both the EU Commission and the Conservatives are wedded to catastrophic spending cuts. These cuts, whoever imposes them, will continue to harm living standards for the majority of the population and will prevent stimulation of the necessary growth to pull us out of the situation. Labour’s task remains championing a challenge to austerity.

Some on the left have sought to highlight the dangers contained in the agreement.

In a blog for the New Statesman on Friday, Owen Jones put it bluntly – under the EU agreement, “economic stimulus is forbidden – because the treaty has buried Keynesianism.”

Seumas Milne tweeted that, “Cameron’s phoney veto row has diverted attention from disastrous permanent austerity eurozone deal: more suicide pact than fiscal pact”.

The effect of the agreement, as Larry Elliott has written, is that it “condemns Europe to permanent deflation and high unemployment.”

The mechanism by which this is imposed is that the structural deficits of the 26 countries will not exceed 0.5% of GDP, which will require handing enormous power to the EU Commission, which will have prior oversight of the national Budgets.

At Socialist Economic Bulletin Mick Burke explained how this will work:

“They must either hugely increase household savings even though incomes are declining; that is, household spending must fall even faster than incomes. Alternatively, businesses must reduce investment to well below the level of its income, which could only lead to a further reduction in competitiveness and a renewed widening of the current account deficit. This is the downward spiral that countries like Greece have already entered.”

Both Cameron and the Agreement are wrong. Cameron is damaging relations with Britain’s biggest market that damage jobs and growth. The agreement is entrenching austerity.

Owen Jones is correct to state this agreement is a catastrophe for the left in Europe. Jobs will be lost, wages will be cut, welfare slashed. So it is welcome that Francois Hollande, the French Socialist Party’s Presidential candidate has pledged to renegotiate the Treaty.

Cameron’s only objection was what he saw as a potential threat to the City of London’s pre-eminence as Europe’s financial capital, no surprise given the recent reminders that the Tories are the party of hedge fund managers, but he may not have been successful even in that limited aim. He is just as keen, if not more so, on spending cuts. As Burke has said, Cameron is already, “cutting public spending by a greater proportion of GDP than any major country which has not been in receipt of EU/IMF funds for its creditors”, namely Ireland and Greece.

Separately from the European project, Cameron will continue with dismantling the welfare state, whether that is the huge assault on the NHS still going through Parliament, or last night’s vote to cut benefit payments to families with disabled children, and an alternative needs to be proposed.

Where Cameron and the Commission have sought to bury Keynesianism, Labour must give it life. In arguing for jobs and growth, we need also to argue why austerity is economically illiterate. With the Five Point Plan it has potentially turned a corner, but that should just be the start of a whole new debate.



Ken pledges a London Living Rent

Photo: Amplified2010

Ken Livingstone today opened a new front in the London Mayoral campaign, attacking Boris Johnson for failing Londoners on the issue of housing and pledging to take action on housing, “to try to reduce the effects of the economic crisis and Tory policy on the living standards of ordinary Londoners” as he has done with his fare deal campaign.

As the Tories will be only too aware, Ken’s new pledge will appeal to a huge swathe of London’s electorate, particularly young professionals, who cannot afford to buy a home and will never get into social rented accommodation.

Stating that, “The market has completely failed to provide the investment in new homes, especially affordable homes”, Ken criticised not only the failure to build more affordable homes, but the increasing unaffordability of private renting. In more than half of London boroughs Londoners are paying on average over 50 per cent of their incomes on rent.

Making two specific pledges at an IPPR London Policy Conference, he said he would lead a London Living Rent campaign which “will be a new way of making City Hall work for ordinary Londoners … by learning from the success of the London Living Wage in arguing, cajoling, intervening and collaborating.” And secondly, he would intervene into the private housing market, arguing “what London needs is a London-wide non-profit lettings agency” which he pledged to establish.

The Tory response has been weak so far – they seem caught out by the proposal. Boris Johnson’s campaign has responded saying rent controls are “counter-productive” and blogger Harry Cole has said a Living Rent would be “unenforceable”.

But they must be fully aware that the London Living Rent campaign threatens to tap into a section of Johnson’s supporters from the 2008 election, particularly young working people who bought into his ‘buffoon’ image and did not see him as the forerunner of Cameron’s cuts, but who do struggle with the cost of private renting.

Following on from the successful launch of the Fare Deal campaign on transport fares, the London Living Rent campaign will cement Ken Livingstone’s message that he is the candidate seeking to reduce the effects of Tory austerity policies and their interest in only defending the wealthiest in society.


Boris Johnson defies public opinion with another fare rise


Boris Johnson this morning announced his revised fare rise, following Labour’s campaign for a ‘Fare Deal’ for passengers.

Even according to his own release, this is still a 5.6% fare rise. Under Boris Johnson a single bus fare on Oyster is now up exactly 50% under the Tory Mayor – up to £1.35. Some fares are much higher – on average Tube fares will rise by RPI + 1% (6%). Some fares on TfL rail services are higher still – including some as high as 8%. There is no indication that Boris Johnson has abandoned his plan for above-inflation fare rises in future years.

Ken Livingstone said, ‘Under enormous pressure from Londoners for a fare cut, the Tories have come up with another fare rise, making Londoners hundreds of pounds worse off and meaning a single bus fare by Oyster is now up 50% under this Mayor.’

‘Rising fares under Boris Johnson or a fares cut with my Fare Deal give Londoners a very clear choice. Fares are rising when they should be cut, and as the Tory Mayro has once again failed to cut them today, I will set out next week further details of how I will cut them instead. Someone has to give a lead when people are are feeling the squeeze – with some vision and hard work this fare rise could have been avoided.’

‘London has a moonlighting Mayor with a second salary worth £250,000 and it is little wonder that he is so out of touch he thinks this fare rise is what people want.’

  • Across London on the 3rd January the Ken campaign is going to leaflet hundreds of stations to highlight the Tory Mayor’s record fare rises. Click here to join in.