U.K. Breaking the Social Contract Set’s it Back to Post-WWII*

U.K. Breaking the Social Contract Set’s it Back to Post-WWII*

Under Coalition plans, “day to day spending on public services… (will be at) It’s smallest share of national income since 1948”.  George Osborne’s 2013 Autumn Statement on spending plans for the UK government consisted of 7,025 words and took 50 minutes to read – but could have been summed up by that one line in the report of the government’s fiscal watchdog, the Office for Budget Responsibility.

On arrival in government, the Conservative section of the Coalition government were keen to present austerity as temporary, necessary and purely practical.  Back in 2010, Cameron claimed that he “didn’t come into politics to make cuts”, and that austerity was simply temporary spending restraint based on a necessary effort to cut the deficit, not “some ideological zeal”.

In 2013, ‘Austerity’ is delivering the half century long ambition of the Conservative party:  to revoke the post-war social contract of the United Kingdom.

  • The modern welfare state:
  • Decent pensions
  • Affordable and decent social housing
  • A publicly funded and managed healthcare system
  • A reliable and low cost transport system
  • The guarantee of a decent education regardless of circumstances of birth

This was the social contract the UK public signed up to in the post war period.


Because these generations had lived through the horrific consequences of unrestrained capitalism; enormous inequality, widespread poverty and destitution, starving and malnourished children, an entrenched class system, the benefits of the hard work of the many enjoyed by a privileged and undeserving few.

David Cameron is taking the country back to those dark days.  Wearing white tie, standing at a gilded lectern, speaking to the Bankers and Brokers of The City of London recently (pictured above) – he stated categorically that Austerity is ideological, and permanent under a Tory government.

The Impact of Austerity

Osborne’s Autumn Statement was nothing more than confirmation of a status quo with which we should all be achingly familiar by now.  The government provides tax cuts and subsidies to corporations, paid for by public money they remove from public services.  Even the meagre sops to the masses of Free School meals for the first three years of a child’s education, cancelling a rise in fuel duty and a married couple’s tax allowance  were revealed by the OBR as unfunded past 2015 – meaning they are short term pre-election incentives.

Today, Osborne announced a “responsible recovery for all”. Who is he kidding?

Life at the Top

Corporation Tax is lower today than at any time in its history.  Company taxes now constitute only 12.5% (Corporation Tax is just 7%) of the tax revenues of the UK.  In comparison, the people’s taxes, (income tax and VAT) make up more than 60% of the tax income.

UK Corporation Tax in 1984 was 52%.  By 1986 it was 36%.  In 1999 it dropped to 30%.  Under the Coalition, Corporation Tax has been cut from 28% to 20%.

The Top Rate of Tax has been cut by 5% – meaning that someone earning £1million a year will be saving £107,500 a year.

Yet in spite of this largesse from government, tax avoidance is costing us almost £70bn each year.

Only one in four of the UK’s top companies pay their taxes, meanwhile they receive tax credits to the tune of hundreds of millions of pounds by people who did pay their taxes.

The Assault on the Welfare State

The Health & Social Care Act has effectively privatized half of the National Health Service, whilst new competition regulations going live in April open the service up to the highest bidders to take over.

The Academy and Free Schools programmes turn public schools in profit making companies, and PFI debt is transferring ownership of schools from the state sector to banks.

The profit making public asset of the Royal Mail was sold off for less than half its value, gifting a working service and vast profits to wealthy investors while defrauding the taxpayer.

Public sector workers (nurses, street cleaners, teachers, scientists) have had their pay restricted to a 1% rise each year.  With inflation at almost 3% this amounts to a real terms wage cut of 2% for the last three years.

The cut in Council Tax Benefit (which supports the same groups) rolled out this April will mean rise of up to 333% in council tax bills.

Workfare has been imposed which has ended the tradition of a contribution based social security system.  Workfare means despite a person’s contributions, they are forced to work full time for months at a time for corporations in order to receive the social security payment they are already entitled to.  If they refuse, they lose their benefit.

The cumulative impact of the Bedroom Tax, the Benefits Cap and cuts to disability benefit meant 600,000 disabled people losing as much as £131 a week.

Over 90% of all care home provision (up from 61% in 1990) to elderly people is in the independent/private sector after the public sector was encouraged to outsource provision in an effort to cut costs.  The same period has seen an astronomical rise is the cost of care home places.

Life at the Bottom

The cost of living is rising at four times the rate of wages.  In fact UK wages are falling faster than any other ‘developed’ country.

Thirty four disabled people have killed themselves, and 32 have died every week while undergoing stressful ATOS ‘work capability assessments’ over the last three years.  Hate crimes against disabled people shot up 25% in 2012.

The number of people reliant on Food Banks tripled in the last year, with 350,000 people unable to feed themselves without charity support.  This winter, the Red Cross will be launching its first emergency food aid programme on UK soil since World War II.

Statutory Homelessness rose by 21% in England and 17% in Wales in 2012. While Rough Sleeping has risen even faster, at 31% in England.  Outreach workers from Homeless Charity Crisis performed a count in London which found a 62% rise in rough sleepers in the capital in just the last two years.

The average cost of a single room in a care home has risen to over £27,000 a year.  This is higher than the average UK annual wage (£26,000) and more than double the average annual pension income of £13,208.  In fact since 2011, care home costs have risen at twice the rate of inflation. Yet last year, the regulatory body for the UKs care homes The Care Quality Commission (CQC) published a damning report that showed that more than half of all elderly and people with disabilities in care homes were being denied basic care.

1 in 6 British pensioners now live in poverty, and 24,000 will die this winter because they cannot afford to heat their homes.

According to George Osborne and large sections of the mainstream media; the UK is in economic recovery.  The economy is scheduled to grow by 1.4% this year, more people are in employment, and the deficit is shrinking.

In reality, the basis of this ‘economic growth’ is an unsustainable rise in private consumption, which can only be temporary as those consumers are using debt to consume. The government know this, it is stated clearly in the report by the OBR.  It is temporary, and debt based.

The government has used benefit sanctions to reduce the numbers of people claiming out of work benefits, and used that to argue more people are in work.  The security and dignity of employment has also been diminished.  Workfare, zero hours contracts, and other non-jobs mean that whilst people appear as employed, that employment is neither secure, nor adequate to meet their living costs or their aspirations.

This is not an economic recovery by any reasonable definition of the term.

What is the point of GDP growth, if the benefits are not increasing the quality of our lives?  The only reason for the public to care about economic growth is the promise that it equates to a better life for us all.  Hunger, poverty, and homelessness rising exponentially in a time of economic growth, can only ever be a political choice.  Austerity is planned hunger, planned poverty, and planned homelessness.  It is the deliberate destitution of the many, to benefit the few.

If the Coalition stay in power or their spending plans are continued (as Labour has all but pledged) to 2018 – it will have taken them just eight years to roll back the UK welfare state sixty years.  It is long overdue that compassionate citizens presented a credible and committed resistance.  Not only to this renegade chancellor, but an entire political and economic system that has enabled corporations to buy the parliamentary system, neuter any diversity of political voices, and dismantle the promise of a fair chance for all.


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