The Conservative state we’re in
George Osborne blames the state for the country’s woes, but they are the result of Labour’s enthusiastic embrace of Tory ideology
Over the last 35 years, the UK state has been thoroughly restructured to advance the interests of the rich and major corporations. Through financial contributions, lobbying, funding of thinktanks, friendly journalists, consultancies for legislators and jobs for potential and former ministers, they have colonised public policy making. The consensus about advancing social rights, equitable distribution of wealth and developing a just society has been eschewed in favour of markets, laissez-faire, light-touch regulation, corporate profits and tax cuts for the rich.
The state, we continue to be told, is the problem and gets in the way of market efficiency, but neoconservatives are very adept at using the state to serve their interests. The private finance initiative (PFI) developed by the Conservatives and championed by Labour, ensures that the profits of many companies are relatively risk-free and guaranteed by the taxpayer.
Corporate thinktanks, accountancy firms and the mega-rich are closely involved with the shaping of tax laws. The state obliges by giving tax concessions to non-dom millionaires. Tax breaks are created for specialist sectors (eg farming, movies) and soon exploited by others. Tax cuts for companies and the rich have been financed by wealth transfers from the most vulnerable. The last Conservative government reduced the state pension by breaking its link with average earnings and condemned many pensioners to poverty. Labour has not yet restored the link. The recent “10p in the £” fiasco is a continuation of the ideology that transfers wealth to the well-off.
The state has been used to smash trade unions and dilute worker’s rights and their ability to secure an equitable share of wealth. The result is that the share of the GDP going to workers in the form of wages and salaries has been reduced from 65.1% in 1975 to 52.6% in 1996. In 2006, it stood at 55.6%, a decline of 10% on 30 years. The Conservatives opposed the national minimum wage (pdf) and Labour appeased the elites by setting it at a low level. This has produced record corporate profits and fat-cat salaries for few, but hardship for many.
Seduced by the myth that private sector is somehow super-efficient, successive governments have privatised almost everything. Gas, electricity, water, telecommunications and many other industries have been sold at knockdown prices to enable a select few to become millionaires. The Conservatives bribed the electorate with few cheap shares, but none of this offered people any control over fat-cat executives, prices or quality of services. Labour has continued with the same policies. Regulators of gas, electricity, water, mobile phone and other sectors have either come from within the industry or are eyeing lucrative jobs there. All too often they see the issues through corporate lenses and have failed to protect consumers.
Light regulation and trusting the corporate elites has been a key factor in the recurring financial crisis. Normal people have been sold dud pensions, endowment mortgages and financial products. The regulators often do too little, too late. Even though people’s savings, pensions and investments were tied up in the financial system, regulators did not monitor the financial dealings of banks. They were left free to speculate and gamble on stock markets. The regulators took no action even though billions of dollars of liabilities and toxic debts were not reported in the accounts of banks. The same opponents of effective regulation are only too pleased to accept state sponsored bailouts.
We are witnessing the results of the failed ideologies of conservatism, eagerly embraced by all the major political parties. We have bigger financial scandals, pensioner poverty, increasing income inequality and prospects of greater social strife. The dominant ideology of prioritising markets and appeasing corporate elites need to be replaced by policies that prioritise the concerns of normal people. Without this fundamental shift there is no prospect of building a fair and just society.
Hundreds of thousands of public sector employees will return to work next week under a cloud of “fear and trepidation” as local authorities prepare to reveal the full extent of jobs and local services cuts, union leaders have warned .
Brian Strutton, general secretary of the GMB, said the number of posts under threat following the swingeing cuts to councils’ budgets earlier this year had now already topped 90,000 with more than half of local authorities still to reveal their plans.