Cuts Are Not the Cure

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2011 National Delegate Conference
13 June 2011

Conference believes there is an alternative to the ideologically driven economic programme of the Conservative led Coalition government in Westminster. The drastic cuts in spending fail to recognize the need of the country to grow our way out of recession and are devastating communities and forcing a new generation into unemployment whilst hitting the most vulnerable and lowest paid hardest.

Conference notes that the deficit is the bankers’ deficit – the Labour government had to borrow to save the UK economy from collapse due to the irresponsible actions of the bankers. The banks’ actions in pouring billions of pounds into risky and complex investments came unstuck and left tax payers and elected governments with a mess to clear up. This resulted in a recession where we lost 6% of national output, two and half million unemployed, pay freezes, inflation rising and where taxation revenues fell suddenly.

Furthermore, Conference is certain that there are choices in dealing with the UK’s current recession. The Coalition are choosing to cut at least £48 billion by 2014/15 and cut at least 330,000 jobs in the public sector, leading to a similar number lost in the private sector. Coalition cuts to jobs, services and state benefits risk furthering a deeper and longer recession by increasing unemployment, cutting spending power, increasing benefit payments and reducing tax receipts. This would make the deficit larger not smaller. It is possible to instead increase investment in jobs and skills that keep people working and crucially improve confidence and economic growth.

Conference also believes that the priorities of any economic policy should be:

1)sustainable economic growth and investment to get the unemployed back to work;

2)maintaining vital public services;

3)fair taxation policy, including ending tax avoidance loopholes;

4)restoring stability and trust in a balanced economy that does not rely on financial services, and is committed to rebuilding our manufacturing base.

Conference rejects the notion that the structural deficit has to be removed within four years and agrees that it is unfair for the deficit reduction plan should primarily focus on spending cuts and not tax rises. Conference believes that positive public spending, both in public services and on the country’s infrastructure can be used to improve both society and the environment. Jobs and spending power also lead to growth and higher growth means a higher tax take. The ability to pull the UK economy out of recession becomes possible without the misery of mass unemployment and a broken society.

Conference believes that there are better ways to deal with the financial crisis – ways which will ensure that the rich and the banks all play their part in the recovery. Conference has long championed fair taxation, such as those set out in UNISON’s alternative budget, and would like to see in particular:

a)reversal of the January 2011 VAT rise;

b)stopping tax avoidance by companies (including many household names such as Cadburys/Kraft, Vodafone, Boots and Top Shop) and rich individuals – these loopholes must be closed. Dealing with tax avoidance amongst the very wealthy would raise £33 billion;

c) a Robin Hood or financial transaction tax (15p per £1,000 transacted could generate significantly more than £20billion a year, 0.05% tax on banks for all transactions not involving members of the public would raise £30 billion). This places the burden of taxation on those who caused the crisis in the first instance;

d)UK Corporation Tax rates will fall from 28% to 24% over the next 4 years. There should be a reversal of this position where UK corporation tax can provide funds to aid the recovery.

e)a one off 20% tax on the richest 10% would raise £800 billion

Using these measures and maintaining and increasing employment in both the public and the private sector will lead to higher tax receipts and to economic growth, which will, in turn do much to deal with the deficit.

Conference deplores the Westminster government’s attacks on public services as a means of dealing with the deficit. The cuts are opposed by many expert economists and are driven by right wing ideology rather than concern for dealing with the financial crisis created by the banks. Conference is further concerned to highlight the hypocrisy of the Liberal Democrats who in opposition campaigned against making any immediate cuts to public spending. Only a few weeks before the poll Liberal Democrat Leader Nick Clegg said early deep cuts would be economic masochism.

Conference believes that cutting public services is unnecessary and runs the risk of further damaging the economy and creating a double dip recession. Our economy depends on a healthy public sector and the private sector depends on public sector contracts. Throwing more and more people out of work will only make matters worse. Conference notes that growth declined by 0.5% in the fourth quarter of 2010 and that a double dip recession is a real risk. The cuts are hitting regional economies and already deprived areas particularly hard.

Conference is appalled at the speed and scale of cuts that have already taken place and the extent of cut backs that are being planned into future expenditure plans by local authorities across the UK. Conference notes that on taking office in May 2010 the Con-Dem Government immediately agreed to cut public spending in the sum of £6 billion from 2010/11 budgets. £1.165 billion was wiped from the books of local government resulting in widespread cuts in front line services hitting some of the more vulnerable people in our society. The subsequent spending cuts announced as part of the Comprehensive Spending Review for the next four years will see cuts of £81 billion. The Office of Budget responsibility has estimated that 600,000 jobs will go in the public and private sectors as a consequence of the cuts.

Conference also notes claims made by the Institute of Fiscal Responsibility that the Comprehensive Spending Review is regressive taking more money away from the poorest than it does from the richest. Conference further agrees with the Institute for Fiscal Studies that these cuts will increase inequality in the UK.

Conference is angry that the burden of the current cuts is falling disproportionally on women and children – 72% of the savings from the Emergency Budget in June 2010 came come from benefits that accr