Draft document for policy conference March 2014 (As amended at Policy Commission on 01.03.14)
Introduction – The Economic Context
The global financial crisis which erupted in 2008 triggered the worst economic slump in many economies since the early 1930s. Six years on output had still not recovered to its previous peak in much of Europe, including Britain. Debt-ridden economies within the Eurozone have been devastated by austerity packages primarily designed to ensure banks and other creditors are repaid regardless of the long-term economic and social consequences. As in the 1930s and 1980s, the mass of working people are being forced to pay the costs of a crisis for which they were not responsible whilst the wealthiest 1% continue to rake in bonuses, and stuff their bank accounts in tax havens.
The crisis was precipitated by the excesses of global financial markets but has also exposed the chronic instability and grotesque inequalities which have characterised free-market globalising capitalism since the 1970s. In Britain we are suffering from the consequences of 30 years of what is known as ‘neo-liberalism’ – the privatisation of publicly owned services and utilities, the deregulation of financial and other markets, the pervasive marketization of everyday life, and a sustained onslaught on the gains won by the labour movement in the period from the end of the second world war after 1945.
At the time of writing (March 2014) Britain is experiencing a recovery for the few. Average real wages (after taking into account inflation) are still at least 6% below their level in 2008 with the average worker £30 a week or £1500 a year, worse off. Cuts in public-sector jobs continue apace, disproportionately hurting women, ethnic minorities and some of the poorest regions in the country.
It is a myth that there is no money available. Private sector corporations were sitting on cash reserves of £671 billion (almost 50% of national income) in 2013, which they were unwilling to invest productively. The Bank of England has pumped many billions more into the financial markets preventing further collapse but also fuelling another round of house price inflation in London and the South-East, whilst much of the country remains trapped in stagnation or decline. Banks are reluctant to lend to any small business which actually needs the money, whilst handing out huge sums to buy-to-let landlords and property developers. Radical measures are necessary to ensure a transformation in the economic structure and a reversal of the damage inflicted over the last 30 years of attacks waged by the rich and powerful on the rest of us.
An Immediate End to Austerity and Cuts in Public Services
The Economic Policies proposed by Left Unity must necessarily need to change in focus over time whilst retaining the core principles on which the party was founded.
At this point we call for an immediate
A Strategic Vision of Structural Change and A Different Society
Left Unity, since its founding conference, is committed to the principle of production for meeting human need not primarily for profit, or ‘people not profit’. We are environmentalist, feminist and socialist and all these traditions of thought have influenced the proposals below for fundamental structural change in Britain. Ultimately our vision is a society organised on completely different principles from those which govern capitalism:
Left Unity as a broad party contains a healthy diversity of views on how a socialist society could be attained. We are under no illusions that any such programme can be implemented without meeting resistance from the richest 1% in Britain and elsewhere, especially those elites who control transnational corporations and global finance. However what we can seek to achieve in Britain, in association with other similar left parties across Europe, are fundamental changes which
We recognise the obstacles to implementing any such programme of structural reforms. The response of Labour Governments to threats of capital flight and investment strikes has always been to capitulate. However:
Full employment, as existed in the postwar period up until the 1970s, should be a primary objective for any left government. But we recognise that the type of jobs created and their conditions and pay also matter. All the policies outlined here will contribute to a dramatic reduction in both unemployment and underemployment (part-time workers who seek more hours). In particular we would prioritise
16. Purple Jobs: The term refers to jobs in the caring sectors which are being remorselessly cut by local authorities as a result of national government reductions in their funding. We would not only reverse those cuts but significantly expand the public sector (which currently mainly employs women) ensuring that labour necessary for the society no longer faces low wages and increasingly casualised and precarious conditions of employment. These are jobs which are critical for support for disabled people, the sick and the rapidly growing numbers of older pensioners. They are also jobs in childcare which would be provided for free to all those with children below school-age. Job creation in a unionised public sector in these areas will serve to strengthen unions and collective bargaining and raise pay levels generally.
(The purpose of Purple job creation is to free women from primary caring responsibilities which have led to their concentration in part-time work, discontinuous labour, and involuntary underemployment. Ending segregation of the labour market where women are consigned to low pay and underemployment to enable them to provide caring for children, sick, disabled people and the elderly, these jobs will enable men and women to work in this sector. This is a step towards ending women’s unpaid personal labour at home enabling their full participation in employment and enabling their access to education, personal development and economic independence.)
17. Creation of Vertically Integrated Cooperative Sector as part of a general national economic plan for the economy. A vertically integrated sector is one which produces all inputs and outputs from initial production to consumption goods. A workers’ owned and operated sector (that is locally or regionally based) can be targeted initially to revitalise areas of the country that are suffering from severe unemployment under worker’s control and management as part of a transformational project away from a capitalist competitive basis towards cooperative organisation of work. Initial start–up funds and investment will be provided by the national government at zero interest.
18. A Reduction in the Standard Working Week to 35 hours in the first instance, with further reductions over time and corresponding adjustments to the hourly living wage. For those paid less than the median wage, no loss of income will be incurred due to reduction in working hours. All additional hours over 35 are to be voluntary at overtime rates of pay, negotiated under collective agreements with trade unions.
The Banks and Finance
The financial crash of 2008 exposed the damaging consequences of deregulation of the banking sector since the 1970s – and the disastrous consequences of having the City of London operate as a global financial centre divorced from the rest of the economy. Even partial socialisation (to cover the losses) of banks such as Lloyds and RBS has not changed how the banks operate or put an end to multi-million pound bonuses
Other Forms of Public Ownership and Cooperatives
Left Unity also proposes
We recognise, however, that state ownership alone does not suffice.
When the Coalition came to power, it made it clear that the reducing Britain’s budget deficit would be primarily achieved through public spending cuts rather than tax increases. The result has been the most vulnerable sections of society pushed ever deeper into poverty. What tax rises we have seen such as VAT have largely been regressive measures, hitting poorest households hardest. Meanwhile, the government has given away billions to the richest individuals and biggest corporations through tax cuts, while failing to stop billions more being siphoned off to tax havens. Richard Murphy of Tax Research estimates the tax gap at £123 billion a year.
Left Unity will therefore:
30. Work to stamp out tax evasion and avoidance, drawing on the wealth of research by the Tax Justice Network. A Left Unity government would implement unilateral measures at home to shore up its domestic tax base, including a general anti-avoidance principle, strengthening HMRC, creating strong barriers to protect tax policy making and adminstration from political and corporate interference, controlled foreign company reform and aligning capital gains tax with income tax. It will work with governments around the world to promote financial transparency and prevent tax avoidance by pushing for country-by-country reporting, unitary taxation and automatic information exchange. It will crack down on the UK’s network of tax haven Crown Dependencies and Overseas Territories which lie at the heart of the global tax avoidance industry.
31. Immediately cut VAT to the EU minimum of 15% (and abolish it for basic necessities) and remove the VAT exemption for financial services. Our long-term goal is to abolish VAT entirely.
32. Reverse the corporate tax cuts, raising rates back to 40% for large companies, while reducing taxes for small businesses to compensate them for the mandatory living wage. As a matter of principle, Left Unity subscribes to international tax cooperation and building a framework of rules and conventions to inhibit tax wars and beggar-my-neighbour tax policies. We will work with other governments to push for higher corporate taxation rates globally.
33. Bring back the 50% tax rate and apply it to people earning over £75,000. We would introduce an 80% for all earnings 10 times above the median wage. We will work to lift all those earning below £20,000 a year out of tax entirely.
34. Introduce an inheritance tax rising to 90% on all wealth and assets 100 times the median average level, along with a wealth tax of 10% on wealth more than 10 times the median.
35. Investigate alternatives to council tax including a mansion tax for homes over £2 million and a local income tax, and introduce a land value tax collected centrally and redistributed to local authorities according to need.
On Trade and the European Union
36. Given that over 50% of Britain’s trade is with the rest of the EU we do not propose a withdrawal from the Single Market, or ‘protectionism’ against imports, whilst recognising that some of what we propose (such as capital controls) will be in breach of Single Market rules on the free movement of capital.
37. We are opposed to Britain joining the single currency as currently constituted with an unaccountable European Central Bank which has helped impose austerity measures on countries such as Greece, Ireland and Portugal.
38. We also oppose the provisions of the proposed Transatlantic Trade and Investment Partnership between the EU and the USA which threaten to impose further privatisation of public services and weaker forms of environmental regulation.
39. We are for joining with others across Europe to campaign for a different form of European Union, a ‘socialist reconstruction’, as called for by the 4th Congress of the European Left Party.
For Further Debate: There are a number of proposals for a different type of economy based on democratic and socialist principles which we believe deserve further debate in the wider movement. However:
40. The Economic Policy Commission considers that under capitalism (but not necessarily in a fully socialist society) the various competing versions of a Citizen’s Income will in practice promote the neo-liberal agenda of reducing the welfare state and leave the most disadvantaged people in society worse off. Our alternative is to promote full employment as outlined in the document and the principle of from each according to their ability, to each according to their needs.
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