Darling fails to be a crowd-pleaser

Budget day started with PCS pickets outside the Houses of Parliament, the Treasury and almost every jobcentre around the country. Anyone observing MPs drive past the PCS protesters to hear Alistair Darling's words of wisdom would have been struck by the lack of public esteem for Parliament. In fact, it's at an all-time low. Ordinary men and women across the country, such as public-sector workers and BA cabin crew, are struggling against pay cuts, redundancies and attacks on their terms and conditions. Add to that a string of parliamentary scandals and it's no wonder people are so disillusioned. Expenses claims, the shady lobbying practices of Geoff Hoon, Stephen Byers and Patricia Hewitt, plus the Tory Ashcroft debacle have left MPs reeling. So this particular Budget comes at a key time for Labour. Key choices are to be made as the recession - according to some commentators - "draws to a close" and in the wake of the decisions taken in 2008 to bail out the banks. At one level Darling made some fairly encouraging Keynesian remarks about the "role of government," defending the role of the state and comparing current levels of unemployment and interest rates to the recessions of the 1980s and '90s. But he soon retreated into Great Britain PLC mode when he said all the bank shares would eventually be sold and that the age of interventionism was over.

If Darling really believes this, he should cast an eye to the media reporting of what is happening in Greece. Greece's budget deficit, coupled with pressure from the EU and international banks, has forced the hapless George Papandreou to make endless flights to European capitals to pledge even more cuts and attacks on the welfare state, only to return home to more strikes and even bigger demonstrations. Darling seemed like a man uncertain of what to say. What was obvious, though, was that above all he wanted to please the City commentators and be told he was being "responsible" and "cutting the deficit."  The Chancellor has allowed, even encouraged, praise from the City to be the gold standard of 21st century fiscal policy. The new national barometer by which government success is measured appears to be at what the level the deficit is. Emphasising the point is the international banking fraternity's decision to lower Portugal's credit rating, which demonstrates the power of big-business sophistry over the real needs of people. Darling did announce some welcome changes and improvements, but, as he trundled his way through his speech, he continued with the same theme he has adopted for so long - essentially that public employees must pay a wholly disproportionate share of the debt burden created by the banking crisis.

A 1% pay limit on public-sector pay for three years, the loss of many jobs and the relocation of one-third of Civil Service positions currently in London will mean hardship and depression for many who are already low paid. As one of the PCS pickets outside Parliament laconically put it, their struggle has an effect on everyone else in the public sector. If this dispute is lost then it can only be a matter of time before severance arrangements for the police and others are affected. Since the EU does not allow state subsidies or direct support for industry, government powers are limited to tax-raising and giving out benefits. In another nod towards Keynes, the Chancellor announced a cut in stamp duty for first-time buyers and an increase in the rate for £1 million-plus properties. However, he then went on to make a very curious reference to the way "welfare reform has restricted the rise in inactivity benefits." This indicates the real purpose of taking many people out of benefits altogether and making draconian demands on accepting low-paid jobs that the welfare trap of housing benefits penalises them from accepting - it's all about the deficit. Yet the huge housing benefit bill for tenants of private landlords who charge exorbitant rents is to be dealt with in absolutely the wrong way.

Instead of controlling rents and the obscene levels of profit made by renting to the poorest tenants, the plan is to prevent those on benefit being allowed to go into "expensive" homes. It looks as though an era of social cleansing could begin with restricting housing support to "low-cost" areas. In a continuation of the Great Britain PLC theme, Darling confirmed the sale of the Dartford river crossing and the Channel Tunnel rail link, putting pressure on government departments and local authorities to continue asset sales to meet infrastructure investment needs. New Labour and the Tories have always believed that government is essentially a business, not a public role and while Darling has changed the mood music, he has saddled himself and any future government with the millstone of debt reduction, whatever the circumstances.
The Tory response was as expected - more cuts more quickly and not raising tax and national insurance contributions for the wealthiest. David Cameron's strange obsession with marriage was dealt a neat blow with plans for tax credits to be paid to families irrespective of the status of the parental relationship.

One telling figure, hidden quietly in the midst of all this was the cost of the Afghanistan war - some £4 billion in the next year alone. Free market obsessions brought us the crisis and while the initial reaction to the crisis of partially taking the banks into public ownership was welcome, the price is being paid by tight spending, wage control and asset sales.  Public support for global regulation and the so-called Robin Hood tax show that for all the shallowness of the media presentation of the crisis, there are many who see the real causes of poverty and inequality in Britain and are prepared to do something about it. With election fever about to fully set in, perhaps the best way of defeating the Tories is to promise a period of redistribution of wealth or quite simply the end of new Labour.