More than one price to pay

Today seemed like one of those days in which you read the news tapes and wish that you hadn't got up at all. That sort of day seems, unfortunately, to be coming round more and more often. Home repossessions reached a 14-year high of 46,000 during the year. Bearing in mind that the vast majority of these will be family homes, that's probably over 100,000 people of all ages who have been thrown out of their homes and have moved into other accommodation - if they can get it. Having defaulted on one mortgage, it's more than likely that they won't be able to get another one for some years, so the chances are that their choices will be limited to private-sector rented housing. And, paradoxically, that can often be more expensive than the mortgage that they have defaulted on. It will certainly be less secure and in a less desirable and cheaper area. It's also likely that those who have lost their homes have done so because of an unexpected change in their circumstances, such as job loss through redundancy, factory closure or cutbacks. Losing their home is just one more aspect of a wider family crisis.

The human cost of these crises is difficult to imagine if you haven't gone through it personally. The sheer shock of such an upheaval can have serious consequences for people's relationships, for their self-esteem and for their health. And there are likely to be many more of them in the coming year if Business Secretary Lord Mandelson has anything to do with it. It is doubtful that his assurance to the academic community yesterday that they were not being singled out to bear the brunt of government cuts did anything to calm the universities' fears. It certainly didn't do anything to calm ours, since the reason he gave was that universities needn't feel singled out because everybody was going to be battered in the same way that they are. The university funding cuts are likely to cost several thousand jobs in the academic sphere. If that is paralleled across the rest of the public sector, as Lord Mandelson seems to be saying, the cost in jobs will be astronomical.

Many thousands more families will be precipitated into life-changing crisis and driven down the income ladder as they come to terms with either unemployment or re-employment in inferior jobs. All to pay for bailing out banks which are either refusing to pay the cost themselves or are being indemnified by Mandelson and new Labour from having to face the consequences of their irresponsibility. And that will result in lower demand in the shops and yet more jobs will go, in a spiral of decline which will be difficult, if not impossible, to control.
But there is another penalty that people will pay, one way or another and that was set out clearly and frighteningly by epidemiologist Sir Michael Marmot in yet another story. Dr Marmot reports something that we all knew must have been the case, but is brought home hard by the figures. The good doctor warns that people in England's poorest areas live an average of seven years less than those in the richest ones. People in the poorest neighbourhoods will also spend a greater proportion of those shorter lives unwell, he adds.
Inequality results in illness accounting for £33 billion of lost productivity every year. And to wind up, he also warns that the current minimum wage of £5.80 an hour is below the level needed for a healthy life.

So, if you are, or are likely to become, one of the victims of the great bank robbery, either directly or indirectly by Mr Mandelson's hand, watch out. Damaging your employment status, your income, your social services, your home life and your children's education are not the only costs that you will face. It could also cost you years off your life. Ever since the banks brought the economy of the country to the edge of meltdown and were bailed out by massive injections of public money, the question of how the bail-out could be paid for has loomed large. Because the bail-out was funded with borrowed cash, as it had to be given the sums involved, it pushed the country's debt levels to hitherto unheard-of levels. And that means large annual interest payments as well as the eventual redemption of the debt. Immediately the debt was incurred, the pressures began to be exerted for its repayment. The credit analysis firms started making loud warnings about Britain's rating - at present AAA, the highest that there is. Moody's, one of the biggest, has warned that it could cut Britain's rating if the Treasury doesn't bring borrowing under control. Standard and Poor's, the other big player in the game, recently downgraded its view of the UK to "negative" from "stable."

Governments worry about this rating because a reduced rating makes the cost of borrowing higher and thus increases the debt level. Just a few weeks ago, the Bank of England warned that Britain is in danger of losing its credit standing. Greece was downgraded in December and the results are now plain to see. But the dangers are for working people and not government in the downgrading or otherwise of Britain's credit rating. Because there is only one way in which that rating can be preserved and that is by bringing the level of public expenditure down. And, if the government is unprepared to charge the banks and their super-rich shareholders for the cost of their bail-out, it will do it the only other way that it has available. That is by swingeing cuts in the public sector, reducing its wage bills and thus the services that it supplies to the public. This would mean massive job cuts in the NHS, the civil services, in local authority subsidies, benefit reductions and all the safety-net provisions for the elderly, the low paid, single parents, education, in short, the decimation of the welfare state apparatus. What has happened with Greece is worrying all governments, like Britain's, which have laid out inconceivably large sums of borrowed money to underwrite their banking industries.

It's right that it should. Because Greece hit the buffers when its borrowing came due for repayment and those buffers are on the horizon for them as well. But the race to kill the public sector with the death of a thousand cuts is no way to solve the problems. Hack the public sector to death and tax income goes down, benefit claims go up, demand collapses for manufactured goods and the economy declines. Certainly, the Tories would love it. They have been trying to kill off the welfare state since its inception. Shadow business secretary Ken Clarke has gloated that the Tories would cut spending more severely than the Conservative government did in the 1980s. "We are going to have to be much tougher on public spending than Margaret Thatcher," he said. New Labour sounds much the same in Alistair Darling's contribution to the race to the bottom. But we must remember the damage the Thatcher government did. And remember also that the ratings agencies are not neutral. They are part of the banking business and market greed is their stock in trade. While they threaten, the banks are continuing on their own sweet way as if nothing has happened, with big bonuses and profits the order of the day.

There is no other alternative except for governments, through taxation on profits and transactions, to make the banks pay for their bail-outs, and pay soon. They cannot be allowed to drive the economy to ruin while wallowing in excess profits as a result. We cannot stand by and watch the bankers fiddle while home burns