“It comes back to how we shape the relationship between the
family, the individuals themselves and the government in the years to come.”
(Gordon Brown, Guardian, May 13th 2008)
With such a quasi-philosophical/political statement it would
appear at first sight that these words were heralding a new political
initiative, such as a Bill of Rights or a proposed Constitution that defines
the relationship between the individual and the State, perhaps a Charter of
Rights and Responsibilities in the 21st century. The reality however
was that Brown was responding to the financial crisis, from the point of view
of British capitalism, in the funding of care for older people.
Unequal Longevity
The development of science and technology, the growing
knowledge of the importance of diet and exercise, combined with improvements in
working conditions and health and safety as a result of the the work of organised
labour, has resulted in us as human beings living longer, at least in the
developed world. The estimates are that in Britain over the next two decades
there will be twice as many people over 85 as there are today and four times as
many over 100 years of age. The downside of longevity however is that, as we
age, we tend to need care for our daily routines. Estimates are that over the
next 20 years almost 2 million more people will need extra help with the daily
tasks of getting dressed, personal cleanliness, shopping and being fed.
This is not to say that all people will enjoy this
longevity. Two years ago figures demonstrated that men in Kensington and
Chelsea enjoyed an average lifespan of 80.8 years while in Glasgow the figure
was 69.3. For women it was 85.8 and 76.4 years. In England and Wales some 20%
of men die before they reach 65 and 33% before reaching 70. In the most
depressed boroughs in the UK only half of men attain 70 years. In every city in
the UK there exists a health map which shows that those in the poorer areas die
much younger than those in the richer areas.
The problem however is that as we age, the cost of social
care also rises. In 2007 the bill was £12.7billion, in 2026 it will rise to £24.1bn
and in 2041 will reach £40.9bn. Alan Johnson, the Health Secretary, expects a
shortfall of £6bn in social care costs to emerge in the next 20 years and
therefore “new sources of funding” will have to be found without “imposing an unsustainable burden on the
taxpayers.” (My emphasis)
Liberalism
Now we come to the heart of the matter. An idea is now being
floated and it is still in its infancy, but the message is clear. Under a
Labour Government the intent is to shift the “burden” of social care provision
from the State to the individual. Until recently the basic ideology of the
labour movement was that the elderly, having contributed to the increase in
national and social wealth during their working life through the output of
their labour, their taxes and national insurance contributions, would be cared
for in retirement by the State.
In line with the pro-capitalist, pro-big business ideology and
policies of the present leaders of the Labour Party, the idea now being
propagated is that individual problems are the problem of the individual. Such
ideas have nothing in common with socialism or social democracy. They are lifted
directly out of the ideology of classical liberalism of the 18th and
19th centuries, an ideology which supported the notion that the
function of the State was to be as minimal as possible so that capitalism could
reign unfettered. The same ideology formed the basis of the neo-liberal
capitalist policies of the Thatcher government. With this ideology the State is
not seen as a mechanism for protecting and enhancing the rights of the
individual citizen, but rather as an apparatus to defend and enhance the
interests of capitalism in general and individual capitalists in particular.
So now the subtle and not-so-subtle campaign begins to
prepare the UK population, especially the poor and low paid who would look to the
State for assistance, to begin making arrangements during their working life to
care for their own old age so as not to put the “burden” on to others, especially
the State. The campaign is aided by the so-called “liberal” political
commentators such as Polly Toynbee. Speaking of the elderly she says, “With
their demand for good care and pensions, they risk trampling on the
impoverished generations that come after, making the employed pay for what baby
boomers have failed to fund in their won working lives.” (Guardian May 13th)
So, as an elderly person, if you felt as a matter of pride
that you did not want to make demands on the State, now you were being told
that you have no right to impose your needs on future generations!
Unequal Provision
And what elderly are we talking about? The directors of
companies have no financial worries in old age given the size of their pension
pots. When Rover in Birmingham closed down 2 years ago and 5,500 workers lost
their jobs, it was reported that the Phoenix Four, the 4 directors in charge of
the company, had a pension pot worth £16millions. When Kirk Lanterman of the
Carnival Cruise Company retired in 2005 his pension was £21,000 per week. In
2006 the TUC calculated that 80% of company bosses retire at 60 years of age on
pensions that are 27 times greater than the average worker. Since then the
amount accruing to the rich for their retirement is even greater.
Adam Applegarth, the man in charge of the fiasco at Northern
Rock, enjoyed a £760,000 severance agreement with the company plus a £346,000
pension top up. In 2007 he also cashed in shares worth £1million. RBS has just
made a cash call from its shareholders of £12bn after a credit write-down of
£5.9bn. Its CEO Sir Fred Goodwin earned £4.1m in 2007. Another Sir, Sir Terry Leahy, the CEO of
Tesco, enjoyed an executive salary package of almost £10m in 2007. Another CEI
in charge of BP, Tony Haywood, received a cash bonus in 2007 of £1.26m on top of a salary of £877,000. The
head of Barclays investment banking, Bob Diamond, which took a hit of £1.6bn
from the sub-prime crisis, picked up £36m in cash and shares as a 3-year bonus
package matured. All of these however pale into insignificance when we look at
David Slager. He is a hedge fund manager who picked up $450m in 2007 for his
troubles.
These outlandish salaries have been condemned by Mervyn
King, the Governor of the Bank of England. He lays the blame for the credit
crunch at the door of commercial banks for their excessive pay packages and
risky lending. Richard Lambert, the Director of the CBI, has also weighed in
criticising the bonus culture in the City.
So even those who are there to protect and serve the
interests of capitalism condemn the greed of sections of their own people for
putting the whole system in jeopardy. And in these straightened times we have
to feel sorry for these recipients of such bonuses as they are predicted to
fall to £5.1bn, down from £8.5bn last year!!
Labour Leadership
And what is the response of the Labour Leadership? For John
Hutton, the Business and Enterprise Secretary, labour should celebrate the
“huge salaries in Britain.” Any other comment might have embarrassed his
recently departed leader Tony Blair who has just bought the home of the late
Sir John Gielgud for £4m. Tony now has a property portfolio in different parts
of the country worth £9m. Not bad for a Labour Ex-PM with a barrister wife.
There are others however who seek to emulate Tony.
Ian McCartney, ex Chairman of the Labour Party who enjoyed
using bully boy tactics to whip LP members into line, gets more than £110,000
per year from a large Texan chemical and engineering company called Fluor. The
former Health Secretary Patricia Hewitt gets £65,000 per year from Boots. What
a coincidence! Dick Caborn, another erstwhile top figure in the Labour Party,
gets £75,000 from AMEC, which specialises in decommissioning old nuclear power
stations.
To those that have
shall be given
The dilemma faced by working people as they get older is
real. Whereas in Scotland care for the elderly is free, in England if you have
assets greater than £22,500, you will have to pay for the costs of caring.
Nursing home costs can be £500 per week and more than 70,000 people per year,
those who have scrimped and saved during their working lives, have to sell
their homes to pay for care.
The Scottish system is seen as “unaffordable” by Labour
Ministers, yet the government has managed to devise all kinds of schemes to
shovel even more money into the pockets of the rich, The inheritance tax threshold,
for example, has been raised from £300,000 to £700,000, shovelling an extra
£1.7 bn into the pockets of the richest 6% of families. Capital Gains Tax is
down to 10% from 40%. A TUC investigation has revealed that on average top
businesses pay an effective corporation tax of 22.5% and not the official 30%.
Such tax avoidance of £25 bn per year cost every British worker the sum of
£1,000 annually. The TUC report, the Missing Millions, also states that if the
tax avoidance did not take place, it could save schools, hospitals and other
public services from cuts.
The point was made succinctly if not a little sarcastically
by a letter writer to the Guardian on May 13th. “Alan Johnson’s
estimate for social care budget: £24bn in 2026. Tax not paid to the Exchequer
in Britain due to tax avoidance: £25bn per year. Sorted then?”
Many other examples could be found where money from the
State is readily available to finance the rich but not to finance social
provision. Subsidies from the State to the privatised rail companies total at
least £6bn per year to boost shareholder dividends. Over the next 10 to 15
years some £14bn will be invested in the Navy and maritime industry including
£3,9bn for two new aircraft carriers. The wars in Iraq and Afghanistan have
cost at least £10bn since 2003 and now cost £3.4bn per year. PFI contracts
bleed State money like leeches and commit future generations to paying the
costs.
The reality is that even when the economy of the 5th
richest capitalist nation on the world, the UK, was relatively healthy, it
found it hard to cater for the needs of the elderly or even other social
provision. Now that the economy has entered a crisis our Labour Government is
succumbing to the pressures of capitalism and seeking ways to use State
expenditure to prop up a decaying system. If this means shifting resources from
the public to the private sector, so be it.
The Reality of
Poverty amongst the Elderly.
And it is not as if workers in retirement had been
“enjoying” a comfortable lifestyle and were now, suddenly, faced with cutbacks.
The reality is far different. The UK charity Help the Aged, in its annual
Spotlight report, published in The Guardian on May 20th, says that
11% of UK pensioners – 1.2 million people – were living in severe poverty in
2005-06 on less than half of typical earnings. Almost twice as many – 21% or
2.2 millions – were classed as living in poverty with incomes of less than 60%
of average earnings. In the past year matters have deteriorated with an extra
200,000 pensioners forced into fuel poverty, with 1.5 million now spending at
least 10% of their income on fuel, mostly to stay warm.
The director of another charity, Age Concern, paints a
bleaker picture. “Many older people spend a higher proportion of their income
on essential items such as food, gas and electricity than other age groups.
Inflation-busting increases in the price of these goods in recent months have
left many pensioners short of cash and struggling to afford even the most basic
household bills. This year alone, rocketing energy prices have pushed 600,000
of the poorest and most vulnerable households into fuel poverty, many of them
pensioner households.” (Guardian May 14th 2008)
An excellent article in the British Pensioner, the quarterly
journal of the British Pensioners and Trade Union Action Group, rebukes Peter
Hain for saying that working people should take personal responsibility for
their retirement income. The article shows that 20% of the over-60s live in a
single room in the winter months because they cannot afford to keep the whole
house or flat warm. Some 2.5 million older people are forced to limit their
heating costs in this way. Some 1 million have to cut down on food to meet
their heating bills. 25,000 elderly people die each year from illnesses linked
to cold and hypothermia and as many as 2.2 million turn off their heating to
save fuel bill costs and therefore wear outdoor clothing indoors. Some 1.5
million go to bed in the day time to get warm under a blanket. The article
shows that an EU study revealed that
the single state pension in Britain of £87.30 (in April it went up to £90.70)
was just 17% of the average wage, the lowest in Europe. Even in poorer EU
countries like Portugal and Greece the pension is nearer 80% of average
earnings. The article also states that 2008 is the centenary year of the
introduction of the Old Age Pension and more than 2 million pensioners are
forced to live in conditions of poverty.
Even if retired people have access to a private pension,
they are penalised disproportionately. Pension Funds attract tax relief of
approximately £19bn per year. Some 45% of this sum goes to 13 million standard
rate tax payers while 55%, some £10bn, goes to 2.5 million higher tax payers.
2.5% of top earners get £2.5bn in tax relief. Whichever way you look at it
capitalism with its largesse favours the rich.
And yet the poor are exhorted to pay for their old age. Some
44% of people on low incomes have debt problems. The bottom 50% of the
population owns 6% of the nation’s wealth. How can you save when you do not
have enough to feed yourself and your family on a day-to-day basis?
Fund Social Needs
through Socialising Wealth.
The wealth in the UK today is the product of the labour of
working people. The problem is that they do not control how that wealth is
distributed. The value that they have created over and above what they receive
in their pay packets is appropriated by the owners of industry who ensure,
through their State apparatus, that the lion’s share is creamed off to those
who already have more than enough for their needs.
The only way to fund social care for the elderly and all
those who need it in all age groups, as well as provide a decent pension and
living wage for all, is to socialise the means of producing wealth, along with
the sources of finance such as the banks and insurance companies.
The present leaders of the Labour Party are tied hand
and foot to the interests of the rich, the capitalist class. A new leadership
of the Party is required that will harness social wealth to provide for all.
