The Challenge that the Workers’ Opposition Faces to Safeguard the Future of the NHS

This week the Health and Social Care Bill returns to the House of Commons from the Lords despite all attempts to delay it, attempts which reflect the people’s opposition to its content. Once there, no parliamentary procedure is going to stop it becoming law.

Last Friday, the government lost an attempt to keep secret a register of the risks attached to the legislation. However, the Coalition will not agree to its being published before the legislation is passed. Last Saturday and Sunday, at the Liberal Democrat spring conference, it was reported that a clear majority of the delegates refused to support the Bill. Yet Nick Clegg, deputy prime minister and heading this junior partner in the Coalition, pledged his support for the Bill. This is all in the face of the opposition from all sections of society to the Bill over one year of its passage through the Commons and the Lords. Also, more than 100,000 (now over 175,000) people have signed the e-petition calling for the Bill to be dropped which was supposed to entitle the signatories to have their petition debated by Parliament. But it was revealed that the cross-party Commons backbench business committee turned this down sometime at the end of February. The cross-party committee refused to allocate time for this debate.

These events show that the Coalition government is and has been intent on rail-roading though its Health Social and Care Bill. In so doing, it is abusing its position of political power, as though all that mattered was that it had managed to form a coalition that can command a parliamentary majority, and utilising the de facto position that no amount of debate in the Commons is going to give any effective opposition to its anti-social measures. It has resorted to the most despicable tactics in order to push through this Bill, which sets out to promote private interest over the public good, to assert monopoly right over public right, whatever the opposition of the people. If it had any shred of social responsibility, the government would have made use of its “pause for thought” to seriously take stock of the opposition of health workers, professionals, GPs and the working class and people as a whole. It would have reflected that what gives a government legitimacy is a mandate for its parliamentary programme and being accountable to the electorate. But it has been revealed as another manoeuvre to attempt to neutralise and deflect opposition to the Bill.

Instead, it is the Opposition that has been forced to try and use tactics to put an end to the Bill which goes against all the people understand by a health service meeting the people’s claims on society and the understanding that health care is a right in a modern society. No amount of manoeuvres or eloquence was going to move the Coalition from its wrecking of this social programme and the public interest. In other words, this arbitrary power of the executive with which the Coalition is playing fast and loose is a reflection of monopoly dictate over the interests of society as a whole.

It is now being said in some circles that this was the last chance to save the NHS. But for the workers' movement it is a chance to sum up what has been achieved in developing this movement and organising it and what is what. Furthermore, the workers’ movement is determined that the battle will continue. Most importantly, the question is what needs to done in order to take this opposition forward and to build an even more powerful movement than before. The most important question is that this movement for the alternative over two years has shown that there is an alternative to this wrecking of the social economy and the public sector, that the Workers’ Opposition can fight both as a movement and as worker politicians and put the alternative at the centre of the political life of the country.

Planting this alternative is the aim of the movement to safeguard the future of the NHS. It is not limited in any way to an outlook that accepts the right of the monopolies to dictate to society as they do now through an illegitimate government which has no mandate for this social wrecking.

The safeguarding of the future of the NHS is about building the resistance and organisation that undermines and overthrows the monopoly dictate in parliament and throughout society. The challenge that the Workers’ Opposition takes up is for the prevalence of the alternative; that of public right over monopoly right in the political, ideological and economic life of the country.

Last month, the Bank of England expanded its programme of quantitative easing – the arbitrary creation of money via the buying of debt, in particular government bonds – by £50bn, the latest increase in its second round of the programme being carried out over the past six months. This adds to the earlier round begun in 2009 of £200bn, bringing the total to an eventual £325bn.

This expansion comes at a time when quantitative easing has been blamed for a drop in the value of pension funds. The National Association of Pension Funds (NAPF) claims that £90bn has been wiped off the value of final-salary pension schemes.

The Bank argues that its buying of debt results in lowering medium to long-term interest rates through various knock-on effects, reducing the cost for businesses to borrow. Meanwhile the holders of bonds – pension funds, for example – can sell them at profit in the short term while their prices are rising and get richer. This trickle-down “wealth effect” of enriching the rich is supposed to help us all as their confidence to spend and invest rises.

However, in direct contradiction with this claim comes the warning made by NAPF that quantitative easing is eroding the value of pension funds.

Pension funds, which require low risk investments, are a major holder of British government debt, particularly gilts. The quarterly review published by the Debt Management Office in December 2011 shows 27% of gilts (£317bn out of £1.15tn) are held by insurance companies and pension funds. They are consequently especially exposed to changes in the price and rate of return of government debt.

NAPF argues that the effect of quantitative easing – a rise in price and lowering of return on government debt – has made pensions more expensive to fund and increased their deficits. Yields on long-term debt now stand at record lows.

NAPF estimates that the first round of quantitative easing pushed gilt yields down by around 1%, which increased the cost of funding British final-salary pension schemes by about £180bn. It estimates further that the latest round has added a further £90bn to that cost over the past six months, coming to a total of £270bn.

This increased “funding cost” is equated with a drop in the “value” of pension funds: from the capital-centred perspective that views pensions as an investment fund, the value of a pension fund is associated with the rate of return on investments bought with that fund.

Furthermore, this lowering of rates of return has pushed pension funds into a large deficit position.

Official figures compiled by the Pension Protection Fund show how final salary schemes moved from a collective position of £46bn surplus in January 2011 to a deficit of nearly £266bn in January 2012. The difference of more than £300bn is comparable to the reduction in value quoted above. Over that year, the number of such schemes went down from 6,560 to 6,432.

“Firms are legally obliged to fill the deficits, and that diverts money away from jobs and investment, and will lead to further closures of final salary pensions in the private sector,” said NAPF chief executive Joanne Segars.

The evidence and the arguments made by NAPF are almost exactly the opposite of those made by the Bank in support of quantitative easing. At the very least, this exposes the lack of any sound theory underlying the arbitrary and pragmatic decisions made regarding the economy.

It further exposes how retired workers are paying for quantitative easing. The approximately £300bn of this “money-printing” has resulted in a similar sized reduction in the value of pensions and increase in their deficit. This is translating into lower annuities. According to NAPF figures, a worker retiring with a £26,000 pension will receive £1,320 per year, which is £440 less than what that person would have received on retiring four years ago. There were 18 annuity rate cuts and just two rate rises in the wake of first round of quantitative easing.

In February, Bank of England deputy Governor Charlie Bean tried to cover over the effect of quantitative easing on pensions.

“Someone with a £100,000 pension pot, who could have expected that to yield an annual pension of a little under £7,000 three years ago, would now get just under £6,000. That is a rather substantial income loss. But it is only part of the story,” he said.

“Those pension funds will typically have been invested in a mix of bonds and equities. The rise in asset prices as a result of QE also raises the value of the pension pot, providing an offset to the fall in annuity rates.”

He clearly does not believe his own propaganda, however, admitting that there are “unwanted side-effects” and that “the immediate consequences may be unpalatable”. His only resort was to arrogantly declare that pensioners should not expect to avoid the burden of the crisis shared by “savers, businesses and employees alike”.

No, we are not “in it together”! Not only do these figures graphically show where much of the wealth behind the money created to pay the rich is coming from – in this case, a reduced claim of the retired on the economy – it also exposes the system of pensions being an individual matter of saving. Pensions should not be investment funds provided by employers, financial monopolies or any other institution. Instead, pensions are a right. As a right, pensions should not be subject to markets. They are a claim on the social product by retired workers, not instruments of investment.

The following article appeared in 5 News , Branch News of
the Harrow East Constituency Labour Party, Issue 1, March 2012

On January 19, 2012, Branch 5 held a successful fundraising event at The Meeting Palace in Wealdstone. Following a delicious buffet, members, supporters and their guests listened to Dr Hakim Adi, writer and history lecturer at the University of Chichester, set the scene for a stimulating discussion:

• There is a Westminster consensus which advocates that the deficit must be cut. Health, education and other social programmes suffer as a result. Net effect is workers pay for problems they did not cause. There is a demand for an alternative as evidenced by the TUC March on March 26, 2011, and the November 30strike. The alternative is summed up in the slogan – ‘Stop Paying the Rich, Increase Investments in Social Programmes’

• There is a need for an anti war government.

• There is a need for democratic renewal. We need to reshape democracy for the 21stcentury instead of using a 17thcentury model.

Dr Hakim finished by stating: “history has shown everything changes and the people are the force which brings about that change.“ Debate followed on what shape the alternative could take. Issues as far ranging as Zimbabwe, Palestine, Israel, Sri Lanka and the Tamil issue, Libya, Iraq and the question of intervention were discussed. The alternative described challenged the status quo. The thought of change was uncomfortable for some. Dr Hakim challenged us to think differently about how politics should be organised: “We therefore have the responsibility to organise to bring about this change – we need to become the decision makers, build an economy which favours the interests of the majority, not the rich. We need to build a country which is a factor for peace and stability in the world” In response to questions, Dr Hakim said: “The alternative would also require a modern constitution, discussed and decided on by all, which is based on the principle that people have claims on society, by dint of being human, rights that must be guaranteed, so that government is responsible for providing for these ever-increasing needs. In short the people not parliament must be sovereign and new mechanisms must be established to bring this about.” The thought of a new way of doing things and the responsibility we each would have to take, was difficult to accept as a proposition and the exchanges reflected this. Worth remembering Gloria Steinem : “Power is not given, it is taken and the process of taking is empowerment itself”. Frederick Douglass put it slightly differently: “Power concedes nothing without a demand; it never has and never will.” This event highlights the importance of making space for political debate and encouraging discussion with people who do not normally engage politically. It’s good to talk!