EMU can seriously damage your health
EMU can seriously damage your health
The Secretary of the Socialist Campaign Group of Labour MPs.
It is always embarrassing when one columnist tries to suck up to another in a magazine they both work for. But that's what you're going to have to live with. It wasn't my fault that Geoff Martin teamed up with John Lister (of London Health Emergency) to write a blistering pamphlet: EMU and the NHS. They just did.
Though they are more likely to receive brickbats than praise for their endeavours, the whole labour movement owes them a debt. Martin and Lister offer a timely reminder of how disastrous Europe's obsession with a single currency is becoming for public services and public investment. The strength of their pamphlet is that it connects cuts in services in the UK with parallel ones in other parts of Europe -- not a nationalist rant but the clarion call for a people's Europe based on expanded public services, genuine social inclusion and full employment.
When thousands of copies of the pamphlet were distributed at the recent UNISON Health Conference it will have given NHS health workers their first clear explanation of how the (much hated) PFI is central to the Maastricht single currency. Many will have settled for Will Hutton's contention that "the PFI is becoming the means of liberally privatising the state". But they may not have sussed its importance in meeting the Maastricht convergence criteria.
The single European currency demands that a ceiling be put on the level of government debt and government borrowing. So if you want to build a hospital, a school, a (channel) tunnel or launch a national programme of council house building, how do you raise the money? Traditionally, governments have done this by raising taxes and/or borrowing on the market. Today, such suggestions would be an affront to the Government's commitment to Tory spending limits or EMU borrowing restraints. That's where the PFI fits in.
Private finance does not count as Government debt. It simply puts us all in hock to private sector leasing charges for up to 60 years. Not only will we be paying rent out of money we should be paying to nurses, teachers, etc. but at the end of it all everything will be owned by the private sector. This is an enormous price to pay for borrowing that the state could do much more cheaply for itself. For capital, however, such a move satisfies both the rentier (who would privatise the state) and the Eurocrat (who would simply hand it over to the corporate boardroom).
Do not be under any illusions about the scale on which this little lottery is being played out. When Labour came to power, it was against the backdrop of £4.9 billion of PFI deals stitched up by the Tories. Rather than calling a halt, Labour has increased the projections of PFI spending to £10.4 billion in our first 3 years in office. There is little doubt that this is as a replacement for direct public investment, not an addition to it. Once you take account of depreciation, today's public sector investment rates are half their level at the start of the 1990s and about a fifth of the rate in the 60s and 70s.
None of this is God-given. It is simply the demands of Maastricht and monetarism. Far from helping us out of a hole, the PFI will throw us into a deeper one, which EMU will only make worse. Tragically, it also distracts us from more sensible alternatives.
This would be a really good time to increase public investment dramatically. Government borrowing or taxation would help to collapse a massively over-valued pound. This would take the pressure off interest rates and direct spending into investment rather than consumption.
Most of us could easily be forgiven for agreeing with Keynes' criticisms in 1925 of obsessive monetarism and an overvalued currency: "... by committing us to a period of deflation, it necessarily postponed active measures of capital expansion at home, such as might facilitate the transference of labour into the home trades."
The single currency that Keynes was warning about was the return to the Gold Standard, a move that was to prove disastrous for the whole of Europe. Yet today the same siren voices draw us down this path again. The problem (we are told) is Britain not being in EMU. Joining would somehow make everything all right. Oh, what fools history makes of us! In 1925 Keynes also wrote: "The President of the Board of Trade has asserted in the House of Commons that the effect of the restoration of the Gold Standard upon our export trade has been 'all to the good'.
The Chancellor of the Exchequer has expressed the opinion that the return to the Gold Standard is no more responsible for the condition of affairs in the coal industry than is the Gulf Stream. These statements are of the feather-brained order."
Today's manufacturing exports head the same way as yesterday's coal. And the drive towards EMU (at any cost) systematically undermines public services, public investment and public employment. Keynes would be amongst the first to tell you "get out and read Geoff's pamphlet". A wisdom from beyond the grave could yet save us from an early one.
Copies of EMU and the NHS are available from People's Europe Campaign, c/o House of Commons, SW1A 0AA.
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