Brit Has Its New Prime Minister-Challenges Ahead
NewsViews Election Forecast that People will kick out Labour from power has become a reality. Although Labour Party may have some consolation that no single party got clear majority, the mandate against the Labour Party was loud and clear. Since the inception of new name in 1996 as 'New Labour' Party's labour base was eroded as it was reduced to a Labour Party only in form as in essence its polices were worst than any right wing government.
Liberal Democrats after a week of deal making finally reached an accord with conservatives and got its leader Nick Clegg as Deputy Prime Minister. This is the country's first coalition since 1945, ending 13 year Labour Party misrule. This can be characterized as coalition without a common ideology but Lib Dem joined forces with conservatives, we ae told, nation come first. The differences on issues like immigration, Afghan & Iraq war will continue but will not be aired in cabinet meeting. While the horse-trading still continues between the members of the new coalition more details of how their fiscal strategies will be merged to form a coherent new tax policy are emerging as follows: (i) increase in threshold on income tax currently from 6,450.00 to 10,000.00, a biggest tax cut seen in decades giving some relief to lower middle class. It reduced government revenue by 17 billion, (ii) Deficit reduction continuing recovery by a significant cut of 6 billion this year in public service spending (Greek reminder ), (iii) Restore public confidence in economy - Urgent need to assess public spending by an independent auditing of the state of national finances since the deficit forecast has been wrong by 40%, (iv) Create a new office of Budget Responsibility and Treasury to give up its role in economic forecast, (v) in principle an agreement on political reforms, (v) possible imposition of levy on banks, etc. Some oldguards of Conservatives, like William Hague, Ian Duncan and others have been inducted in the cabinet but surprisingly veteran conservative leader Michael Howard did not make to the list. There are only 4 women in the cabinet which included an Asian woman, Baroness Warsi. Opponents already started criticism of coalition cabinet for a weak record of conservatives on equal opportunity. Labour record on equal opportunity was not that great either except public relations exercise. Needless to mention its Equality chiefs Gurbux Singh was convicted for threatening a police officer and Trevor Phillips was found trading cash for Racism (http//: newsviews-raceclass.blogspot.com & http//:cemkumar.googlepage.com, previous issues).
One thing is clear financial market did not take the coalition and cut in spending very well as pound continues to be weak and FTSE also did not show any sign of recovery. Labour Party left 161 billion deficit last year i.e., about 11% of GDP, which is the largest in the Developed Countries according to the IMF. Although cuts in deficit was vital such measures are not popular with public when global financial crises is not yer over. One wonders how the coalition will reduce the deficit while the economy is still in recession. What is known as the 'catch of 22' or Marxists would put it as inner contradiction of capital accumulation.