New Communist Party of Britain
In their attempt to shift the excess goods being produced the ruling class cajole workers in to spending future earnings. They have been so effective in this that by April 2012 personal debt in Britain had risen to £1,459 billion, or £29,706 for every adult. In 1997 debt per adult was about 105 per cent of average annual earnings; by 2012 it had risen to 122 per cent making British workers amongst the most indebted in the world. Average unsecured borrowing (including credit cards, bank loans, retail finance deals and overdrafts) is £4,219 per adult. Annual interest repayments, on personal debt, is currently £63 billion with each household paying on average £2,396 in annual interest repayments. The annual interest that the Government pays on the entire Public Sector Net Debt of £2293.9 billion is £62 billion.
The debt burden is a big factor in Britain’s long working hours culture, initially workers boosted their wages by paid overtime, £19 billion in 2011, to enable them to service their debts whilst maintaining a socially accepted lifestyle.
As the crisis deepened and paid overtime dried up, some workers, fearful of defaulting on their debts or in an attempt to curry favour with their bosses in the hope of keeping their jobs, worked extra hours unpaid. More than five million workers work an average of 7.2 hours unpaid overtime every week. This has saved employers £22 billion a year and boosted profits; the unintended consequence is that more goods are produced and workers have even less money with which to buy them back, making the stockpile of unsold goods even larger and increasing the likelihood of further cut backs and unemployment.
Another reason the ruling class like workers to take on loans is that it might discourage workers from striking or taking other industrial action to increase pay. In the end the debt culture backfires when workers start to default and the loans turn “bad”. Either way it ends in crisis for the capitalists, as all they have managed to do is convert some of the unsold goods into loans that will never be paid back.
The Office for Budget Responsibility (OBR) predicts that total household debt will reach £2,044 billion by 2017. Are they right? Who knows? What we do know is that there is a limit to the amount of debt that workers can take on, but it’s a limit that cannot easily be predicted. When that limit is reached workers stop spending.
Recently there has been a noticeable deterioration in confidence amongst the working class about meeting loan repayments, particularly among 18 to 24-year-olds. This lack of confidence and the continued downward pressure on wages has seen retail sales fall by 1.1 per cent in the year to April 2012.