New Communist Party of Britain
New Communist Party of Britain
adopted December 2015
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 2014 average household debt was £54,472 or more than 140% of income, making British workers amongst the most indebted in the world.
Total interest repayments on personal debt over a 12 month period has been estimated to be £55.5 billion and this at a time when interest rates are at an historic low. That’s an average of £152 million per day, or put another way the average household has to pay an average of £2,100 in annual interest repayments.
At the end of the second quarter of 2014 the estimated Public Sector Net Debt was £2,269 billion or 126.6% of GDP, when the Conservative government came to power in 2010 it was £2,265 billion. So after 5 years of austerity measures Public Sector Net Debt hasn't changed in real terms. However, using the governments preferred measure of public debt it is only £1,402.2 billion or 79% of GDP with interest payments of £52 billion per year. The slight‑of‑hand that the Conservative government uses to get to this low measure of public debt is by excluding pension contributions, private finance initiatives (PFI) and Northern Rock liabilities. Also excluded from the governments preferred measure is approximately £500 billion of potential liabilities to the banking sector if there is further deterioration in global finance markets.
The debt burden is a big factor in Britain's long working hours culture, initially workers boosted their wages by paid overtime, £18.3 billion in 2013‑2014, 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. In 2013 almost than 5.5 million workers worked an average of 7.8 hours unpaid overtime every week. This has saved employers £33 billion a year, boosted profits and cost the government lost revenue; 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 them 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.
In December 2014 the Office for Budget Responsibility (OBR) forecast that the household debt to income ratio will start climbing from 146% of income to a new high of 184% by the year 2020, resulting in households having to pay £2,760 of interest payments per year. By the time we get to 2020 who knows what interest rates will be.