Sunak’s Autumn budget announcement was full of big boasts and brash spin. In a departure from the rigid fiscal orthodoxy that had characterised the budgets of his Conservative predecessors, rather than a list of cuts, Sunak preferred to make big play of a large number of (mostly small and all wholly inadequate) spending pledges. But despite all the relentlessly positive messaging from Tory central office, faithfully echoed in the Tory press in the run up to budget day, the reality facing working-class people was bleak before the budget and remains bleak after it.
For example, the end of the Tories’ imposed pay freeze on public sector workers was heavily trailed in advance. But what does this really mean? It is certainly true that public sector workers need a significant pay increase, and have seen their pay fall over many years.
Since 2010, for example, teachers have been subject to a 10% real-terms pay cut. With inflation predicted to reach 5% according to the Office for Budget Responsibility (OBR) – a figure which is almost certainly an underestimate – then a pay increase of 15% is required to regain lost income. But even if the Pay Review Board awarded half of this, i.e. 7%, would the government be willing to fund it? Without pay awards being fully funded, employers will attempt to pay for wage increases through cuts and redundancies. It’s therefore vital that public sector unions take this opportunity to mobilise a mass, determined struggle, including through coordinated strike action, to fight for pay rises that reflect rising living costs and make up for lost ground. This must be done at the same time as relentlessly defending all existing jobs.
Inflation and its impact on living standards are now, more than ever, central issues facing working people. The cost of supermarket shopping, as well as of gas, electricity and petrol have all shot up. With the season of cold weather round the corner, millions of people will be faced with unpayable heating bills. Yet very little is proposed to ease this burden. In fact, things will get a lot worse from next April when the cap on household energy bills will rise by around £400. High energy prices raise income for the government through increased VAT receipts, and both the price rises and the tax increase disproportionately affect those on lower incomes.
The contrast between the Tory greenwashing that has filled the airwaves in the run up to COP26 and the hard realities of budget day couldn’t be greater. The truth is that this winter fossil fuel companies will once again be allowed to make bumper profits poisoning the planet while leaving millions struggling to heat and power their homes.
The budget debate has also highlighted the timidity of the Labour Party under Starmer’s leadership. Precisely when private energy firms are failing to provide cheap power, when 16 of these companies have actually failed, Labour has chosen this time to abandon the demand to bring the energy utilities into public ownership!
At the same time Sunak pledged to increase the over-23s minimum wage to £9.50 an hour. This is still way below what’s needed to meet basic living costs. But it also makes a mockery of Starmer’s miserly insistence that Labour should not promise more than £10-an-hour, despite the party’s conference voting to support the demand first raised by the (now disaffiliated) Bakers’ Union for £15.
Universal credit cut
In the meantime, millions more are being hit by the cuts in Universal Credit. Despite some additional money being put in to sugarcoat the pill, this will still represent an overall cut of £4 billion to those on the lowest incomes. Then there is the National Insurance rise, which is really a massive tax hike. Council Tax is also likely to go up significantly, although this will not resolve the continuing crisis of local authority funding.
In addition, and without much comment, it is almost certain that interest rates will increase over the next few months, and for hundreds of thousands of households that will be the difference between staying above water or plunging into debt.
It is almost incredible how, on the eve of hosting COP26, in the budget statement there were no concrete steps outlining a path towards a zero-carbon economy. In fact, some measures that were announced, such as reducing the tax on domestic flights, are likely to have the opposite effect on carbon emissions.
Even though Sunak is a self-declared fiscal conservative, the budget marked a further shift away from the simple austerity approach of Cameron and Osborne. Sunak proudly proclaims that spending levels will return to 2010 levels. These are to be paid for by higher taxes with the burden placed on the backs of working-class people. Taxes are at their highest proportion of GDP since the early 1950s, an era of post-war reconstruction.
But this new approach will be as doomed to failure as was the previous policy. Although growth has seen a short-term bounce, the OBR predicts that growth rates will fall back to nearer 1% by the end of next fiscal year. Low growth rates over years and ever widening inequality are endemic problems to the British economy and act as obstacles to future development.
‘Age of optimism’
A real ‘age of optimism’ is indeed possible. But only on the basis of building a huge movement of workers and young people to drive out the Tories and fight for the socialist change that’s needed.
The mass protests set to take place around the COP26 summits next week will give a small glimpse of what is possible. They will show, especially, the tremendous appetite for transformative system change that exists among young people. But the strike of bin workers in Glasgow – set to coincide with the climate protests – will demonstrate something equally crucial: the tremendous potential power of the organised working class.
The pandemic, as well as the ‘era of the shortage’, has illustrated incredibly clearly that it is workers who keep society running – who create wealth. Yet under capitalism, huge swathes of that same wealth are creamed off as profit and concentrated in the hands of a parasitic rich elite. Socialists fight to expropriate that elite – by nationalising the big monopolies under democratic workers’ control and management – so that all society’s wealth can be used to the benefit of people and the planet. On this basis, it would be possible to democratically plan the economy, providing millions of new green jobs for example, and facilitating a just transition away from reliance on fossil fuels altogether.
Crucial to achieving this is the building of a strong socialist force which is capable of pointing a way forward for the workers’ movement and organising the struggle to change society. This is the kind of force Socialist Alternative is fighting to build. Now is the time to join us in that struggle.