By Paul Callanan, Socialist Alternative Political Committee
The Covid-19 pandemic and the subsequent shutdown – which came in the context of an already developing global economic downturn and an especially weak and failing British economy – has had massive and unprecedented consequences. According to the Office for Budget Responsibility, Britain’s GDP has fallen by an estimated 35% in the immediate aftermath of the lockdown being announced.
A recently leaked report from Treasury officials outlines the impact that the crisis, along with the huge state intervention that has been necessary to stave off total collapse, has had on government finances and, in particular, debt. What’s more, it poses ‘options’ for the government as the lockdown is eased and measures such as furlough are ended.
The government finds itself in a quandary because the predicted deficit for this year is £337 billion – far in excess of the £55bn that was expected before the pandemic struck. This crisis has shown that, when it is necessary to save capitalism, enormous state spending can be produced in a matter of hours or days – without any of the restrictions the capitalist class have used to justify much of their austerity agenda. Chancellor Rishi Sunak has yet to explain how the government’s wage support scheme, which has seen the state cover 80% of the wages of 8 million furloughed and self-employed workers, is to be paid for in the future, for example.
Of course, whatever course of action is set upon by the Tories will be one that ensures the interests of the bosses and super-rich are protected. This report makes it abundantly clear that it will be working class people, those who have already suffered the most because of the pandemic, who will be asked to foot the bill in the future.
One option on the table is another round of swingeing austerity. Scandalously, a two-year public sector pay freeze is one option being seriously considered. This could generate savings for the government of £6.5bn by 2023-24. It is no surprise that former Tory chancellor turned Evening Standard editor George Osborne is a big fan of this approach.
The fact that this plan is even being considered reveals the rank hypocrisy of the likes of Johnson and Sunak when they go out every Thursday and clap for NHS and care workers who are on the frontline of the crisis. It’s not enough that they have been part of governments that over the last ten years have gleefully swung the axe on these services and workers. All the while demonising them. They now wish to inflict further misery.
Also being considered are eye-watering tax hikes. This is the favoured option of think tanks like the Institute for Fiscal Studies and the National Institute of Economic and Social Research. Nothing wrong with raising taxes surely? Isn’t it correct that those who can afford to foot the bill are asked to pay? In any sane world, yes. But of course, what is on the table is not tax rises for the wealthy but for the working class The report also outlines what it calls a “broad based approach” which would entail an increase across all tax bands. This will hit lowest-paid workers the hardest.
The pensions triple lock, which ensures the basic state pension increases by at least 2.5% per year to keep up with inflation, is also up for grabs. The Social Market Foundation has floated this idea along with the suggested tax increases in the hopes that the burden can be shared by young and old alike! But how about, rather than targeting working-class people of any age, taking wealth from those who have managed to make a killing over the last ten years despite the hardship the majority have suffered?
The Tories are well aware that any of these approaches jar with their previous rhetoric around ending austerity. Instead they are left with praying for growth in the economy. As soon as the report got out into the public domain Johnson rushed to the backbench 1922 Committee to announce that there would be no return to austerity and that he would be “doubling down” on planned infrastructure and transport projects. He also flatly denied that the government would be freezing the wages of NHS workers.
This shows the tremendous pressure the government is under. Of course, most workers will know that promises are worthless coming from the Tories. They have already failed to deliver the PPE they promised frontline workers and are now attempting to send many workers back to their jobs at the risk of their health and safety.
The Treasury report reflects the fact that, as always, the government will seek to act in the interests of the 1%, the bosses. And their preferred method of achieving this is to prepare for a new offensive against the jobs, conditions and services of working-class people. Be that through continued austerity, a harsh new tax regime or through simply standing back and hoping for growth while millions face unemployment, loss of hours and pay cuts.
However, the fact that they have not settled on any one course of action is a reflection of a very weak government, under pressure from all sides.
At this stage the capitalist class is very nervous about the prospect of a renewal of austerity and its potential to further hamper the prospects for recovery. This is reflected in the furlough measures that the government has had to implement during the pandemic. To stave off the threat of job losses, the bosses had to call on the government to prop up wages. To not do so would have meant an immediate jobs bloodbath and an even bigger spike in unemployment than has already been seen. The catastrophic potential impact of this posed a threat not just to workers but to the profits of the bosses. They cared little that this scheme meant huge numbers of workers seeing their incomes drop by 20% – many employers were unwilling to top up wages by even this measly amount. But this meant that, when the government discussed plans to pull the plug on the scheme, they faced the threat of a huge backlash from working class people, but also from sections of the capitalist class who are currently being propped up by this state funding. As a result, the Tories were forced to extend the scheme by a further three months. Similar pressures in this direction may well be a feature of the situation as we emerge from lockdown.
Tax hikes could also have a similar effect in plunging the economy further into crisis. This is not a route the Tories will go down with any relish – not least because they are a party that falsely presents itself as being the party of lower taxes. Such an approach would threaten to alienate their own rapidly diminishing social base. What’s more, in order to win the recent general election, the Tories were only able to pull themselves back from the brink of calamity based on the ‘Johnson revolution’ and adopting a distinct right-populist tinge.
The Tories took seats in working-class areas by cynically posing as champions of ‘the people’ on the issue of Brexit – and linking this with the idea of the return of decent jobs to areas devastated by decades of austerity and neoliberalism. The fragile electoral coalition Johnson assembled to win the general election will almost certainly not remain intact in the context of renewed capitalist crisis compounded by austerity.
Especially worrying for the government is the rebellion it could face from below as a result of new austerity measures. Day by day, the devastating results of cuts on public services over the past 10 years are becoming more apparent. The NHS and care services have been left totally unprepared for a pandemic on this scale. The solidarity shown by ordinary people putting themselves at risk in those sectors to care for victims of Covid-19 shows that any government attempting to attack the conditions of medical and care workers would be playing with fire.
We have also seen workers in many sectors begin to organise to fight back as the government attempts to force people back to work on unsafe transport across a number of sectors – most recently in schools. Just last week, the NEU organised an online meeting of 20,000 teachers, the biggest online trade union gathering ever, demanding ‘no return until it’s safe’. The most far-sighted workers, activists and trade unionists know that a growing combativity around this issue could be turned into a movement to defend jobs and pay if there was to be a renewed austerity offensive.
Whatever the course is set upon by the government and bosses, working class people need to be prepared to fight. Whatever pressure the government faces from their big-business backers, we cannot rely on them to chart a way out of this crisis in a way that will serve the interests of working class people. Quite the opposite. All the options currently being discussed at the highest levels of power involve protecting the rich and powerful and their profits.
Working class people can only rely on their collective strength and organisation. We can build on the growing experience of many workers throughout this crisis who have fought to ensure that we are not forced to work in unsafe conditions. The fact that the Tories have had to rush to deny that they are planning attacks on the public shows that this is a government attempting to hide its weak position, mortally afraid of the fact that a mass movement could beat them.
It is clear that when we emerge from lockdown, we will not be entering the world as it was before the pandemic. Workers and young people will need to go into that world armed with a political programme to change society. The new normal will be one of ever-deeper capitalist crises. We must not let the bosses clamber out of that crisis on the backs of working class people as they did in the past.
Only a socialist programme will provide full solutions, not only to a shrinking economy, but to the mass unemployment, poverty and inequality that have been the reality for the majority of people for so long. The banks and the big corporations that control the economy, and the wealth and resources in society, will not be able to ensure growth, provide jobs, services and homes while they remain in private hands.
A mass movement can fight for a society where these major monopolies are taken into public ownership and organised democratically under working-class control. Only then could ordinary people plan a way out of the Covid-19 crisis and the economic catastrophe that has arisen from it, laying the basis to build a socialist society that can meet the needs and wants of all people – not just those at the top.