This week, the UK Chancellor Jeremy Hunt unveiled his annual budget, with billions announced for the war in Ukraine but no new money for a public sector pay rise and a fresh attack on welfare claimants. As hundreds of thousands workers strike against poverty wages, Hunt’s budget provided comfort for the rich and crumbs for the rest of us.
By Jonny Jones. *This article was originally published on the rs21 website.
Jeremy Hunt’s budget is a commitment to making workers pay the costs of 13 years of Tory misrule. From austerity to the calamitous mini-budget last autumn, the Tories have been a disaster for the working class. The Office for Budget Responsibility admits that Real household disposable income per person – a measure of real living standards – is expected to fall by a cumulative 5.7% over the two financial years 2022-23 and 2023-24. This would represent the largest two-year fall since records began in 1956-57.
Despite this, Hunt had nothing to say about one of the most important issues facing workers today: pay. Hunt joked that after planning for a quiet life on the backbenches, he decided to embark on a new career in finance.
Well, quite: Hunt was installed as chancellor at the behest of the bond markets, and he continues to preside in their interests. As the recent collapse of Silicon Valley Bank has shown, the finance industry is still reliant on the state to bail it out when its chickens come home to roost.
Hunt made much of the fact that forecasts show that there will be no technical recession and that inflation will fall by the end of the year. But the economy will certainly contract, and who knows if these forecasts are accurate. We always knew inflation would start to decline on the back of shifting global economic factors – not because of the actions of the government – but we don’t yet know by how much. All this means is that prices will rise more slowly than previously. But prices will have already risen by around 20 percent in 2022-23 while average pay growth lags far behind.
No additional funding was announced for the NHS, despite the enormous crises in heath and social care that have led to problems getting GP appointments and growing hospital waiting lists. In fact, as the New Economics Foundation have shown, NHS budgets are likely to decline by £8.8 billion over the next five years as their ‘real term increases’ are based on ‘implausibly low forecasts for inflation’. Hunt did announce a loosening of regulations governing new medicines – great news for Big Pharma, but maybe not for patient safety.
Hunt announced that energy bills will remain frozen after April, but the end of the direct rebate to households means that they will in fact pay on average £285 more than in the previous 12 months. He has done nothing to help address the housing crisis, with both Local Housing Allowances and the budget for top-up payments (Discretionary Housing Payments) remaining frozen. Meanwhile, 3.2 million low paid workers are dragged into paying income tax by the ongoing freeze in the thresholds at which people pay the basic rate.
One of the key factors underlying Hunt’s budget decisions is the significant level of ‘economic inactivity’ that has led to tight labour markets in some sectors, in which fewer workers looking for jobs are able to push up wages. Around 5.8% of working aged people in Britain are out of and not looking for work, around 500,000 more than pre-pandemic figures. Many of these people will be affected by Long Covid, and by the mental health crisis the Tories have exacerbated.
Hunt announced a raft of measures to tackle this inactivity, including a significant increase in childcare provision to get parents back into work. However, as the Women’s Budget Group have pointed out, not enough money has been allocated to sustainably fund the expansion and pay childminders a real living wage, while an increase in staff-to-child ratios for two-year-olds from 1:4 to 1:5 will put greater pressure on childminders.
Hunt also announced that schools will provide ‘wrap around care’ from 8am to 6pm by 2026. But he has allocated just £289 million over the next three years to pilot the service, which works out to just over £17,000 per primary school in England.
On the more punitive side of things, Hunt also pledged a crackdown on benefits claimants, including stronger sanctions on jobseekers who do not accept ‘reasonable’ job offers. Tony Wilson, the director of the Institute for Employment Studies, described such a move as ‘an appallingly bad idea’.
Meanwhile, Hunt uses the fig leaf of trying to get more doctors to stay in work to push through what even Sky News’s political editor called ‘a big bung for wealthy people’ by abolishing the lifetime tax allowance on pensions, a giveaway for the richest in society at a time when many people face the threat of insufficient pensions savings for their old age.
Despite telling workers there’s no money for pay rises, Hunt unveiled a new policy that would undermine the increase in corporation tax by giving away around £27 billion to big businesses over the next three years. He committed to increasing military spending by £11 billion over the next years, including £1.9 billion over the next two years to bolster munitions stockpiles depleted by the war in Ukraine.
He also announced new nuclear power investment, with a ridiculous sleight of hand that designates it as ‘sustainable energy’ and thus making it viable for ‘incentives’. Fairy tale investment in carbon capture technology and quantum computing only underline the fact that the government has no credible strategy for the future of British capitalism or for tackling climate catastrophe.
In response to the budget statement, Keir Starmer was quick to point out that it is workers who are bringing down inflation through their ‘sacrifice’. But this is a remarkable statement to make on the day when over half a million workers, from teachers and lecturers to civil servants, junior doctors and even Amazon workers, were out on strike demanding a pay rise and refusing to sacrifice our livelihoods.
Workers are absolutely right to strike. Whenever inflation is mentioned, the Tories are quick to invoke the Covid pandemic that they so woefully mismanaged, and the war in Ukraine for which there seems to be unlimited funding. This flailing government want us to pay for the cost of living crisis as well as for a productivity crisis that has gripped Britain for decades.
The strikes in Britain offer an alternative to hopelessness. They offer a better way forward than the Tories’ cynical attempt to shore up support through brutally racist anti-refugee policies. Where the Tories offer division, and Labour offer slightly less division but more competently administered, militant workers can provide a vision of unity in struggle. This means all of us fighting to deepen and extend the strike wave, rejecting below inflation pay settlements recommended by wavering trade union leaderships, and building the spirit of resistance out into wider society.
*cover image via creative commons.
