Labour’s budget won’t deliver for workers – socialist policies would

Editorial from the Socialist – the paper of Socialist Party Scotland – Nov-Dec edition

Behind the rhetoric of a Labour budget that promised to “restore stability, protect working people, fix the NHS” lies the reality that underfunded public services will continue to be underfunded, austerity will remain and working-class people will continue to be asked to pay the price for the crisis of British capitalism.

That much was clear within minutes of chancellor Rachel Reeves’ finishing her budget speech.
Stability is ruled out, as the paltry growth rates for the economy she predicted for the next five years made clear.

Projections of 1.1% for 2024, 2% for 2025 and 1.5% for 2026 underline there will be no escape from the stagnation that has gripped the economy since the 2007/08 great recession. Growth rates that will lead to deepening attacks on the lives and incomes of the working class throughout the term of Starmer’s government.

Given the projections for the UK economy, this is as good as it gets. £40 billion in taxation hikes – primarily employers national insurance – and a tweaking of the fiscal rules to release £50 billion plus for capital spending will not be repeated in future budgets.

Even then, Reeves still announced 2% efficiency and savings targets for all government departments. That is not “an end to austerity”, as promised by Reeves and Starmer. It hard bakes austerity into already shattered public services. It will do nothing to end the deepening crisis in local government, civil service, the NHS, schools and universities.

Scotland

£2.8 billion will be added to the Scottish government spending pot as a result of budget – £1.5 billion of it for this financial year. Yet the last two years have seen more than £2 billion cut from public spending by the SNP government in Edinburgh – as inflation and welcome workers’ pay strikes forced the government to pay out more than planned.

The Scottish government budget in December will likely see further austerity to spending as the SNP continue pass on Westminster cuts.

As it is the value of the Scottish block grant has fallen by £6 billion since 2020, meaning this Labour’s extra money means no exit from austerity.

Millions of pensioners are losing the Winter Fuel Payment, including in Scotland with the SNP pressing ahead with the cut. Millions more face cuts in benefits and 400,000 will lose out as a result of changes to the Work Capability Assessment.

The uprating of benefits next year will be based on an inflation rate of 1.7%, with price rises predicted to be well over 2% next year that means the poor will get even poorer.

Even the increase in the minimum wage to £12.21 an hour from April 2025 for over the 21s, will not relieve the cost of living crisis. Moreover, younger workers will be restricted to just £10 an hour and apprentices £7.75.

According to the Institute of Fiscal Studies per capita income will increase by just 0.4% in this parliament. In other words even after the cost of living crisis of the last parliament, workers will feel worse off when the distorting impact of the richest are stripped out.

A socialist budget, in contrast to the one Reeves delivered, would have ensured a screeching end to austerity. The immediate introduction of a £15 an hour minimum wage for all workers, regardless of age. And a guaranteed increase in that wage based on the cost of living.

Benefits would be set at a level that covers living costs, the same with pensions. The NHS, council services and the devolved administrations would have received funding to reverse every penny of cuts made over the last 15 years, as a first step to funding genuine needs budgets.

A massive programme of council house building, new hospitals and schools that would create millions of jobs would have also been announced.

And where would that money have come from? Through a widespread programme of socialist nationalisation under workers’ control and management of the banks, energy companies, construction, the pharmaceutical giants, tech corporations and the major capitalist companies that dominate the economy.

Such a measure would release hundred of billions to invest in the lives of the majority of society. A far better use of resources than lining the pockets of international shareholders.

The Sunday Times Rich List for 2024 – a who’s who of exploiters and speculators – reports that the 350 richest individuals and families in Britain now have a combined wealth of over £750 billion.

In 2023, Shell and BP made £22 billion in profit between them, aided by the huge rise in energy bills for most households. The money is there.

In addition to reorganising the economy for human need not capitalist greed, taxing the wealth of the billionaires and windfall taxes on profits could also play a role. Crucially, the ownership and control of the economy is essential for a socialist plan to be successful.

Nationalising the banks and the big financial companies would open up access to huge reserves of wealth, but crucially would allow the implementation of capital controls to block any attempts by the super-rich to remove their wealth from the country.

Socialist nationalisation would not involve decisions being made by unelected government officials, but by elected representatives of workers and service users in each industry, with full control over how they are run. All representatives would be regularly elected and subject to recall, as well as only being paid the same wage as their fellow workers.

capitalism a dead end

It will come as no surprise to anyone that this right wing Labour government has taken the road of propping up ailing capitalism.

Privatisation and austerity are central to that agenda. Just look at their so-called Employment Rights Bill, which has not yet delivered a single reform to benefit workers. Even lifting the David Cameron Tory anti-union laws on balloting thresholds won’t be acted on until April 2025.

Why not use emergency parliamentary powers to tear up all the anti-union laws? This could be done in hours by a genuine workers’ government.

What is certain is that unless the working class is organised and fighting for its own rights, including having its own political party fighting for its own interests, the rich will continue to get richer.

The massive authority accrued by the trade union movement over the course of the strike wave means they are in prime position to take concrete steps towards the formation of a new party of the working class and young people.

Armed with a socialist programme to end the rule of the billionaires and big business, a new society can be built based on democratic socialist planning to end poverty, austerity and inequality once and for all.