Tory budget delivers for big business not workers

Matt Dobson

Tory chancellor Jeremy Hunt’s Westminster budget, announced amidst strike action by hundreds of thousands of workers, is yet another attack on the working class.

Moreover, it will also fail to meaningfully fulfil the aims of Britain’s capitalists to reduce the effects of inflation quickly while increasing productivity and economic growth. No wonder that two-thirds of adults in the UK expect the economic situation to worsen for their families.

In contrast, the outlook could not be more dramatically different for the bosses in the energy, food, automotive, and transport industries who, according to the Unite trade union, are responsible of more than half the increase of inflation through blatant profiteering. 

Their profit from exploitation of workers and consumers is up a colossal 89% since the pandemic. How will the paltry rise in corporation tax from 19% to 25% affect them? 

Only 10% will even need to pay according to Prem Sikka, an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield. Many can use loopholes around “full expensing” to write off the costs of plants and machinery, meaning around £10 billion comes back to them.

The capitalists are also hanging onto their profits with record low levels of investment. Even the creation of new economic zones, with £80 million in tax breaks, are unlikely to raise UK productivity in relation to its competitors.

Hunt, for the very wealthy and their heirs, created another inheritance tax loophole with changes to the pension tax allowance rules. This is a transfer of wealth of £1.1 billion to the affluent. 

Coming along the tracks is of course the Tory aim of raising the state pension age, a major attack which will need to be met with similar resistance now being seen by the French working class.

incomes falling

Workers, who the Resolution Foundation revealed a few days after the budget have suffered 15 years of wage stagnation since the 2008 crisis, are worse off by £11,000 a year. There were also no funded public sector pay rises.

While there were giveaways for the rich, millions of workers after this budget are paying even more in income tax and national insurance. The Tory budget enables those with a £2 million pension pot to pay £250,000 less in tax, while a worker barely surviving inflation on £29,000 has to pay £500 more a year in NI. 

The Tory chancellor pledged to keep the energy price cap at £2,500, but this will have little impact given the scale of crisis and the removal of the £400 payments.

The measures to reduce the extra cost for those on prepayment meters, only from July, (that will be paid for by other bill payers not the energy giants) are also too little to late given the misery that had been inflicted on the poorest in the last winter. 

The Tories are hoping inflation comes down to 2.9% from over 10% by the end of 2023, this may well prove to be delusionally optimistic given the overall problems in the world economy. Indeed inflation actually increased in February in 2023. 

Even the Office for Budget Responsibility forecasts that inflation may not drop to 2% until 2028. Many workers who haven’t had a pay rise this year will find their real wage packets are 3% less by next winter, showing the value in the wage increases won by recent trade union strike action.

Technically the UK may avoid recession, but this will be the biggest drop in living standards since the 1950s.

The extra Barnett consequential funding for Scotland will mean only £320 million, which pales in comparison to the scale of cuts to come. The SNP/ Green de facto coalition, in response to Hunt’s announcement, were clear they would continue to pass on Tory austerity by working within its financial limits.

A struggle to heat our homes and put food on the table is not inevitable if the current strike wave is escalated against the weak divided capitalist parties at Westminster and Holyrood and the profiteering bosses. 

They said to health workers, teachers and lorry drivers, to give just a few examples, there was no more money, but determined strike action forced them cough up more. 

The TUC/STUC needs to coordinate strike action and build for a 24-hour general strike for above inflation pay rises and an end to cuts. Ultimately Hunt’s budget reflected the oligarchic, greedy weak state of the British bosses and their system. 

A new mass workers’ party, based on the organising power of the trade unions, is urgently needed that fights for socialist policies. Keir Starmer merely wants British capitalism to be more productive and competitive and for workers to pay the price.

A socialist economic programme would include the nationalisation of big companies and industry, including energy, under working-class control and management. Seizing the wealth of the bosses and utilising it for our needs is essential.