Tory budget will bring more misery

Matt Dobson reports

In the aftermath of the world economic crash a decade ago, Con Dem Chancellor Osbourne stated “we are all in this together”. It was an attempt to invoke national unity, while implementing the most vicious neoliberal austerity package on the working class since Geddes in the 1920s.

It is not all that long ago that the current Tory Chancellor Rishi Sunak was using his speeches on the commons benches to openly mock the “works of fantasy” proposals of previous left Labour chancellor John McDonnell’s policy to stagger a rise in corporation tax of 25%.

However, Sunak’s March 2021 budget announced an increase of corporation tax to 25% from April 2023 – the first rise since 1974. The budget also included the continuation of the job retention (furlough) scheme until September, albeit with increased employer contributions this summer. Plus the extension of the extra universal credit payment for six months.

In total, over £400 billion has been spent by the Tories in economic support measures since the pandemic started. However, he effectively announced an end to state support and a return to austerity from September.

As the Joseph Rowentree Foundation pointed out: “The government’s decision to cut universal credit and working tax credit in six months – just as the furlough scheme ends and unemployment peaks – will pull 500,000 people including 200,000 children into poverty as we head into winter.

The Resolution Foundation’s analysis of the budget revealed that: “The real earnings of UK workers will fall this year and remain stagnant after that even as the economy recovers from the coronavirus pandemic. Incomes will lag behind inflation during 2021-22 – meaning living standards will drop – and will only rise by an average of 0.3% annually over the course of the next four years.”

cuts continue

Deep cuts to council budgets will also continue. There is no extra funding and there will be pay freezes in the NHS, social care and the public sector. Mass anger is building over the 1% pay rise announced by the Tories for NHS workers.

The SNP-led Scottish government will only increase that 1% to 2% for the majority of public sector workers in Scotland. The lowest paid, those earning less than £25,000 a year will get a £800 increase. It’s a kick in the teeth for those frontline workers who sacrificed and delivered so much during the pandemic

The Tories have to recognise the “acute” damage of the crisis on the economy. The UK economy shrank by 9.9% in 2020, the biggest fall since the Great Frost Crisis of the 18th century, 700,000 have lost their jobs. Sunak admitted the UK economy will have permanently lost 3% in GDP as a result of Covid, which it won’t get back.

Currently the Tories, with interest and borrowing rates internationally being low have flexibility with borrowing (now up to 17% of GDP) but this will not always be the case. As well as the risk of inflation, the Tories and majority of the British ruling class are cautious about the political consequences of this level of state intervention being seen as permanent and are preparing future attacks on the conditions and income of workers.

A section of the capitalist class is also unwilling to wait forever for Johnson’s post Brexit promise of a “Singapore on Thames” low tax haven. The level of investment and raised taxes also has to be seen in the context of the vast wealth inequality in society and the scale of profiteering during the crisis.

The day before the budget, billionaire hedge fund speculator and former boss of the current chancellor, Sir Christopher Hohn, paid himself a dividend of £345 million, one of the largest-ever annual personal payouts in the UK.

British Airways, for example, is sitting on billions of pounds of reserves but has used the crisis to fire 42,000 workers and rehire them on permanently reduced wages. Even after Sunak’s increase, British corporation tax will still be the lowest in the G7.

Socialist Party Scotland propose an immediate windfall tax on the hundreds of billions hoarded by big business linked to a program of socialist nationalisation under democratic workers’ control of the main levers of the economy.

SNP Westminster leader Ian Blackford continued to verbally rage against Tory austerity, but it is clear the Scottish government has no fighting strategy and will continue to pass on Tory attacks. Why not launch a mass political struggle to force the Tories into a u turn by setting a no cuts budget utilising the financial powers of the devolved parliament and demanding a return of the three billion stolen from Scotland by Tory cuts?

Such an approach could be linked to a mass struggle mobilising the workers movement to demand the democratic right to indyref2. Only Socialist Party Scotland and the Trade Unionist and Socialist Coalition standing in the forthcoming elections have such an approach.