“A week is a long time in politics” – a well-trodden phrase – but currently it seems as though an hour is. It speaks volumes about the chaos in the government that this article has been through multiple versions in a matter of days as events have unfolded.. Not small changes, but significant amendments. It began when the Truss government conducted a mini budget on 23rd September 2022, just 17 days after Liz Truss became the Tory Party leader and UK Prime Minister. Except what was announced wasn’t mini and could barely even be described as a budget. Ordinarily a budget would suggest some kind of number crunching. The then Chancellor, Kwarteng didn’t even bother to put his plan to the Office for Budget Responsibility before announcing it.
The last 12 years of Tory rule saw an increasing tax burden. Despite the growing tax revenues, public sector spending as a whole fell. Even ‘protected’ areas like the NHS saw spending fall in real terms as any increases failed to keep pace with inflation. If tax revenues were going up but public spending fell, where did the money go? It went to paying for the national debt created to prop up the banks after their speculation crashed the world economy in 2008.
The mini budget as originally set out would have created a £45 billion a year hole in UK government finances to plug. That’s the equivalent of around half of the NHS budget. The government was going to plug this hole by borrowing, at a time when interest rates are generally going up, to restrict inflation. The borrowing costs would add more pressure to public finances, and that’s just year 1. The plan itself was predicated on growing the economy to the extent that tax revenues would increase to completely replace the missing £45 billion. If that assumption failed to happen then the mini budget will create a permanent hole in public finances to be filled by yet more borrowing and by yet more public sector spending cuts.
The Tory orthodoxy of 12 years was to “balance the books” by slashing public services, with the poorest in society feeling the consequences of those decisions. Unsurprisingly the UK economy stagnated with an ever growing proportion of people struggling to make ends meet. In that backdrop the COVID lockdowns and government financial interventions were a blessing for some. It meant increased benefits, guaranteed income, a reduction in costs like commuting, secured tenancies as landlords couldn’t evict tenants. It gave the public an inkling of what life could be like under Socialism.
Lockdowns may have helped some of the poorest, but it was the rich that really gained from COVID. Contracts were awarded to Tory cronies in yet another transfer of public money to private capital. The bill for COVID soon mounted up and there was no doubt who the Tories would target to pay the bill. Sure enough workers were told to pay more tax to fund adequate medical and social care. Benefit claimants were once again targeted for cuts. As the cost of living rose, workers were told not to ask for too much money in pay rises in case they stoked the already high inflation that they had not caused. But many trade unions are organising and mobilising a worker fightback. We aren’t prepared to pay for another crisis of capitalism.
When austerity was launched in 2008, it was the public sector trade unions that led the fight back. Unions such as the PCS and NUT took strike action in 2010 culminating in a public sector wide strike on 30 November 2011. It was a mobilisation not seen for decades and it should have been the start of something bigger. Instead right wing trade union leaders made back room deals to undermine further coordinated action and the movement was taken apart. A few unions tried to continue the fight but they were isolated and they eventually conceded. This defeat informed the mood of the trade union movement for nearly a decade. Every attack on workers was met with words and no appetite for action. Even left wing trade union leaderships fell into defeatist attitudes. They instead pinned their hopes on a Labour government – which was a doubtful strategy even during the short lived Corbyn leadership.
In 2022 there are different trade unions that lead the fight, in formerly public industries such as post and rail as well as in the private sector. They are unburdened by the defeat in 2011. New trade union leaders are becoming household names. The names of the public sector trade unions are being forgotten as they are shown up for their rightward drift. There is an energy amongst workers. They know they have been taken for a ride. They were promised that fixing the budget would bring rewards worth the initial pain. Those promises ring hollow when many households choose between heating and eating, and for some even that choice is no longer available.
Enter Liz Truss; posing as the next Thatcher. She claimed to be cutting taxes to give workers more in their pocket. This was supposed to boost the UK economy, bringing prosperity to all. Yet you only needed to see who was receiving those tax cuts to see the truth. Bankers were in line for their bonus cap removed, the 1.25% national insurance rise removed, the 45% top rate of tax removed. The richest would have seen £10,0000+ savings each year. By contrast a worker on the average wage will be facing around £350 in tax. To put that in context, average energy bills rose by more £500. Any tax savings for the average worker are dwarfed by the scale of the cost of living crisis.
This was a mini budget for the rich. Such a ploy might have succeeded during times of plenty. But when most people are struggling, such a giveaway was too much even for a lot of Tory MPs. There was open talk on the backbenches of voting for Labour amendments. Even some cabinet ministers broke ranks to discuss their opposition to aspects of the mini budget due to be implemented. It soon became a question of not ‘if’ but ‘when’ a u-turn would happen.
The first u-turn came on Sunday 1 October, when the abolition of the 45% tax rate was withdrawn. This was the easiest decision for Truss’s government, with the subheading being that they are listening to their party and to the country. Yet if they thought this would placate dissent in their ranks or calm international markets, they were clearly unable to read the situation.
On Friday 15 October, 22 days after the mini budget was given, Kwarteng was asked to ‘step down’ as chancellor. Jeremy Hunt was appointed in his place. This was followed over the weekend with a shredding of the mini budget. Measures such as the cutting of income tax, maintaining the corporation tax rate at 19% and VAT free duty for tourists are gone. Around £13 billion of the tax cuts remain. The markets have responded with approval to the reversals. However no reversal for their friends in big businesses and their bonuses.
Many political commentators are saying that Liz Truss’s authority is gone and Jeremy Hunt is the de facto prime minister. That analysis has now been borne out as a new Prime Minister has been crowned – Rishi Sunak, in an astonishing turn of events where we have had three Prime Ministers in a matter of weeks. Yet for the working class there’s no meaningful change. The Health and Social Care Levy is gone, but there’s no plan for the funding or implementation of adequate social care. The Energy Price Guarantee, already inadequate for many families, is now for six months only to April 2023, leaving many with huge uncertainty as to how they’ll continue to afford gas and electricity. The cost of living crisis is still not addressed.
Jeremy Hunt has already said that tax rises and public spending cuts are necessary. We can expect real terms benefit cuts, public sector job losses, pay restraint. The next budget announcement at the end of October is likely to heap further misery on the poorest in society. Yet there are divisions within the Tory Party. They are certain they will lose the next general election but some MPs how to retain their seats. Those MPs know their constituents are struggling and that their party needs to be seen to be doing more or risk public backlash in the form of non-payment campaigns or protests.
This marks the weakness of the Tory Party today. Many in their ranks still want to be seen as fiscally responsible. Others, elected in the so-called red wall, are seeking financial support for ordinary people. Most of the cabinet itself is formed predominantly of free marketeers. Although they are hurting from the market reaction to the mini budget, they are still open to taking a ‘smash and grab’ approach to the UK economy and finances. These contradictions and tensions won’t go away, giving the opportunity for bold action by workers to extract gains. The Ukraine war is being used as an excuse to rip -up environmental protection legislation, to increase the dependency on fusil fuels, including the dangerous move back to allowing fracking, and all this in the face of an ever-increasing climate emergency.
The current disaggregated ballot of PCS members is just such an opportunity for civil servants. After supporting the UK through the crises of 2008, Brexit and COVID, we deserve fair pay, pensions and a fully funded and staffed civil service. BLN members are calling on all PCS members to use their ballot to vote YES for strike action. We need to be part of the growing trade union opposition to current Tory policy. Its clear from the rail dispute that the Tories fear strike action by unionsand the public support that workers in dispute are gaining and aim to introduce even more anti trade union laws,. We must be prepared to be bold: coordinating our strike action with other unions where practical, taking our own strike action as necessary. Unlike the current Left Unity NEC majority, BLN members won’t shy away from the candid conversions with members on what’s needed to win this dispute.
A strong Labour opposition putting forward Socialist policies would reinforce the demands of trade unions and give hope to workers. Instead the current Starmer shadow cabinet refuse to back strikes. No one knows what they stand for. They are gaining traction in the polls simply because they aren’t the Tories. Starmer’s ‘strategy’ comes with risks as it leaves many voters with nothing to vote for and they may stay away. What’s needed is a party that will support the trade unions and challenge red and blue Tories at the ballot box.
The Tory Government is on its knees and fighting for its survival. We await to hear what Sunak has planned for us – but we can be certain that it will means cuts, closures and reductions in the real value of our pay. Now is the time for us to act – vote “yes” in the ballot, post your ballot paper by the end of October. Unions are moving into action, workers are winning, let’s join them and increase our chances of defending our lot.
PCS Broad Left Network 