Letter from Mark Langabeer, Hastings and Rye Labour member
The Office of Budget Responsibility are predicting the biggest fall in the living standards since WW2. They predict that average disposable income would fall by 7% and that Gross Domestic Product will fall by 2% next year. Britain has already entered recession.
But their predictions are slightly better than the Bank of England’s. The OBR see unemployment rising by 500,000, but the Bank says 800,000. Whoever you believe, prospects for 2023 look grim.
Were there any good things in Hunt’s statement? He announced pension and state benefits would rise by 10% in April. The Minimum Wage will increase by over 9%. There is a cap on in social housing rents of 7%. He also increased the windfall tax on energy producers, from 25 to 35 % and increased taxes for top income earners.
However, for the majority of the working Class, it’s bad news with ‘stealth’ tax increase through freezes on both tax and National Insurance allowances. It will result in more workers entering higher tax bands because tax allowance would normally be increased in line with inflation. The Government are raising the energy cap from next April from £2500 to £3000, making another big hike in bills. Council taxes are also likely to rise by 5%. It is the highest tax burden for 80 years.
Hunt claims that it is a budget for stability, growth and public services, but although it appears that the ‘markets’ are satisfied for the moment, there’s little evidence that the measures are supporting growth. There are proposed steep cuts in public spending in the future: most of the cuts in public spending are put back by two years. They have given modest spending increases for the NHS, social care and education, but not enough for decent pay rises or to match real inflation in these sectors. Although the Government say they need to save £ 50bn, the National Debt will actually increase in the next two to three years.
Parking a tank on Starmer’s lawn
It is clear that the delay in most of the public expenditure cuts is linked to the election cycle. But is has also been suggested that the Sunak/Hunt leadership are parking a tank on Keir Starmer’s lawn, because so much of the pain will come in after the next general election.
The OBR predicts that inflation will fall to just over 7% next year. If not, then the likelihood of industrial action will increase. Nurses are already threatening strike action in December. The idea that workers will accept a big fall in living standards could prove wishful thinking, particularly if the bosses are making big profits and awarding themselves large pay rises.
All the evidence suggest that during the ‘boom’ periods growth rates are lower and the slumps are deeper. The OBR state that the fall in real incomes will wipe out all the modest gains made in the past eight years. This should be a wake-up call for our movement. No amount of tinkering will end the boom/slump cycle.
As one socialist put it, you can’t plan if you don’t control, and you can’t control what you don’t own. It’s time that Labour adopted the programme of its founders and implement public ownership of the principal means of production, distribution, and exchange.
