Letter from Mark Langabeer, Hastings and Rye Labour member
The Budget has gone down badly with many employers. The supermarket chains claim that it will result in higher prices, job losses, or both. This is largely propaganda because it’s based on the myth that wage rises cause inflation.
The real reason for the hue and cry is that the budget might cut their profit margins. Labour’s strategy is to stimulate growth by investing in public services and most employers want better services but don’t want to pay for them. The moans by the bosses should be taken with a pinch of salt.
That said, in my opinion, the increase in the minimum wage and employer’s NI contributions will result in workers paying the price. The impression that these companies hire workers for altruistic motives is simply false: they employ people because it’s their only means of extracting profit, and they will show you the door, if they are cannot profit from your labour.
The media and the Tories have made a lot of noise about the increased inheritance tax on farmers, but, again, it’s a propaganda con by the Tory press, because as Rachel Reeves said, only a quarter of farmers will be affected. Likewise, employers that have only have a small number of staff are exempt from extra NI contributions.
Will Labour’s budget cause inflation? The capitalist system is supposedly on competition and there are no loyalties between businesses, so if the price of food and drinks are cheaper and of a similar quality at one supermarket, then they benefit at the expense of the other. Thus the likes of Lidl are gaining market share because they are cheaper. Employers also have to compete for workers. In many sectors there are shortages of labour, and in times of relatively full employment, the bosses are forced to increase wages to attract new staff. That’s the main reason for the average increase in wages of 5%.
In my opinion, the problem with Labour’s plan is that if the budget cuts profits, the bosses will be less likely to invest in things like new plant and equipment, housing, and new technology. Rather than tinkering with the system, they should bring the banks and large companies into public ownership with compensation based only on need. This would ensure that profits are going to benefit all of us, and not just a tiny few.
