Letter from Mark Langabeer, Hastings and Rye
The good news is that Labour have agreed to honour the Pay Review Bodies’ recommendations on pay for many public sector workers. Staff are to receive a 5-5% pay rise. Given that the current rate of inflation is 2%, it will probably be accepted. It would also appear that they have offered an improved pay deal for Junior doctors. The deal is said to be 22%, and although over two years, the BMA are recommending acceptance.
The bad news is that Reeves has ‘inspected the books’ and declares that are worse than anticipated, with a government overspend of £20 billion. Reeves argues that the Tories were hiding this from the electorate and many of the infrastructure projects the Tories planned had not been budgeted for. As always, the Tories are disputing this.
The Tories certainly have form for being economical with the truth, and that is putting it mildly. They lied their way through fourteen years of government. They even tried to argue that the economy had ‘turned a corner’ during the election.
However, Starmer and Reeves have committed themselves to Iron-clad fiscal rules, which will mean that there will be more austerity measures. But the decision to cut infrastructure projects will dent economic growth. They have also decided to cut pensioners’ winter fuel allowance, introducing a means tested system instead.
The argument goes that ‘rich’ pensioners don’t need the allowance, but the problem with means testing is that those who should apply often don’t because of the stigma attached to claiming. Should some pensioners die as result of Reeves/ Starmer policy, it will become an albatross across their necks for years to come.
It’s suggested that more big decisions are anticipated in the autumn statement. Will there be tax rises or spending cuts? The governments can make choices: it could introduce taxes on the wealthiest, with a higher tax band on bosses’ pay bonuses and capital gains tax rates. Maybe a wealth tax or more council tax bands for large properties.
They could also raise corporation tax, but the Starmer/Reeves strategy relies on private investment and more business taxes would mean that the bosses would just cut investment. This is why socialists argue that it‘s necessary to bring the large companies and banks into public ownership, because private companies are only concerned with making profit. If there is no prospect of profit, they will refuse to invest, and that is the key to economic growth.
