The Tories have given us another budget for the rich. 1700 people with pension savings of over £1 million will be among those who benefit from the budget. On one estimate changes to pension rules are the same as giving the top 1 per cent a tax cut of £9,000 pa. Some of the richest people in the country will benefit by over £200,000
At the same time Chancellor Hunt has frozen tax thresholds for the rest of us. This will make two million low paid workers pay income tax and force three million middle income earners onto the higher rate of income tax. So to pay for a tax and pension bonanza for the wealthy we face the equivalent of a 4% tax increase.
And if you are unemployed and on universal benefit there will be increased sanctions to ‘encourage’ you back to work. This could affect 800,000 parent and carers. And the much vaunted improvements to free child care are being phased in over two years. That is no help to you now if you are a single parent, or if both parents have to work to meet the unprecedented cost of living crisis.
The Tory budget tries to put all the blame for the UK’s problems on external factors like Covid and the war in Ukraine. It ignores the effect of Tory policies like austerity and Johnson’s disastrous Brexit deal. It offers nothing for those workers struggling in overpriced rental properties who cannot afford to save for a mortgage, never mind a £1 pension pot.
Hunt promises to help with childcare and energy costs but is silent on why these costs are the highest in Europe. The budget ignores the NHS crisis, underfunding in education and does nothing to address the continuing crisis in social care. Public sector wage claims are ‘unaffordable’ but there is another £9 billion for arms spending.
Alongside the budget comes the forecast from the Office for Budget Responsibility (OBR) According to the OBR, after allowing for inflation incomes will fall by 5.7% over the next two years. Living standards in 2028 will still be less than they were before the financial crash in 2008.
A new banking crisis?
That is 20 years of wage cuts, and all the evidence suggests that we could be heading for another financial meltdown. The week began with the collapse of the Silicon Valley Bank, the 16th largest bank in the USA. On Budget day it was the turn of Credit Suisse, Switzerland’s second largest bank. Its share value fell by a quarter and the contagion spread to other banks in Europe who had to temporarily suspend trading in their shares. The Swiss bank, UBS lost 8.7% and Deutsche Bank fell by 9.2%. The Bank of England claims that UK banks are secure but Standard Chartered, HSBC and Barclays all fell as the FTSE 100 index lost £75 billion in the biggest fall since Russia invaded Ukraine.
No matter what the government does it cannot prevail against the pressures of a world economy heading for crisis. And, even if a Labour government were serious about repairing the self-inflicted damage of the last 13 years of Tory rule, they would soon bow to market forces and abandon their promises.
The answer is to challenge the market. While Hunt and Starmer waffled on inside Parliament, workers were calling for real change. Half a million workers went on strike yesterday including teachers, civil servants, railworkers and “junior” doctors. They came to London in their thousands to make their voice heard outside Westminster. This impressive display of workers power shows the way forward. The unresolved question is, “If the Tories won’t budge and Labour won’t come off the fence and back the unions against the government, what next for the class struggle?”
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