Sunak’s proposals yesterday do nothing to tackle the root causes of the cost of living crisis. Remember when the Tories and their media fanboys accused Corbyn of wanting to take us back to the 1970s? The Tories have taken us even further back, with the highest tax burden since 1949 and the biggest drop in disposable income since records began in the 1950s.
A Crisis Of Capitalism
This crisis was not caused by Brexit. It was not caused by Covid and it was most definitely not caused by the Russian invasion of Ukraine. Sanctions will drive up prices eventually. But the cost of living crisis began well before the invasion of Ukraine. It is rooted in a crisis of capitalism where profits and dividends have to be protected at all costs, and those costs are passed on to us.
Of course, the media ignored this fundamental point in their coverage of the mini budget and focus on the details rather than the bigger picture. But most of the papers acknowledge that Sunak’s measures do nothing to help the poorest in society.
The biggest increase in prices has been in basic foods that figure heavily in the diets of the poor. Jack Monroe drew attention to this and to the reduction in the number of value items on sale in supermarkets. The outcry caused some reversals of this policy but did not stop the upward pressure on prices. Official inflation figures do not capture the reality of inflation for families on low incomes when basic foods like pasta and tomatoes have gone up by a half or a third.
The hike in gas and oil prices this year is most obviously felt in the doubling of household energy costs. But it drives up all other costs as well. Nitrogen fertilisers are FIVE times more expensive now than last year. And, once it’s planted, getting a crop from field to plate requires fuel for tractors and other farm machinery, transport and processing costs. Either costs are passed to the consumer or farmers cannot afford to grow as much, and shortages translate into higher prices. Either way we lose, and the energy giants prosper.
The property market is broken. Housing benefit subsidises ‘market’ rents that would be unsustainable without government handouts to landlords, aka Housing Benefit. Yet the government insists on measuring inflation using the consumer price index (CPI), which does not include housing costs, instead of the retail price index (RPI). So today’s headline rate of 6% should be 8%. This is important because the CPI is used to calculate benefit and pension increases rather than the RPI.
Fuel costs are rising so rapidly because speculators are driving up the price in anticipation of shortages that have not happened yet. Read the financial pages and they tell you that the markets have moved in response to the Russian invasion of Ukraine.
Translation: Billionaire investors, our very own oligarchs, see a chance to make massive profits if these shortages materialise. They are doing the same with wheat. They are speculating on crops that have not even been planted yet. So they are literally hedging their bets and gambling on disaster for the rest of us in order to make a killing.
The reality is that their actions are already killing people who cannot afford to pay for the necessities of life. And more will die in the year ahead.
Even before the war, the number of people at risk of starvation had risen from 87 million to 276 million. If this year’s harvest is disrupted, millions more could starve according to the United Nations.Who Profits from War and Who Pays? – Critical Mass (creatingsocialism.org)
I did not expect a Tory Chancellor and one of Britain’s wealthy elite to tackle the structural failings of world capitalism. But he was expected to take action to mitigate the effects on UK citizens, especially the poorest.
He was in a good position to do so. Higher than expected tax revenues last year yielded an extra £20 billion for the Exchequer. And there is more to come. Changes to the terms and conditions of student loans should provide another £11 billion. And the doubling of energy prices doubles the government’s tax take on VAT for our gas and electricity bills.
So he had plenty of leeway to make radical changes to secure the population against food and fuel poverty. At the very least we should expect energy price caps, a cut in VAT on household energy bills and food subsidies paid for by a windfall tax on the energy giants.
His tax changes do nothing for people on benefits who should have seen the cuts to universal benefit restored. They do nothing for low paid workers reliant on food banks. The Resolution Foundation has calculated that only one in eight working households will benefit from the tax changes. Real income will decline by 4% rising to 6% for the low paid. Half a million children will drop below the poverty line, the highest increase ever outside of a recession.
Of the 31 million people in work, around 27 million (seven in eight workers) will pay more in income tax and [national insurance] in 2024-25.Spring Statement 2022: Half a million children to be plunged into poverty after Rishi Sunak’s announcement (inews.co.uk)
The cut in petrol duty barely covers the increases that have already happened. Sunak boasts about his NI surcharge paying for improvements to health and social care. The biggest improvement he could make would be to pay a genuine living wage to health and social care workers to lift them out of poverty and uplift the government grant to local authorities that pays for social care costs.
Tinker, Tailor, Soldier . . . Thief?
But he chose to tinker with the system. Sunak has no understanding of most people’s lives, our daily struggle to survive. His was a political decision, not one driven by economic necessity. The war in Ukraine provides the government with an alibi. We are told that we are all in it together. We have to sanction Russia, and that will cost us all. The same reasoning will be used to justify increases in military expenditure. Meanwhile, Sunak claims to be a tax cutting chancellor while stealing from us with his NI increase, the graduate tax and increased VAT returns from energy bills.
Crisis or Crime?
Are we all in it together? I have lived through a fair number of capitalist crises in my time. But this is the first time I can remember a crisis driving profits up. A crisis in which the rich not only do not suffer, but are able to increase their wealth while the poor go cold and hungry, is not a crisis, it is a crime against humanity. They are stealing our livelihoods and, in the case of the most vulnerable, they are stealing our lives. And as we reported this morning, not even the air we breathe is safe.
Life long socialist. Now retired, I have been an office junior, a bookseller, a docker and a teacher. I write a lot and read a lot more. Committed member of the Society of Authors, English PEN and the National Education Union. Uncommitted member of the Labour Party. Will they expel me before my direct debit expires?