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UK: The bankers’ budget - robbing the poor to pay the rich

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JEREMY HUNT has delivered a new austerity budget that offloads £55 billion of tax rises and spending cuts onto the backs of the poor and working class.

The Tories’ fourth budget of the year is a plan to protect profits at the expense of workers’ incomes. Soaring inflation, bills, prices and taxes target ordinary people, while the vast unearned profits of the big banks, energy companies and corporations are left untouched.

Hunt falsely blamed the ‘global situation’ for a crisis made in Britain. Liz Truss’ disaster budget was only the latest episode following 12 years of austerity and Brexit which have left the economy stagnating, public services on the brink of ruin, and workers’ incomes falling at the fastest rate in 70 years.

The government’s own forecaster, the OBR, reports living standards will fall by 7% in the next two years. For poorer workers it will be much more. Meanwhile, Hunt has delivered an £18 billion tax cut for banks.

The new government hopes to distance itself from Truss by lowering the threshold for the top rate of income tax from £150,000 to £125,000. But this miniscule increase (£1,243 a year more for those earning £150,000) is dwarfed by the punishing tax hikes on working people.

The so-called ‘stealth’ tax hikes achieved by freezing the threshold on personal allowances and income tax will drag millions into paying higher rates. The income tax freeze alone will cost the average worker more than £600 a year.

Pensions and benefits will be increased in line with CPI inflation 11%, instead of RPI, currently running at around 14%, and a more accurate indicator of working class living costs. Even this won’t compensate for the below-inflation 3% rise this year—and won’t come in until April. Millions are already worse off and face a hard winter.

The recession, which the Bank of England promised will be the longest since the 1930s, will see 500,000 jobs wiped out. What does Hunt’s budget provide for this? Subjecting 600,000 universal credit claimants to the punitive ‘work coach’ and sanctions regime to force them to take low paid, insecure jobs.

The universal £400 payment to help with energy costs will end this winter, at the same time as the limit on the energy price has been raised, costing the average household an extra £900 a year. The windfall tax on energy company profits will increase, bringing in £14 billion—a paltry sum compared to the £15bn profits banked by BP and Shell in the first three months of this year alone.

Where is all this money going? Not to the public sector. Headline announcements of increases to NHS and education budgets are deliberately misleading. The NHS will get £3.3bn, compared to the £10bn health researchers say it needs just to stand still after covid, never mind years of underfunding.

Education budget increases will be swallowed by inflation and pay rises. The announcement that the increase fulfils a Tory promise to restore per-pupil funding to 2010 levels is a stark indicator of how a generation of young people have been sacrificed. Post-16 and special needs education continues its unmanaged decline with no new funding.

Repeating the 2010 playbook, Hunt wants to offload as much responsibility from central government to local authorities, who can now raise council tax by 5% a year, taking the average Band D rates above £2,000 a year. These eye-watering hikes on an already unfair and regressive tax means workers pay more for worse services.

Set against this, the government is now spending more on servicing debt interest than on any public service except the NHS. That money is paid to the banks and financiers who forced up interest rates in the first place. This class war budget is going to collide with national strikes as civil servants, nurses and education workers fight for cost-of-living increases over the winter.

Hunt and Sunak were installed following a market revolt against Liz Truss, who was herself installed after a party revolt against Boris Johnson. The new government refused to hold an election, and knows it has no mandate for a budget whose sole purpose is to placate the financiers holding the country to ransom.

The response on the back benches was muted. Tax rises and falling living standards won’t make the Tories popular come the 2024 election, but the restoration of what the money markets judge to be ‘responsible’ government has cut the ground from under the opposition.

Keir Starmer’s attempt to steal the Tories’ clothes by promising that Labour is now the party of “sound money” set the trap, and Hunt’s new budget, which postpones most of the cuts until after the 2024 election, has sprung it.

Labour is committed to “balancing the books” and abiding by the Tories’ fiscal rules after the next election. Asked what Labour’s alternative to tax rises and spending cuts would be, former banker and current shadow chancellor Rachel Reeves was left waffling about making ‘fairer choices’. But Labour’s shadow health secretary Wes Streeting last month ruled out supporting nurses’ demands for a decent pay rise. The Tories have put Labour on the spot—and they have failed the elementary test of class solidarity.

There’s a simple alternative to Tory and Labour austerity. Britain is rich but unequal. This government is protecting the wealth of the rich and making workers pay the price for economic chaos, war and climate change which we didn’t cause. Against the organised impoverishment of millions, the labour movement needs to wage a class war to protect living standards and fight for a workers’ answer to the crisis based on expropriating the wealth of the rich and creating a sustainable, democratically planned economy in the interests of people not profit.

We can start by building a massive campaign of solidarity with the health, postal, and railworkers’ strikes this winter, and organising in the unions for escalating, all-out action as the quickest route to victory. To build a class-wide united front, we should convene mass assemblies in every locality, bringing together workers, renters, and unemployed, to discuss how to respond to the crisis and agree a common plan of action to unite the resistance.