By Mark Buckley
The Chancellor Rishi Sunak made it clear in his Spring Statement that the austerity offensive that has been in place since 2010 is being hugely increased. The scale and breadth of the attack is so great that it even left the overwhelmingly Tory press in shock. The front page of the usually ultra-loyal Daily Express was ‘The forgotten millions say: What about us?’.
There are a series of indicators that highlight the depth of the attack and the huge hit to living standards it will cause. Many commentators pointed to the official forecast that in the 12 months from April this year there will be the biggest fall in real household incomes since records began in the 1950s. Keynesian economist Geoff Tily reckons that this is the biggest fall in real pay (after inflation) since Napoleonic times. Another highlighted the official forecast that average real wages after tax will be lower in 5 years’ time than they are today.
What has been absent from the commentary is any serious explanation of why this has come about. The reality is that the British economy has never properly recovered from the impact of the Global Financial Crisis in 2008. Repeated bouts of austerity have persistently undermined the economy further. Brexit has permanently hobbled the economy too and the catastrophic response to the pandemic has added supply shortages to the mix, of both labour and goods.
All of these are the failures of government policy, whose aim has been to lift profits in the short-run. But without any plan to grow the economy this can only mean increasing the rate of exploitation. This has the direct consequence of pushing living standards sharply lower.
This weakness of the economy is determined primarily by the lack of private investment. Business investment has not grown over 14 years, since 2007, before the global financial crisis. In 2007 and in 2021 it stood at £198 billion. Over that period the economy has grown by less than 1% per year in real terms. This is a function of both weak underlying growth and repeated crises. But now the OBR forecasts of just 1.1% average growth over the next 5 years, even without any new crisis!
The government response since 2010 has been to load the burden of these crises onto workers and the poor. The Johnson-led government has significantly extended and deepened that austerity offensive. It also refuses to increase public sector investment, and has capped it so that profit-making opportunities are not lost by the private sector.
Despite a number of ridiculous claims otherwise, Johnson’s government has prioritised boosting profits at every turn. Their measures include tax cuts for banks and big business, subsidies to company shareholders, removal of levies and duties, lowering wages to 80%, allowing ‘fire and rehire’, corrupt allocation of public contracts, outsourcing, privatisation and even funnelling billions for non-existent goods and services, such as PPE and test and trace.
Freezing public sector wages, cutting benefits, ‘fire and rehire’ and the outrageous attack at P&O are all part of the drive to anchor wages lower. There are also 600,000 fewer people in work since the pandemic began, in a classic case of Marx’s reserve army of labour to pin wages lower.
All of this has been accompanied by a conscious widening of inequalities and increase in racism, misogyny and discrimination against disabled people. Given the pre-existing levels of discrimination, these are the inevitable consequence of the government policies of targeting middle- and lower-paid workers to bolster the position of the rich and big business.
The left needs first to understand the scale of this attack and alert the wider labour movement to its consequences. It also needs to play a central role in supporting every economic struggle that breaks out, explaining the causes of increased exploitation and attempting to unite dispute, campaigns and lobbies against these policies. Because of the sheer scale of attacks, we should expect these types of struggles to increase over the next period.