Build a new mass workers’ party and fight for socialism
“Ordinary voters are stuffed”. According to the Financial Times, this was the reaction of one Tory cabinet minister to the autumn statement. Another was reported to have told Labour, “you’d better be preparing for power.”
Multimillionaires Sunak and Hunt spent weeks promising that the autumn statement would be jam-packed with misery. The reality lived down to their promises. The share price of the energy companies soared when the statement was announced, so puny was the ‘wealth tax’ imposed on them. Everyone but the capitalist elite, in contrast, got a kicking.
Overall, living standards are set to fall by 7% over two years, the biggest fall since records began. The cap on energy bills is to be lifted to £3,000 – an unpayable sum for millions. Meanwhile taxes will reach 37% of GDP, the highest level since World War Two.
Austerity Mark II
Public services, already cut to the bone, are set for ‘Austerity Mark II’. Inflation means that they would need £43 billion extra just to stand still. Hunt’s statement instead means many will reach collapse point. Last week, two Tory councils warned the government that, no matter how many services they cut, they are facing “financial disaster”. Even the supposedly ring-fenced services will suffer. The NHS, for example, received only half the extra money needed to stay afloat.
This brutal statement was an attempt to make the working and middle class pay for the crisis of British capitalism. Hunt, however, tried to deliver the misery in soothing tones, with a veneer of ‘caring’ for the poorest. Benefits, for example, are to increase in line with CPI inflation, by 10.1%. Spiralling food and energy costs mean that real inflation for the poorest in society is running at 15% plus, so this will still be a real-terms cut in benefits, which are already impossible to live on.
The reason that they did not go further, and – as they hinted at beforehand – break the link between inflation and benefit rates, is because of the social revolt that would have been guaranteed by such savagery at a time when the British economy is entering what the Bank of England predicts will be the longest recession since the 1930s.
The same is true of their attempt to ‘backload’ some of the austerity, leaving it to the next government, almost certainly Starmer’s New Labour, to try to implement it. Faced with a rising tide of class struggle they realise there is a limit to what they can hope to achieve before the next general election. The workers’ movement has the task of ensuring they achieve none of it, and are forced out of office in short order (see opposite).
This remains a very weak, divided government which can be defeated. Sunak’s coronation represented a pause in the escalating Tory civil war, but the autumn statement marked a resumption of hostilities. The right-wing Tory-supporting press savaged it. The Daily Mail headline was “Tories soaking the strivers” and the Times “Years of pain ahead”. Trussite Tory MPs are threatening to vote against it, and may be joined by others who don’t want to vote for measures that will harm their electorate. A complete fracturing of the Tory party, forcing Sunak into a general election before the parliamentary term ends, remains a real possibility in the near future.
‘The markets’
Sunak and Hunt’s justification for Austerity Mark II is the need to “reassure the markets”. In the immediate term, they appeared to have achieved that goal. However, the markets’ trashing of Truss’s mini-budget and its unfunded tax cuts for the rich, were not only a judgement on her government’s ‘irresponsibility’ but also on their view of the state of British capitalism.
Britain is the only one of the G7 economies that is still smaller than pre-pandemic. Levels of investment are at historic lows, and productivity is virtually flatlining. The particular weakness of British capitalism leaves any capitalist government with limited room to manoeuvre in the current crisis, never mind the fragmenting Tory party.
After the autumn statement spending cuts, the interest payments on government debt are still predicted to be at the highest level, as a proportion of national income, since the 1950s. And the risk of new attacks by ‘the markets’ has not gone away, including more hikes in the cost of servicing UK government debt and further falls in the value of sterling, increasing the cost of imports.
A mass movement against Austerity Mark II could quickly force a general election and kick the Tories out. That victory would enormously raise the confidence of working-class people. However, a Starmer-led New Labour government has made it absolutely clear that it will also slavishly obey the diktats of ‘the markets’, which means accepting the necessity of austerity and, as Labour deputy leader Angela Rayner put it, would mean “no chance” of “inflation-matching” pay rises for public sector workers. The need for a trade union struggle will therefore continue under Starmer.
Labour shadow chief treasury secretary and ultra-Blairite Pat McFadden, explained the Labour leadership’s justification for austerity when he wrote in the Financial Times that “no one should be in any doubt about the ability of the financial markets to punish a country. No wonder Bill Clinton’s strategist James Carville wanted to be reincarnated as the bond market – that way, as he pointed out, you can intimidate everybody. Business needs certainty and stability after the endless chopping and changing of recent years.” That, McFadden concluded, would be provided by Labour’s “financial responsibility”, otherwise known as doing the bidding of the bond markets, which they claim to be powerless before.
But who are the bond markets? They are not some kind of independent arbiters of sensible financial policies; they are driven by the gambling of super-wealthy speculators and managers of financial institutions across the world, interested only in their own profits. The working class needs to start to build our own mass party that will stand up for our interests rather than prostrating itself before the financiers.
The Socialist Party will fight for such a party to adopt a programme to take the levers of power out of the hands of the unelected capitalist elites, including nationalisation of the banks and finance companies under democratic workers’ control and management. This, along with nationalisation of the major corporations, capital controls and a state monopoly of foreign trade, would lay the basis to begin to build a democratic socialist plan of production, designed to meet the needs of the majority rather than providing unimaginable wealth for the few.
