Editorial of the Socialist, issue 1016

Protesting in London, photo Mary Finch

Protesting in London, photo Mary Finch   (Click to enlarge: opens in new window)

Crisis Tory Budget brings no relief from austerity

Philip Hammond attempted to give the impression that his budget on 29 October represented a major turning point for the economy and for Tory policy.

But the reality was clear to see – nothing of substance on offer for working class people, and a desperate government still divided at every level.

Theresa May’s bizarre statement at Tory party conference that “austerity is over” was dialled back to Hammond pledging that it’s “coming to an end”.

In fact there has been no overall increase in spending on public services other than the NHS – and even that money is not enough to stop continuing real-terms cuts.

The disagreement between the prime minister and the chancellor over how much to promise spilled out before the budget was announced when Hammond indicated that the announcements were contingent on getting a Brexit deal agreed and a ‘no-deal’ scenario would require a “different approach”.

Meanwhile May briefed journalists that all of the budget’s commitments were fully funded regardless of Brexit negotiations.

In the actual budget speech Hammond again contradicted May by leaving open the possibility that the spring statement could become a “full fiscal event” if needed – ie an emergency budget in the case of no deal.

This is a further indication that May is desperate to bolster her incredibly weak and fragile support base, and recognises the threat her government faces as a result of mass anger building under the surface. Why else would a government so wedded to privatisation pledge to abolish Private Finance Initiative deals for future projects?

She also wanted to placate backbench Tory MPs feeling the pressure in their constituencies. This has particularly been the case in recent weeks over the chaos with Universal Credit.

The chancellor pledged to slightly slow its roll out and to increase by £1,000 the amount claimants can earn before suffering cuts to the benefit. But this won’t end the suffering it’s causing- we need to fight for Universal Credit to be scrapped, and with the government on the back foot, now is the time.

The huge anger that has been shown in several recent protests for increased funding for schools is clearly responsible for the £400 million extra announced.

But the Tories are incapable of disguising how cruel and out of touch they are. Hammond said the money would help schools “to buy the little extras that they need.” In reality many schools cannot cover the costs of basic teaching resources and support staff. Besides which, this sop was dwarfed by the £1 billion extra given to defence.

The small-scale spending increases, while all extra funds are welcome, show no actual change of direction. £500 million extra was announced for the housing infrastructure fund, which funds infrastructure such as transport and schools to allow homes to be built. But that does nothing about the fact that nowhere near enough homes are being built and those that are are unaffordable for the vast majority.

Responding to the budget, a report by the Resolution Foundation has revealed that, far from aiding struggling families, Hammond’s trumpeted tax cuts in fact primarily benefit the top 10% of earners, who stand to gain £410 a year. Meanwhile poorer families will have a paltry £30 more annually as a result.

Labour’s opposition

Corbyn rightly called this a “broken promises budget” and dispelled the lie that austerity is over. But there is an urgent need for him and the Labour left to outline a clear economic alternative – or some workers can be convinced that Hammond’s budget is the best they can hope for.

The day before the budget, shadow chancellor John McDonnell was interviewed by the BBC’s Andrew Marr. He returned to Labour’s hugely popular manifesto commitments from the 2017 general election, and attacked Hammond’s plans in advance.

But unfortunately he appeared to again be making the mistake of attempting to assure the capitalist class that a Labour government wouldn’t go ‘too far, too fast’.

He spoke of “beginning the process of reversing austerity” in a way that is “realistic and responsible”. In answer to Marr’s attacks on Labour’s plans to nationalise the utilities, McDonnell’s main defence was that these are “traditional business measures”.

And when asked if a Corbyn government would reverse cuts to local government funding – such a major factor holding Labour’s vote back in areas where Labour councils have implemented brutal cuts – he again only said they would ‘begin’ this process.

No amount of niceness or soft phrasing will make big business amenable to Corbyn and McDonnell’s programme. Even Hammond has gone too far for some sections of the capitalist class! The Office for Budget Responsibility and Moody’s ratings agency criticised the chancellor for spending all projected growth rather than using it to balance the budget.

The only answer is to present a fundamental socialist alternative. That means committing to halt all cuts at every level and to invest in the jobs, homes and services that people need.

It means being clear that nationalisation would be done by paying compensation to shareholders only on the basis of proven need.

It means pledging the nationalisation of not just a few key companies but the 100 or so that control the vast majority of wealth in society.

A Labour government could be swept to power at any time, given the weakness of the Tories and the mess they’re in over Brexit. If that were to happen, attempts at sabotage by the capitalist class would be inevitable, and could only be defeated by socialist measures.

The capitalists’ most reliable henchmen would be the Blairites inside Labour. Corbyn must deal with this now by a programme of measures to transform Labour through democratisation and kicking out the Blairite saboteurs.

This version of this article was first posted on the Socialist Party website on 30 October 2018 and may vary slightly from the version subsequently printed in The Socialist.