Dave Nellist, Socialist Party national committee and national chair TUSC
Tory chancellor, ‘Richi’ Sunak, is due to present his autumn budget and spending review statement on Wednesday 27 October.
Despite several previous announcements, on transport schemes, for example, and a minimum wage increase, this budget will have been no afternoon of joy for the working class. It is preparation for making ordinary people pay for the government’s spending and borrowing used to prop up businesses during the pandemic.
The spending review sets out the government’s plans for each government department over the next three financial years.
The overall spending ‘envelope’ had already been announced by the chancellor in September, setting public spending at £3 billion lower in 2024-25 than it had been in March 2020. Despite all the pressure on public services from Covid-19, Sunak is planning lower public spending than before the pandemic!
Separate announcements for some increases in spending, on the NHS and social care for example (though in both cases woefully inadequate compared to what is needed), will mean that other departments face further cuts. Sunak may end the freeze on pay for most public sector workers, but if pay increases come out of existing budgets, that will also lead to cuts elsewhere.
In its pre-budget statement, the Institute for Fiscal Studies (IFS) predicted further cuts to what the Treasury has designated as ‘unprotected budgets’ – including prisons and courts, further education, and local government – of £2 billion in 2022-23.
The Tories had planned an overall increase of 8% in unprotected budgets in the three-year spending review final year (not coincidentally, the year by which a general election must be held). But further pressures of the pandemic could lead Sunak to bring some of that spending increase forward.
If inflation exceeds 5% next year, as the Bank of England has predicted, increasing interest rates and the cost of servicing government borrowing will add to those pressures.
Public spending has suffered a decade of budget cuts: 30% on transport, 50% in the Department of Work and Pensions and 60% in local government, housing and communities.
At the beginning of October, the IFS estimated that English councils needed £10 billion extra in core funding by 2024-25 to maintain even existing service levels (though not restoring the libraries, youth and community centres lost – or any of the 600,000 local government jobs axed).
The Tory leadership of the Local Government Association, in March 2020, estimated £15 billion had been cut from council funding in the last decade. Last year, the chancellor gave local councils just £2.2 billion extra, but said that three-quarters of that had to be raised with a 5% increase in council tax.
That is likely to be the outcome of this week’s budget and review: inadequate core funding for essential council services and the bulk of any increase in spending councils are allowed to make coming from higher taxes on working people. There is no call from the Labour Party for proper central funding of local services.
This further pressure on public spending makes even more significant Unite the Union’s decision at its recent conference to call on Labour councils now “to set legal, balanced no-cuts needs-based budgets” (see ‘Unite policy conference: Significant breakthrough in policy and workplace organising‘).
Unite has thrown down the gauntlet to Labour councils which continue to make cuts and privatise services. The Trade Unionist and Socialist Coalition (TUSC) will pick up that gauntlet and work with socialist activists across the unions in mounting the widest possible anti-austerity challenge in the elections next May.