Link to this page: https://www.socialistparty.org.uk/issue/1154/33278
Tories 'era of optimism' means real-terms living standards cut
Fight for a real wage rise for all
Fight for socialism
Brent Kennedy, Carlisle Socialist Party
Some wages may be rising on paper, but in real terms they are falling. Analysing the budget hype, the Institute of Fiscal Studies (IFS) reveals the truth: "High inflation, rising taxes and poor growth... will see real living standards barely rising and, for many, falling over the next year."
Rishi Sunak really put the con into Conservative with his budget spin. His headline 59p increase in the minimum wage - in six months' time - amounting to a rise of £16.52 after tax, if you can get a 35-hour week, will be wiped out by National Insurance and price rises. But those low-paid workers, and those who can't work, have just been hit immediately by the £20-a-week cut to Universal Credit, leaving many £1,040 a year worse off.
While the Tories give the banks billions of pounds more in tax cuts, just as they are doubling their profits, the Resolution Foundation shows that the average family will pay £3,000 a year more in taxes due to the budget. So much for 'levelling up'!
The living standards of the public sector workers who have sacrificed so much in the pandemic will fall drastically this winter as their pay is capped or frozen. Sunak has promised them 'jam tomorrow' - next April - hoping they won't fight him now. But he has set aside no additional cash for a pay rise next year, hoping they will have to fight either for more pay or better public services. Their union leaders must fight for both, but now, and mobilise public support.
But even worse is to come. Over a decade of Tory austerity and wage squeezes - unprecedented in 200 years - has resulted in a staggering gap in living standards.
The IFS now warns that a continuation of this will leave the average worker £13,000 worse off by 2026! By then, average wages would be £30,800, compared with £43,700 had they continued their pre-2008 trend. That amounts to a loss of 42% of potential household income thanks to the Tories and the lack of Labour 'opposition'.
This harsh material reality will expose the illusion of the Tories' 'era of optimism'.
This stagnating spending power will only hold back economic growth further. The Tory toffs talk about a high-growth, high-wage economy, but then say wage rises depend on rising productivity. But how can workers increase their productivity if their bosses are cutting investment by 2.5% this year, after no investment growth for the last seven years?
This lack of investment shows that the bosses are not 'optimistic' about their own crisis-ridden capitalist system.
To ensure the investment in decent living standards and the public services we deserve, we need to fight for an alternative socialist system that puts people and the planet before profit; one where the major industries are publicly owned, and the economy democratically planned to meet the needs of the majority, not a super-rich minority.
In The Socialist 3 November 2021: