It was billed as a make or break budget. Still less than a year and half into its term, the Labour government is already many months into survival-crisis mode. Chancellor Rachel Reeves and her boss Keir Starmer are both clinging on by their fingertips.
By Claire Laker-Mansfield
They will hope the budget has squared the circle and steadied the ship. But instead as the dust settles, Labour MPs are assessing the damage, wondering if there is any hope of a polling turn-around, weighing their options, and considering when and whether to attempt a messy (and potentially disastrous) leadership challenge.
In this context, it is little surprise that Reeves has opted to make some small concessions to the growing unrest on her party’s back-benches.The biggest of these was the U-turn on the two-child benefit cap – over which seven left-wing Labour MPs, including Your Party’s Zarah Sultana, were previously suspended. Reeves was also cautious about headline-grabbing announcements of major new spending cuts, aware of the government’s massive unpopularity and fearful of the huge working-class rebellion she could face. But that doesn’t mean there won’t be more austerity.
‘Black hole’
To plug the so-called fiscal ‘black hole’, Reeves has opted for tax rises, which will hit working and middle-class people the hardest. The freezing of income tax thresholds will take thousands of pounds out of the pockets of low and middle income earners over the next few years. It will deepen the cost of living crisis and further impoverish millions.
Yet none of this pain will generate any corresponding gain. Tax rises on working people will not fund any significant new investment – quite the opposite. This is money which is basically destined for the pockets of bond-holders and speculators. It is money being spent to service the massive public debt accrued as a result of two enormous bailouts of the failing capitalist system: in the wake of the 2008 crash and during the Covid pandemic.
These events both resulted in unprecedented wealth redistribution. Wealth was transferred in vast quantities – not from the rich to the poor, but from the poor to the rich. The state saved the banks when they faced collapse, and it injected massive liquidity to protect big business during lockdown. And still, years on, the invoice continues to be laid at the feet of the working class.
Meanwhile, with jitters now engulfing global markets about a potential AI bust, one has to wonder whether this is a system workers will soon be asked to bail out yet again! Indeed, any such global economic crisis would surely spell certain doom for this already battered Labour administration.
Those who enriched themselves through the fallout out from 2008 and Covid are sitting on enormous wealth which could be used to address the deep problems facing society. The richest people in our society are by far the wealthiest to have ever existed in history. Yet these are the people whose interests Rachel Reeves is most committed to serving.
Wealth tax?
So instead of a wealth tax – which could, even if set at an extremely modest level, erase the ‘black hole’ at a stroke – workers will get hammered with tax rises while public services continue to deteriorate. Austerity is still the name of the game for this government.
In truly dystopian fashion, ‘efficiency savings’ are to be this Labour government’s pretext for attempting to remove one of the most basic and ancient democratic rights to have been won by the people in British history: the right to trial by jury. The connection between budgets like this, which prioritise the interests of the rich, is unmistakable. The obscene authoritarian crackdown represented by the ban on Palestine Action, or the imprisonment of climate activists, makes this link even more blatant.
This budget will do nothing to address any of the fundamental problems that haunt British capitalism. Reeves simply cannot fix the productivity crisis, as that would require enormous levels of new investment. This is not something Britain’s ruling class, the inheritors of a declining imperialist power, are willing or perhaps even able to finance. Reeves may irritate some capitalists and landlords with small increases in their tax bill here and there (with measures like the ‘mansion tax’, for example). But she will not dare to threaten their most fundamental interests. She is truly and consciously a slave to the diktats of the markets.
Reform
Perhaps the single biggest winner from this budget will be Nigel Farage. If you were a Reform infiltrator working in Labour HQ, you could do little better than to promote Starmer’s current strategy. On the one hand, the party is legitimising the racism of the far right and adopting their cruel anti-refugee policy proposals. On the other, they are ensuring working-class people get poorer and poorer. No wonder Reform are enjoying a massive poll lead.
This underlines the importance of the Your Party launch conference which took place at the end of November. As an explicitly socialist party, it is in a position to provide the only viable answer both to this government and to Reform. That starts with supporting the call to tax wealth not work. But beyond taxing the billionaires, we need to fight to fundamentally re-organise the economy.
We need to fight for an end to the capitalist system of perpetual crisis, in which the requirements of profit-making are always the ultimate bottom line. Your Party can go further than those, like the Greens, who are rightly pointing towards progressive taxation, but who stop short of challenging the broken economic system itself. We need a party that will fight for real, root-and-branch socialist change. That means fighting for the nationalisation of the biggest monopolies – putting workers in control of the wealth they produce, and allowing for the creation of a democratically planned economy, which could meet the needs of people and the planet. If you agree and if you want to join the revolutionary socialists organising in Your Party, join us.
