The UK Budget on Wednesday was again dominated by the increasingly desperate political predicament of the Conservative Government – rather than a genuine attempt to address the deep, long-standing crises within the wider economy as they affect the lives of millions of people. The specific local consequences of the Budget are: a predicted Barnett consequential for the NI Executive of £100 million (additional to the still contested “restoration of Devolution” financial package); one-off regeneration funds of £20m each for Derry/Coleraine and a “UK Levelling Up award” of £2.2m for the Shore Road Skills Centre project in north Belfast.
While the much previewed cut in National Insurance rates did take place, these minor returns have to be seen in the context of the decades of economic class war that have been inflicted on the incomes and public services of the general population. Furthermore, even on this “tax cut” the biggest beneficiaries i.e. those paying less in future – will be those earning between £75k-£150k. The treatment of National Insurance could also signal the longer-term strategy from “small-state” ideologues, to dilute the state’s obligations to universally provided social security and shift society increasingly towards Anglo-US models of private insurance.
The general pattern, therefore, continues to show how the unremitting heavy lifting is expected to come from those who can least afford it. For them, the story is of the highest tax burden since the Second World War and the lowest wage growth (between 2010-2020) since the Napoleonic Wars. Furthermore, for the long-term payment of National “Insurance” their “return” is a state pension inadequate both in terms of its size and the cynically delayed age at which it can be accessed. Adding to this general burden are the commodities and mortgage prices that have soared – the latter by hundreds of pounds since Liz Truss’ forty-four–day Premiership. As the Resolution Foundation has highlighted prices between Jan 2021-Janary 2024 have soared - on clothing (by 20%), food (up 31%) and on energy costs (up 90%).
By contrast, at the tip of this capitalist pyramid, the beneficiaries of tax avoidance, tax evasion and tax “reward” at a personal and corporate level continue to be facilitated. We see a cut in capital gains tax on property at the higher rate from – 28% to 24% - that rewards a Parliament where dozens of MPs including the current Chancellor are landlords and the Prime Minister who is able to avail of the “freedom” (because some of his income is taxed at source in the United States where there is a lower capital gains rate) to pay an effective UK tax rate, not the top rate, of 23%. Similarly, the Budget saw an announcement that one day, we hope, will feature in a National Audit Office report questioning its rationale and value for money. This was the news that one of first symbols of the UK’s switch to an economy built to serve the interests of parasitic finance capital, Canary Wharf, is to receive £242 million from "levelling up" funding for the private sector to build 8,000 homes in the “Canary Wharf/Barking Riverside” area.
While the answer to “what next economically?” at a UK level may include a General Election, though possibly not without another “fiscal event” and all the jargon of “fiscal headroom”, “future growth forecasts” etc. that will precede it, the reality of what is really on offer is in the small print of the Budget – real terms cuts to public services – with a forecast of 1% growth in day to day public sector spending hidden behind talk of “public service productivity plans” and IT “solutions” that will merely further reduce staffing with longer terms cuts pencilled in for after the Election.
Treasury forecasts, however, are not self-fulfilling or unchallengeable. Quite the reverse. If the last decade or more has taught us anything, it is that collective resistance from workers is capable of not only defeating the ideology these forecasts are shaped by, but also shifting the terrain on which this “battle of ideas” is fought. We only have to think of how the resistance to the lies of “welfare reform” and opposition to the stale economics of “revenue raising” has provided the foundation for the current local advances on pay/staffing and created a new consensus that now accepts our arguments about the need to address the long term underfunding of our public services. This has shown the value of Trade Unions and their allies determinedly resisting austerity inflicted on our members and their families whether its authors are in London or Belfast. The detail of the UK Spring Budget and the broad acceptance of it from the Official Parliamentary Opposition at Westminster reinforces how necessary the continuing pursuit of this fight will be.