The Tory spending review shows the government’s priority is to protect profits and making working class people pay, argues Shabbir Lakha
“Today’s spending review delivers on the priorities of the British people.”
Rishi Sunak’s opening line sounded like an attempt to convince himself more than anyone else. The incoherent spending plans are a mish-mash of short-term profit-saving, bare-minimum action to save lives and a longer-term continuation of austerity.
Despite Sunak’s best efforts to present his plans as a record amount of public spending that will benefit the majority of people, in reality it’s more money for businesses and cuts for working people.
Public sector workers, hailed throughout the year as heroes, are now going to face another pay freeze. Sunak’s justification for this is to maintain “fairness” between public and private sector workers. He said,
“Unlike workers in the private sector who have lost jobs, been furloughed, seen wages cut and hours reduced, the public sector has not”
The only reason the public sector workers have not is because they’ve had to risk their lives to continue working through the pandemic. Freezing their pay for that is a slap in the face.
The reason private sector workers have been hit this hard is because the government refused to attach any conditions to the furlough money they gave businesses or to increase statutory sick pay.
NHS workers are the only exemption from the pay freeze following the backlash earlier this year when nurses were excluded from a pay boost. But the rise will be miniscule in comparison to the up to 20% real-terms loss in pay NHS workers have faced in the last decade, and the 15% pay rise they’re demanding.
Care workers who aren’t employed by the NHS, were completely let down by the government when it came to the basic PPE they needed and when tens of thousands of patients including those still-infected were made to return to care homes from hospital. And their reward is a real-terms pay cut.
Schools have been among the top vectors for the spread of the virus since they reopened in September. Teachers have had to work in full classrooms and in schools that haven’t shut despite cases. The NEU’s joint General Secretary Mary Bousted rightly called the announcement a “body blow” for school staff.
For the 2.1 million public sector workers earning below the median wage, Sunak has been kind enough to guarantee a pay rise of £250 next year, or £20 per month. The National ‘Living’ Wage will also go up 2.2% or 19p per hour, bringing it up to £8.91 and still well below the Living Wage foundation’s rate.
The government has also refused to maintain the already inadequate £20 a week Universal Credit top-up. So the people who are worst off will be up to £1,000 further worse-off in the next financial year.
Shamefully, the primary argument in opposition to the pay cut by Labour’s Shadow Chancellor Anneliese Dodds was that it would reduce purchasing power of workers and “take a sledgehammer to consumer confidence”. She said Sunak wasn’t acting in the national interest, which is to “lay the foundations for economic growth”, and said that businesses are upset.
So what is the government going to be spending money on? Sunak announced that the government plans to spend £540bn altogether in 2021. Among its spending will be £80bn on PPE, vaccines and testing, £55bn on public services and £100bn in capital spending for infrastructure.
The money now being spent to stockpile PPE is vastly greater than what would have been spent had the government not cut NHS stockpiles before the pandemic. And of course, having spaffed £12bn up the wall on a defunct test-and trace system, Sunak is ready to dish more.
Despite the research and development of vaccines being significantly publicly funded, pharmaceutical companies like Pfizer have maintained that they will patent a vaccine and the government is ready to hand them further billions to buy it.
The government’s spending throughout the pandemic has seen huge sums of money given to incompetent firms with connections to Tory ministers. The spending on public services will deliver more money to private rail companies, and Sunak stressed that the National Infrastructure Bank will work with the private sector to fund infrastructure projects – yet further public subsidies for private profits.
The NHS is promised a meagre £3bn increase in spending, about 10% of the funding gap it had even prior to the pandemic. A significant amount of the ‘extra’ money given to the NHS to deal with the pandemic was reapportioned from existing budgets. Sunak also repeated the same disproved Tory pledges of building 40 new hospitals, and 50,000 new nurses.
Audaciously, Sunak claims that the government has been able to spend as much as it has because we entered the crisis with “strong public finances”. Ten years of austerity which left our NHS incapable of dealing with the virus effectively – and has meant we’ve had to spend more than we otherwise would have – is hardly something to boast about.
There was not a single mention of tax. It seems incredible that a government seemingly intent on balancing its books is cutting pay for the lowest paid while UK billionaires have amassed over £150bn in the last year. In fact, corporation tax remains due to be lowered to 17% in April. Unsurprisingly, the Institute of Directors is “relieved”.
While public sector workers will have their pay cut, foreign aid has been cut from 0.7 to 0.5 percent, and the government tried to justify not being able to spend £170m on free school meals for the poorest children, they have £16.5bn to spend on the military (on top of its £41.5bn budget).
Sunak is reported to have been against the defence budget hike, and it’s not hard to see why. It’s hard to justify the exorbitant spending on a non-existent threat in the middle of a very real social crisis. But dutifully relaying Boris Johnson’s message, undoubtedly aimed at Washington, Sunak proclaimed that the money was necessary to “strengthen the UK’s place in the world” and to once again be “leading in solving the world’s problems”.
The spending review comes after the Office for Budget Responsibility’s report that the UK economy has contracted by 11% this year, and economic output is not forecasted to return to pre-crisis levels until the end of 2022 – blowing the government’s previous mantra of a ‘v-shaped recovery’ out of the water.
The government has borrowed £394bn in 2020 bringing debt up to 91.9% of GDP and expected to rise to 97.5% by 2025.
The complete mishandling of the pandemic has only exacerbated the economic crisis. Had the government taken decisive action to lockdown earlier in March and invested properly in a functioning test and trace system, it would have save thousands of lives and mitigated the economic disaster we now face.
Instead it has scrambled to protect short-term profits at every stage, costing lives and damage to the economy. Today’s spending review should be a clear indicator that the government is trying to shift the cost of its mistakes onto working people so that the richest in society can recoup. This is Austerity 2.0 and we have to resist it.
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Shabbir Lakha is a Stop the War officer, a People's Assembly activist and a member of Counterfire.
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