8th October 2022
Calming the faithful? Liz Truss at Tory Party Conference.
The crisis of British capitalism, which became manifest with the banking crisis of 2008, continues to play out its latest act with the debacle of the Liz Truss premiership. The British ruling class has been divided in its response to the crisis for the past fourteen years and continues to struggle to find the best fit to maintain its power and privilege.
The David Cameron/George Osborne years of enforced austerity continued the drive to reduce spending on public services, in order to enrich further the already wealthy, but foundered on the question of Brexit. The more mainstream sections of the capitalist class recognised the benefits of continuing with the European Union’s public spending straitjacket and the free movement of cheap labour. A more jingoistic section of the ruling class saw exit from the EU as the chance to play up old tropes about immigration, empire and national identity to pursue their own chauvinistic agenda.
Neither saw coming the ground shaking impact of the change in Labour Party direction under the leadership of Jeremy Corbyn, which tapped into popular disaffection with the outcomes of both Tory austerity programmes and EU ineffectiveness to provide anything for the British working class.
With the pro-Brexit Tories in the ascendant, seeing off the Corbyn challenge was essential if a progressive Labour government, unchained from the monetarist constraints of the EU was not to be let loose. A combination of disinformation, character assassination of Corbyn and promotion of the blokey populism of Boris Johnson, contrasting with the robotic Theresa May, were the weapons of choice.
Success for Johnson in 2019 appeared to buy time but the incompetence of Johnson personally, and his administration in general, led to a crisis of confidence in Johnson’s ability to keep the Tory ship afloat. The leadership election marathon of 2022 ensued with Liz Truss emerging as the candidate of the political wing of the ruling class, though elected by a marginal demographic on a small percentage of the vote.
The first weeks of the Truss premiership suggest that her backing falls well short of unanimity in Parliament, with the Tory rank and file and certainly with the British public. The mini-budget debacle has been rapidly followed by the u-turn on the 45p top rate of tax proposal, which Truss openly blamed on Chancellor Kwasi Kwarteng in a BBC interview, failing even to show solidarity with her closest ally!
The go for growth agenda which Truss and Kwarteng, at least for the moment, appear to agree upon, has been met with a sinking pound, emergency action to shore up pensions by the Bank of England and an unprecedented wave of strike action in response to rampant inflation and rising interest rates. Truss has even sunk to the level of inventing the ‘anti-growth coalition’ which for her includes anyone who disagrees with the economic strategy she and Kwarteng are following.
The ‘cost of living crisis’ may be the phrase making the news and media headlines but the reality is that the crisis is one of capitalism and part of its ongoing decline as a political, economic and social system. Failing to tax the rich, the Truss government’s only recourse to fund the so-called growth programme will be to double down on public expenditure and continue to punish the poor by cutting back on public services.
The growth plan announced by Kwasi Kwarteng makes no mention of the farrago of ‘levelling up’ but instead dangles the carrot of Investment Zones. These are basically a Tory trick to privatise areas previously under local government control, much in the way that the Development Corporations of the 1980’s, the response of the Tories at that time to ‘inner city crisis’, distorted local economies.
Meanwhile recent research suggests that local councils are likely to be facing a financial black hole of £7.3bn by 2025/26. This week it was revealed Kent County Council faces a budget gap of more than £50m by June, enough to wipe out 50% of its total reserves if not reduced. An estimated 1 in 6 councils in England could run out of money as early as next year without further budget cuts or additional income.
Phillip Woolley, head of public services consulting at Grant Thornton UK LLP, said,
“Our research shows, the additional Covid-19 funding – while critical to support immediate challenges – has not addressed underlying systemic issues or the precariousness of councils’ financial sustainability in the face of economic instability. Local authorities are also now facing the risk of interest rate rises increasing debt financing costs and the real risk of reduced funding from central government, in response to the current economic turmoil facing the country.”
Wakefield Council has taken steps to close its County Hall building to save on energy costs and is considering its options for further building closures to keep costs down. It is unlikely to be the only council contemplating such measures in an attempt to preserve essential services for the most vulnerable.
However the ruling class twist, turn or shuffle the personalities in 10, Downing St installed to do their bidding, there is no getting away from the reality that, for the majority, capitalism is a moribund system that not only fails to meet their needs but makes them pay the price for the crises arising from its contradictions. If ever there was a time to build the call for a fundamental change in favour of a socialist alternative, that time is now.
Avanti Populo 