22nd May 2022
Sunak at the CBI – tough times ahead for those not on the rich list
Having scraped through the so-called party gate farrago with only one fixed penalty notice and most of the hit being taken by his office juniors, Boris Johnson and his Cabinet cronies have yet to wake up to the cost of living crisis which is engulfing the country. Not the country they live in of course, with Rishi Sunak and his wife having just made the Sunday Times rich list, and most of the Cabinet being financially well cushioned from any prospect of having to sell The Big Issue on street corners any time soon.
Out in the real world though, things are a little different. Inflation has hit a 40 year high of 9% this week. The Bank of England expects it to go higher. Food bank queues are expected to grow longer. The cost of energy and fuel will continue to soar. Heating or eating may no longer be a choice for many, who may struggle to do either without significant financial support.
As ever the Tories have imaginative solutions. Buy basic food brands, stay on the bus all day to keep warm, learn how to make a meal for just 30p at your local food bank. Finally, and this is the clincher, one Tory even suggested that people ought to go out and get better paid jobs! If they were joking there would be little enough cause for laughter but the fact is they are not. These are all serious suggestions from Tory MPs.
Speaking at a CBI business dinner this week Chancellor Rishi Sunak warned that “the next few months will be tough”, before proceeding to give no clues as to what he or the government propose to do about it, suggesting,
“There is no measure any government could take, no law we could pass, that can make these global forces disappear overnight.”
The debate continues about a possible windfall tax on the profits of energy companies, which Sunak suggested he may impose unless they come up with credible investment plans, but the weeping of shareholders, desperate for their dividend pay out, may yet trump the needs of the average consumer. Labour continue to press for a windfall tax which, while bringing some short term relief to consumers, falls far short of the real need to nationalise the energy and utilities sector, in order to ensure that it is managed in the interests of the people and not the bank balance of shareholders.
On which note, the Institute for Fiscal Studies (IFS) this week illustrated the extent to which the rise in energy prices meant inflation was much higher for poorer households, as they spend more of their household income on gas and electricity than the rich. In effect this means that inflation for the poorest 10% of households was at 10.9% in April compared to 7.9% for the richest 10% of households. Add to this the fact that state benefits only rose by 3.1% in April, most likely less than many shareholder dividends, and the real terms cut to living standards is clear.
Like the government, the Bank of England this week also shrugged its shoulders in the face of the cost of living crisis with Bank Governor, Andrew Bailey, saying that, in the face of the global shocks he blamed for rising prices, that there was “not a lot we can do about it.” Bailey went on to suggest that food price rises in the months ahead would be “apocalyptic”, blaming the war in Ukraine for that one, and that the Bank felt “helpless” in the face of price growth.
In the short term the government must be pressed to find more support for the poorest and do more to mitigate the rising cost of food and energy. Once the winter months approach this will become even more urgent.
The Covid 19 pandemic and the war in Ukraine are convenient excuses for the current crisis and the government is quick to use them at every opportunity. However, the fact of 12 years of Tory government, much of which has been driven by an austerity programme designed to squeeze the public sector, drive down wages and attack workplace terms and conditions, cannot simply be airbrushed away. While scandalous levels of profit have been made at one end of the social spectrum, abject poverty for many has been the reality at the other.
As the Institute for Public Policy Research have observed,
“Now there are more billionaires in the UK than ever before and the collective wealth of the richest has grown again.”
The only mitigation for the apparent helplessness of the government in the face of global forces is the reality that there is much that they cannot directly control. Capitalism is a system within which inequality is endemic. Overproduction will result in crises and waste, inter-imperialist rivalries will result in wars, all of which will generate migrant crises and the familiar boom and bust cycles to which capitalist economics is prone.
No amount of fiddling with policy levers and proclamations to be levelling up will change these fundamentals. Of necessity short term measures must be fought for, such as more support for those on benefits and the struggle for better wages and conditions. The real struggle however remains that of exposing the capitalist system for what it is, one driven by the need to maximise the profits of the few at the expense of the many.
The real struggle is that for an altogether different approach, a socialist economy, where the needs of the people come first and any profit generated in reinvested for the social good. Until then we will continue to live under a system where the richest and poorest in society remain worlds apart.