KEIR STARMER made the case for raising public spending in his scene-setting pre-Budget speech. The Prime Minister did not shy away from the need for tax rises, even with Establishment hacks from the BBC onwards training their fire on these at his press conference.
His promise that there will be no return to “devastating austerity,” combined with his reference to the crippled state of the NHS in arguing for investment in public services, will be welcomed across the labour movement.
We should not imagine that the coast is clear when it comes to spending cuts. What he terms “the harsh light of fiscal reality” will be used in defence of these, too, and many will hit the most vulnerable, like the already announced cut to winter fuel payments — which Starmer stood by today.
But this address was different in tone from most policy announcements since Labour came to power. It didn’t try to run with the billionaire-owned media pack in hounding the weakest while treating tax cuts as the solution to all Britain’s problems.
It was frank — scathing — about the damage done to core state functions from healthcare to the prison system by Tory cuts, and pledged to repair the damage. This in itself suggests the sustained pressure from unions determined not to let Labour continue the Conservatives’ policies is making a difference.
Unless the party gets bolder in shifting the tax burden towards big capital and the wealthy, however, its wriggle room will be limited. This, as the 50,000-strong petition for a wealth tax presented in Parliament by Leeds East MP Richard Burgon recognises, is the only way to pay for the investment we need.
The failure to recognise class realities is the big flaw in Starmer’s reasoning.
This is not 1997, he says, when public services were in a dire state but the economy was growing. Nor 2010, when public services were in a better condition but the economy had tanked. Instead his government faces the worst of both worlds.
There’s an element of truth to this, but Labour would stand a better chance of delivering the improved services he promises if it asked a few “who, whom” questions in the Lenin spirit. For whom is the economy doing badly, or for that matter, well? On whom will the tax burden fall — and who will benefit from increased spending?
At least part of the funding crisis affecting hospitals and schools stems from private financing deals, which tie them into long-term debt repayments. These, like the NHS’s use of private-sector contractors, is lucrative for the contractors and bad for everyone else. Labour needs to turn its back on such arrangements, but seems keen to continue them.
Who will pay more tax? Freezing income tax thresholds shifts the burden downward; raising National Insurance for employers doesn’t, but may be passed on to workers.
The mooted rise in capital gains tax is more positive, but rises in corporation tax and a wealth tax as backed by the TUC could be game changers.
The “harsh fiscal reality” Starmer cites does not apply to everyone. An unambiguous targeting of tax rises on the richest would explode the right-wing media narrative that assails even Starmer’s Labour Party — that taxes punish ordinary people.
The inflationary crisis has been a bonanza for asset-holders and the banks: Britain’s “big four” banks posted record £44 billion profits this year.
The energy giants have celebrated record profits too, while research by the Unite union has exposed systemic profiteering across the economy since Covid. The richest 50 families in Britain now own more than the poorer half of the entire population.
Austerity was always a class question. The money is available to reverse it, but we need to make the rich pay.
