On a general level, we have a Tory government that because of a 5 year Parliamentary rule is clinging onto power; because they know if there were a general election they would lose and lose badly. Neither the Truss government or the Sunak government have been elected by voters; they have been chosen by the members of the Tory Party because this is a Parliamentary Constitutional Democracy. All potential voting polls for the next General Election show that the Labour Party as the clear victor; in recent by-elections (to replace Members of Parliament) Labour is winning with a massive increase in votes. Essentially the Tory party is holding the country hostage and are working hard to destroy the public sector, peoples’ wages and benefit income.
Recession and Inflation
Britain is in an economic recession combined with high inflation. The Bank of England is responding as all other central banks, increasing the rate of interest. This works if inflation derives from increased aggregate demand, but the current inflation actually derives from massive increases in profits and profit-margins and the high prices of food and fossil fuel energy are undermining the real wages and incomes of the working class. Essentially, what is being argued is that the way to stop inflation is to increase the depth and length of the recession.
Once again, it is the working class that is paying for the economic crises of the Capitalist economic system. Moreover, increasing the rate of interest undermines the struggle against the recession and economic growth. It would make far more economic sense (even from a mainstream economic perspective) to raise wages and wage incomes to fight inflation. Yet all we hear from the so-called economic specialists on the news is that this may lead to wage-price spiral inflation. If this happens, it will be minor and may well lead to an increase in production of goods and services demanded by workers which can help with the recession. Even though they are writing about the US, Stiglitz and Regmi make these points clearly and they apply to Britain which has low unemployment, a labour shortage and higher levels of economic inactivity:
“Increasing pay, improving working conditions, making employment more flexible (more working from home, more flexibility in hours), and providing better childcare are among the ways to increase labor force participation. And maintaining a tight labor market is a way to induce employers to offer workers good wages and working conditions. Slowing the economy down will have the opposite effect,reinforcing wage and income inequalities— including across races, ethnicities ,and genders—and likely further reducing labor force participation (Stiglitz and Regmi, p. 52).”
The UK economy is essentially a rentier economy producing services (predominantly financial and insurance based, but also retail, hospitality and tourism) which are export oriented combined with a low paid workforce. Economic growth is the lowest of all advanced capitalist economies and much of this problem arises from what is produced in Britain and how it is produced, the impact of Brexit and the privatised nature of the economy. Many parts of the public sector have been privatised (e.g., care, the Royal Mail, parts of the NHS, rail) and the workers now work for private companies. Many sections of the NHS have been privatised and the workers are employed by agencies earning far less than they did working for the NHS. In a local hospital, part of the staff doing cooking, cleaning, and security were privatised and getting 17% less in wages than those staff (doing the same jobs) who were still part of the NHS. Getting higher wages and being taken back into the NHS took serious strike actions over a couple of years, but it did happen and it was a major victory; the agency workers got back pay and were brought back into the NHS).
Membership of the European Union not only provided Britain will trading partners it provided them with labour (both cheap labour working in services such as care workers and in the retail and hospitality industry as well as skilled workers like Doctors and Nurses). Brexit has cost the British economy in terms of trading partners, manufacturing work done in conjunction with other European countries and now that the tariffs on imports and exports to the EU have come into force, it has raised prices. Britain is dependent upon imported energy and food. So, Britain is not only being hit by the international price rises in fossil fuel and food arising from the breakage of supply links due to the pandemic and the Russian war in Ukraine. It also has to deal with the loss of trading links with the EU.
Tony Danker, the Director-General of the Confederation of British Industry (CBI) constantly complains about the low levels of economic growth and blames the labour shortage (brought about by Brexit and the covid pandemic, as well as bad wages and working conditions which they refuse to admit responsibility for) as the culprit and also low productivity. What needs to be recognised is that it was the decisions of businesses to not invest in technology, to deskill employees and pay lower wages that is the reason for low productivity. There is only so much that a wage squeeze to ensure profitability can ensure growth and profitability. For those that claim to love Adam Smith, this is bizarre and indicates that they probably have never read his work. A cursory reading of The Wealth of Nations where he discusses the division of labour and economic growth and the chapter on wages where he discusses the importance of high wages and working conditions to increase productivity and to ensure sales of goods and services.
Rather than pursue economic growth in response to the 2007-8 crisis by increasing capital investment and stimulating effective demand, the Tories decided to destroy benefits and undermine wages and working conditions. The introduction of austerity by Cameron and Osborne following the 2007-2008 economic crash has led to over a decade of wage stagnation and the destruction of the social safety net. Initially, since there were disparities between private and public sector wages doing the same jobs, the government lowered public sector wages (rather than raise the minimum wage throughout the economy) which were frozen and then increases were capped to 1%. It was only recently that this was lifted. Private sector wages only passed public sector wages following the pandemic.
The welfare state was reconfigured by the Tories under George Osborne following the ideology of less eligibility where benefits had to be less than the wages of those in paid employment. Universal Credit (UC) includes a benefit cap placed for those not in paid employment where the overall amount of benefits you could receive was limited below any wages you could earn in paid employment. UC also included a lovely Malthusian point that was added so only 2 children would receive child benefits (unless the third child was a twin or the product of rape) and support because “women had children to get more benefits.” Sanctions and conditionality were brought in to force those “lazy” workers to get jobs and then the cap would be lifted. If you earn too high a level of wages then benefits are withdrawn. Those predominantly hit by this conditionality of course were disabled people and single mothers. The social safety net was undermined and literally became a tool to allow employers to pay less money especially for those in part-time work (again predominately women as childcare is extremely expensive and they need to work around school times and women have caring responsibilities due to our primacy in social reproduction).
Using the excuse that inflation must be addressed, the Tories government are continuing to destroy the economy, especially the public sector, which will leave the incoming Labour Party having to fix the disaster made by the Tories rather than actually put forward policies for which they have been elected. This will hold for rebuilding the public sector, ensuring economic growth, and pledges on the environment.
The Autumn Budget
At the last Autumn budget announcement in November, the Tories pledged to increase the national “living” wage from £9.50 to £10. 42 (9.7% increase which is below the CPI and RPI level of inflation) and all benefits will increase by 10.1% (and include a one-off cost of living payment of £900, £150 for disabled people and £300 for pensioners to cover increased costs of energy) but they do not come into force until 1st of April 2023. For example, the benefit cap will be increased £20,000 to £22,020 for families nationally and from £23,000 to £25,323 in Greater London, while for single adults it will be raised from £13,400 to £14,753 nationally and from £15,410 to £16,967 in Greater London. According to the Institute for Fiscal Studies, the real benefit rate will not return to pre-Pandemic levels until April 2024. It is important to note as well that this increase is a flat rate increase and doesn’t take into account differences in size of families or differences between those living in different regions of the UK).
Average living standards will fall 7.1% over the next two years (equivalent to £1700 decrease; so 4.3% this year and 2.8% next year) despite the increase in the national living wage and benefits and the energy price guarantee (with the typical bill rising to £3000 (from £2500 under Sunak) and the energy guarantee running out in March 2024); the grants available to all households have been removed and these are only available to those on benefits. An important point is that while they are covering some of the costs of rising fossil fuel and energy prices, they are not addressing the rising food and household prices that have become the dominant increase in the cost of living recently.
There were no introduction of wealth taxes nor has there been any attempt to make current taxes more progressive. Tax thresholds were frozen until 2026, but this has now been extended to 2028, which means more households will be brought into tax if there is a recovery. Tax rises for those earning over £125,140 (they were increased to 45% level from 40%) rather than creating more tiers for those earning over £150,000 with progressive increases for those earning higher levels of income. According to the IFS, this will bring 350,000 more people paying the highest tax rate of 45%. The cap on bankers’ bonuses (put in place under austerity following the 2007-8 crash) has been removed.
For the first time in a while funding for education now exceeds its costs; this is important the situation is desperate for teachers and for the quality of education. Using the money that was supposed to be spent on the Health and Social Care levy, the government has increased spending on schools an extra £2 billion from 2023-2025 representing a 4 % increase. But despite all their supposed concern with training workers, there was no new money allocated to further education and universities and there was no new money for nursery school education.
Now onto the NHS which is literally on its knees. £3.3 billion was put aside for the next two years for NHS England (this doesn’t include Wales and Scotland). Take into consideration that NHS England stated that £7 billion was necessary to get the NHS up to snuff, this is already below that level. The NHS has been long suffering from a labour shortage which has been exacerbated by Brexit and low pay and poor working conditions. The money provided may be helpful to keep things barely functioning, but the NHS needs urgent investment, support for training for NHS workers (for example, the nurses’ bursary was cut during austerity) and it takes time to train medical professionals. Support workers (cooks, cleaners, porters and security) pay is low and there are insufficient staff. Capital investment is desperately needed as hospitals need to be upgraded and retrofitted to accommodate the needs of patients as well as be adapted to environmental changes. According to the Kings Fund:
“The net effect of all this is relatively small, and the £3.3 billion boost remains the headline with NHS England’s budget rising to £160.4 billion in cash terms in 2023/24.”
According to the Kings Fund, this £3.3 billion is predominately meant for non-wage elements of the NHS budget as the pay element is still under negotiation. There is a serious issue which is already being felt in Britain of wages for NHS workers some of which has already been decided by the pay review board, like that of Nurses who have been offered a 4-5% increase on pay (in the context of CPI inflation running at 10% and RPI running at 13%); what this means is instead of an increase in pay, there will be a cut in real pay for nurses.
Social care funding has once again been delayed despite the collapse of the service due to massive privatisation. The collapse of the social care system was clearly seen during the pandemic and the current reality that healthy people are using hospital beds because there are no available places to send them to recuperate and get physiotherapy. Much of adult social care has been privatised and workers have low wages and terrible working conditions; support and assistance for disabled people is insufficient both in terms of quality and quantity available both due to privatisation as well as insufficient funding by the national government. The voices of disabled people as to their needs and support are routinely ignored. So, what has the government promised? £2.8 billion in 2023-24 and £4.7 billion in 2014-15 to be raised from multiple sources, but what is still not clear is on what the money will be spent and how it will be spent (this is the same nonsense that appeared in the Health and Social Care Act where money was pledged but it was unclear how it would be spent and whether the system in desperate need of repair to provide the needed support and assistance that disabled people need. Specifically, 1/3 of this money will be pledged to help deal with the reality of no social care so that people can leave the hospital. So much of social care has been privatised which means that the needs of those who need support and assistance are subsumed to the needs of the owners of nursing homes and other support systems whose interest is profitability rather than the quantity and quality of available care. For older people and disabled people who get support and assistance at their homes, the situation is the same. Local councils pay agencies to provide the work in the most part and both the amount of care and support workers as well as the pay they get are far too low as they are treated as unskilled labour (and we are back to the idea that traditional women’s labour is unskilled; this is not insulting it is absurd) and disabled people have limited say and control over what they can get. The whole system needs to be completely replaced and this is not going to happen.
Cuts to government services are scheduled to come into force after the next general election. Some protection is only being offered to health care, education and defence; there are a number of sectors that are facing deep cuts and transport is one of them.
Collapsing standards of living and low wages for the working class
Despite both the international prices of fossil fuels and food coming down, inflation is still very high. The CPI and CPIH have eased a bit (down from 11.1 and 9.6 in November to 10.7 and 9.3 respectively); there is an assumption that rents will follow housing costs but that is debateable). The Retail Price Index of Inflation is at 13.5% (excluding mortgage interest, which will be rising if people have flexible mortgages as the rate of interest has been increased by the Bank of England). The RPI (above) does present a better indication of the spending of working-class people and while not in use by the government, it is being used by several Trade Unions in pay disputes. To give you an idea of the situation in terms of inflation and its impact on wages, here are some graphs.
To get an idea about median annual wage differentials for full-time employees disaggregated by age and gender in 2022, from Statistica, we have the following and remember that women are over-represented in part-time work because of care responsibilities:
Median annual earnings for full-time employees in the United Kingdom in 2022, by age and gender
The Winter of Our Discontent
People in full-time work are finding themselves dependent on food banks (food banks are not a social safety net contrary to what is happening in Britain) irrespective of the Energy Support programme as the grants have been targeted to energy costs and not rising prices of food and housing. The cost-of-living crisis is eating away at real wages in a situation of stagnant nominal wages for over a decade. Conditions of work have been eroded and precarious labour is becoming the dominant form of employment. Workers across the public and private sector are unable to cope with the erosion in their standards of living and despite the anti-union laws which demand a 50% turnout for ballots, plus 40% additional support for ancillary workers in the public sector (plus a 14 day notice of strike), strike ballots have been won and trade unions have been striking. The government is bringing in the army to help (they cannot refuse being scabs as they could face court martial) cover (read that as breaking the strike) both with the border forces and with upcoming strikes in the NHS of ambulance workers).
The trade unions in Britain are not taking the destruction of their real wages and attacks on working conditions lying down. Additionally, several organisations (Enough is Enough, Don’t Pay and the People’s Assembly) have been mobilising people to oppose the government’s response to this crisis which to say the least has not offered the support needed to prevent the standards of living continuing to collapse; in fact, we have seen that standards of living will continue to be eroded over the next two years. There are no guarantees (economic predictions are notoriously wrong) that economic growth will rise sufficiently and inflation will decline sufficiently to eliminate the cost-of- living crisis.
There have been several significant strikes that are trying to address the situation; port workers in Felixstowe (the largest container port in England) had already gone out in August and September (and accepted a deal of a raise of 8% and £1000 bonus) last week. December has been a month of strikes; issues are not only pay which is being highlighted by the MSM, but working conditions are at the centre of the struggles.
In December alone, those workers going out include the Rail, Maritime and Transport Workers, ASLEF (train drivers) and TSSA (transport and travel). TSSA workers on Network Rail have voted to accept an offer which includes back pay and a 4% wage increase; strikes continue on other rail lines. The RMT are protesting not only wages but the attacks on conditions of work and the attempts to “modernise” the service which include removing conductors and support staff which will make the railways of all types much more unsafe. These include workers in both public and private sector employment. The RMT is going out on 48 hour strikes in December and there are plans to strike in January as well in England; in Scotland and Wales negotiations with devolved governments have been successful. Continued strike actions with Network Rail are due to redundancies, cuts in maintenance services, a 30% increase in unsocial hours and an insufficient pay increase.
Bus drivers have also gone out, teachers have voted to strike and are going out, University and Further Education workers represented by the University and College Union have struck. Following the government planning to cut 91,000 and the cost- of- living crisis, the PCS went out in the Autumn and is now going out The Public and Commercial Service Union representing civil service workers have voted in November to strike and are demanding a 10% pay rise, better pensions, job security and no cuts to redundancy terms. (e.g., UK border force are striking at major airports from the 23rd-28th of December, driving inspectors, workers at the Home Office and the Department of Works and Pensions are all going out. The Postal Workers at the Royal Mail represented by the Communication Workers Union have gone out not only about wages, but threats of compulsory redundancies, they have 6 strike dates in December. The Royal Mail has been privatised and of course there are the threats of “modernisation” which include job cuts with other workers to pick up the slack for those that are sacked. The posties have wide support.
For the first time in their history the Royal College of Nurses is striking in England, Wales and Northern Ireland (the Scottish government reached an agreement with nurses in Scotland) they have already struck on the 15th of December and are again going out on the 20th. They are demanding a 19% pay increase (RPI inflation plus 5% for back pay) and demanding that staff shortages and deteriorating conditions of work as well as deteriorating conditions in the NHS are addressed. The government gave them 3% last year and in the summer a pay review board suggested a 4-5% increase; that was before inflation reached the levels it is today. The obvious suggestion of redoing the pay review for nurses has, so far, been refused by the Health Secretary Steve Barclay and the Prime Minister Rishi Sunak; this is despite even some Tory MPs suggesting doing this; neither the Health Secretary nor the Prime Minister will engage with the unions on pay negotiations. Health care support workers and ambulance workers across 3 unions (Unite, UNISON, and GMB) are going out on strike beginning this week; these will affect 10 out of 11 hospitals trusts in England and Wales and the military, volunteer ambulance workers (non-emergency), taxis and community care teams. Let’s be real, the military is untrained in these jobs at both the Border Force or on Emergency Ambulances, moreover they cannot even strike themselves. On its own, GMB represents 10,000 ambulance workers in 9 ambulance trusts. All of these strikes are being done ensuring that there are staff left to address emergency needs and surgeries. Despite the cancellation of appointments and non-emergency services, the nurses have wide support at 60% of those surveyed (up 3% from the previous survey).
The government is planning on passing bills making strike ballots even harder to win; they are also planning on putting in more laws against pickets and protests … forbidden things leads to wildcat strikes and bigger protests and that will not change the situation in their favour
Some final thoughts
Despite incoming increases in the minimum wage and benefits (both below the RPI inflation) in April, the situation is dreadful now during the winter and we have months to go until April. People cannot afford heating, they are strictly budgeting their money for heating, energy costs and food. One problem is uniting the struggles, we cannot demand that trade unions demand increases in benefits, but they should be addressing this issue. People are standing with striking workers and we need striking workers to stand in solidarity with those on benefits, those trapped in precarious employment like zero hours contracts need to be organised by trade unions and while several unions have raised the impact of the situation on women, disabled people and people of colour, we need all unions to be addressing it. We need to stand together in solidarity across movements and across the trade unions to actually get some reforms and positive changes.
Treating striking workers as “greedy” is not working as the strikes actually have widespread support. The Prime Minister, Rishi Sunak, has the chutzpah to call trade union leaders and striking workers “grinches” as they are striking during the Christmas Period. If the government thinks that increasing the depth and length of the recession which will certainly lead to a rise in unemployment and refusing to increase pay for public sector workers (e.g., teachers, university lecturers, nurses, ambulance workers, workers at the Dept of Works and Pensions, the Home Office, and the Border Force) in the midst of the worst cost-of-living crisis in decades is at all a coherent response to the economic and social crisis in Britain, he must be delusional. The government can try to blame the workers for ruining Christmas, but we all know that the government is responsible for this mess.