“We do not yet know the precise content of the Tories’ new package. But taken across their media interventions this morning it is clear that Truss’s team will act, and that in doing so they will present Labour with new challenges.”
By Simon Fletcher, Modern Left
The new Prime Minister will be announced shortly and her team is now shifting the debate onto how the new Tory administration will handle the impending cost of living calamity.
Today’s indications are that Liz Truss looks likely to introduce big measures in response to the energy price crisis. At the same time, the Conservatives are reported to be looking at a new bonfire of workers’ rights.
The Times today reports that “Liz Truss is to announce a vast support package to deal with surging energy costs as her allies and officials discuss plans for a gas and electricity price freeze with industry leaders.” It quotes industry sources who said that a price freeze for consumers was “the only conversation that anyone was having with the government”, including discussions involving Kwasi Kwarteng, who is said to be favourite to take over as Chancellor of the Exchequer.
Under proposals being discussed, the government would either refund energy companies directly for the cost of buying wholesale energy above the price cap charged to consumers, or underwrite commercial loans taken out to cover the shortfall. “The money could then be recouped over many years as and when energy prices eventually fall,” says The Times.
It seems we can assume that under these possible outcomes, the state would bear the cost, but will gain no long-term stake in the energy companies, and will leave the structure of the energy sector untouched.
In the Financial Times, Kwarteng himself writes that as prime minister, “Liz will take immediate action if elected that will help people with the challenges we face in the coming months,” adding that “given the severity of the crisis we face, there will need to be some fiscal loosening to help people through the winter.”
Kwarteng’s FT piece also talks a lot about economic growth, very blatantly seeking to occupy the space that Keir Starmer’s July speech sought to do.
We do not yet know the precise content of the Tories’ new package. But taken across their media interventions this morning it is clear that Truss’s team will act, and that in doing so they will present Labour with new challenges.
Stephen Bush of the FT argues that “Kwarteng is giving us the broad outline of his fiscal rules here and they are looser than the ones set out by Rachel Reeves, his prospective Labour shadow. (Labour has pledged that its day-to-day spending will be funded through taxation not borrowing, while Kwarteng is saying that, at least temporarily, more borrowing is the order of the day.)”
Whilst the Tories may offer some relief for rising energy prices for the winter, that will not eliminate the bottled-up problems in the British economy that have already led to huge pressure on household incomes – and a sharp rise in industrial disputes and strikes. Millions of workers’ wages have already fallen in real terms. Even with measures that may ameliorate an even sharper deterioration, the intensity of this issue in the economy and politics is not going to be abolished. So labour movement campaigns over the cost of living will continue, including over pay. Several major disputes in private and public sectors, including on the railways, in the communications industry and the Royal Mail, and in schools and higher education are all underway or imminent. Some of the present disputes have been building for a very long time. Trade unions and movements like Enough is Enough will continue to push, and Labour will remain under pressure from these dynamics.
Even if the Tories are forced this week to announce the kind of package flagged in this morning’s papers, there will be no improvement in their existing approach to the workforce. Over the weekend The Times reported that the incoming Prime Minister plans further attacks on workplace rights. “The foreign secretary, who is expected to be confirmed as Britain’s next prime minister on Monday, wants to review existing EU worker protections, including the 48-hour working week, in an attempt to improve the competitiveness of the UK economy.”
The new government is reported to want to look at rules on taking breaks and calculating holiday pay.
The TUC has called on Truss to come clean about her plans. “We’re talking about vital rights and protections here – like holiday pay, equal pay and safe working hours,” was the response of Frances O’Grady. “Let’s not forget. The Conservatives repeatedly promised to protect and enhance rights at work. That promise now seems in tatters.”
Coming so soon after the Tories’ changes to the law in order to help break strikes with agency workers, it is clear that the government will maintain its effort to hold down the ability of working people to protect their living standards and workplace rights. In classic fashion, their approach seeks to transfer the cost of this latest economic crisis onto working class people.
The Prime Minister will change but the Tory party has not.
The BBC has reported further details of the energy policies under consideration, including that the cost may need to be paid back “through you paying extra on bills for the next decade.” As James Meadway argues, that should be totally opposed.
- This article was originally published by Simon Fletcher’s Modern Left on September 5th, 2022.
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