“Beyond the myths and distortions put out by the Downing Street spin machine, the truth of the Autumn Statement is that we have the largest fall in living standards since records began 75 years ago.”
By Richard Burgon MP
Listening to Jeremy Hunt deliver the Autumn Statement yesterday, it felt like the Tories were living on another planet. The Chancellor’s words were at odds with the lives of millions of people up and down the country.
While the government is acting like the crisis is over, the reality is that millions of people are going through the deepest social emergency in decades.
Beyond the myths and distortions put out by the Downing Street spin machine, the truth of the Autumn Statement is that we have the largest fall in living standards since records began 75 years ago.
Growth has been downgraded, even after what has been called the worst period of economic growth in a century, and wages are set to be no higher in 2028 than in 2008 – two decades of lost wages for workers.
Despite 13 years of Tory cuts, even deeper public service cuts are planned for the next election, deepening the austerity that’s not only caused such harm to the key services people rely on but severely undermining growth in the economy.
Whenever we have these big set-piece economic events, the economy is talked about as if it is entirely divorced from people’s lives. We should remind ourselves that the economy is meant to serve people. How well it performs should be judged by how well it delivers for the vast majority of people. And by that simple measure, it is failing people.
The worsening social crisis sees 14 million people living in poverty, including over four million children, in what is meant to be the sixth-richest economy on earth.
According to the Trussell Trust, one in seven people face hunger across the UK, equating to around 10 million people. We are living in a country that has more food banks than branches of McDonalds.
Homelessness in our society is on the rise as rents and mortgages soar. Of course, this is just the tip of the iceberg with many more families living in totally unsuitable, overcrowded and temporary homes.
According to National Energy Action, six million households are in fuel poverty, meaning they are unable to afford to heat their homes to the temperature needed to keep warm and healthy.
On top of all this, sick people are not able to get the treatment they need because government neglect of the NHS has created record waiting lists.
However, this social emergency is not affecting all of us. For some, the last few years have been boom time. Britain’s super-rich boosted their wealth by £31 billion in the last year alone, at a time when living standards have been under a near-unprecedented attack for everyone else.
This is no one-off. British billionaires’ wealth has increased by over £430 billion in the last decade.
Vast fortunes such as these are almost difficult to imagine, so to put it another way, they have increased their wealth by £120 million every single day for the last ten years.
This soaring wealth of the billionaire class is the flip side of the weak wages we see across society. As the share of the economy going to workers has gone down, the share going to the super-rich has gone up.
This soaring inequality is one reason I have been campaigning for a Wealth Tax.
A Wealth Tax could create a huge social emergency fund to help people during this crisis. It could provide the much-needed funds to help rebuild the public services hit by a decade of austerity. It could fund the investment we need to build the infrastructure for a greener, fairer, high-wage economy.
An annual wealth tax of just 1.5% on assets over £10 million would raise around £12bn per year. This is a measure backed by three in four people, including over two-thirds of Tory voters.
A Wealth Tax isn’t our only option, there are other reforms to tackle wealth inequality that could raise billions more.
Equalising capital gains with income tax rates would raise up to £15bn per year. Tackling the non-dom tax break for the super-rich would raise up to £3bn a year. Ending fossil fuel subsidies for oil and gas companies could raise £4bn a year.
Another sector that has done very well out of this crisis is the banks. The pre-tax profits of the big four banks – Lloyds, Barclays, HSBC and Natwest – are up 79 per cent compared to the same period in 2022.
Just like the energy companies, the banks have used this crisis to line their pockets with windfall profits. They’ve done this by charging higher interest rates for loans but not passing them on to savers.
It’s time for the banks to be made to pay their fair share. So just like the energy companies, they should face a Windfall Tax on such unexpected and, frankly, unmerited gains.
Spain’s progressive Government offers one example of what a Windfall tax could look like. It introduced a 4.8% Windfall Levy on certain bank incomes above a threshold of 800 million Euros. Replicating that could raise almost £4bn this year in the UK.
But perhaps the simplest move would be to reverse the tax break for banks that Rishi Sunak introduced. Sunak has slashed the bank profits surcharge from 8% to 3%.
Reversing this tax break could provide billions each year to fund policies such as the introduction of universal free school meals, scrapping the two-child cap or providing a proper pay raise for Junior Doctors.
The banks were bailed out when they were in trouble during the 2007 global financial crisis. It is now time for them to be taxed fairly to help bail out communities who are now in such difficulties.
- This article is an edited version of the speech given by Richard Burgon MP during the debate on the Autumn Statement held on November 23rd, 2023.
- Richard Burgon is the MP for Leeds East, the Secretary of the Socialist Campaign Group of MPs and a regular contributor to Labour Outlook. You can follow him on Facebook, Twitter and Instagram.
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