“Due to inflation the government’s budget requires £19 billion in additional expenditure to maintain our public services… but after thirteen years of Tory government, our public services have collapsed in many cases”
Jon Trickett MP
By Jon Trickett MP
The Autumn Statement yesterday was smoke and mirrors from a Chancellor who is resorting to cheap tricks.
Huge corporate tax cuts were announced, along with cuts to National Insurance. However, all is not as it seems.
The Chancellor forgot to mention that the Office of Budget Responsibility (OBR) has said that due to inflation the government’s budget requires £19 billion in additional expenditure to maintain our public services at their current level. This means that huge cuts are planned for a few years down the line. The Resolution Foundation has said that the cuts that the Government are proposing are “completely implausible”.
After thirteen years of Tory government, our public services have collapsed in many cases, including schools, hospitals and the police. There is an increase in poverty and the use of food banks. Growth is static. Our people are living in increasingly difficult times.
How can this be happening? The truth is that our country is poorer as a result of Tory tax cuts for the big corporations and the wealthy, and cuts to public services and capital spending, which has caused historically weak levels of economic growth.
In addition, the OBR has said that working people are facing the worst cut in living standards since records began. The government is claiming that inflation is going in the right direction, but the cost of food is increasing by 10%. The bottom four deciles—that is, two fifths of the population—spend more than 40% of their total household income on food and housing. Food prices going up are driving people further and further into destitution and poverty.
Government Ministers have blamed external forces for inflation. Of course, external forces have made a difference. But this Tory government let inflation rip. Was there another option for the Government to try to protect working people? I think there was. Spain, for example, with the same spending pressures from oil costs, harvests, the wars and so on, managed to keep inflation down to 2% while ours was roaring away at up to 11%.
What did Spain do? It removed VAT from basic foodstuffs, capped prices, made payments to households, and reduced VAT on electricity and gas. Why couldn’t our government have done the same?
Ministers have said that this is a Budget for working people. I represent large numbers of working people and the average salary or income in my constituency is £29,200, which is way below the national average. With wage increases needing to match food inflation, I calculated the result of today’s announcements for people on £29,200. The amount of income tax they pay will increase by £456, because the Government has not increased the tax thresholds. This ‘fiscal drag’ will cost a worker on the average salary in my patch £9 a week.
The Chancellor announced a reduction in national insurance of 2p, but after the income tax increase this will still leave people in my constituency on the average salary more than £2 a week worse off. The Tories are giving with one hand then taking away with the other.
The people I represent and the people of Britain as a whole are not fools. We might see today’s right-wing newspapers bellowing out a great triumph for the Conservative Government, but people will look at their pay packets and realise they are worse off.
In the House of Commons yesterday I made the point that we tax earnings from work to a significant amount — so someone who earns £50,000 will receive £38,400 after tax and national insurance. By contrast, someone who earns £50,000 from dividends will take home another £8,000 and receive £46,250. How is this fair?
If we were a Parliament for working people—one that valued work and labour as a way of contributing to our society—we would not tax work more heavily than income from wealth.
It is clear to me that there is money in our society that could be used for public services and to help working people. This government is choosing to protect those who own wealth, whilst taking more and more money from the pockets of those who work. The responsibility may soon fall to a Labour government to reverse this trend.
The Labour Party must make different choices. We must act in the interests of those we were created to represent. That should start with making sure working people are fairly rewarded and those with large amounts of wealth are taxed properly.
- Jon Trickett is the MP for Hemsworth and a regular contributor to Labour Outlook. You can follow him on Facebook, Instagram and twitter.
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