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Unions must fight this public-sector pay freeze and puny increase in the National Minimum Wage


MUCH of Chancellor Rishi Sunak’s one-year spending review today had been extensively trailed in the media.

As widely predicted, he added a little to the government’s anti-Covid budget while confirming that — sooner or later — working people and their families will have to pick up the giant tab for combating the pandemic in Britain.

But he could not hide the reality that a severe economic and fiscal crisis is following hot on the heels of the coronavirus crisis. In fact, the British economy was already teetering on the brink of recession at the beginning of 2020, as were the economies of Germany, France, the US and Japan.

The Covid-19 pandemic has overshadowed that development and is likely to recede before the economic crisis is resolved.

The scale of the challenges facing the working class and peoples of Britain is enormous. Even after the initial shock of the pandemic is ameliorated, GDP will have fallen by at least 11 per cent in the course of this year — the biggest slump for 300 years.

In his efforts to sustain the economic basis of our society, the Chancellor has made available an extra £280bn in public spending this year, taking the state deficit to a peacetime record level of 92 per cent of GDP.

But Sunak was somewhat shy about his plans to bridge this unprecedented gulf between the government’s income and expenditure. He did not even hint at how the borrowing will be repaid.

Simply printing money is no solution.

The money will have to be gathered in, or else the Treasury’s credit-rating will vanish as the pound sterling is flushed down the toilet and import prices rocket.

The Tories’ 2019 general election manifesto pledged no rises in income tax, VAT or National Insurance contributions. Nor — on present, rather optimistic projections — will the projected economic recovery expand tax revenues enough to fill the gap in time.

The Chancellor knows he will have to announce some very difficult choices, very quickly. He can break his party’s manifesto pledges, or he can cut public spending at the next opportunity, or he can do both.

He began that task today with what he believed would be easy targets, freezing public-sector pay for most non-NHS workers and slashing Britain’s overseas aid budget from 0.7 to 0.5 per cent of GDP.

Sunak’s excuse that public-sector pay rises have been outstripping those in the private sector is based on a very short-sighted view of the past. According to the Office for National Statistics, the ground lost to private-sector pay by public sector workers was far greater during the 2010-17 austerity years than any improvement since.

In any event, there should be no conflict between workers in different sectors. As Lydgate first said in his Debate between the Horse, the Goose and the Sheep (1440), “comparisons are odious.”

All workers benefit from the labour of others and all deserve wages which reflect the true worth of their contribution to society.

What is needed now is a united trade union response to the public-sector wage freeze and the puny increase in the national minimum wage.

There are alternatives. Taxing the wealth of the one-tenth of Britain’s population with personal assets worth more than £6.5 trillion (around half of the total) would be a start. Levy a windfall tax on the bloated profits of the big pharmaceutical companies. Impose a transaction tax on the City spivs and speculators.

Previous chancellors offered more than £1.1 trillion to rescue the banks and financial markets after the 2008 crash. The world’s fifth biggest capitalist economy can afford to find much more to invest in our future than Chancellor Sunak scraped together today.

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