Watching BBC Breakfast Time this morning reveals how the Budget every year works as ideology, as a show to cover up the real economic processes affecting our lives and what the government is doing. A focus group was set up in a café somewhere in a northern town. Look at us; we are getting down with ordinary people; we are not in the Westminster bubble. People have been selected to represent different sociological categories: a teacher, somebody running a bar or club, a representative of a business trade association, and so on.
You see, we are including a range of people; we have balance. A presenter poses predictable questions. Everything is done in quick succession; there is never time to really analyse or discuss anything. Bars and clubs are closing; how can the Chancellor keep them open with changes in VAT or business rates? Does the teacher want tax cuts or spending increases? In this fantasy, nobody’s interests depend on exploiting or restricting the interests of anyone else. We are all in the same national boat. The banker and the worker can both benefit at the same time. Restaurant owners and Deliveroo riders have the same interests.
“In this fantasy, nobody’s interests depend on exploiting or restricting the interests of anyone else. We are all in the same national boat. The banker and the worker can both benefit at the same time.”
Later on, we will see lots of graphs working out supposed gainers and losers, but nothing and nobody is connected to anything else. The key categories of fiscal rules, debt-to-GDP ratios, growth, inflation, or public spending are all givens, unproblematic categories that are never discussed or questioned. As the presenter back in the studio says, ‘it is all about a balance between politics and economics’.
A balance is assumed to be possible, and economics stands apart and is excluded from politics. Parliament does not directly vote on interest rates or the price of gilts (government bonds that allow borrowing to finance spending), despite the political implications of these decisions. Even the Guardian has noticed something is not quite right about the way most of the media and political class, including the Labour opposition, totally accept the ideology of fiscal rules.
Focus groups and panels actively exclude trade union leaders, silencing potential challenges to the corporate business narrative. In the 1970s, the strength of workplace organisation meant that a different relationship of forces between the classes had to be acknowledged by the mainstream media, and there were always trade union panellists.
A great fuss is made of Jeremy Hunt, the Chancellor of the Exchequer, being in the control room of the economy, ready to push the right buttons. His red attaché case, like some stupid prop in a game show, has the secret words that will activate the complex manoeuvres.
The media still make a big deal of having a reveal during the set-piece speech in parliament, a bit like the false drama of who is the winner on Strictly Come Dancing or some other competitive reality show. Of course, most measures are carefully leaked out before the speech, although one or two things are kept back for the rabbit-out-of-the-hat moment.
Key economic decisions are made outside the Chancellor’s control, and the spectacle of the budget City investors can easily put pressure on government policies. The political class deliberately limits the impact of taxing and spending on the economy by enforcing strict agreements. Decisions on whether utilities like water, gas, electricity, or transport are run for shareholder profit or in the common interest are not made in budgets. Labour has taken any talk of such a shift, which would make a bigger difference than any changes proposed in this budget, off the agenda.
“Key economic decisions are made outside the Chancellor’s control, and the spectacle of the budget. City investors can easily put pressure on government policies.”
Ownership and control of key sectors of the economy can begin to challenge how resources are allocated to favour a fairer, greener, and more equal society. Instead, Hunt is proposing to sell off publicly owned shares in Nat West Bank at knockdown prices, less than what was paid for them when the state saved the banks. Decisions around mass sackings, such as we have seen in the steel at Port Talbot or the Body Shop, are in the hands of corporate capital.
British governments only seem to intervene to provide more subsidies and bribes to keep these companies’ profits high, rather than intervening to save jobs. Carbon emissions will soar as a result of the Tories decision to further exploit the Rosebank oil and gas fields in the North Sea. This will not be discussed in the budget. Labour has stated it will not stop licences that have already been granted.
Protecting the environment and reaching net zero is not a big topic in the TV studios or for the government. Fuel duty has been frozen and cut over the last few years and has not been increased this time. It has been calculated that the 5 pence freeze will save £60 for the well-off motorists with their SUVs and just £22 for lower earners. Investing less than the money given out on this measure on public transport would actually save more money for most earners. Expanding nuclear has become a Tory mantra. Hunt is putting in more money, so that is supposed to provide a quarter of British energy.
The budget calculations assume an unrealistically low increase of 1% in public spending, which will inevitably imply spending cuts. Make no mistake, all the waffle about increasing productivity through digitalisation means job cuts. Public sector workers involved in nationwide strikes in the last year will not be given wage increases to protect their standard of living or to redress long-standing downward pressure on their salaries. Labour under Reeves is not likely to pay them a decent wage either.
Birmingham has just announced the biggest ever local authority cuts. Nottingham did the same the other day, and many councils are de facto bankrupt. Nothing has been announced to remedy this situation. Tories know that local people do not always blame the government but rather local leaders, who are often Labour. Managers, city traders, and high-paid workers who often vote Tory ignore the impact of local authority cuts because their kids don’t use youth clubs or state schools. Their families use private leisure clubs and do not have to rely on public transportation. These people are also more likely to have private health care, so they avoid the NHS waiting lists. We are not all together in the TV focus group; we are not in the same boat.
“Managers, city traders, and high-paid workers who often vote Tory ignore the impact of local authority cuts because their kids don’t use youth clubs or state schools.”
What about the headline cut in National Insurance? At 2 percent, it amounts to £450 annually for someone on £35K, or around 1.5%. Inflation is still above that figure and was much higher last year, so this is not allowing any catch-up at all. Fiscal drag will further limit any gains since more and more people fall into higher tax bands since the thresholds are frozen, while pay increases have been around 4 to 5% on average. Hunt made a great deal about the lowest personal taxation in decades; he conveniently forgets VAT, which we all pay as a non-progressive tax and which was barely 10% at the time he is referring to. The Chancellor may brag about Britain having much lower personal taxation than many European countries, but he fails to acknowledge the standard of public services and lesser social inequality in those countries.
As a desperate electoral bribe, the tax cut looks like it will be far from enough to increase Tory support from their historic law of 20%. People are not stupid; a few more pounds in their pay packet does not help them get a hospital appointment, stop the huge increase in rents, or pay a ten percent increase in their mortgage. Labour is facing an open goal, but it seems determined to roll the ball as slowly as possible into the net without unduly upsetting the goalkeeper.
For the poor, there is not much interest from the government, the opposition, or the media. The Household Support Fund, worth about £850 million, which the government provided following the pandemic and the cost of living crisis, has provided a very minimum contribution to the most deprived people in our society. This has been extended for just six months. Food banks have been using this fund to meet rising demand, and councils also use it to provide some basic necessities to the poorest. The non-working poor will receive no benefit from the NI cut.
Although government budgets mostly make small tweaks to the capitalist economy, any progressive government that challenged, even in a limited way, the logic of this economy would come under severe attack from corporate power, the city, and the majority of a compliant media. We saw this threat when the confused policies of an extreme neo-liberal leader like Liz Truss threatened the stability of capitalist power from the right. Imagine what they would do if a Corbyn-type government tried to carry out any changes.
Let us learn about the budget from somebody who has worked in the belly of the beast. Gary Stevenson was a successful city trader. Here is what he wrote yesterday:
Traders do not care about the budget, because the budget is not for traders and the budget is not about the economy. The budget is a piece of theatre meant for your consumption. It is a cute moment—a photogenic moment where a multimillionaire can hold up a red box and bribe you with a bit of your money, while they and all the other multimillionaires bankrupt the government with monetary and fiscal stimulus packages that seem somehow to always end up in their own pockets. They then use that money to buy assets such as all the houses that your children will need but never be able to afford to own.
And the traders—traders like me—sit in skyscrapers and we laugh. Because we know that Jeremy Hunt and Rishi Sunak, who are multimillionaires just like we are, will never tax us. We know that we will get richer and you will get poorer, and our lives will get better, and yours will get worse year after year after year. And each of us are paid millions of pounds every year to bet on it. To bet on it, instead of telling you.
Only by building a movement in the workplaces and communities combined with radical left government could you overcome any corporate counterattack against real changes. Big business and the city cannot continue to make profits without the cooperation of their workforces. Building towards that alternative means rejecting the B-team approach of Starmer and Reeves. The fact that Hunt shot their fox twice by adopting Labour policy on non-dom taxation and on the windfall levy on North Sea oil and gas companies shows how weak the Labour alternative is. Labour will have to find another source of tax revenue to fund their proposed NHS investment unless they u-turn on this as well.
“The budget is a piece of theatre meant for your consumption…multimillionaires bankrupt the government…while they…buy assets such as all the houses that your children will need but never be able to afford to own.”
We must actively challenge the economic narrative presented by the Tories, Labour, and the media, offering working people a different analysis. They try to persuade us daily that economics is too complex for ordinary people to understand and that this is the only possible reality. Struggles, campaigns, and workers’ daily experiences of their exploitation can unmask that reality. Anti*Capitalist Resistance hopes to contribute effectively to developing such an alternative.
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