Bank of England – workers must pay for capitalist inflation – Only socialist revolution can resolve crisis


NOT TO WORRY about spiralling inflation, MPs were told on Monday by senior members of the Bank of England, as the soaring cost of essentials like energy and food means workers will have less to spend on other goods so businesses will struggle to put up prices.

‘There is no risk of a wage-price spiral in the UK,’ said Michael Saunders, an external member of the Bank’s nine-person interest rate-setting committee, told the Treasury Select Committee. He added: ‘Talk of a return to the 70s is completely misplaced.’

In other words, the prospect of workers and their families having to spend their entire income on food and energy – and in the case of millions having to choose between one or the other – is the way out of the inflation crisis, according to the Bank.

His view was echoed by the Bank’s governor Andrew Bailey, who said that the labour market situation was ‘very different’ now than that in the 1970s.

Bailey told MPs: ‘The collective bargaining position is very different.’

This was a direct reference to the continued refusal of the leadership of the unions to wage any real fight for wage increases, a refusal that the Bank and the Tories are relying on to hold back the anger of workers as they see paltry wage increases swamped by price increases that are driving millions into absolute poverty.

Bailey’s confidence about the spineless refusal of the TUC leaders to fight on behalf of the working class was confirmed the next day, when TUC general secretary Francis O’Grady, speaking about the wage crisis, acknowledged the fact that ‘Real pay is less than £2 a week above the pre-2008 financial crisis peak.’

But she ended not with a call for action but with a humiliating appeal to the Tories, saying: ‘In the midst of a cost-of-living crisis, people deserve better. The government must give unions more power to negotiate better pay and conditions for all workers.’

While O’Grady was begging the Tories to give the unions more power, the true cost of the crisis engulfing the working class was revealed yesterday with the official figures from the Office for National Statistics (ONS) showing that the cost of living surged by 4.2% in the 12 months to October.

This, the highest rate in almost ten years, is mainly due to higher fuel and energy prices.

Household energy bills were the biggest driver of inflation after Ofgem, the energy regulator, lifted the price cap on domestic gas and electricity last month.

Gas bills shot up by 28.1% in the year to October – electricity by 18.8% – the highest annual rates for these utilities since early 2009. Petrol prices went up by 25.4p a litre in that month and have continued to climb ever since to over 1.44p a litre on average.

Over three million people lived in fuel poverty before the end of the energy price cap according to the End Fuel Poverty Coalition and half a million more households will be at risk since the cap was finally abolished on October 1.

This is clearly good news for the Bank of England. It is now openly declaring that wages must be kept below poverty levels and the working class driven into the gutter of starvation in order to rescue a bankrupt collapsing capitalist system.

The working class are not accepting paying the price for the capitalist crisis by seeing their lives destroyed.

Workers must demand a recall of the TUC Congress to confront this crisis by organising the fight for a sliding scale of wages and the demand that wages keep pace with an inflation rate based on the cost of goods and services that are necessary for workers to live.

Leaders who refuse this demand must be thrown out and replaced with a leadership prepared to fight for a sliding scale of wages by organising a general strike to kick out the Tories and bring in a workers’ government that will nationalise the banks, energy and the major industries placing them under the management of the working class – replacing bankrupt capitalism with socialism.