LABOUR Chancellor Rachel Reeves turned up at the annual conference of the Confederation of British Industry (CBI) yesterday to defend her autumn budget in the face of a concerted attack from the bosses, industrialists and bankers.
Reeves and Labour leader PM Keir Starmer had gone out of their way prior to the general election to prostrate themselves before the CBI, winning their support with the pledge that Labour would be a government for ‘business’ while throwing a few crumbs to workers in an effort to placate a working class rising up against being driven into the ground through inflation, low pay and the destruction of the Welfare State.
Reeves’ solution to this was a budget that involved a massive increase of £25 billion in National Insurance (NI) contributions paid by employers on every worker on the payroll. This would, Reeves claimed, mean a tax increase that would not break Labour’s pledge of no increased taxation on ‘working people’.
Of course, in reality all this increase is being passed on to workers in the form of wage freezes, increased unemployment through cutbacks on jobs, and the inevitable increase in the price of goods, driving up inflation.
It is this that the CBI, in an unnatural concern for the wages and jobs of workers, is concentrating on in their attack on Reeves and the Labour budget.
Opening the conference, CBI director-general Rain Newton-Smith welcomed the Labour government’s moves to ‘stabilise’ public finances before accusing Reeves of undermining economic growth by taxing companies.
She said: ‘When you hit profits, you hit competitiveness, you hit investments, you hit growth.’ She added: ‘Tax rises like this must never again simply be done to business,’ and insisting that profit is not a ‘dirty word’.
For her part, Reeves responded by saying that the CBI has offered ‘no alternatives’ and: ‘We have asked businesses and the wealthiest to contribute more. I know those choices will have an impact. But I stand by those choices as the right choices for our country.’
Reeves and Starmer knew full well that her tax increases through ramping up NI contributions would be simply passed on to the working class in the form of higher prices, wage cuts and increased unemployment, and this was a price worth paying to help find the money for the £22 billion ‘black hole’ they claim to have found in government finances.
The CBI’s manufactured outrage has nothing to do with concern that thousands of small businesses are going bust every week or that hundreds of thousands will be laid off, instead, their anger is designed to warn the Labour government that it needs to crack down harder on the working class.
As the Telegraph reported yesterday: ‘Business lobby groups are learning that they need to be more vocal with ministers, fearing that they held back when privately discussing workers’ rights reforms earlier in the year.’
This is what the CBI really hates – the token granting of limited employment rights to workers when the bosses are demanding the right to fire and hire at will.
What the CBI chooses to ignore at its conference is that Reeves’ budget also contained a massive government borrowing binge to ‘stabilise’ British capitalism, something the CBI welcomed.
Labour borrowed £17.4 billion in the single month of October from the international financial markets, driving up the interest rate charged on the debt.
In October alone, the interest paid by the UK government on its debt was £9.1 billion – the highest October figure since monthly records began in 1997.
These billions will be paid for by workers and their families through unemployment, wage freezes and savage austerity cuts to the NHS and all the gains of the Welfare State won by the working class.
This Labour government, determined to rescue bankrupt British capitalism and the profits of the bosses and bankers by driving workers into the gutter, must be removed and replaced with a workers’ government and a socialist planned economy
The TUC must be forced to call a general strike to bring down Labour and bring in a workers’ government that will nationalise the banks and major industries, placing them under the management of the working class.
This is the only way forward.