YESTERDAY’S ‘bombshell U-turn’ over PM Keir Starmer’s and Chancellor Rachel Reeves’ budget plans not to increase income tax has exposed the civil war in the leadership of the Labour Party, just days before presenting her budget for the UK economy.
It comes after a week of speculating and scheming about a leadership challenge to Starmer over the plans to dump Labour’s election manifesto promises of no tax increases, a move which is enraging workers and MPs alike.
Health Secretary Wes Streeting said on Thursday: ‘I’m not in favour of breaking manifesto pledges. I think that trust in politics and politicians is low and it’s part of our responsibility to not only rebuild our economy and rebuild our public services, but to rebuild trust in politics itself.’
The split over raising revenue from a bankrupt economy is fundamentally whether to raise taxes or abolish the welfare state, including the NHS. Neither of these will be tolerated by the working class.
Last month’s official figures showed no economic growth in the UK, stalling at 0.1 per cent.
Health Secretary Streeting’s preference is to sack 18,000 staff in the NHS, announced on Thursday, and to privatise what remains.
The NHS cutting wages and restricting jobs for newly qualified doctors has already caused a 5-day strike by resident (junior) hospital doctors throughout England.
Dr Tom Dolphin, BMA council chairman, said the union had ‘reached an impasse’ with the government over pay and jobs. ‘We’ve got pay that is still a fifth down on the value that it had in 2008,’ he said, adding there are ‘thousands of doctors who are unable to get into training posts, are unable to become the specialists and the GPs of the future that we need.’
Streeting’s vicious response to the resident doctors’ 13th strike action was to accuse the British Medical Association (BMA), of acting like a cartel and threatening the future of the NHS, by holding the public and the government to ransom. However, NHS hospital consultants are also set to join the resident doctors’ strike for their own 5.5 per cent pay increase.
Yesterday’s financial markets reacted immediately to Reeves’ U-turn, with the yield on the benchmark 10-year government bond rising 0.11% or 11 basis points – a very big move in a short time – while the pound sterling was also lower, falling 0.3% to 1.313 US dollars.
However, Reeves is widely expected to use stealth taxes to raise cash by extending the freeze on thresholds on income tax and National Insurance (NI), or even lowering them, among others, to reduce government borrowing and the near £100 billion annual interest payment on government debt.
That would mean as salaries rise, more people would be pulled above the income threshold at which they either start paying tax and NI or qualify for higher tax rates.
The Institute for Fiscal Studies (IFS) estimates that extending the freeze by two years could raise £8.3bn a year and would mean someone on the minimum wage would be liable to pay income tax if they worked just 18 hours a week.
As the debt crisis engulfs all capitalist countries globally, the utterly bankrupt UK economy now cannot fund local council provision for 638,745 children with special education needs and disabilities in England. The system is on the brink of ‘total collapse’, the County Councils Network (CCN) warned yesterday.
The CCN said that local authorities had deficits which will reach £4.4bn a year by the end of this parliament in 2029, as they struggled to cope with increased demand.
The government has put off planned reforms to the SEND system until next year but ministers face pressure from Labour MPs who warn there will be political danger in watering down support for children.
On a global scale, the falling share values of US companies investing heavily in AI, are due to unrealised profit increases.
With its anti-working class policies of not abolishing the gig-economy, deporting refugees, proscribing pro-Palestinian protest groups, not abolishing evictions and imposing universal ID cards, this government is splitting apart in the face of working class opposition.
In fact, the moment of truth has arrived for this capitalist system.
The deafening silence of the TUC is holding back mass action to defeat this government. Workers must demand their union leaders call an emergency meeting of the TUC to organise a general strike to bring down this Labour regime of pro-capitalists.
The time has come to establish a workers’ government and socialism which will nationalise the big industries and banks, and establish a socialist planned economy. This is the only way forward. Build the Workers Revolutionary Party now!
