Trade unions must act now to defend living standards!

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BANK of England Governor Mervyn King sent a letter to Chancellor Alistair Darling yesterday because inflation has taken off.

Under statutory obligations put in place when former Chancellor Gordon Brown made the bank independent of government in 1997, the Governor has to send a formal explanatory letter when inflation is above two per cent.

King wrote his letter after figures from the Office of National Statistics (ONS) showed that the Consumer Price Index (CPI) rose by 3.3 per cent in May, up from three per cent in April. The Retail Price Index (RPI), which includes the prices of more items, such as housing, increased by 4.3 per cent, up from 4.2 per cent in April.

Concerning the change in the CPI, King wrote to Darling saying: ‘As things stand, inflation is likely to rise sharply in the second half of the year, to above four per cent. I must stress, however, that there are considerable uncertainties, in both directions, around this, and any such projection is particularly sensitive to changes in domestic gas and electricity prices.’

The Governor said he expected the rate of inflation to peak towards the end of this year, as long as there were no ‘unexpected increases in oil and commodity prices’.

Yet King himself acknowledged that world agricultural prices have increased by 60 per cent over the past year and that retail food prices are up by eight per cent. He was speaking a day after the price of oil hit a new high of $140 a barrel, double what it was a year ago. This has resulted in a massive increase in prices at the pumps and a huge rise in haulage costs.

King’s projections are based on hope and not on the present trends!

It is clear that the official inflation figures (CPI and RPI) are biassed in favour of financial and other business interests and those of this government.

They are not a measure of the real rate of inflation experienced by most workers and middle-class people, who spend a larger proportion of their incomes on food and energy than the rich. Their experience is that they are spending, not three per cent (CPI) more, but at least 10 to 20 per cent more on basic necessities!

It is clear that inflation is outstripping the wage increases in current pay offers, particularly in the public sector where the Brown government is attempting to impose three-year pay deals and rises of about 2.5 per cent on local government workers, NHS staff, teachers, lecturers and civil servants.

Yet the Chancellor made clear yesterday that the government is setting out to make the working class pay for capitalism’s inflationary crisis. Darling called for ‘restraint’ in pay rises awarded in both the public and private sectors.

The working class is not to blame for inflation, which has been fuelled by the credit boom of the past few years, with speculators driving up property prices and share prices. Now they are driving up the prices of essential commodities, like oil, metals and food.

With up to five million public sector workers engaged in battles against government-imposed, pay cuts, their trade unions, organised in the Trades Union Congress, must develop their own cost of living index. There must be a fight for a sliding scale of wages, where wages increase automatically in line with this index.

Workers must demand their unions organise a public sector general strike to put an end to the government’s pay cuts and win inflation-proof wage rises.

If the Brown regime does not concede, it has to be brought down by a general strike, embracing the whole trade union movement. It must be replaced with a workers’ government that will get rid of this bankrupt system and implement socialist policies to defend people from the threatening catastrophe of the capitalist crisis.

Such a struggle demands the building of a new revolutionary leadership in the unions to replace those leaders who have refused to organise the struggle against pay cuts and have foisted lower living standards on their members, because they refuse to take on the Brown government.

This will be a vital issue discussed at the News Line-All Trades Union Alliance Conference in London on June 29 (see page 1). Make sure you are there and that your union branch is represented at this important conference!