CHANCELLOR SUNAK lifted a little of the lid off of the crisis of British capitalism yesterday when he told the House of Commons, in the course of his spending review, that the UK’s economic catastrophe had ‘only just begun’.
He expects the number of unemployed people in the UK to surge to 2.6 million by the second quarter of next year.
He reported that the damage caused by Covid is expected to be ‘lasting’.
The latest figures show 1.62 million people are unemployed.
Sunak said the government would spend a gigantic £280bn this year ‘to get our country through coronavirus’.
He also announced that public sector pay would be frozen, except for nurses, doctors and key NHS staff who will get a pay rise.
He continued to predict that the economy would contract by 11.3% next year, the biggest fall for a hundred years.
Sunak said the UK was expected to borrow £394bn this year – the ‘highest recorded…in our peacetime history’.
The chancellor had intended, as usual, to set out plans for the next three years, but this was reduced to just one year by the extent of the economic catastrophe.
The chancellor warned unemployment will rise to 2.6 million by the second quarter of 2021.
He said that total departmental spending across Whitehall will be £540bn in 2021.
Day-to-day departmental spending will rise, in real terms, by 3.8% – ‘the fastest growth rate in 15 years’.
For Labour, Anneliese Dodds criticised the planned cut in overseas aid spending from the current 0.7% of GDP to 0.5%.
The chancellor, she said, has ‘turned his back on the world’s poorest’.
She also added that it is in ‘Britain’s economic interest’ to support economies around the world.
The shadow chancellor said Labour has ‘heard nothing’ about further economic support for firms in the new tier system for England.
She also called for temporary increases to Universal Credit announced this year to continue beyond next April.
She said the UK has ‘had the worst decade for pay growth for eight generations’.
Cuts to councils, she added, had seen 240,000 jobs cut over the last ten years.
Former Labour leader Jeremy Corbyn, sitting as an independent MP, called for public servants to get a 10% pay rise, to ‘begin to make up the ground they’ve lost over the last ten years’.
He also said there should be a return to ‘proper national pay bargaining’ for all civil servants, ‘so those people who deliver for us are seen to be treated properly and fairly’.
Unison general secretary Dave Prentis said the announcements made by the chancellor yesterday were ‘austerity – plain and simple’.
He criticises the public sector pay freeze – which excludes doctors and nurses – saying: ‘Going after the pay of millions will be a bitter pill for key workers getting the UK through the pandemic and out the other side.
‘Extra money in pockets gets spent locally. Less than a pound more a week for some won’t save the thousands of ailing shops and leisure, arts and hospitality venues across the country.’
Prentis said reviving the UK economy ‘will take a gargantuan effort from everyone’.
He added: ‘That means investing in the entire economy, not seeking to divide and rule between the sectors. Key workers mustn’t be taken for granted and left to carry the Covid can.’