By George Banks
After an initially muted response to Labour’s first budget, the bosses are off the leash. At the annual CBI conference, employers launched into a diatribe against Chancellor Rachel Reeves’ modest raid on corporate profits by raising employers’ NI contributions and the minimum wage.
CBI director Rain Newton-Smith claimed that firms were ‘caught off guard’ by these increases and demanded that ‘tax rises like this must never again simply be done to business’.
Next up was CBI chair, Rupert Soames, who asserted that businesses are being ‘milked as the cash cow’ which ‘makes employing people, particularly the young, part-time and low paid, much more expensive’. For good measure he denounced the Employment Rights Bill as an ‘adventure playground for lawyers’.
Put simply, these are threats to lay off low paid workers and redirect investment elsewhere if the bosses are (gently) squeezed for a share in repairing the damage done by 14 years of Tory assault on public services and the damage caused by severing relations with the UK’s largest trading partner.
From the boardroom to the barnyard next as Labour faces early opposition from Britain’s influential but normally quiescent farming lobby. The NFU, and hard-pressed farmers like multi-millionaire TV presenter Jeremy Clarkson, whipped up a storm in a hen house over plans to abolish a tax break on agricultural land (see page 2).
‘Never again’
In response to this cacophony of self-interested squawking, Reeves rashly promised, ‘businesses can be certain that we’re never going to have to do a budget like that again’. She insisted that it was an emergency measure made necessary by ‘the Tories’ dreadful mishandling of the nation’s finances, which resulted in a £22bn black hole, which is now plugged’.
A downpayment on this future generosity was banked by a promise that the public sector would have to ‘live within its means’. The means, of course, being whatever the government and the rich decide they can afford.
Labour hopes that a growth miracle will bail it out of future squabbles with the bosses. But if it doesn’t, it will have to raise taxes. How else will it find the money to blow 2.5% of GDP on the military or stump up the massive guarantees and subsidies big business will demand to secure investments in green technology and infrastructure?
Labour’s general attitude to political economy is that ‘a rising tide lifts all boats’. That’s why they march in lockstep with the bosses in the never-ending pursuit of growth. That’s why social welfare and public services are reduced to the level afforded by the share of profits the capitalists are willing to surrender – no matter how much benefit claimants, parents and the elderly may suffer.
The idea of seizing control of the decisive levers of the economy so that a government can actually have some control over what grows, where, and in whose interests is an offence to the vast majority of ex-lawyers, SPADs and Councillors packing the Labour benches.
Labour’s central political problem is that it campaigned on the basis of restoring public finance and addressing the dysfunctional state of public services, while promising not to raise taxes ‘on working people’ (VAT, NI, income tax) or, in general, on the unearned wealth and super-profits of the rich.
The party’s electoral tactic led it, and obliges it to remain on the terrain of a relatively small number of voters in constituencies threatened by Reform. This resulted in winning one of the largest majorities on the lowest share of the vote in modern history. This narrow and unstable social base, coupled with the failure to make the case for soaking the rich, is the root of Labour’s economic woes.
Reeves and Starmer’s decision to plug the gap with revenue-generating measures that raise trivial sums but anger well-organised lobbies leaves the Labour government subject to powerful pressures that it is not well placed to withstand.
The poverty of Labour’s ambition is exposed by a series of crises across the public services: in healthcare, housing, social care, prisons, water and transport. Local councils are bankrupt. Schools and other public infrastructure are literally collapsing thanks to decades of under-investment. Likewise Britain’s environmental commitments are hanging by a thread, dependent on private investors taking the bait.
The national economy is plagued by systemic problems like high unemployment, an aging and sick workforce, low investment and therefore productivity, and a layer of super-exploited precarious workers, many of them migrants, living from job to job.
All this is daunting enough before we consider the danger of an economic downturn, whether triggered by one of Donald Trump’s trade wars or by Reeves’ promise to relax regulation on the most parasitic and risky investment banking, which she now claims ‘went too far’ after 2008.
The promised £70bn additional public investment will not come close to meeting these challenges. Promises to raise no more taxes in the lifetime of this parliament, if kept, would mean an era of austerity, stagnation and decline, increasing poverty and degrading workers’ living standards. This is what the mantra of ‘partnership with business’ looks like in practice.
Resist
After 14 years of the Tories, workers can’t take the pain which Starmer, Reeves and their capitalist partners want to inflict. In the class struggle Labour will always side with the bosses in their role as representatives of the British state, which fundamentally serves capitalist interests. Labour have gone as far as they intend to go.
To make them go further, to have a hope of stemming the decline of living standards and public services will require workers’ resistance on a mass scale. The strike wave of 2022–23 marked a reawakening of union militancy, but these disputes were deliberately restrained by the timid strategy of the bureaucrats, preventing them from combining into a national political struggle.
With rank and file organisation in the unions still embryonic or non-existent, the vast majority of striking workers were powerless to prevent these sell-outs. Workers must quickly learn the lessons of these struggles.
Union activists also need to confront the bosses every time they announce cuts or closures, using the excuse that they cannot afford higher wage bills or meet environmentally necessary quotas, as in the case of the car industry. They should demand the bosses open their books and prove it.
If they are really broke, then Labour must be forced to nationalise them without compensation and place them under workers’ control. Union leaders, including left-talking ones like Sharon Graham, should be told to place these demands on Labour or make way for those who would.
The limits of Labour’s programme reveal the need for the working class to have its own political instrument, a party with a revolutionary programme in the tradition of Marx, Engles, Lenin and Trotsky as its foundation. Such a party is urgently needed to defend the working class from the ceaseless attacks of the capitalists and prepare the class for its historic task, the overthrow of private property and production for profit and its replacement by an international socialist society. Its construction is the most urgent task facing revolutionaries today.
