Signalling of Austerity 2.0 is a socioeconomic disaster

Molly Scott Cato on the Autumn budget statement today: “The chancellor focused his tax changes on earning, saying those who earn the most will make the largest contribution, but this neatly distracts attention from owning”.

House of Commons chamber
House of Commons chamber

Chamber of the House of Commons, UK Parliament (CC BY 3.0)

Molly Scott Cato

When austerity first entered the political narrative in 2010 it was just a word. We did not understand what it would mean for our public services, regional economies )where government spending is so important), or our wider society. After 12 years of spending cuts and the erosion of the public sector, we know only too well what it means. And we know that our society simply cannot take any more of it. So the signalling of Austerity 2.0 in today’s Autumn Statement is a social and economic disaster.

The first round of austerity was socially devastating but it was also economically unnecessary, just as it is unnecessary now. Nobody would be so foolish as to suggest that we can avoid the stricture of the financial markets, but money invested in our country and its people will establish the foundation for building a successful economy. Without adequate railways or broadband and with children who go to school too hungry to learn we are not building the basics for our economy to flourish.

The Green Party begins with understanding what we need to spend and then finds ways to fund it. When people are dying because ambulances don’t reach them it is obscene to argue about whether we can afford to fund the health service better. Likewise when those with life-threatening conditions cannot find space in hospital because the social care system is broken. Living in a decent society means finding a way to fund public services and the most obvious place to look right now is towards the wealthy.

The chancellor focused his tax changes on earning, saying those who earn the most will make the largest contribution, but this neatly distracts attention from owning. The easiest prize when seeking to increase tax yields is the accumulated wealth of the super-rich. That is why the Green Party is proposing a wealth tax to directly remove the financial assets of the richest 1 per cent and share them with society as a whole.

And while lowering the threshold for the payment of the highest rate of tax is welcome, again this ignores the fact that earnings from assets are taxed at a lower rate than earnings from investments. If we really want a flourishing economy of enterprise and energy then we should stop rewarding people who earn money from doing nothing. The Green Party would introduce a single tax on all income so that people who live from investments pay the same rate as those who live from work.

These proposals are what a genuinely socially just tax system would look like, so where is Labour? Of course, they are right about closing the ‘non-dom’ abuse and making more of an effort to end the scandal of corporate tax avoidance – but this would bring in less than £10 billion. And of course, we support the extension of the windfall tax on North Sea profits, although it is unlikely to bring in the £50 billion Labour claims. But the Labour Treasury team is far too timid on taxing wealth and the wealthy. In trying to position themselves as fiscally responsible, they are abandoning their working-class voters and making it impossible to adequately fund the public services they depend on.

We estimate that our policies for taxing the super-rich would boost government income by tens of billions. This would enable us to fund public services properly, including our policy of free social care. This is what health professionals see as the priority to the health service crisis that is biting earlier than ever this year. 

It has become a cliché to say that British people expect European levels of public services with US levels of taxation but it is a chimaera as mythical as Hunt’s suggestion of Singaporean efficiency. The reality is that most British people are willing to pay more in tax to fund decent public services. As citizens, we are all aware that bad government and inadequate spending have left us with public services in crisis and that this is bad for our society, and for all of us individually and collectively. The wealth that we need to fund our public services and build a strong, green economy is there: it is a political choice whether the Chancellor chooses to tax it or not.

There is no surprise that the Tories protect their wealthy funders and voters, but why are Labour forgetting their commitment to equality? By doing so they are falling into the Tory trap and we will all pay the price