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Editorial: Britain's low tax, low spend political consensus is built on lies

THE Sunday Times Rich List, like the Unite union’s latest study on corporate profiteering, exposes the lie that services are crumbling and wages being held down because money is short.

Tax Justice UK’s finding that most people would vote for a party promising higher taxes on big business to fund increased public spending exposes another lie — that voters think being “fiscally responsible” means taxing and spending less.

This is an election year, and Labour set out this week its “six fixes” for a broken country. But Labour both swallows and constantly regurgitates both lies: which risks condemning us to another decade of falling living standards.

Keir Starmer never shuts up about how he has changed the Labour Party. But it is not on the brink of power because of him, let alone because it has jettisoned almost the whole of the redistributive programme it put to the people in 2017 and 2019.

Labour’s poll lead is because after 14 years of savage cuts to public services, they are visibly coming apart at the seams, and because a 16-year wage squeeze since the bankers wrecked the economy has combined with a couple of years of runaway inflation to make almost every household in Britain feel poorer.

That is its good fortune today, because no government can remain popular while inflicting such pain on the public. But it will be its bad fortune tomorrow unless it can address those problems.

We must be blunt: with its current policies, it can’t. 

Rachel Reeves’s plan is to hold down spending, indeed to mirror Tory spending limits exactly, on the basis that this will somehow encourage growth. 

It is the same plan that David Cameron and George Osborne mis-sold to the public as “austerity” in the early 2010s, and it will have the same result, worse public services and lower living standards. Labour will not fix our schools, or fill the NHS vacancies, or restore real-terms pay to 2008 levels. 

Still less does Labour have answers to the big questions, climate change and a planet edging closer to world war. Its refusal to invest has killed off its so-called Green Prosperity Plan. There is not one foreign policy issue on which it differs noticeably from the Tories: it is even starting to mimic their international alignment with the insurgent hard right. Today shadow foreign secretary David Lammy pointedly rejected London Mayor Sadiq Khan’s call for Labour to criticise US presidential candidate Donald Trump and praised Trump’s demand for higher European military spending.

Hoping even for Blair-era style improvements in services and pay rates is a lost cause. Starmer will not inherit a growing economy as Blair did, and Blair’s wheezes to increase investment in the short term, such as PFI deals for hospitals and schools, are a major cause of their financial troubles today.

Most unions enthusiastically backed Labour’s 2017 and 2019 manifestos, which through renationalisation of key sectors and higher taxes on the richest would have begun to undo the damage of four decades of neoliberal policy.

Since then, workers have become more militant as the surge in industrial action shows. This should give us confidence to demand more, not less.

That confidence should be buoyed by the evidence that inequality is a public concern and, as we discovered in 2017, public ownership is a votewinner. 

With Big Oil and the big banks posting eye-watering profits each quarter, with shareholder dividends up 20 per cent on five years ago, everyone can see through our rulers’ lies: Britain is awash with money.

But that money will not fund services or pay rises unless it is taken back from the greedy few. Reeves’s promise of growth is a mirage: if their class keeps winning, ours will always lose.

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