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Thatcherite economics, Enoch Powell’s policies and repression

The cost-of-living crisis is no ‘accident’ – it’s deliberate policy by the Tory government, writes DIANE ABBOTT

THE media reaction to the Queen’s Speech was rather odd. Apart from a couple of die-hard Boris Johnson supporters (yes, I know), the overwhelming majority of the commentary was negative, even including The Times newspaper, as well as The Guardian and others. 

This reflects the government’s deep unpopularity and general dissatisfaction with the series of crises it has caused or contributed to.

But there was also a widespread misunderstanding, one the labour movement should not make.

This was the repeated claim that the government has “run out of ideas in tackling the cost of living crisis.” This is completely mistaken. 

So far from lacking a response to the cost-of-living crisis, this government is the principal architect of it.

Of course, the effect of war in the Ukraine has been to push up prices of key commodities globally, and almost no country is immune from that.

But the rate of inflation hit bottom in this country and many others about a year before that, essentially because of a failure to invest in people (either hiring or training) or in plant and equipment for the first two years of the pandemic.

At the same time pay was cut and hundreds of thousands dropped out of the workforce, taking early retirement, going back to education or migrating to another country. 

In some cases pay was never restored and unscrupulous employers took advantage of “fire and rehire” to lower conditions too. Many people could simply no longer afford to go to work, or it was barely worthwhile. Mainstream economists have even dubbed it the “Great Resignation.”

This explains why we have both historically low rates of unemployment and yet there are half a million fewer people in work than before the pandemic began.

All of this, from allowing “fire and rehire” to actively cutting pay, including the pay freeze in the public sector, is government policy.

In addition, the cost of living is not solely about rising prices. Taxes on ordinary people have been raised, while bankers and big business got tax cuts.

Income tax thresholds, National Insurance rates, student loan repayments have all hit incomes.

Pensioners were hit by the government reneging on its “triple-lock” pledge, which means they have been clobbered by a big cut in the real value of their pensions. 

This country is one of the very few, if not the only member of the G7 whose government has tightened fiscal policy since the pandemic began.

Others recognise that they are very far from an economic recovery and that raising taxes or cutting government spending is currently too damaging.

The government has also allowed energy prices to soar while other countries capped the rise for consumers.

At the same time, the energy companies’ profits are surging, yet ministers refuse to implement windfall taxes, although even David Cameron and George Osborne implemented them. 

These are government policies and political choices which have driven the cost-of-living crisis, and they have little or nothing to do with China or Russia, as some like to claim.

All this is to demonstrate that, far from running out of ideas on how to tackle the cost of living, this government is overwhelmingly responsible for making ordinary people worse off.

Voters understand this, which is why the Tories were given a drubbing in the local elections.

The government has plenty of ideas on how to make ordinary people pay for the crisis they did not cause. And what the Queen’s Speech actually showed is that they are going to implement even more of them.

The first big new idea is a rather tired old one in favour of business deregulation.

Decades of deregulation have not led to the super-efficient economy its advocates claimed. 

It is straight out of the Thatcherite playbook, which does not lead to stronger growth than the preceding decades, the ones with strong unions, nationalisation, higher taxes and a growing welfare state.

The cost of deregulation is also a very high one. We now routinely have raw sewage discharged into our waterways. Deregulation led directly to the banking crisis of 2007 to 2008.

Worst of all, it also led to outrages such as the Grenfell fire. The Tories know all this, but are still choosing to rush headlong down that path.

This deregulation drive will do nothing substantial to raise growth or lower inflation. Here, the outlook is extremely grim.

The former chief economist of the Bank of England tells us that high inflation could be with us for years, not months, while the Chancellor crowing about finally recovering after more than two years into the pandemic seems to have ignored the fact that GDP contracted quite sharply in March.

Authoritative commentators such as the National Institute for Economic and Social Research say that the risk of recession is coming closer.

When Boris Johnson casually announces that 90,000 civil servants’ jobs will have to go, there can be no doubt that this is an all-sided attack on working people and the poor.

It is a toxic combination of lower pay and social welfare payments, cuts to public services, higher taxes and prices, deregulation and job losses. 

It cannot be any surprise that this government is hugely unpopular, and is set become much more unpopular as time goes on.

The surprise is that anyone could believe that agreeing with this rotten government on key policies could prove popular.

Naturally, Tory strategists will be aware of the effects of these policies on their poll ratings, hence the misplaced discussion about income tax cuts now or later.

Even though people do need help on their living standards, tax cuts benefit the better-off most, and leave those on pensions or benefits unaided.

But the political response to these widespread attacks is also clear, a classic divide-and-rule tactic. We saw this disgracefully with Priti Patel’s slurs in the Queen’s Speech debate on those of us who defend the legal rights of refugees.

We already have a situation which would have pleased Enoch Powell, where the children of migrants to this country can be deported, even though they are born here. This effectively abolishes citizenship for millions at a stroke, overwhelmingly people who are Black or Asian.

At the same time the Tories intend to curb the right to protest. This is cast as preventing Extinction Rebellion’s tactics, even while the government policy is “racing towards environmental catastrophe,” according to the Office for Environmental Protection.

These divide-and-rule tactics and repressive measures have also repeatedly been used against the labour movement. If there is to be any resistance to these impositions on ordinary people, we must also strongly oppose the Tories reactionary political agenda too.

Diane Abbott MP is the member of Parliament for Hackney North and Stoke Newington.

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