OVER many years numerous authors have written about the role of disasters in creating conditions to implement huge attacks on living standards. These disasters are not necessarily naturally occurring. They can be the result of policy. 

A week ago the new Tory government that no-one elected deliberately created a crisis which they hope to use to lower living standards for the vast majority of people in this country. 

First they provided huge giveaways for big business and the rich. They will then go on to use this crisis of their own making to make enormous cuts in public-sector services, public-sector pay and benefits for the poor. Of course, Labour should commit to reversing every single one of these attacks.

Firstly, it is necessary to characterise accurately what they have done. This is not a usual Budget on any reasonable comparison. 

We can completely disregard the idea that this was a “Growth Plan.” When David Cameron and George Osborne introduced their 2011 Budget it was also accompanied by a “Plan for Growth.”

Like Cameron and Osborne before them, Liz Truss and Kwasi Kwarteng will produce growth in the bank balances of the already rich, and in the use of foodbanks, little else.

That 2011 Budget was widely regarded as the centrepiece of the entire austerity programme. It did not lead to growth. It ushered in what was then the slowest decade for real GDP in the period since the end of World War II. The revolving door of Tory prime ministers and chancellors since only added to those measures.

A review of the numbers involved is instructive. Over the course of five years after the 2011 Budget the official Treasury estimate was that there would be a total net “tightening” of policy worth just £80 million, which is a negligible amount in an economy on its way to producing roughly £2,000 billion per year.

The reason such a small sum could produce such a large negative effective is because net effect of combined spending and taxation numbers disguises the economic and distributional effects of those changes.  

It is now more widely understood that Cameron and Osborne were acting like Robin Hood in reverse, increasing taxes mainly paid by middle and low-income earners while cutting taxes on big business and the rich. 

In fact, in that Budget there were huge changes to both. Among the changes estimated by the Treasury was an increase in VAT revenues amounting to £13bn, and cuts to corporation tax were estimated to be almost exactly the same. In the Treasury accounting the net position was deemed to be neutral. 

But they are very far from being economically or politically neutral. They were an ideologically inspired transfer of incomes from ordinary people to big business; the bigger the profits the more the benefit to the business. 

The claim was that the cuts would lead to more business investment (those “growth plans” again) and that, eventually, we would all be better off. In fact business investment has not risen at all.

By comparison, the net sums arising from the “mini-Budget” are enormous. According to the Treasury’s estimate the total giveaway in this Budget amounts to well over £160bn. Clearly, this dwarfs the 2011 Budget.

In part this is because there is no new revenue planned, aside from the already announced windfall level on energy companies, which was essentially Labour’s idea. 

It is this part of the policy which has caused such turmoil in financial markets. These market reactions in turn will cause further hardship, as a falling pound can only add to inflationary pressures, while rising interest rates on government borrowing will feed through to higher interest costs on all borrowing including mortgages, business borrowing and credit cards.

The main complaint from media and financial commentators, including some very senior ones, is that these are “unfunded” tax giveaways. 

Socialists, the left and the wider labour movement should not make the mistake of echoing this criticism. 

The huge giveaway to big business and the rich is wrong in principle and especially at a time of collapsing living standards and failing public services for the majority of the population.

But there is a further and potentially disastrous reason why the “unfunded” nature of the cuts is not the main issue. Because the Tories could fund them either by increasing taxes on workers and the poor, or more likely, by swingeing cuts to public spending. Or both.

There have already been widespread reports that both benefits and public-sector pay are in the firing line. This is after years of austerity. This year alone 10 per cent inflation has made a huge further dent in the incomes of workers and the poor. 

If either benefits or public-sector pay are held way below the level of inflation (which is widely expected to remain high) over the next two years, then the cumulative cut in real incomes will be unprecedented. It would be much worse than even in the Thatcher period or in the Depression of the 1930s.

The scale of this assault is worth setting out in detail, because it helps to give a more accurate idea of what is required to in order to reverse it. Now is not the time for minor reforms or adjustments.

The outcome of the Labour conference should be judged in this perspective. There were some very welcome announcements both prior to and at the conference itself. Reversing the cut to the 45p higher tax rate is both popular and the right thing to do, and will yield an estimated extra £2bn a year. The renationalisation of the railways is also very welcome and popular. 

The Tory obsession with fracking is a pointless and ill-judged episode in the “culture wars” and Keir Starmer is right to pledge we will outlaw it in government.  

It is not clear how exactly the Great British Energy will operate. Starmer likened it to EDF in France. But EDF is the main provider of French energy and has recently been nationalised because it is a more efficient for the public to own producers of public goods. That still seems a preferable option, as is now accepted for rail.

All these announcements were positive and provide new and clear distance from the Tories. The key question is whether they are sufficient for the task at hand. 

Labour cannot preside over a continuation of sharply falling living standards. We need a genuine growth and prosperity plan that matches the scale of the crisis. 

We should begin with investment in green jobs for the future. And the funds are there. Not from ordinary people, but in all the tax giveaways to big business and the rich that the Tories have just made. Our ambition must be to reverse these Tory attacks in total.

Diane Abbott is Labour MP for Hackney North and Stoke Newington and served as shadow home secretary from 2016 to 2020.