Tory chancellor Rishi Sunak was set to deliver his summer statement on Wednesday this week. It was expected to include a raft of measures in an attempt to prop up the British economy.
It was widely reported that he would announce a cut in the 20 percent VAT tax rate to encourage spending. In 2008, the Labour-run treasury slashed the VAT rate from 17.5 percent to 15 percent, driving up retail sales by about 1 percent.
Cutting VAT helps poorer people less than the better-off. People on low incomes spend more of their money on basic goods that are exempt from VAT.
And Sunak is under pressure to put into action Boris Johnson’s “opportunity guarantee” for young people.
The prime minister boasted last week that the Tories would set up a scheme offering every young person the chance of an apprenticeship or an in-work placement.
This is likely to act as another cheap labour scheme.
Bosses are lobbying Sunak to slash national insurance contributions—either by raising the threshold or exempting some groups of workers. Employers are also fighting for cuts to business rates—which are calculated on the value of company buildings—and are arguing for payment holidays.
The rates, which net the treasury around £30 billion a year, are due for a “fundamental review” in the autumn, but bosses are asking to bring the changes in early.
Despite talk of the market being king, big business has demanded unprecedented levels of government intervention, particularly in industries heavily hit by the pandemic.
For some sectors, there’s no end to the lockdown measures that has seen profits tumble.
On Sunday, the government announced a £1.57 billion bailout package for the arts and heritage businesses.
Yet the money is too little too late. Theatres are already sacking workers and closing for good following almost four months without audiences.
The scale of the crisis is forcing the Tories to cough up cash. Although they appear impressive, these billions don’t begin to address the long-term impacts of the pandemic.
Tens of thousands of workers have lost their jobs in recent weeks and around 2.8 million people are applying for unemployment benefits—double than at the beginning of the pandemic.
Sunak gave £7 billion to the welfare system as hundreds of thousands of people signed on for Universal Credit in an attempt to address the increased demand.
But the Universal Credit system should be stopped and replaced with one that doesn’t plunge people into poverty.
Government inaction, limited measures to prioritise the needs of the bosses, and a backdrop of a decade of austerity all paint a miserable picture for working class people.
Jonathan Reynolds, the shadow work and pensions secretary has blasted the government response.
“Nothing we’ve seen so far suggests that their response matches the gravity of the situation,” he said.”
Some 9.2 million workers are now relying on the government’s furlough scheme, which is set to end in October. Recent analysis from the Institute for Employment Studies says that rates of unemployment could rise to 4 or 5 million without intervention.
Yet instead of seriously intervening in this crisis, the government is rolling back the furlough scheme which is keeping many working class people afloat.
The cuts are already being felt across the retail and hospitality sectors. Some 5,000 workers were axed from Upper Crust and Ritazza cafes,
Pret A Manger bosses have warned of 1,000 jobs cuts despite refusing to pay its rent for the next quarter and receiving £90 million in emergency funding from banks.
Even though the bosses are receiving handouts from governments and banks, it is workers who pay for the crisis.
Workers’ jobs are cut, wages slashed and conditions attacked so bosses can continue to sit on vast reserves of capital. In 2008 the global financial crisis kickstarted a decade of brutal Tory austerity that has seen the rich get richer while everybody else gets poorer.
We can’t pay for their crisis again—now is the time to fight.