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Wealth Tax: Labour says No

by Nikola (Workers GB Writers Group)

The UK is in the grip of a wealth inequality pandemic. As workers face, “the longest wage squeeze since Napoleonic times,” according to the TUC in August 2022, the Labour Party’s shadow chancellor Rachel Reeves, has confirmed they will not be levying any form of wealth tax on the rich, whilst according to the FT vowing to rigorously, “holding down public spending.”

Following the government’s disastrous handling of COVID and the collective West’s proxy war against Russia in Ukraine, resulting in rocketing energy and food prices, inflation has taken a sledgehammer to the incomes of working class households where, according to Robert Palmer, executive director at Tax Justice UK, under circumstances, “it was clear that wealth inequality was entrenched.”

The effects of inflation punish the working class. According to the Resolution Foundation Think Tank: “As lower income households spend more of their budgets on energy bills and food their effective inflation rate is higher than average: 12.5% for the poorest 10th of households compared with 9.6% for the richest 10%.”

Tens of thousands of workers such as the rail, bus, and post office workers, teachers, nurses and junior doctors have taken, or are in the midst of, industrial action in an attempt to protect the value of their pay, jobs and standard of living from the erosive effects of high inflation. Scolded by a government, who have allowed the most obscene unfettered profiteering by corporate capitalism, daubed “greedflation” warning the unions their pay demands are unreasonable and a key driver of inflation. However, according to The Office for National Statistics “annual average regular pay growth for the public sector was 6.2% in April to June 2023” when the Consumer Price Index (CPI) was at 8.7% and whilst the national average pay increase was around 6% when inflation was at 11.1% in October 2022.

Despite inflation’s steady decline now at around 6%, at its height, food prices were outstripping and continue to outstrip inflation with costs rising to around 17%, some essentials such as eggs and dairy are at 22%. The Heinz group who must have had an attack of dyscalculia at the time increased the price of tomato soup by 78%. Shurely shome mishtake?

The Mail on Sunday in January 2023 revealed that “seven of the biggest consumer businesses are about to unveil combined profits of £50 billion for 2022 – £2 billion more than the previous year… Of the firms making the total £50 billion global profits, Mondelez (the US conglomerate which owns Cadbury chocolate and Philadelphia cheese), Danone, Nestle, Procter & Gamble and Reckitt Benckiser (which owns Dettol, Harpic, Finish and more) are expected to say last year’s profit was significantly greater than in 2021.”

Not content with piling on the misery, the Bank of England employs the mechanism of raising interest rates, the fiscal equivalent of the rack, to counter inflationary pressures. Currently at 5.25%, hard pressed homeowners have shouldered 13 consecutive interest rate rises in less than two years with a forecast of more to come. A rise of 3% an average mortgage represents another £200 a month households need to conjure up on top of everything else. Renters do not escape this vicious fiscal cycle either as landlords pass on the interest rate rise to their tenants to mitigate against their financial losses.

Energy prices are due to fall by an average of around £250 a year following Ofgem’s reduction in the energy price cap, however this still leaves millions of households paying bills hundreds of pounds higher than in the winter of 2021. The gas and electricity price hikes were the largest ever recorded in the UK going back to 1988 and 1970 for April 2022 and October 2022 respectively.

The average bill in April 2022 jumped from £1,277 to around £2,000 trebling the number of households in ‘fuel stress’, defined as spending more than 10% of household income on energy. Meanwhile Reuters on August 30 reported: “Britain’s gas producers and electricity generators could make excess profits of up to 170 billion pounds ($198 billion) over the next two years, Bloomberg News reported on Tuesday, citing unpublished analysis that the finance ministry disputed.”

Many lower income households are reliant on a weekly or monthly income, many living pay cheque to pay cheque, more exposed to inflation eroding the value and purchasing power of their pay, cutting back on essentials like clothing, heating and food, one meal a day a necessity rather than an faddy diet option. The well-off however, counter the erosive effects of inflation on their wealth by running off to their asset managers and stock brokers who scour the globe for investment opportunities that will hold their value and protect their wealth over the long term.

The 2021 COVID pandemic in the UK created a record number of billionaires, 171 in total, up 24 from the previous year. However for many working-class families the picture was not as rosy. According to the publication This Is Money of December 2021 reported: “An extra 300,000 people have fallen into poverty which is defined in terms of families whose income is 60% below the median UK income… those with less secure employment were more likely to fall through the cracks, leading to more inequality … those in Yorkshire and the Humber, and the North-West and Merseyside saw their real incomes fall by around 15 times as much as in London.”

The Trussell Trust reported between April 2022 and March 2023, 760,000 people, the equivalent of the population of cities like Newcastle, Sheffield and Nottingham were using a food bank for the first time, whilst a TUC analysis showed workers were “on course for £4,000 real wage drop over the next three years.” As we trundled toward the next general election the situation couldn’t look more bleak.

In July of this year, Keir Starmer was interviewed on BBC’s Sunday with Laura Kuenssberg. Starmer kicked off the interview in a move worthy of the late great Pelé, who, after some skilful dribbling, deftly kicked the can of junior doctors’ pay down the road. He continued to advise that before investing in public services, the economy needed to grow, explaining, with a strong whiff of Eau De Tory Toilette, “…the first rule of politics of government has to be responsible economics and so we will start from that place and we will reform…” The R word, liberally spread throughout the interview, rarely ends well for working class people.

As the interview continued he talked about “tough decisions in relation to reform,” however we can be certain he didn’t mean this to encompass the nationalisation of the Royal Mail, public transport, the water monopolies which has 68% support amongst conservative voters or energy that has 62% of conservative voters. In the largest ever poll on nationalisation conducted by Survation, We Own It reported: “Privatisation has failed. Our new poll shows a majority of the UK public support public ownership of key utilities like energy and water – including Conservative voters.”

Starmer swatted away the question of unfreezing housing benefits that would provide much needed financial assistance to vulnerable renters facing spiralling rental costs by saying he wasn’t going to write the manifesto on the show. However we clearly saw the implied message within the Labour manifesto, no jam tomorrow, or the next day ad infinitum.

According to The Equality Trust “Compared to other developed countries the UK has a very unequal distribution of income…” adding “By 2023, the richest 50 families in the UK held more wealth than half of the UK population, comprising 33.5 million people. If the wealth of the super rich continues to grow at the rate it has been, by 2035, the wealth of the richest 200 families will be larger than the whole UK GDP.

The relationship between the Labour Party, the wealthy and corporate capitalism is like office flirtation that becomes a full blown secret affair that everyone knows about, they’ve been on a couple of dates, done the deed but it’s British people who get shafted.

Labour have demonstrated they are running scared of their own legacy by refusing to levy any form of taxation on the rich, allowing them to flourish, whilst forming policies designed to deflect Tory attacks in the run up to the 2024 general election. Instead of redressing some of most egregious examples of corporate capitalism’s profiteering through taxation they are implicitly condoning this feeding frenzy on the basics necessities needed to sustain life: food, shelter and heat during the winter months, the worst effects of which, are foisted on their voter base. Instead they have donned the mantle of eager custodians of Tory greedanomics.

George Galloway has called Labour and the Tories two cheeks of the same backside. With a general election looming we should keep in mind, we teach those who govern or aspire to govern us, by what we tolerate from them.

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