Less than a week before delegates gathered for the COP26 United Nations Climate Change Conference in Glasgow, the British government’s Chancellor of the Exchequer presented the Autumn Budget and Spending Review. For all Prime Minister Boris Johnson’s declarations about saving the planet, if you follow the money then you can see where the priorities really are.
The Budget confirmed that total UK military spending for the four financial years from 2021 to 2025 will increase by £24.1bn, to £190.5bn. The Royal United Services Institute states that this is the largest short-term increase in UK military spending since the Korean War rearmament, 70 years ago. However, the government’s total planned spending on reducing the country’s carbon emissions over the same four years will be £25.6bn. This is 13% of the planned military spending.
The increase in military spending includes a 44% increase in the stockpile of nuclear weapons, which is intended to grow from 180 to 260 warheads. The United Nations says that this increase breaches international law. It ends 30 years of phased reductions in nuclear weapons since the collapse of the Soviet Union. The increased military spending also includes maintaining the two new aircraft carrier-led fleets which are to be regularly deployed in the seas off China and India. About 20% of the Royal Navy’s vessels are stationed in the Middle East.
COP26 and the Autumn Budget and Spending Review Total government planned spending on overseas aid, including finance for combatting climate changes, is to be £45.5bn for the years 2021 to 2025. This is less than 24% of the military spending. The reduction in the overseas aid budget from 0.7% of gross national income to 0.5% will amount to a reduction of over £18bn over the period 2021 to 2025. This saving is transferred to the increased military budget.
Far from saving the planet, the imperialist British ruling class and its state are preparing to wage wars on it. They do not intend to spend all this money on the military just to keep it parked in the garage. Since the end of the Second World War the British military have intervened abroad on close to 150 separate occasions. Future interventions are being planned and prepared for.
Paving the path to poverty
The Chancellor devoted more time in his 27 October Budget speech talking about cutting duties on beer and sparkling wines than he did on the need to confront the climate and environmental crises. He proceeded to cut air passenger duty on domestic flights, thereby ensuring an increase in greenhouse gas emissions. This came a week after MPs voted to allow water companies to continue pumping raw sewage into the country’s rivers and sea. According to the Environment Agency, in 2020 water companies discharged raw sewage more than 400,000 times over a period of 3.1m hours.
Chancellor Rishi Sunak, a former Goldman Sachs banker, said the government’s Budget was intended ‘to usher in a new age of optimism’ and in the name of ‘levelling up’ and creating a ‘high skill, high wage, high productivity’ economy, he ensured that millions of people, not just the poorest, will be worse off than they have been. The Institute for Fiscal Studies (IFS) summarised the trajectory set accurately: ‘The primacy of asset accumulation, and the importance of asset holdings, over the possibility of getting better off through earnings, is being maintained into a second decade.’ The transfer of value from labour to capital continues and is accelerating.
Sunak said ‘as we look forward… my goal is to reduce taxes’. This pronouncement is obligatory for a Conservative Chancellor but flies in the face of reality. Taxes will grow from 33.5% of gross domestic product (GDP) prior to the pandemic to 36.2% by 2026-27. This is the highest taxation has been as a proportion of the UK economy since the Second World War and the post-war Labour government. Total government spending is set to rise from 39.8% of GDP to 41.6% by 2026-27. Despite the government’s ideological commitment to a small state and to free markets, it depends on an increased role for the state to maintain private accumulation and capitalism. Thus far, the cost to the government of Covid-19 is £390bn. Government borrowing in 2021 is forecast to be £183bn. The only time it has been higher in real terms was in 2020 and in the two World Wars. The working class will foot the bill. According to the Institute for Public Policy Research a typical family will lose £500 a year from April 2022 due to the planned 1.25% increase in national insurance payments, an expected 5% rise in council taxes and freezing of income tax allowances.
Total government departmental spending is due to rise by over £150bn over the remainder of the parliament, which will be to May 2024, unless there is an election beforehand. Central government funding of local government will rise by 9.4% to £12.5bn in 2024-25, but this will only restore funding to 2010 levels, since when central government grants have dropped 40%. Significantly, spending on health and social care is due to rise by about 4% a year over the next three years. This will make the total spend equivalent to 8.4% of GDP by 2024-25, more than double its share in 1978-79. Demographic changes and the costs of treatments will continue to exert pressure for considerable increases in health and care spending. The Office for Budget Responsibility (OBR) reckoned an additional 5.5% of GDP will be needed by 2050. The chief executive of the Nuffield Trust responded to the Budget saying that planned spending was insufficient to address ‘the disastrous situation in social care’.
Spending on education is up by 2% a year until 2024-25. Spending per school pupil will have returned to 2010 levels by 2024. However, spending per Further Education and Sixth Form student will remain below 2010 levels. This hardly corresponds with a high skills and high productivity economy. It is reckoned that for children to catch up on lost learning due to the pandemic lockdown, some £10bn-£15bn is needed, but the total pledged is less than £5bn.
The £20 a week cut to Universal Credit will take £1,040 a year from at least 5.5 million people. The Joseph Rowntree Foundation described it as the largest single cut in welfare in British history. It will drive another half a million people into poverty. The IFS commented ‘No increase in out of work benefits for the childless unemployed for half a century leaves their living standards dramatically trailing those of the working majority.’ The British ruling class is well versed in using the whip of hunger to force people into accepting low paid jobs.
Energy bills are expected to rise by as much as 30%, forcing another half a million people into fuel poverty. The poorest households spend proportionately about seven times as much of their money on energy as the richest households and three-and-a-half times the national average. Rents are expected to increase by an average of 8.5% and the Food and Drink Federation reckons that food prices will rise 9% by Christmas 2021. Real pain is being prepared and will be inflicted: the OBR warns that inflation could soon rise to 5%. Many households will get benefit increases of 3.1% from April 2022, in line with September 2021’s inflation rate, but by April prices will be going up by significantly more than 3.1%. The impact will be equivalent to hundreds of pounds removed from households and individuals and their ability to sustain themselves. Sunak said, ‘Our plan is working’. This diabolical government and state must be confronted before more fatal damage is done.
Trevor Rayne
