More confident now that even the unions which reject the public sector pensions deal have relegated further national strikes to an undefined possibility in late April, chancellor George Osborne may cut income tax for incomes over £150,000 in the Budget on 21 March.
Only a short time ago, even the Tories thought it too risky, politically, to cut the 50% marginal rate at time when poverty is increasing for the majority of the population at a rate outstripping the Thatcher era, while the ultra-rich are doing well and inequality is increasing sharply.
Especially risky at a time when tax credits for low-paid workers are being cut in real terms, and cuts in housing benefit and other benefits are working their way through the system.
But, on the day before the Budget, it looks as if Osborne just might do it, claiming to “balance” it by raising the income threshhold below which very low-paid workers pay no income tax.
The big story of the Budget will not be in the tax adjustments, but in the ongoing social spending cuts. Osborne is unlikely to announce significant change there, but those cuts are still working their way through.
An analysis in January by a right-wing thinktank, the Institute for Fiscal Studies, showed that so far only 12% of Osborne’s planned cuts to welfare spending and only 12% of his planned cuts to spending on public services have been implemented. There is 88% still to come.
The cuts so far have not reduced the government’s Budget deficit, because they have depressed most incomes so much as to cut tax revenue even more than spending. Their real purpose is not budget-balancing, but to “use” the crisis to push down wages, harshen work regimes, and cut social overhead costs several notches for the sake of greater profitability in a capitalist revival, some years in the future.
As the IFS reported: “Over the next few years, the UK currently has the fifth-largest planned reduction in public spending as a share of national income [among relatively well-off countries]. Only Iceland, Greece, Estonia and Ireland are planning larger cuts...
“If the current plans are delivered, spending on public services will (in real terms) be cut for seven years in a row. The UK has never previously cut this measure of spending for more than two years in a row... Over the seven years from April 2010 to March 2017, there would be a cumulative real-terms cut of 16.2%, which is considerably greater than the previous largest cut (8.7%)... from April 1975 to March 1982”.
The setbacks over pensions do not mean that the 88% of cuts to come are guaranteed safe passage. Already, though belatedly, protest over the NHS has erupted as the Health and Social Care Bill comes near to passing into law.
We demand of the union leaders simply that they use union resources to assist, nourish, publicise, and generalise every bout of working-class resistance, instead of downgrading local struggles in favour of promises of future one-day “spectaculars”.