By: Janset An
Today, Keir Starmer is ranked lower in his approval ratings than Rishi Sunak. Knowing this, one may find it difficult to believe that only six months ago, Starmer headed an election victory ending the 14-year rule of the Conservatives with a majority Labour parliament. So, what has changed?
The Plight of the Poor
When Starmer assumed the role of prime ministership in June 2024, he announced to the whole country that his government would be “ready to restore Britain to the service of the working people.” In the aftermath of the “age of austerity,” this resonated with many. An absolute poverty rate of 18%, increased “deaths of despairs” and high rates of homelessness are indications that a mass portion of this populace has been left neglected for years.
Yet “the working people” of Britain were let down once again in 2024 – this time by the very government that claimed to have their back.
The £25 billion increase in national insurance has been an unsubstantive burden on small businesses and employers.Companies have had to engage in layoffs, shorten working hours and consider pay cuts. It is also projected that there will be price hikes, worsening the current inflation. Not only has this policy hit “working people” , placing them in a more economically precarious position, it will also impact innovation by reducing firm incentives and funds for investment. Given that the number of startups have been declining in Britain, this burden on small businesses was the last thing the government should have inflicted.
The government also targeted the most vulnerable of society with their supposedly economising policies. It was announced the two-child benefits cap would not be abolished- this policy will keep up to 250,000 children shackled by poverty, according to the Child Action Group. The government also made a controversial cut to winter fuel payments, affecting over ten million pensioners.
According to the CPP, Labour’s projected increase in public spending is £72 billion short annually of what is required to maintain standards of public infrastructure by 2030The government then targeted the most vulnerable of the society with their economising policies. It was announced the two-child benefits cap would not be abolished- this policy will keep up to 250,000 children shackled by poverty, according to the Child Action Group. The government also made a controversial cut to winter fuel payments, affecting over ten million pensioners.
Britain’s economy has flailing productivity, below that of the likes of Germany, France and the US- this is subsequently being translated into the form of contracting economic growth
Strengthened transport networks, innovation, investment into health and education to foster a skilled and healthy workforce all contribute to increased productive forces in the economy. Public investment on infrastructure is essential to target all these malaises, as well as inflation. putting downward pressures on inflation.
The government believes the contrary, restricted spending, will achieve this aim.A new transformative economic plan was needed in October 2024: targeting the richest 1% in this country that holds more wealth than 70% of the population.
The Prop Up of the Rich
So why these policies?
The chancellor, Rachel Reeves, has explicitly announced that the Treasury is committed to balancing the budget by 2029-2030. Plus, the government did warn of “unpopular decisions” that would have to be taken to cover the (now overly regurgitated) £22 billion “black hole” in government finances.
However, the government’s commitment to this new age of fiscal frugality is not consistent across the board. When the budget is more closely analysed, one discovers that the “unpopular decisions” in question have come at the sole expense of low and middle-income households.
Corporate tax currently remains at 25%, a 0% difference in the rate compared to the Sunak ministry. Given that companies’ profit margins have increased by 30% compared to the pre pandemic period because of the cost of living crisis, not increasing corporation tax has been a massive miss of indispensable funds. What about a wealth tax that could potentially raise £24 billion a year? Despite widespread calls from dozens of Labour MPs and unanimous support for this tax from the Trade Union Congress, this wealth tax is non-existent in the budget.
In Britain today, 1% of the population holds more wealth compared to 70% of the population. Ambitious policies were needed to target this polarising level of wealth inequality. However, the increase in capital gains tax was also not equalised to the increase in income tax leaving those earning income through wealth accumulating more than those earning through labour.
Given these opportunities to raise funds, the reasonings behind not abolishing the two-child cap and cutting the winter fuels seem void- these two policies would have only cost £2.7 billion.
Furthermore, the chancellor Rachel Reeves has already been alluding to the adoption of PFIs (outsourching the financing, operating, maintaining of public infrastructure to the private sector). Reeves has been seeking £9 billion in private finance to fund the Lower Thames Crossing project. It has also been reported that the new government has been cosy with the £10 trillion valued financial institution, BlackRock, hosting them in Downing Street to discuss potential partnerships. The PFI experiment proved that privatising public infrastructure only incentivised inflating costs covered by taxpayer money rather than increased efficiency and affordability. Bankrupt NHS trusts and collapsing walls in schools motivated the then Conservative chancellor Philip Hammond in 2018 to abolish them. It is tragically humorous to me that now they will potentially make a return under a Labour government.
Aside from all these economic misdirections the government’s reputation has already been tainted by scandals in its early days. Liz Kendall, the very fuel minister that oversaw staggering cuts to the winter fuel payments, was exposed to be using £350 of taxpayer money a month to cover her fuel bills in her £4 million valued mansion in Notting Hill. Meanwhile, Starmer was in the midst of the freebies controversy as it was uncovered, he had accepted more than £100,000 worth of gifts.The government’s out-of-touch hypocrisy, is slowly being realised by the public.
The Rise of the Right
In closing, Britain today is not only in an economically vulnerable state, it is also socially volatile given the slow but concerning rise of the right. Only a few months ago, mosques and hotels housing migrants were attacked by violent racist mobs in the August riots. The right-wing media outlet GB News now has more viewership than Sky News, and the Reform party under Nigel Farage is growing in popularity through its strategic adoption of left wing economic policies, such as adopting the nationalisation of Thames Water. Meanwhile on X, Tommy Robinsone has gained Elon Musk’s public endorsement to his 213 million followers.
What is happening in Britain is not isolated to Britain only. It is part of a global trend of the decline of the Centre Left in the midst of the rise of the right. Look at America and Trump, Germany and Weidel, France and Le Pen, Hungary and Orban…the list goes on. Neoliberalism has spread globally and its victims are falling prey to the blame game that is keeping migrants responsible for their economic grievances. The right is weaponising these grievances masterfully.
Therefore, the consequences of Starmer’s policies not only have serious implications for people’s livelihood and their feelings of neglect but also fundamentally for this country’s future. For a vote lost by Labour today will be one gained by the exremist right wing movement.
Government tendency to govern on behalf of corporate interests under the cover of increased efficiency and economic growth has been the same unchanging story for decades since the neoliberal doctrine was first implemented in Britain by Thatcher in the 1980s and continued by the conservatives in the past decade.The only difference today is that it is done in a shade of red rather than blue