Written 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 minister in July 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 despair’ and high rates of homelessness in Britain are all 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 hit 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 an economically more precarious position, but it will also impact innovation by reducing firm incentives and funds for investment. Given that the number of startups has 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 policies. It was announced that the two-child benefits cap would not be abolished—this policy will continue to 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.
Unlike the unlucky pensioners, Fuel Minister Liz Kendall was not exempt from this benefit cut. It was exposed that Kendall, the very minister who oversaw staggering cuts to the winter fuel payments, was using £350 of taxpayer money a month to cover her fuel bills in her £4 million mansion in Notting Hill— a principled government indeed.
In addition, Britain’s economy structurally has severe productivity issues (currently its performance is below that of Germany, France, and the US) and suffers from contracting economic growth. An ambitious public investment plan on infrastructure was needed to target these economic malaises as well as to put downward pressure on inflation. However, according to the CPP, the government’s projected increase in public spending is annually £72 billion short of what is required to maintain standards of public infrastructure by 2030.
The Prop Up of the Rich
So why these policies?
The Chancellor, Rachel Reeves, explicitly declared that the Treasury would be 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 been directed disproportionately at 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 increased by 30% compared to the pre-pandemic period by taking advantage of the cost of living crisis, not increasing corporation tax has been a massive missed opportunity for raising indispensable funds. It has also been a massive disservice to justice.
In addition, ambitious policies were needed to target the increasing polarising level of wealth inequality in Britain—today 1% of the population holds more wealth compared to 70% of the population according to Oxfam.
However, the increase in capital gains tax (taxation on the selling of private assets) was not equalised to increases in income tax, setting the precedent for those earning income through wealth to continue accumulating more than those earning through labour. 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.
Given all these opportunities to raise funds, the reasoning behind not abolishing the two-child cap and cutting the winter fuel benefits seems void—these two policies would have only cost £2.7 billion.
Furthermore, Reeves has already been alluding to the adoption of PFIs (outsourcing to the private sector the financing and operating of public infrastructure). The PFI experiment proved that moving all the risk of a public project to private hands does not miraculously incentivise cost-cutting operations. If anything, it incentivises firms to inflate costs to take advantage of taxpayer money and to extract profits by making services unaffordable. Cases of collapsing walls in schools under PFIs and bankrupt NHS trusts are testaments to this fact.
Reeves has been seeking £9 billion in private finance to fund the Lower Thames Crossing project while BlackRock (the £10 trillion-valued financial institution) has already been hosted in Downing Street to discuss potential partnerships. PFIs were abolished under the Conservative Chancellor Philip Hammond in 2018—it is tragically humorous to me that now they will potentially make a return under a Labour government.
The Rise of the Right
In closing, Britain today is not only in an economically vulnerable state, but it is socially volatile given the 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 supporting the nationalisation of Thames Water. Meanwhile, on X, Tommy Robinson 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’. Look at America and Trump, Germany and Weidel, France and Le Pen, Hungary and Orban, Italy and Meloni…the list goes on. The victims of decades of global neoliberalism are falling prey to the blame game that is keeping migrants responsible for their economic grievances. The right is weaponising these grievances masterfully.
The consequences of Starmer’s policies not only have serious implications for people’s livelihoods but also fundamentally for this country’s future and state of democracy. For a vote lost by Labour today will be one gained by the extremist right-wing movement.
