A budget for the 1% – how Trussonomics is set to fail those struggling with the cost-of-living crisis?

By 03.10.22BlogOctober 11th, 2022No Comments

This budget disproportionately benefits the wealthiest, and fails to adequately protect the most vulnerable in society this winter. A blog by Harry Window

With the opulence of proceedings after the passing of the Queen set against a backdrop of impending destitution, inequality has not appeared so stark across the UK for many decades. Yet in the wake of Liz Truss’s ‘mini-budget’ it seems things may well get much worse. It’s hard not to disagree with those who argue that Truss is neglecting working people, whilst Britain’s wealthiest are laughing all the way to the bank.

Soaring household bills and spiralling inflation means millions of working households were looking towards the government to provide support over the winter months. Throughout summer, citizens expressed growing fear over a zombie government that was content to sleepwalk into a crisis with no plan on how to solve it. Now that a new Prime Minister has been announced, and a new fiscal strategy unveiled, this fear has shifted into sheer panic and horror.

The big idea to tackle inflation was a bundle of tax cuts that would disproportionately favour the rich. This regressive policy packages means that even despite the decision to keep the 45% top rate of tax, the top 5% will still receive a quarter of all cash gains. This wealthy group is still set to gain £3500, compared to just £90 on average for the poorest fifth of households. Simply, anyone who already couldn’t even begin to imagine the squeeze of a cost-of-living crisis, is now even further removed from the issue. Despite the U-turn on removing the higher rate of tax, such decisions communicate whose interests this government is going to prioritise.

Adding insult to injury is the disregard for protective legislation, which Kwasi Kwarteng looks to scrap to stimulate the economy through deregulation. At the top of the list: removing a cap on banker’s bonuses, a sector which already contributes to an extremely unequal economy. Boosting banker’s bonuses hardly seems like the post-Brexit opportunities that the government promised to many working-class voters during the 2016 referendum. The tone-deaf decision speaks volumes about who our policymakers listen to and whose interests they favour. This is exemplified further by the refusal to introduce a windfall tax to protect households against the extreme profiteering of energy companies. Instead, unsustainably high levels of borrowing will be made at the expense of the taxpayer.

This fiscal event overlooks the needs of anyone who doesn’t belong in the top 1%, at a time when real support is needed, at a time when food bank use is spiralling, and millions are facing fuel poverty this winter.

‘Trussonomics’ focuses on a need to prioritise growth instead of “looking at all economic policy through the lens of redistribution”. This view shows a complete disregard for sustained reductions in public spending over the previous years that have left public services crippled and sorely underfunded.

Yet, the most vulnerable in society will be waiting for the wealth to simply “trickle down” and help pay their bills this winter. There has been no further targeted help for vulnerable and low-income families, despite research stating that the poorest families could face bills that cost 47% of their disposable income, even after the price cap is introduced. Instead, a blanket approach will again disproportionately favour those who can already afford their bills.

The lack of concern shown by this government for those on the lowest incomes is alarming. Reducing support to benefit claimants appears to be part of the government’s plan, with the government looking to do more to ensure people “seek more work” in order to combat the cost-of-living crisis.

The problem is that in the current circumstances, people don’t “need more graft”, but instead secure employment and investment in skills and training. Workers face increasingly precarious conditions as they balance zero-hour contracts and multiple part time jobs in an increasingly exploitative gig economy. This occurs alongside failing public services, adding to the pressure as many balance the pressures of unpaid care, diminishing health and social care provision and burdening travel costs. This failure is clear when we consider that over 40% of people on universal credit are already in work, demonstrating the extremely precarious financial situation that many families find themselves in.

The reality for most workers is that neither their benefits nor their pay packets will keep pace with inflation. Only Britain’s richest 1% have seen their pay match the rate of inflation, whilst everyone else faces the cost-of-living crisis with wholly inadequate support. The gratitude that was shown to key workers throughout the pandemic has quickly dissipated, leaving behind no meaningful material gains for those who kept the country afloat during these very tough years. Instead, CEOs take home exorbitant pay packets that should be distributed more fairly across organisations in order to support employees during this time of economic turmoil.

Meanwhile, plans to relinquish trade union rights that would help secure better conditions for these workers, are already being demolished as per manifesto pledges. Yet, trade union legislation is the mechanism through which these issues can be addressed. We need to strengthen worker voice in order to better communicate issues that are faced across the organisation and improve workers’ rights.

The policies outlined in this budget are most certainly concerning, and reflect a government neglecting to prioritise the many struggling households, while arguing taxing the rich less is the key to Britain’s economic woes. The Prime Minister’s U-turn on the top rate of tax, suggests Truss and Kwarteng have failed to convince many in their party, let alone the electorate, of their strategy. But the potential for cuts to public services and benefits to fund the remaining tax cuts, means that times are only likely to get harder for most of us, unless further U-turns are in stock.