From Socialist Review, No. 170, December 1993.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Archive.
Marked up by Einde O’Callaghan for ETOL.
The calm before the storm. The weeks leading up to budget day on 30 November had a slightly unreal air. There has probably never been so much advance speculation about a budget. Whatever the final contents of Kenneth Clarke’s speech – we go to press before it is delivered – this budget is certain to create a political row with wide ramifications.
It will, firstly, almost certainly increase taxation. Norman Lamont’s April budget is best remembered for slapping VAT on fuel (at 8 percent in April 1994 and 17.5 percent the following year). In addition, he planned to cut mortgage tax relief and raise National Insurance contributions (the equivalent of 1p in the pound on income tax).
The total increase in taxation will be £6 billion in 1994 and £10 billion in 1995. That is before any further tax increases to be announced.
Outcry at the imposition of VAT on fuel has been as great as the initial outcry against the poll tax. Even the electricity companies have written to the government complaining that if customers refuse to pay the tax, disconnections will be extremely difficult and politically embarrassing. All the signs are that this opposition will grow, especially since the government compensation package for pensioners and those on benefits is likely to be miserly and inadequate.
But there may be even greater anger next April when most people find their pay packets substantially reduced. A married man on £10,000 a year with a £30,000 mortgage will be £4.94 a week worse off, before VAT on fuel is taken into account, according to a Labour Party survey.
All this is in direct contravention to Tory election policies, which were centred on scare mongering that Labour was the party of high taxation and promises to reduce taxes. Those promises were always based on a lie (the burden of taxation rose overall during the Thatcher years, despite cuts in income tax). But now the row over taxation is one of the main issues threatening to blow the Tory Party apart.
The argument about whether to tax or not to tax, and how far to cut public spending, has raged within the cabinet and among Tory MPs over the past months. The right wing ‘bastards’ – Howard, Portillo, Lilley and Redwood – are adamant that taxation should fall or at least remain constant. To help cut the public sector borrowing deficit, they are demanding swingeing cuts in benefits for the unemployed, single parents, and the sick and invalids. Portillo has even floated getting rid of the universal state pension.
Their opponents in the cabinet are horrified. They have little inkling of the real levels of dissatisfaction which exist against the government, but they recognise that an all out assault on the welfare state will be deeply unpopular and probably unworkable.
In addition, they fear that the right wingers have got the upper hand in John Major’s cabinet since the Tory Party conference two months ago. Then the right used the most crude racism and populism to stamp its authority on the conference and marginalise its opponents.
Juvenile criminals, single parents and foreigners were to blame for the ills of society. John Major – weak and vacillating as ever – has echoed some of these sentiments. His ‘back to basics’ campaign takes at least some of its narrow nationalism and bigotry from the agenda of the Tory right. While some of this may have a temporary appeal to some voters the Tories want to woo back to their fold, for the most part it appeals only to the converted, and it hardly papers over the cracks in society which are becoming more and more apparent.
Fiddling while Rome burns perhaps most aptly sums it up. All the big problems of British capitalism – welfare spending, unemployment, the decline of manufacturing industry, the decay of infrastructure – are ignored or tinkered with, while measures which are at best cosmetic are increasingly put forward as the new panacea.
The result is a Tory government even more unpopular than two months ago (one recent poll showed it 20 points behind Labour), and still wracked with divisions. As the Independent on Sunday reported before the budget:
‘One minister last week confided his fear that the next general election will be lost because of the lurch rightward. The new approach, even in its back-to-basics form, is miles away from the one which delivered the Tory victory at the last general election, the minister argued. Then, the prime minister articulated a softer, more human version of Thatcherism; now his party seems more Thatcherite than ever.’
Interestingly, the main counter attack – from Michael Heseltine – took place at the conference of the Confederation of British Industry, most of whose delegates were clearly unhappy with the anti-European stance of the Tory Party conference.
Britain’s rulers have lost their way since the heyday of Thatcherism, when they really believed recession and stagnation had become things of the past. Now, they can see no clear strategy ahead, as reflected by the uncertainty and confusion dominating every level of the Tory Party.
The fortunes of the government look very shaky in the coming months. Tory splits are unlikely to be healed by the budget. Signs that economic recovery is under way are few. And the protests over VAT can turn into an explosion, as the full scale of the attacks across the whole of the working class become clear. As a former Tory minister said recently about the back to basics campaign, ‘it may divert attention, but the underlying splits are all there.’
There has never been a better time to fight, and more and more groups of workers are beginning – despite the timidity of the union and Labour leaders – to come to this conclusion.
Last updated: 1 March 2017