AFTER months in which Labour argued that such is the dire state of the economy that Tory spending limits must be maintained, the Chancellor of the Exchequer now says that further cuts in public expenditure are needed.
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The question raised by any talk about varying the structure of taxation is where taxes fall. The richest 10 per cent of families hold 43 per cent of all wealth. The bottom 50 per cent — and be sure that this includes the greater proportion of people who see themselves as working class — possess less than 10 per cent of wealth.
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When the overwhelming majority of voters, including Tory voters, see public ownership of rail, mail, water and energy as desirable this is not simply a yearning for the more efficient delivery of these services and utilities than private ownership is able to provide. More, it is an expression of a clear understanding that revenues from these myriad transactions should not be privately appropriated but applied to the common good.
The present Labour administration has, with rare exceptions, ruled out the recovery into public ownership of privatised sectors and, less performatively than Gordon Brown in his day but no less systematically, has assured the corporate world that not only are the foundations of private ownership safe but that Labour, even more than its Tory predecessors, holds appeasing the bond markets a central part of its economic strategy. Hence the cuts announced today.
Reeves’s dilemma is highlighted by the necessity to find £1 billion to fund the juniors doctors’ pay increase; something similar for the teachers and a backlog of other public-sector pay claims.
Under this system spending is always about priorities. But there is money about. She is already committed by Starmer’s diktat to find £57.1bn in defence spending in 2024-25 which is a 4.5 per cent increase in real terms. No cuts there!
A bigger source of revenue would result from taxing wealth at the same level as income by raising the capital gains and dividend tax rates to the level at which workers pay on their wages.
An even bigger windfall would result from a socialist economy in which all rents, interest and profits arising from human economic activity were held in common rather than being privately acquired.