The ruling Conservative Party might have reflected on its failures and offered fresher policies to rejuvenate the economy and heal social divisions

Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.

It is almost a year before the next general election and the current UK government is unpopular, as evidenced by opinion polls and by-election results. The ruling Conservative Party might have reflected on its failures and offered fresher policies to rejuvenate the economy and heal social divisions. But none of that was evident at its annual party conference where leading lights jostled for power and moved the party further to the right.

Suella Braverman, the Home Secretary, a descendant of migrants, demonised asylum seekers arriving in small boats. In her customary manner, she claimed that a ‘hurricane’ of mass migration is coming to UK. Previously she claimed that 100 million refugees are coming to the UK, followed by “likely billions more eager to come here if possible”. Home Office records show that 85,000 people arrived in the UK in small boats across the English Channel since 2018 – just 17,000 a year on average though numbers have risen to 45,000 recently. Braverman rails against the UN Refugee Convention, which was co-drafted by the UK. She wants the UK to withdraw from the European Convention on Human Rights (ECHR) and join Russia and Belarus as the only European countries outside the ECHR.

Liz Truss, who was shortest serving Prime Minister for only 45 days, demanded tax cuts for corporations and the rich, in the belief that somehow wealth will trickle-down. This theory was summed by economist JK Galbraith as the belief that “if one feeds the horse enough oats, some will pass through to the road for the sparrows.” Liz Truss’s September 2022 budget followed through with her preferred policies. It resulted in a financial crisis, interest rate hikes and bailouts of pension funds. She is still pushing the same policies. Meanwhile, sparrows have got skinnier. 14.4m Brits live in poverty. The average real wage is unchanged since 2005.

For nearly a decade, the UK had low corporation tax, interest and inflation rates, but that did not persuade private sector to invest heavily in productive assets. Brexit and trade barriers enacted by the right-wing shift in UK politics have made businesses even more reluctant to invest. In the past, the state invested directly in new industries, such as aerospace, biotechnology and information technology, especially as the private sector showed little appetite for large investment and high risks. Now the entrepreneurial state has been replaced by a profit guarantor state. It guarantees corporate profits through outsourcing and privatisation. The UK languishes in the 35thposition out of 38 OECD countries for investment in productive assets. Many hopes were pinned on state investment in infrastructure but the Prime Minister cancelled the planned high speed (HS2) railway link between Birmingham and Manchester.

Unless the masses have good purchasing power, the private sector will remain reluctant to investment. The government offered no policies for increasing real incomes, and remains wedded to austerity and real wage cuts.

Chancellor Jeremy Hunt appeased the right-wing by scapegoating the poor and sick for the UK’s economic woes and promised to cut welfare payments by possibly £4bn and force some benefit claimants to work. A major problem is that some 38% of the people on Universal Credit are in employment and would struggle to make ends meet without benefits. Reduction in benefits will increase poverty. No conference speaker offered policies for improving workers’ share of GDP, which will necessarily reduce capital’s share.

The attacks on imaginary malingerers may appease the party faithful but how will the state force people to work and with what consequences? Some 7.7m people in England (out of population of 56.5m) are waiting for a hospital appointment. That is 1 in 7 persons. Due to failure to get timely hospital treatment, some 2.5m people have long-term illness and have become economically inactive. Will Ministers override medical judgments and force people to work? They offered no policies to reduce hospital waiting lists.

Jeremy Hunt also dangled the £4bn tax cut. But the government has massively increased tax on the masses. Since 2021/22, tax free personal allowance and income tax thresholds have been frozen until 2028. Due to fiscal drag, more people are forced to pay income tax. In 2023/24, some 24.1m people are paying income tax at the basic rate of 20% on incomes between £12,571 and £50,270; 4.7m paying tax at the marginal rate of 40% on incomes between £50,271 and £125,140; and 778,000 are paying tax at the marginal rate of 45% on incomes above £125,140. This compares with 23.2m paying tax at the 20% rate in 2021/22, 3.8m paying tax at the marginal rate of 40% and 445,000 paid at the marginal rate of 45%. The personal allowance and threshold freeze was expected to raise £25.5bn additional tax revenue per year by 2027/28 though recent estimates suggest that it would hit £40bn by 2028.

The £4bn tax cut bribe will do little to improve people’s lives. In 2022, 21m adults (out of 55m) had annual income of less than £12,570 and did not pay income tax. They would not benefit from any income tax rate cut. The government could help the poorest by cutting indirect taxes. The poorest fifth pay 28.3% of their income in indirect taxes, compared to 9% for the richest fifth. So, cutting indirect taxes and shifting the cost to the richest would reduce poverty, inequality and stimulate the economy, but no conference speaker offered such policies.

The Conservative Party conference offered no hope to people suffering from 13 years of failed economic policies. Its right-wing drift is fermenting social instability. Its faith in defunct economic theories has increased hardships for millions of people.  The worst thing is that the Labour Party, the official opposition in parliament, is emulating many of the Conservative policies. Perhaps, at its own conference next week, the leadership will spell out policies that distinguish it from the Tories.

Comments are closed.