"The policies outlined in the King’s Speech deepen repression and social divisions, and do not provide a springboard for economic rejuvenation."

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.

This week King Charles III opened the UK parliament’s latest session, possibly the last before next year’s general election. The King’s Speech, written by the Conservative government, contained no surprises as the government is continuing with its dead-end and repressive policies.

The briefing notes accompanying the King’s Speech are full of spin and aspirations but short on policy details. The government is chasing sustained economic growth, which has been elusive for the last 13 years. A key requirement for this is investment and good disposable income for the masses. The government has failed on both counts. The OECD’s data shows that despite low inflation, corporation tax and interest rates since 2010 the UK is almost the lowest investor in productive assets. It is ranked 35th out of 38 OECD countries.

There are two major reasons for this and neither is addressed in the King’s Speech. Firstly, until the late 1970s the UK state directly invested in emerging technologies, such as aerospace, biotechnology and information technology, especially as the private sector showed little appetite for long-term risks. However, the entrepreneurial state has been replaced by one which guarantees corporate profits as evidenced by privatisation, outsourcing and massive corporate subsidies. In recent years, it has bailed out banks and energy companies and handed £895bn of quantitative easing to speculators. In the last five years, it has handed £45bn subsidy to privatised rail companies. Yet the government skimps on public investment. Investment into High Speed railway (HS2) project has been axed. The King’s Speech promises to “reduce public sector debt” and there is nothing to suggest that the state would resume its entrepreneurial role.

Secondly, low disposable income of the masses is a disincentive for long-term investment by the private sector. Who will buy goods and services? With government led austerity and drive to cut wages, the average real pay is at the same level as 17 years ago. UK workers have missed out on average of £17,000 in real pay increases. Some 14.4m Britons live in poverty. One in twenty people (3.8m out of 67.3m) are unable to afford food or other basics, and half of these have a weekly income of less than £85. Such mass exclusion from social consumption is counterproductive. There is nothing redistributive in the King’s Speech.

In its briefing notes the government crows about tackling inflation, but its policies have squeezed low/middle income families. The fall in inflation, as measured by consumer price index, from 11.1% in October 2022 to 6.7% in September 2023 is due to the arithmetic of inflation rather than government policies.

Inflation is caused by corporate profiteering and not by wage rises. For example, energy sector companies have doubled and trebled their profits. Supermarkets have doubled their profits since 2019. In the first half of 2022, profit margins at FTSE350 companies were 89% higher compared 2019. The four global giant agribusiness corporations (ADM, Bunge, Cargill and Louis Dreyfus) saw profits increased by 255%. Semiconductor manufacturers increased profits by 96%, compared to 2019; shipping giants reported a 20,650% increase and road freighters reported a 149% increase. The King’s Speech has no policies for curbing profiteering.

In 2022, inflation spiked because of profiteering. About six months ago energy prices, a key driver of inflation, began to decrease. This reduced the inflationary pressures in other sectors as well. By September 2023, the earlier high energy, food, goods and services prices dropped out of the rolling twelve-month inflation index. They were replaced by the new lower tariffs, resulting in lower inflation rate.

The government’s main tool for tackling inflation has been higher interest rates, which has squeezed low/middle income families and made economic rejuvenation more difficult. Interest rates have increased from 0.10% in March 2020 to 5.25% in August 2023. People have been forced to hand more of their wealth to banks. In the first nine months of 2023, big banks (Lloyds, Barclays, HSBC and Natwest) made pre-tax profits of £41bn, compared to £23bn for the same period in 2022. Huge bank profits have increased business and household costs, but have enriched bank shareholders and executives. The policy has increased inequalities, squeezed economic growth and had little or no effect on reducing inflation.

The King’s Speech heralds further repression of worker rights, and erosion of pay and job security. Following the Strikes (Minimum Service Levels) Act 2023, the Transport Secretary has decided that in a strike, rail companies must operate at least 40% of the timetabled service. Even 40% of the trains cannot run without 100% security, ticketing, platform, cleaning, signalling, systems, IT and other staff. So despite a lawful ballot, workers will be forced to work. Train companies have failed to train sufficient number of drivers and rely upon them to work on their off-duty days. How will they be forced be work. What about those who are sick?

The enforcement of the minimum service levels is toxic. Under the Act, Ministers communicate the minimum service levels (e.g. 40%) to employers who then decide the name, number and variety of workers needed to meet that requirement. Employers submit the list of required employees to trade unions who in turn are required to ensure that the named workers, which could include local trade union officials, cross the picket-line and deliver the required service. Any worker refusing to do so faces immediate sack without compensation or right of appeal. Trade unions refusing to co-operate can be sued by employers for damages.

The government policy is contrary to article 11 of the European Convention on Human Rights (ECHR), which guarantees freedom of association for workers. Ministers have indicated their readiness to withdraw from the ECHR Prolonged legal battles would be inevitable. Industrial relations would be damaged and millions of workers would be forced to accept low wages and job insecurity because taking effective strike action would become almost impossible. Almost 250 years ago, philosopher Adam Smith said: “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable”. Such basic wisdom is lost on the government.

The policies outlined in the King’s Speech deepen repression and social divisions, and do not provide a springboard for economic rejuvenation.

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