The government claims that to pay inflation-busting increases to public sector workers would cost an extra £28 billion: but BBC Newsnight’s economics editor Ben Chu argues the cost would be £10-£15 billion.
Either way the cost is not the main obstacle: the main problem is the government refusal to fund the NHS at a sustainable level, because their priority since 2010 has been to keep taxes low for the wealthiest few and the corporations, which are coining in ever-increasing profits.
Chancellor Jeremy Hunt has said he accepts that the NHS is “on the brink of collapse” and admitted there are “massive pressures in the NHS … with doctors, nurses on the frontline frankly under unbearable pressure”. But he still argues more real terms cuts in the NHS are needed to help fix the economy that has been broken by years of austerity since 2010.
But Hunt has agreed to scrap the cap on bankers’ bonuses and just cut the bank surcharge from 8% to 3% while banks are making windfall profits on massive £950bn of reserves held at the Bank of England (because of increased bank rate from circa 0% to 3% and rising). Hunt has also refused to levy windfall taxes on oil and energy companies that are ripping off the wider public and reducing millions to poverty.
And while demanding NHS savings, Hunt does not appear to be concerned to reclaim the billions of pounds lost to fraud during the Covid pandemic: HM Revenue and Customs’ Covid fraud taskforce is being shut down – abandoning efforts to track the estimated £4.5 billion that was lost to fraud and error from the furlough scheme, help for the self-employed and Eat Out To Help Out.
The government is silent on up to £37 billion that was wasted on the ineffective privatised ‘test and trace’ system, an estimated £17bn lost on “bounce back loans”, and ministers have written off £8.7 billion spent on contracts with Tory donors and cronies for PPE that can’t be used or was bought at inflated prices.
Astonishingly, every year the HMRC admits to failing to collect at least £35bn due in taxes, around £15bn of which is down to fraud: but HMRC staffing has been cut, making life easier for the tax-dodgers.
Some people do very nicely from all this.
Unite the union has shown that profit margins for the UK’s biggest listed companies were 73% higher in 2021 than pre-pandemic levels in 2019. Even removing energy companies from the tally, average profit margins still jumped an astonishing 52%. Across the UK company profits jumped 11.74% in the six months from October 2021 to March 2022. This increase in UK wide company profits – not Putin’s war in Ukraine – is responsible for 58.7% of inflation in the last half year.
While real terms pay for nurses, NHS staff, public and private sector workers has fallen since 2010, the number of billionaires in Britain has more than trebled from 53 in 2010 to 177 at the latest count, while the number of millionaires has mushroomed more than five-fold from 508,000 to a staggering 2.85 million.
The wealth of the richest 250 people in the UK continued to grow before and during the pandemic, and has risen another 8% in the last year to £711 billion, according to the Sunday Times Rich List: and much of this wealth escapes tax altogether.
Labour MP Richard Burgon has suggested four measures that could raise an additional £40bn a year to fund public services without taxing anyone earning under £80,000 per year:
- scrap non-dom tax status (raising £3bn);
- a 1% tax on wealth above £5 million (£10bn);
- a 45% tax on pay above £80,000 and 50% tax on pay above £125,000 (£6bn);
- and tax dividends and capital gains at the same rates as income tax (£21bn).
It’s hard to see why this approach should not be implemented to get the wealthiest who have gained most to pay a fairer share towards public services. It’s more than enough to meet the pay demands of health workers, teachers, university staff and others fighting now, increase funding for NHS and social care – and to increase Universal Credit and other benefits to ensure more support for the poorest and lowest paid.
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