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A new era of austerity is a political choice that must be rejected


4 min read

A new era of austerity is dawning. We’ll be told it’s for our own good. Don’t be fooled again.

In 2010, David Cameron sold austerity as an inevitable response to the 2008 financial crash. The human cost of those decisions is still felt today – 300,000 excess deaths, zombie public services and the quilt of our social fabric ripped apart.

Now, in 2022, the same lie is peddled again. Rishi Sunak and Jeremy Hunt lecture us that “difficult decisions” – code for cuts to public services and higher taxes for ordinary people – are necessary to respond to the repercussions of Russia’s assault on Ukraine and the aftermaths of Covid. And Brexit, even if Tory omerta means the obvious is unmentionable.

There is nothing left for the Treasury to hack from the body of our public services

Their purported aim is to restore economic credibility – credibility which was demolished by the Conservatives themselves. But no veneer of fiscal responsibility can hide the fact that this will be a continuation of a calculated austerity agenda.

Even if the Chancellor sticks to current budgets, this will mean real term cuts driven by inflation, and below inflation public sector pay deals.

Welsh government has already estimated that the value of their three-year-budget may well be £4bn less in real terms than expected.

Public sector budgets have been cut through the flesh and into the bone. There is nothing left for the Treasury to hack from the body of our public services. These services are our common good – what protects the weakest protects us all. Surely after a worldwide pandemic we now understand that individual liberty is meaningless when society fails to protect everyone.

As the Prime Minister himself says, the United Kingdom is facing a “profound economic crisis”. The answer cannot be more of the same failed formula.

Ordinary people should not be forced to pick up the bill. In the UK, the financial wealth held by the richest 1 per cent of households is greater than that held by 80 per cent of the population.

Oil company BP reported obscene profits of £7bn in the third quarter. Shell reported its second highest quarterly profit on record but did not contribute to the UK's windfall tax on energy firms.

Meanwhile, latest figures show that 34 per cent of children in Wales are living in poverty, a figure which will only get worse with austerity.

There is no lack of wealth in the UK – but our tax system allows wealthy sociopaths to hold back their dues to the common good. That must change.

Tomorrow, I will present the Tax Reform Commission Bill – which seeks to assess the impact of the tax system and make recommendations for reform.

Why not extend the same National Insurance Contribution rates that are applied to earnings from employment to income that is received from holding investments – such as dividends, rent, and interest on savings? That could raise an additional £8.6bn every year.

Why not look at reforming National Insurance? Contributions could be equalised for higher earners, with academics at CAGE Research Centre suggesting that a full equalisation could raise up to £19.7bn.

Why not implement an expanded and backdated windfall tax? The global norm of profit taxation on oil and gas is 70 per cent – in Norway it is 78 per cent. The UK government could choose to give households certainty for when current energy support packages come to an end in April.

The government could also choose to end the fundamental unfairness of the non-dom status which allows a select few to live in the UK but receive special tax treatment. Abolishing it could raise more than £3.2bn each year.

Our government in Wales is currently severely limited in how it can raise public funds. Setting our own income tax bands in a way that recognises who profits from what sort of wealth could provide a more sustainable source of income for Welsh public services.

These are important questions – and if the UK government is confident of their answers and social justice, they will grasp the chance to establish a commission to consider ways forward.

All proposals put forward by the commission would have to support the delivery of policies aimed at reducing inequalities. Surely that is an aim we can all agree on.

We should remember the words of health inequality expert Professor Michael Marmot: “Austerity will cast a long shadow over the lives of the children born and growing up under its effects.”

Ahead of another austerity Budget, we must ask ourselves, do we really aspire to condemning future generations to an unchallenged ideology that the common good is unaffordable, or can we find a better way?


Liz Saville Roberts, Plaid Cymru MP for Dwyfor Meirionnydd.

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