The (soaring) cost of living under New Labour posted by lenin

The baseline rate of inflation is now 3% and the headline 4.2%. This will clobber workers already suffering pay cuts and Victorian working conditions. The BBC says that the proportion of incomes going on essential goods has risen to over 30% - I don't know where these statistics come from, because in my household, what with the cost of rent, food, clothing, energy, water, council taxes and so on it has always been closer to 75%, and it's higher now. New Labour's neoliberal policy package relies on its promise to keep inflation down, not just as a means of suppressing pay demands, but also as a promise to voters that their incomes won't suffer sudden, big real terms cuts. Aside from everything else that was wrong with the policy, it was always an illusory idea when commodity prices are determined by global speculation without large-scale state intervention. Governments worldwide are talking about raising export tarrifs and price controls, given the furious social upheaval that rising costs have unleashed. Even Hillary Clinton is proposing temporary price controls on petrol and mortage interest (for this, liberal Obama-supporters upbraid her for failing to understand "basic economic theory"), while McCain is co-sponsoring a bill with Ted Kennedy to control prices on medicines. These are hardly radical measures, but don't expect New Labour to imitate them. Any help this government offers with the bills will be strictly in the form of modest tax-cuts, but as tax receipts fall with the economic downturn, the temptation would surely be to raise the shortfall through indirect measures such as VAT, or by borrowing billions. Either way, the Tories - whose past record in government is gradually sliding down the memory hole - are likely to hammer them for this.

Since these price increases are coming at the same time as New Labour pay cuts for the public sector, I would expect an increased tempo in industrial action. In 2007, the number of working days lost to strike action grew 20-fold over the year, with Prison Officers, Royal Mail workers, civil servants, lecturers and others out on the picket lines. It was the second highest rate of strikes in a decade. Although New Labour's early rule was characterised by a decreasing incidence of strike action, a momentum has built up since the firefighters dispute in late 2002. It's pretty far from the peaks of industrial action in the 1970s and 1980s, but as unions increasingly co-ordinate their actions in response to a co-ordinated offensive by the government, last year's record could well be broken. That changes matters. The Tories might like to capitalise on fears of a new 'winter of discontent', but this also serves to remind people of the hated Thatcher years that followed. Given that Cameron's strategy is to try and woo working class voters suffering, and pose as a 'progressive', he won't necessarily do himself any favours with loud union-bashing. Of course, talking to business audiences, the Tories are all for breaking the public sector unions, but in the context of strikes that will widely be seen as legitimate, they may decide to restrain their rhetoric a bit.

Union leaders are pleading with the government to tax the rich and forge a new election deal, modelled on the Warwick Agreement, in advance of 2010. But if New Labour failed to uphold its promises last time round, there is no reason why anyone should believe them this time. And why on earth would union members want to be party to an ass-saving deal with a government that gratuitously attacks them? Fortunately, the PCS is looking at further national strike action at its upcoming conference. Healthcare workers are being balloted on the government's pathetic pay offer, and if they vote against it, they may be out as well. Further education unions have rejected their pay offer. The NUT's recent, highly successful national strike action is likely to result in further action. If you want your money back, you better hope for a big co-ordinated stoppage, and soon.

Labels: gordon brown, neoliberalism, new labour, strikes, tory scum, trade unions