Public Affairs

Trade Union Desk

Interventionism is normal, and wise

The ICTU’s John O’Farrell questions whether the financial response to the pandemic is indeed ‘extraordinary’ and argues for a more comprehensive social security net to enable greater economic resilience.

There are certain stories that get attention and others that don’t matter to the ‘national conversation’. I.F. Stone, that great muckraking journalist from Washington DC, used to say of his local paper, The Washington Post, that “you never know on what page you will find a page-one story”.

Things get reported in the UK press, but the fun stuff which used to get shovelled away on page 17 is now further relegated to websites that most of the news-interested public don’t know about. That is why newspapers still matter. They imply a status and professionalism that demands to be taken more seriously than online reporting, even after the phone-hacking scandal and the raging dementia afflicting stalwarts of the Tory press.

The Daily Telegraph has a strange sense of ownership for our Prime Minister, Alexander Johnson, as if he is on a brief sabbatical from his column under the penname ‘Boris Johnson’.

The Daily Express has long been a joke in Fleet Street, but sadly is taken more seriously in UK politics than Opendemocracy.net, as the treatment of two stories published on each ‘platform’ on the same day demonstrates. The website used Freedom of Information laws to reveal that “only six employers have been prosecuted for paying employees less than the minimum wage in the past six years, despite tax authorities finding more than 6,500 violations”.

The investigation also found that “dozens of firms that were named and shamed by the UK Government last year, for failing to pay the minimum wage, also collected millions in furlough payments”.

The big scoop from the Express was that Inheritance Tax was forecast to bring in £6 billion a year, with ‘angry campaigners’ such as The Taxpayers’ Alliance and the chief executive of tax planners ‘The Wealth Club’ (no, really) loudly demanding justice for the 5 per cent of estates that are eligible and don’t hire tax advisors (see above).

And on the same day as those stories broke, the Financial Times revealed the existence of the Prime Minister’s ‘Advisory Board’ of donors over £250,000 to the Tories, and who regularly meet Johnson. Some may even call him ‘Al’, like his family and friends, among other topics: “Some members have used these discussions to call for spending cuts and lower taxes, one donor said.”

The same weekend saw reports that one in five firms plan on letting staff go in response to HM Treasury’s furlough policy change, with firms asked to contribute 20 per cent towards the salaries currently being subsided by the State.

Earlier that week, the UK Welfare Minister decreed that the £20 uptick paid for the past year to people on Universal Credit (UC) is no longer necessary. The Taxpayers Alliance thought that was a great idea, despite the huge numbers of the working poor whose dependency on UC is in effect a subsidy for their tightwad employers.

The pandemic may not be about to end right away, but the Government are determined to act as if the old economy is back. Its allies in the Tory press are lining up to ensure that no good can come out of the suspension of business-as-usual, outside of the coteries which benefitted most from the economic stimuli churned out by HM Treasury.

There is another way, as shown in the recent paper from NERI, Social Security and the Pandemic – An Extraordinary Response. “One of the most significant lessons of this crisis has been that, rather than being a drag on growth or competitiveness, having a proper, well-funded social security net is one of the key components of a resilient economy.” In contrast to the austere response to the 2008 financial crash, “the Covid-19 pandemic has offered a glimpse of how an interventionist government can deal with the employment fallout from an economic crash”.

International comparisons illustrate that “the financial supports made available to workers in the UK and Ireland during the pandemic may seem extraordinary in comparison to the status quo, but in comparison to what is provided in peer countries, they are quite ordinary”.

“It is clear from comparisons with these peer countries that there is a clear tax gap with the UK and Ireland. The level of employer’s social contributions in both countries stand in stark contrast to their peers. It is clear that this anomaly must be remedied.”

Not less tax on the inheritances of the wealthiest, or their capital gains, or corporate profits, but more. Not more cuts to Universal Credit, but permanent increases. Not stripped-down and outsourced public services, but high-quality, universal services paid for by the means to money only possessed by states.

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