Workers' Weekly On-Line
Volume 52 Number 12, May 28, 2022 ARCHIVE HOME JBCENTRE SUBSCRIBE

Workers' Forum

Rishi Sunak's Package Does Nothing to Assist Working People Attain
Financial Security and Amounts to a Further Pay-the-Rich Scheme

Chancellor Rishi Sunak announced on May 26 a package of household support allegedly to combat the cost of living crisis, including a windfall tax on gas and oil companies, which he says is worth £15bn. The government has been forced to make the U-turn from its position that nothing could be done due to the widescale opposition from all sectors of society. The Chancellor himself said that the government had been forced to take further action to help the British public because the pressures on household bills have "got more serious" in recent months.

Rishi Sunak announced a temporary 25% windfall tax on the "extraordinary profits" of gas and oil companies in what he called a "targeted energy profits levy". It does not appear clear what the Chancellor deems "extraordinary", and in any case he said that the tax is to be phased out when profits return to "normal" levels. What has perhaps not received so much attention is that at the same time he announced a new tax allowance for the energy companies. According to the government, "The new 80 per cent Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest - providing them with an additional, immediate incentive to invest. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax they will pay."

The Chancellor's statement indicated that £400 is to be paid to every household this year. This is not a solution to the cost of living crisis. It is known that the current fuel price inflation is not going to be matched by these handouts. Exploitation by energy companies will continue. Furthermore, this grant will go straight to the energy companies to settle customers' bills. The "price cap" on these bills is set to rise even further. Thus overall the scheme amounts to a pay-the-rich manoeuvre to ensure that the prices set by energy companies and the regulators are met.

Commenting on the government's package, TUC General Secretary Frances O'Grady said, "Unions have repeatedly called for an Emergency Budget to help families, and a windfall tax on energy companies." She continued: "While today's intervention is badly needed, we should have never been here in the first place. Years of attacks on wages and universal credit have left many households on the brink. The government still doesn't have a plan for giving families long-term financial security. With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate - not just a one-off boost. That's the best way to protect livelihoods and to support the economy."

The fact is that absence of those representing the interests of working people in positions of authority means that problems affecting workers, such as price inflation, are dismissed as impossible to solve. Even worse, broad problems in the social and natural conditions are allowed to fester and deteriorate. In these conditions, the fight for higher wages is crucial and must be supported by all. Ultimately, there is a need for a new direction for economic and political affairs, an alternative, so that a way out of the crisis is accomplished. This requires a determined opposition from the workers to the status quo of paying the rich and refusal to invest in social programmes.


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