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When Jeremy Hunt got up to deliver the autumn statement to the House of Commons on 17 November, he did everything he could to emphasise the help he was providing to the least well off.
He increased the national living wage by 9.7% to £10.42 – the largest ever increase. He confirmed that the state pension and social security benefits would rise by September’s rate of CPI inflation – 10.1%. And he announced further help with fuel bills into 2023/24, with a £3,000 ceiling on the energy bill for the typical household and further targeted cost of living payments for those on means tested benefits.
But try as he might, the chancellor could not disguise the fact that this was a disastrous autumn statement for working people, for public services and for the wider UK economy.
He tried to pin the blame for recession on the war in Ukraine and the long-term economic costs of the pandemic. But it’s clear that the situation is far worse in the UK because of 12 years of Tory mismanagement, which culminated in the Truss/Kwarteng mini-budget in September. The UK is the only major economy that is smaller now than before the pandemic. And of the 20 largest economies in the world, only Russia’s growth is forecast to be lower than the UK’s next year.
So what are the key messages from the autumn statement for UNISON members and public services? From the Treasury documents and the Office for Budget Responsibility (OBR) report that was published on the day of the statement, it’s clear that our members face a challenging period ahead. The following are five key takeaways.
1. Even after years of lost pay growth, the government promises more of the same
The OBR’s forecast for earnings suggests that inflation adjusted pay won’t return to 2008 levels until 2027. This means that, across the economy as a whole, workers in the UK are facing 19 years of no cumulative wage growth.
Analysis of the autumn statement by the Resolution Foundation shows that this unprecedented downturn has cost workers a staggering £15,000 a year compared to a world where their wages had instead continued to grow at the rate they were before the financial crisis.
The mechanism through which this has impacted UNISON members has been government pay policy – the years of restraint, freezes and real terms cuts since 2010.
And the fiscal forecasts included in the autumn statement suggest that, without a fight, more of the same lies ahead.
There is certainly nothing here to convince UNISON members balloting for industrial action that the government want to re-set the dial. This is clearly unsustainable.
2. Get ready for Austerity Two
It was announced in the autumn statement that the government will stick to increases in spending in public services announced at the spending review in 2021, for the next two years.
However, because these increases were announced in cash terms and inflation has subsequently risen dramatically, budgets for all public services are now significantly smaller than originally expected.
And although the chancellor made great play of announcing an extra £3.3bn for the NHS and £2.3bn for schools, these compensatory increases do not offset the impact of higher inflation. Bigger reductions still are pencilled in for 2024/25.
3. We’re facing the largest fall in living standards since records began
With a combination of increased taxes – set to rise to their highest share of national income since the Second World War – stagnant pay and double-digit inflation, it’s not surprising that the OBR report projects the largest fall in living standards since records began in the 1950s.
Personal tax and benefit changes announced over this parliament will result in typical households seeing their income fall £1,100 by 2027/28. What’s more, because the government deferred its planned overhaul of the social care system, council tax for many may well rise by 5% too.
Although the government is providing more help with energy bills, many will struggle to heat their homes and keep the lights on.
The Resolution Foundation has calculated that higher energy costs mean around a third of households will be worse off by £1,000, one fifth will be worse off by £1,000-£2,000, and one in eight households worse off by £2,000. They give the example of a single person on £20,000 not in receipt of benefits, who, they calculate, will be paying £1,900 more a year for their energy in 2023/24 compared to two years previously.
4. This was a deeply political autumn statement that puts the Conservative Party’s interests above those of the country as a whole
It’s no surprise that the government has deferred the greatest cuts to public services until after the next general election, which has to take place by January 2025 at the latest. In doing so, it is trying to lay a trap for Labour.
While the cost of living crisis deepened and energy bills soared, the Conservatives simply wallowed in self-indulgence at the UK’s expense. The mad circus of three prime ministers, four chancellors, and two acrimonious leadership races tells its own story. Unsurprisingly, opinion polls indicate that the public has had enough.
Behind closed doors, Tory strategists admit that, although they can’t see themselves winning the next election, they can see Labour losing – if, with the support of the right-wing newspapers, they can do enough to cast doubt on the opposition’s economic competence.
One Downing Street source told the journalist Matthew D’Ancona: “Labour is the dog that hasn’t barked. Our real job is to get them to bark – to say something that suddenly makes them look stupid, or at least vulnerable.”
Thus, Labour has to dodge the fiscal trap. Between now and polling day, every Labour announcement will be poured over forensically and subject to the charge of wrecking the UK’s hard-won economic credibility.
5. It’s time for change
This clearly is a government which has run out of ideas. It has no vision for the future of the UK and how we can be a fair and equal country. Levelling up has largely been abandoned. Public services are on their knees. It really is a case of same old Tories.
A key task for UNISON activists and members over the coming months will be making the case for why the next general election should be followed by a renaissance for public services rather than more cuts.
