Once again, George Osborne clone Rachel Reeves has been bandying about the Labour Party’s austerity agenda. Specifically, she told Sky News on Labour’s decision to scrap the winter fuel payment to millions of pensioners:
It wasn’t a decision I wanted to make. It was a decision I had to make in incredibly challenging circumstances, to put our public finances on a firm footing.
Cue everyone on the left and anyone with marginal economic awareness’s collective eye-roll at Reeves’ already tiresome “tough choices” propaganda.
However, “tough choices” wasn’t what a lot of people were hearing. Former independent MP Claudia Webbe called it out for what it is:
Dear Prime Minister,
Austerity is not a tough choice. It’s a political choice.
It’s class war.
— Claudia Webbe (@ClaudiaWebbe) August 27, 2024
The new right-wing Labour government is waging class warfare and it’s making the political choice to do so – plain and simple.
Rachel Reeves’s bullshit black hole
Of course, Rachel Reeves claims it’s all to fill that £22bn fiscal black hole the Tories saddled it with.
Here’s the thing though, that’s ALSO a political choice. The truth is that the black hole is a bogus concept – a convenient excuse to manufacture consent for more austerity. As the Big Issue previously explained, the black hole is:
just how much the government is predicted to miss its own targets rather than the kind of household debt we are brought up to avoid.
Specifically, as the outlet detailed, this based on forecasts the Office for Budget Responsibility (OBR) has made:
Economic forecasts are produced by the Office for Budget Responsibility, which makes an assessment of whether the government will hit its own “fiscal rules”. The government responds to these and decides what to do. These measures usually form a large part of a chancellor’s budget plans.
And that’s the rub. The black hole is dictated by the government’s own targets – in other words, it chooses what this is.
It has been a key pillar of the Cameron-Osborne conflation of household debt, and government deficit. For a whole bundle of reasons, these are decidedly not the same. Economists, think tanks, and many others have repeatedly debunked this dangerous myth. The New Economics Foundation has neatly summed it up:
when the government reduces its spending, employment and wages fall in both the public sector (e.g. for nurses, teachers, and police officers) and those sectors that provide goods and services to government (e.g. construction workers).
The reduction in employment and wages means that nurses and construction workers spend less in the economy overall, harming other businesses not directly affected by the reduction in government spending. This can then lead to further falls in employment and income – the ‘multiplier effect’. Of course, the reduction in employment and incomes means a reduction in the government’s tax take. By cutting its spending the government also ends up reducing its own income. So unlike a household, government spending and income are not independent of one another.
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Moreover, the government can ask the Bank of England to lower it borrowing costs, or create more money. It did this during the global financial crisis in 2008, and during the pandemic.
Importantly then, as the Big Issue argued in terms of the government’s supposed black hole in finances:
The targets aren’t laws of nature. The government could actually miss its fiscal rules and it would not ruin the country.
Convenient framing as a pretext for austerity
Ergo, the chancellor chooses to focus on plugging this arbitrary black hole. Maintaining this delusion has enabled successive governments to unleash wave after wave of needless, callous, murderous austerity.
That’s the problem with this black hole bullshit. It has worked much the same as an actual black hole – or at least the prevailing myth of them. That is, it has sucked in, or suckered more aptly, the British public en masse. The right-wing has narrowed the telescopic lens so effectively, that now, fiscal responsibility is all that matters.
In reality though, black holes spit most matter back out, and create new stars. This is what the Labour government should be doing. It could invest into the public sector, raise wages, motivating workers to spend more in the economy. This would create new jobs elsewhere and in turn generate more government income through tax. In other words, this would actually reduce the government’s debt to income ratio.
Rachel Reeves is choosing to use this framing, because it benefits her government. They are foisting blame on the Tories for the public spending cuts they now intend to make. Of course, it’s indisputable that the Tories fucked up the country, and its finances.
But it didn’t do this by failing to plug the black hole, not “balancing the books”, or whatever so-called fiscally responsible metaphor is the zeitgeist. It did this with austerity.
Punching down by Labour
Of course, this all highlights that filling this so-called black hole by slashing the winter fuel payment to a majority of pensioners is one such political choice. Not a “tough choice” – a deliberate one.
Rachel Reeves is choosing to punch down on the poorest households. In fact, it’s likely also doing this as a pretext for more benefit cuts too:
Spot on Kevin. You give all pensioners the winter fuel allowance &claw it back (& more) from the rich through progressive taxation. Instead Lab have scrapped the universal element, destroying the idea that everyone has a stake in the welfare state. Which was the point of doing it pic.twitter.com/8Wh1tcpDod
— Saul Staniforth (@SaulStaniforth) August 28, 2024
In other words, not only is Labour stripping support from many vulnerable people, but it’s also bolstering right-wing benefit-bashing narratives. Specifically, those that seek to sew division where there is and should be none – between so-called benefit scroungers versus hard-working taxpayers.
Reeves has other options, and she knows it. She’s just choosing not to implement them. Plenty of people on X spelled these out. Labour still hasn’t got the memo that taxing the rich is a popular idea:
This morning Rachel Reeves said she had no choice but to scrap the universal winter fuel allowance for pensioners.
That’s a lie of course. Reeves could have introduced a wealth tax and made the super rich pay, but she’d rather make ordinary people poorer. pic.twitter.com/iU8BnUCcCd
— Saul Staniforth (@SaulStaniforth) August 28, 2024
The last election was about kicking out the Tories after 14 years of austerity.
Austerity is neither necessary nor inevitable. It is a political choice.
A just choice now would be more taxes and less profits for the super-rich.
That’s what millions of people desperately need.
— Apsana Begum MP (@ApsanaBegumMP) August 27, 2024
The new bloc of independent MPs also called Reeves and Labour out for this:
Politics is about choices – and the government is choosing to inflict pain and poverty across the country. pic.twitter.com/wxbQaCQkgL
— Jeremy Corbyn (@jeremycorbyn) August 27, 2024
As the Green Party’s deputy leader Zack Polanski underscored, Reeves explicitly chose not to do this:
Keir Starmer says cutting the winter fuel payment is a choice he had to make.
But when asked about a wealth tax – Rachel Reeves said their spending commitments didn’t require extra investment.
So his tough choices are to not tax wealth of billionaires.
Choices.
— Zack Polanski (@ZackPolanski) August 27, 2024
Again, borrowing is always an option too. Grace Blakeley expressed for Tribune Magazine that while interest rates are high and this means taxpayers footing a larger bill for this, there’s something that just might help with that soaring inflation. That is: tax the parasitic corporations who’ve been profiteering off the backs of the Tories’ cost-of-living-crisis-come-class-war. Naturally, she wasn’t the only one pointing this out:
By cutting the winter fuel allowance for 10 Million pensioners, Starmer will save £1.4BN a YEAR. The energy companies are making over £1BN in profits a WEEK, but, yes, Starmer’s ‘Labour’ had no choice but to take this ‘difficult decision.
— Joe (@MrJoeGooch) August 28, 2024
In fact, Gina Miller highlighted that Labour actually has a lot of options:
Budgets are always about political choices
Starmers and Reeves’ Painful Autumn Budget is not necessary if they:
– raise corporation tax to 28% (also Harris/Walz proposal)
– impose an additional 1% tax on individual wealth in excess of £10m per annum, raising £11.9bn
– Equalise…— Gina Miller (@thatginamiller) August 27, 2024
One poster reminded people that Labour chose to bailout the banks, but now it’s forcing cuts on people Tory austerity had repeatedly marginalised:
Never forget. Austerity is a political choice. Labour “rescued” the banks to the tune of a trillion £’s but Starmer chooses to squeeze ordinary people & make them poorer still. The UK economy is NOT a household budget. The UK creates its own currency. It can NEVER go bankrupt.
— Bevan Boy 💚 (@mac123_m) August 21, 2024
Rachel Reeves: it’s political choices, once again
At the end of the day then, Reeves didn’t have to make the decision to plunge thousands of pensioners into fuel poverty by cutting the winter fuel payment. However, since her alternatives involved taxing the wealthy corporate capitalists Labour is now firmly in bed with, she wants to hide that she had any other options.
Austerity isn’t, and never was necessary. But disingenuous neoliberal opportunists like Reeves will continue to repeat this lie until she’s Tory blue in the face – which she already is.
Feature image via Youtube – the Independent/Sky News/the Canary
