Unite: Economic Insights | Q4
The British economy is in crisis after 14 years of Tory rule,? and with our public services crumbling and the value of wages falling, the new Government needs to make better choices.
The UK economy is worth ￡2.7 trillion, but workers' share of the pie is much smaller than it used to be. We have bosses using the longer-term stagnation of the UK economy to claim there is not enough money for pay rises amidst the heightened cost of living and the Government grappling with a ￡22bn 'black hole.'
As the Government keeps pushing on 'tough choices', it's time for politicians to change the old status quo that keeps putting everyday working people and communities at the back of the queue.??
Delivering lasting change will take money, and with high growth unlikely to arrive any time soon, delivering lasting change will require different choices, including a wealth tax and borrowing.
Our researchers and forensic accountants at Unite Investigates show how different decisions can be made to secure the future of our industries, restore public services and tackle the widening rift in wealth inequality.
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Cuts and Austerity aren't Labour's only option
At the first Trades Union Congress (The TUC) conference under the new Government, the Prime Minister reiterated Labour's byline of 'tough choices' with the ￡22bn 'black hole' inherited from the Conservatives.
After 14 years of Austerity, The Labour Party bour Party has a chance to change the status quo, which continues to put everyday working people at the back of the queue.
Sooner or later the government will face a stark choice - return to this austerity or raise cash by taxing Britain’s billionaires, corporate profiteers and bonanza bankers much more.
We have already seen how are public services have crumbled from the NHS to schools, and less spending on any part of the public sector has a clear impact on our lives. Now, many local authorities are at breaking point following a decade of austerity with services ranging from bin collections to swimming pools are already being cut back.
This is why Unite is calling for a tax of 1% to be applied to the wealthiest 1%, which would raise ￡25bn a year - money which can be used to fund our crumbling public services and invest back in our broken economy.?
"Britain is in crisis, yes. But to say there is no money to rebuild our industry and infrastructure, or to restore our public services, is simply not true. The top 50 families have more wealth than half our population. The profit margins of the average British firm have rocketed by 30 per cent since before the pandemic. If we taxed 1 percent on the wealthiest 1 percent, the so-called black hole would be gone. The money is there. It's time for a wealth tax on the super rich and a tax on excess profits. We don't need more excuses about fiscal responsibility or talk of wealth creation. We need change, not more cuts.? Labour must have the courage to make the right choice and fight for change for workers and our communities.” - Sharon Graham
Our industries need investment
British manufacturing went from the workshop of the world to a historic decline. We've slipped out of the global top 10 of industrial nations, and now millions of jobs across the sector have been lost, and as a result, we make less and import more.
This has been a disaster for Britain, and it needs addressing. Put simply, we need to start making things for ourselves again.
The steel industry shows why we need a real industrial plan with real jobs and real money. Unite has recently welcomed confirmation from the Government that they are moving towards future investment in the South Wales steel industry, following their commitment to the first stage of investment of ￡500 million in a 3.2 mega tonne electric arc furnace at Port Talbot.?The Government is in ongoing talks on further investment, which should include installing new lines and generating jobs at both Port Talbot and Llanwern. This should be agreed over the next 12 months.
But even with this commitment, thousands of steel jobs are going and we are still lagging miles behind some of our competitors in terms of investment in industrial growth. The German Development Bank has the equivalent of ￡430 billion available, while Labour has proposed a sovereign wealth fund worth less than ￡10 billion.
From oil and gas to steel and manufacturing, it is clear after years of neglect that British industries need investment to create well-paid jobs.? It's time to stop aimlessly relying on profiteers and greedy bosses who have proven time and time again that their interests are only self-serving with no long-term loyalties to the good of our economy.
Britain has a bright future. We have advantages in many of the industries of tomorrow, but in terms of job creation, that potential is not yet being realised. Now, we need real long-term manufacturing partnerships with the state taking an active role in the development of industry and, crucially, jobs.
The Future of Oil and Gas
With the recent announcement that Petroineos intends to close the Grangemouth oil refinery next year, cutting the jobs of 500 workers and thousands more in the supply chain, and with the government having no alternative plan, the importance of Unite's call for a just transition is evident.
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Unite is out every day, fighting to protect the tens of thousands of jobs which come from work in the North Sea. As the UK drives the switch to renewables, we're calling for a solid plan and investment which secures jobs for workers whose livelihoods depend on the oil and gas industry.
"We need a concrete plan and serious investment. Unite has a plan to create 35,000 commensurate new energy transition jobs in Scotland by 2030. This will require an investment of ￡6.6 billion over the next six years. That is the commitment we need to see if oil and gas workers are not going to be the coal miners of our generation. And until these new green, well paid, skilled jobs are in place, there must be no ban on oil and gas licences." - Unite general secretary Sharon Graham.
For a just transition that doesn't leave workers and their communities behind, we need investment in permanent, local jobs in industries like wind power manufacturing and operations, hydrogen, carbon capture and decommissioning. At a cost of an additional ￡1.1 billion per year, this is a fraction of the ￡36 billion in profits oil companies made from the North Sea last year and is an investment which will pay for itself.
With global market chaos pushing up bills and rampant profiteering from oil and gas companies threatening our future, it's ever clearer now we need to work towards a self-sufficient energy system with 75 per cent local content of energy to harness public sector purchasing power to benefit workers and communities.? Listen to Executive Council member Cliff Bowen share the #NoBanWithoutaPlan motion at Trades Union Congress (The TUC) .
The current cost of living
Prices have risen 50% faster than wages since Spring 2021, meaning the equivalent of an annual pay cut of over ￡2,800? for the average worker. Those in the lowest? 10% of earners make ￡9,600 a year or less and 8.9% of workers are in 'low-paid jobs' - the lowest proportion on record, according to the ONS. These stark figures clearly indicate how the cost of living and wages will be putting a strain on many working people across the UK.
This also exposes the claims made by bosses and politicians about a? 'wage-price' spiral as a total nonsense. In reality, workers need to fight to win back the earnings they've lost to inflation and profiteering by employers.
While the the FTSE 350? is up 7% compared to last year and CEO pay at record levels, workers are still lagging behind - making redistribution more important.
At 5%, interest rates are still around their highest level for 16 years, piling misery on millions. Although the Bank of England cut interest rates for the first time in over four years, they were only cut by 0.25%, and the official rate of 5% still represents one of the highest levels in the last decade and a half.
The Bank of England governor, Andrew Bailey, warned people that a rapid series of further interest rate cuts was not in store. These high interest rates heap pressure on workers - both by dampening down economic activity and by increasing the cost of housing and debt.
In response to the Bank of England's small cut, Unite General Secretary
Sharon Graham said:
"Interest rate increases have led to soaring mortgage rates, which are currently at historically high levels. In August, the average mortgage rate fell slightly to 8.16%, down from 8.17% the previous month - however this remains well above historical levels. As a result, households with mortgages up for renewal in the UK face significantly higher monthly costs. This is having a major impact on living standards. A recent report from the IFS calculated that between 2022 and 2023, higher interest rates for households remortgaging or taking out new mortgages have pushed 320,000 people into poverty."
Housing costs are a significant component of the cost of living crisis, with rents up by almost 9% in the last year. The current state of the housing market is working for no one but the ultra-rich.
As the Resolution Foundation reported, the share of income families dedicate to housing has doubled since 1980. Successive governments have failed to address this mounting crisis by providing decent, affordable housing – and so workers are left with no choice but to take action.
For renters, housing costs already take up around 26% of workers' income on average. That figure is from 2022; since then, rents have shot up across all regions of the UK. The situation is most extreme in
London, where the average private tenant spends 41.5% of their income on rent. Overall, rents have increased by an average of 8.6% in the last year.
The bottom line is that housing is hugely expensive in the UK, and to address this, our members – whether renters or owners.?
With the impact of the rising cost of living on working people, redistribution is as important as ever. It’s no wonder Unite's membership is up by 27,000 since July 2022 - ?workers must keep pushing to secure good pay deals to keep up.
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