A letter to the Chancellor

Dear Chancellor:

We’re told it’s the ‘Budget for Growth’. That is – apparently – what everyone is talking about. Well yes Chancellor. You’re right. Our members are indeed talking about growth. Because as you release your Budget and spout on about your GDP and your business incentive drives, my members are talking about the sickeningly high growth in their weekly shopping bill, in their energy bill, in their childcare bill.

This is the reality Chancellor. When I travel round the country meeting workers, no one is talking about GDP. Why would they? It’s an abstract figure that masks inequality and often says very little about our real well-being as a nation.

Because what people truly care about is the real economy: jobs, pay and conditions; decent public services; and a sustainable future.

And the reality is that GDP growth is not the same as the money in workers’ pockets. It’s not the ‘plans’. Not the ‘drives’. Not the FT index. But the actual money they use to pay their bills with. The money they have worked hard to earn.

Because out here in the real world, since 2010, real wages have fallen by 14.5 per cent, while UK GDP has grown by 18.8 per cent. Even the price of this recent growth has been fuelled by low pay and the country working longer hours.

So who actually cares about GDP when your wages are falling? When you can’t replace your child’s shoes that no longer fit them? When you can’t afford to heat your home?

Meanwhile – as you well know Chancellor – our public services are crumbling. Including demographic change, over the last decade NHS spending has simply flatlined. And you want to talk about growth?

But it’s not just in our public services. We also haven’t seen anywhere near enough growth in the urgent investment needed to transition UK industries to a green future by 2050. So where’s all this growth then Chancellor?

The idea that growth will save us is a fairy tale. All the signs are that we are in a long-term pattern of economic slowdown.

In the 1970s to 1990s, growth averaged between 2 and 2½ per cent per year. In the 2010s it was 0.6 per cent. Ask one of my members who works in agriculture. A tree doesn’t grow overnight. But a child’s hungry tummy does. Clearly we can’t rely on growth to address the urgent needs of working people.

When they tell us we need to wait for growth before we can have decent pay rises, that is a choice to ignore the elephant in the room. Because we can prove that the money is there, just hoarded in the hands of the rich and powerful, British oligarchs.

Unite’s latest profiteering report shows how the profit margins of Britain’s biggest companies have spiked 89 per cent over the pandemic.

Which brings me on to investment. Because while profits boom, investment stagnates. This is one of the main reasons for the growth slowdown in recent decades, and more importantly for the real decline in living standards.

The private sector is systematically failing to invest in our future: whether that means our energy supply, our transport infrastructure, or industries like steel.

Your only solution Chancellor, is apparently tax incentives. While going ahead with the planned raise in corporation tax to 25 per cent, you are now offsetting this with new business tax breaks. Have you learned nothing after decades of low corporation tax have failed to deliver a boom in investment?

The headline rate is still well below the 33 per cent of 1997. As the rate was cut to 19 per cent over the last 25 years, investment as a share of GDP stagnated at around 17-18 per cent. Among OECD countries, the UK is one of the worst performers for business investment.

This failure to invest is the result of a broken economic system, in which decisions are framed by the City and global financial markets. Those who make the decisions are choosing to funnel money into speculation and shareholder payouts rather than the real economy.

None of this is helping my members pay their bills – or feel safe or secure in this ever changing topsy-turvy economy.

And we return to the word of the day – growth. Who is growth really for? Ask yourself Chancellor – who really benefits?

The economic wealth created has been on the back of workers – hardworking people like my members – and it is being snatched and grabbed at by the already rich and wealthy.

UK dividends have doubled from about £55bn in 2010 to £110bn in 2019. The FTSE 100 has hit record highs while real wages have plummeted and City bonuses soared. There are now 177 UK billionaires, up from 29 in 2010. The pandemic has accelerated a shift of wealth to the richest households – not exactly where it was most needed.

And what are our politicians doing to redress the balance? Even Labour hasn’t grasped the nettle that growth is not the point here. None of our politicians are addressing these issues.

Our members want a fair share of the pie – we’ve made that clear time and time and again. But it’s not really the size of the overall pie that counts; it’s the share of the pie that really matters.

So Chancellor – forget growth – do the maths. It’s the ratio. Give the workers their fair share of the pie. Give us a relevant economy – give us a workers’ economy.

Yours sincerely,

Sharon Graham

Unite General Secretary