PM Truss' new Chancellor, Kwasi Kwarteng will deliver a "mini-budget" on Friday. It will outline the "energy price guarantee", already announced earlier in September, which is meant to help households with energy bills. This will cap bills for 2 years at £2,500 (based on average usage), which is still more than double the average £1,100 level of October 2021, and still unaffordable for millions!
Over two years, this is estimated to cost (depending on gas prices) £100-£150 billion, which will be paid for with government (i.e. tax) money, with no higher taxes on energy companies' profits, nor price controls on energy producers! Instead, workers will continue to fund the sky-high profits of energy companies.
Kwarteng's budget is also expected to reduce taxes, even though Britain is a low-tax economy compared to other similar-sized rich countries. Still, Kwarteng will cancel the 1.25% rise in National Insurance (which was meant to pay for social care and the collapsed NHS). Together, the "energy price guarantee" and cuts to taxes will benefit the rich twice as much as the poor, according to the Resolution Foundation. He's also planning to cancel the cap on bankers’ bonuses..!
Even Financial Times commentators consider Truss and Kwarteng’s plans to be dodgy, calling them "gamblers on a huge scale" and ridiculing their notorious “Britannia Unchained” treatise for suggesting Brazil as an economic model. But while the FT worries that global money markets will refuse to continue to lend Britain money - if inflation keeps rising and the value of the pound keeps falling - these same factors will cause further drastic cuts in workers' incomes.
In fact the pound’s value recently reached its lowest point against the dollar for 35 years, making imports more expensive and, since Britain imports 46% of its food, plus medicines, cars, fuel, etc., workers are now paying more for almost everything they buy.
Already Britain is one of the most unequal countries in the G7, paying among the lowest wages. An average household here is 20% worse off than its north west European counterpart. And by 2030 a Polish family will be better off than its British equivalent!
Truss and Kwarteng intend to redistribute wealth to the already wealthy and keep the blows raining down on workers' heads. A concerted fight back could, however, send their good ship “Britannia” crashing onto the rocks!