TUC: David Cameron wants you to believe he’s the workers’ friend. Don’t fall for it

Frances O’Grady

Average wages have decreased in real terms under the present government. Expect more of the same – and worse – if the Tories are re-elected

Which party is most trusted to be on the side of working people? This is set to be a defining question of the general election campaign. Even the Conservatives want to pose as the worker’s new best friend. David Cameron’s recent appeal to business leaders to play nicely and give their staff a pre-election wage boost is their latest bid to shake off a reputation as the party of the rich.

But Cameron’s imitation of the TUC’s slogan “Britain needs a pay rise” was more theft than flattery. After all, the prime minister has presided over the longest squeeze on real earnings since the 1850s. And as nurses, firefighters and other public workers suffering real pay cuts can testify, this government has failed to practise what the prime minister preached.

Yes, David Cameron, Britain needs a pay rise – so cough up

Cameron’s real dilemma is that his austerity policies have delivered the slowest recovery on record and that, as a consequence, his deficit reduction target has been missed by a country mile. It is not just tax dodgers who have left the Treasury cupboard looking bare. Research published by the TUC today shows that the government is collecting £33.4bn less in income tax and national insurance than expected because UK workers’ earnings have failed to grow as forecast. And as families that are scraping by are reluctant spenders, depressing VAT returns too.

This all adds up. The Office for Budget Responsibility now expects the government to have borrowed £91bn in the year to March 2014/15 – a cool £54bn more than the chancellor had originally intended. It may be unrealistic to expect politicians to own up to past failures, but it is the implications of these policies for the future that are most frightening. The Conservatives’ election platform and the economic policy that Cameron will stand on in just a few weeks’ time will keep the salaries of ordinary workers permanently depressed.

The most obvious impact is on public-sector staff. Planned government cuts mean that nearly a million more public-sector jobs are due to disappear and the pay of those that remain will lose value every year, as wages are either frozen or held below inflation. That, of course, will have a chilling effect on pay in the private sector, which will face less competition for staff.

And worse still, the Conservative party’s proposals for industrial action ballots are designed to stop unions from doing anything about it. Official strikes will become next to impossible, harder to hold than in any other advanced economy, in clear breach of the basic human right of free association. And this will not just hold back pay in unionised sectors. Collective bargaining often sets “going rates” that help to lift pay in non-union firms too. Unions are the last line of defence not only for their members’ pay packets, but for all workers’ share of the total wealth produced.

Caught in an austerity hole, the Conservatives have made it clear that, if re-elected, they will keep on digging. Much commentary has focused on the impact on services of cutting back spending to a share of the economy not seen since the 1930s. But peacetime cuts deeper than any since the so-called Geddes axe in the 1920s will also depress consumer demand, slow growth and could snuff out recovery.

The research also shows that while average pay has fallen by £2,500 in real terms since 2010, the real-terms earnings of FTSE 100 CEOs have shot up by £700,000 on average – no doubt helped along by those vanilla tax arrangements which apparently “everyone” enjoys.

Meanwhile, our analysis shows how household debt for ordinary families is forecast to rise at nearly three times the pace of wages over the next parliament. This will leave total UK household debt nearly £1tn (61%) higher in 2019 than it was before the 2008 financial crisis. And lest we forget, a debt bubble born of rising inequality was how this whole mess started.

We face a close election but the choice is increasingly stark. Politicians who belatedly claim to side with working people will have hard questions to answer about why they have allowed living standards to lag so far behind the fortunes of those at the top of big business.

And those whose friendship is genuine need the courage to ditch failed austerity policies and to promise investment for the future in the greener jobs, decent homes and good pay that working people deserve. That is the way to secure a fair economic recovery built to last.

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