If the economy needs sacrifices, it will be workers who are thrown to the wolves | Nick Cohen


We are back in the thieving world of Fred “the Shred” Goodwin and Northern Rock. The sole difference from 2008 is that instead of the state expecting ordinary people to bail out failed banks, it is expecting them to take pay cuts to protect bosses’ bonuses. The war against inflation in the 2020s, like the war against financial collapse in the noughties, must be fought by those least able to fight it.

Nowhere in the speeches of the prime minister, chancellor or governor of the Bank of England is there a hint that a national emergency demands equality of sacrifice. They do not repeat David Cameron’s line that “we’re all in this together”. As millions sink down, all they say is that it is their patriotic duty to protect the privileged by sinking deeper. Or, as a writer plucked from the Victorian age explained to Daily Telegraph readers Last week, the rewards of the rich are “natural and inevitable” but the “clamour” of workers for pay rises is “nothing but shameful opportunism”.

The hopes of working-class voters that Brexit would raise wages by removing the competition from EU workers have proved false. Unemployment is as low as it has been for 50 years. Employers are desperate to fill vacancies. Despite the most favorable of circumstances, average pay rose by just 4.2% between January and March – far behind inflation, which is now at 9% and heading higher. Averages conceal as much as they reveal, however, and the Resolution Foundation found that bonuses in the financial services sector were running at a “red-hot” rate of 30% a year. That is still not fast enough for the City, which is pushing the government to remove all limits on the rewards they can dole out. Meanwhile in the corporate boardroom, chief executives’ renumeration packages are at 63 times the pay of their average (median) worker – almost double the 2021 ratio.

The manifest unfairness explains why the government has been surprised that its old tunes about militant workers holding the country to ransom no longer play with the public. The Conservatives have yet to realise there is no good argument against the staff at BT threatening to strike to maintain their wages, when the chief executive pocketed a 32% increase and shareholders received £700m in dividends.

The prime minister breaking his own lockdown rules is not the sole reason for the anger in the air. Inflation makes the previously poor desperate, the previously comfortable poor and everyone aware of inequalities around them. Yet as the rage rises, the government has lost the ability to talk to the public. It isn’t even going through the motions with insincere appeals for the top of society to lead by example or for the wealthy to show the same restraint they expect the lower orders to endure.

A political movement that can no longer mouth the necessary insincerities of public life is a dying movement. The Conservatives’ inability to pretend that they care about the economic crisis is bringing reveals how the “red Tory” of the 2010s is in its death throes.

On the rhetorical level, a part of the center right responded to the collapse of the neoliberal order in the crash of 2008 with as much urgency as the center left. Dominic Cummings said the deep hostility of voters to the elites “rak in the money”, with the “mugs on PAYE” paying to bail them out, was the experts who warned that leaving the EU would be an economic disaster weren’t believed – even as they told the truth. Theresa May’s adviser Nick Timothy spoke of a country trapped in markets that worked for no one except vested interests. May’s denunciation of the “citizens of nowhere” was not aimed at migrants, as her critics claimed, but at international elites. Boris Johnson won an election by promising to level up the regions, reach out to the left-behind and create a high-wage economy.

I’m sure leftish readers will say that the Conservative party just lied to gain power. They can point to the chancellors who controlled economic policy. Rishi Sunak, like Philip Hammond before him, is a Thatcherite. George Osborne was a fiscal extremist who implemented cuts more severe than any Margaret Thatcher dared attempt. For all that, I do not see how you can maintain that a party that took Britain out of the European single market is pro-business. Demographic change has turned the Conservatives from a neoliberal to a post-capitalist pensioner party, which makes money by cutting deals with rightwing plutocrats and maintains itself in office by attending to the needs and prejudices of its core over-65 vote (whose pensions, you must have noticed, it made damn sure rose in line with inflation).

In government, Cummings tried to redistribute wealth and allow great labor mobility by authorizing mass housebuilding. But a revolt of elderly homeowners in safe Conservative seats stymied him. Perhaps, then, we can go further than cheap jeers about lying politicians and say that the Conservatives are incapable of addressing the UK’s problems. But even that sweeping statement understates the nation’s malaise.

Previous crises have brought forward politicians with solutions. Phil Tinline’s admirable new history, The Death of Consensus: 100 Years of British Political Nightmares, shows how Labors responded to the poverty of the 1930s by planning a welfare state and putting their plans into action in government in the 1940s. It moves on to the Tory right responding to the strikes and inflation of the 1970s by devising the anti-union laws and marketisation of the 1980s.

Vacuity characterises the crisis of the 2020s. There are no solutions on offer beyond making the rest of society pay to maintain the incomes of its pensioner and wealthy supporters, in the case of the Conservatives, and the fantasy worlds of Scottish and Brexit nationalists, which just make the UK poorer. As for Labor, I have no idea how it intends to put its ideas into practice or indeed what ideas it possesses.

The absence of workable plans for the future is what gives our crisis its frightening quality and why I suspect today’s anger will morph into despair.

Nick Cohen is an Observer columnist

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