UK

How the Government can combat right-wing extremists by challenging neoliberalism

Prem Sikka

5 August, 2024
LEFT FOOT FORWARD

The political system has abandoned low/middle income families and makes them an easy target for right-wing extremists offering simplistic solutions

Right-wing extremists continue to use their well-tried playbook to demonise minorities for the UK’s economic and social woes. They wave flags and populist slogans to blame Johnny Foreigner for social problems. With charismatic leaders, they persuaded people to believe that exiting the European Union (EU) would somehow restore a golden age and enable the English to ‘take back control’. In 2016 the UK left the EU, the biggest trading bloc right at its doorstep. This has cost the UK economy around £100bn a year and has sliced 5% off economic growth. The only Brexit benefit that Brexiteers could offer was a return to imperial measurements of pounds and ounces.

The bigoted utterances of right-wing politicians such as Boris Johnson, Suella Braverman and Nigel Farage are amplified by newspapers such as Daily Express, Daily Mail and The Sun and have created space for hate and social divisions. The standard practice is, blame migrants and minorities rather than neoliberal economic policies for social problems. This has emboldened thugs who in broad daylight are attacking, burning and looting libraries, citizens’ advice bureaus, hotels, foodbanks, supermarkets, wine, shoe, phone, vaping, travel and other businesses to create panic and fear. Black and Asian people have been physically attacked. Muslims and mosques have been particularly targeted by racist thugs. This is organised violence and terrorism rather than protests or demonstrations in any traditional sense.

Communities are uniting to counter misinformation and racist propaganda of right-wing extremists. Firm policing is a key requirement but policing alone can’t tackle the underlying issues. The government needs to attend to the economic causes of the unrest. These are neoliberal economic policies which have institutionalised never-ending austerity, deprivations, real wage cuts and loss of public services and polarised society.

The evidence of social exclusion and a polarised society is all around us. The richest 1% have more wealth than 70% of the population combined. The bottom 50% of the population owns less than 5% of wealth, and the top 10% owns a staggering 57%. Some 37% of total disposable household income in the UK goes to the fifth of individuals with the highest household incomes, while 8% went to the fifth with the lowest.

To boost corporate profits, successive governments have sought to cheapen labour and imposed real wage cuts. Workers share of gross domestic product, in the form of wages and salaries, has declined from 65.1% in 1976 to barely 50% now. The median pre-tax wage of £28,584 is lower in real terms than in 2008. Due to spread of fire and rehire on low pay and zero-hour contracts early 6.2m workers are in insecure jobs. The Joseph Rowntree Foundation estimates that a single person needs £29,500 a year to reach a minimum acceptable standard of living, and a couple with two children need to earn £50,000 between them. The grim statistics are that over 50% of the population lives on income which is below the level needed for minimum standard of living, and governments have not listened to cries for help.

Most Britons are now unlikely to own a home, which has an average price of £375,000. First-time homebuyers are spending 40% of pay on mortgage repayments and renters are spending nearly 40% of their wages on rent, leaving little for other essentials. Governments promise to build new affordable homes but rarely hit the targets. Social housing has severely declined. Household incomes are depleted by unchecked corporate profiteering. Most mobile phone and internet companies hike prices by the rate of inflation + 3.9% each year. Water and energy companies are guaranteed real returns by regulators, regardless of the quality of service. Profit margins of companies have soared by an average of 30% since the pandemic. Electricity and Gas supply companies have increased their profit margin by 363%. Bank profit margins have increased by nearly 50% compared to their pre-pandemic average. Big supermarkets have increased their profit margins by 19% and made an extra £17.4bn in profits.

Work doesn’t pay enough and people increasingly rely upon charity and benefits to make ends meet. Some 38% of the people claiming Universal Credit are in employment. In 2008/09, just 26,000 individuals used foodbanks, but by 2022/23 the numbers soared to nearly 3 million. Social security benefits have not kept pace with inflation and some 12m people, including 4.3m children, 30% of all children, live in poverty. For the period 2013-2019, the government reduced social security benefits in real terms by freezing their value or increasing them by a lower rate than inflation. In 2017, the government introduced the two-child benefit cap, condemning millions of children and their families to poverty. Due to low incomes and profiteering 6m people are trapped in fuel poverty. In 2022-23 around 800,000 patients were admitted to hospital with malnutrition and nutritional deficiencies, a threefold increase in 10 years. Scurvy and rickets, once banished, have returned as the UK hurtles towards a new Victorian era.

Youth clubs offered younger people a chance to build solidarity and communities, but with government cuts to local council funding over 1,200 have been closed since 2010. Hundreds of children’s centres, council-owned and affordable leisure centres, community centres and village halls have closed.

In England, 6.38m patients are waiting for 7.6m hospital appointments. Those who can afford to pay for private healthcare may bypass the queues, others pay with their lives. Some 300,000 people a year are dying whilst waiting for a hospital appointment. Social care is shambles as corporations fleece public budgets. Nearly 29,000 people a year die waiting for social care. People struggle to see a family doctor or dentist and some have taken it upon themselves to extract infected teeth. Due to lack of healthcare 2.8m people are chronically ill and unable to work. Due to lack of investment public buildings such as schools are literally falling down.

None of this has put the brakes on neoliberalism. Governments tax wages at marginal rates of 20%-45% whilst capital gains accruing to the wealthy are taxed at the rates of 10%-28%. Since 2021, income tax thresholds and annual tax free personal allowance have been frozen at £12,570. Millions more people are sucked into paying income tax. In its last two budgets, the Tory government loped £21.4bn off national insurance rates, which benefited the richest the most. It gave zero benefit to 17.8m adults surviving on incomes below £12,570. Social mobility has been reduced as fewer people are going to university. Those going are saddled with lifelong debt. Not so long ago, higher education was funded from the public purse. Now the cost has been dumped onto households who carry a debt of £236bn and paying interest at the rate of up to 8%, way above the rate of inflation. UK Households have a debt of £2.1 trillion and there is no relief in sight.

The Labour Party came to power in July 2024 with 33.7% of the votes, winning 412 of the 650 seats in the House of Commons. It promised ‘change’ but remains committed to neoliberal economics. Almost its first act was to confirm continuation of the two-child benefit cap and withdrawal of the winter fuel payments for retirees. Some 2.1m retirees live in poverty. The UK state pension is less than 50% of the minimum wage, and almost the lowest in industrialised nations. Some 68,000 pensioners a year die in poverty. Last winter resulted in 5,000 excess deaths of retirees as they struggled to make a choice between eating and heating. Labour promised no tax rises for corporations or the rich.

The above provides a brief glimpse of people’s desperation. Hope and social wellbeing has been drained by neoliberal economics and self-imposed fiscal rules. The social strains are the direct result of governments appeasing corporations and wealthy elites. The political system has abandoned low/middle income families and makes them an easy target for right-wing extremists offering simplistic solutions. The government needs to redistribute income and wealth and invest in public services. Such calls always lead to the usual question “How are we going to pay for it?” Well, a country that can bailout banks and energy companies, fund foreign wars in Ukraine, Afghanistan and Iraq and hand over billions in subsidies to corporations can also eradicate poverty and injustice, if the political will is there. Since 2010 HMRC failed to collect between £500bn and £1,400bn of taxes. Billions more can be raised by taxing capital gains at the same rate as wages and through wealth and financial transactions taxes.

Immediate steps should include abolition of VAT on domestic fuel and reduction in the standard rate of VAT. A sizable increase in personal allowance will take millions out of the income tax net. Two-child benefit cap must be ended. Real value of benefits must be preserved. Profiteering must be curbed. Councils must be allowed to build social housing, which will be at a lower cost than profiteering developers. There should be worker-elected directors on boards of large companies to ensure that wealth is equitably shared. Wherever possible, customers too should elect company directors and vote on executive pay as that would curb exploitation by water, energy, supermarkets, banks and insurance companies. Rather than guaranteeing corporate profits through privatisation, outsourcing and private finance initiatives, the state should invest directly in key infrastructure and meet community needs. Another world, a better world, is possible.

Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.