On Tuesday 25 October, Rishi Sunak was anointed as Britain’s prime minister, replacing Liz Truss, who had lasted a mere 44 days (from 6 September to 25 October), the shortest serving prime minister in British history.
Sunak is the third prime minister in just seven weeks. His is the fifth consecutive government in six years, forcing one journalist to comment that Britain had acquired Italian-style politics and finances, without the sunshine.
Liz Truss had based her campaign to become prime minister on massive tax cuts for the rich, allegedly to promote GDP growth, while proposing to fund these cuts through borrowing. Although Truss won the contest in the Tory membership vote by a margin of 57.5 percent to 42.5 percent, it was a smaller margin than predicted.
On becoming prime minister, Truss appointed Kwasi Kwarteng, her long-time friend, to be the chancellor of the exchequer. Kwarteng presented his ‘mini budget’ to parliament on 23 September. Among other measures, it included plans for: cutting the basic rate of income tax from 20 percent to 19 percent as of April 2023; reversing the planned rise in corporation tax from 19 percent to 25 percent; axing the cap on bankers’ bonuses; scrapping the Johnson government’s increase in national insurance to fund social care; and raising the stamp duty threshold for home buyers from £125,000 to £250,000 and from £300,000 to £425,000 for first-time buyers.
Earlier, on 8 September, Truss had given large handouts to energy behemoths by pledging to cap domestic energy prices at £2,500 over two years, while Ofgem had only a few days earlier confirmed the price cap at £3,560 (and £4,000 from January 2023), apparently to protect the domestic suppliers of energy against rising gas prices. The government planned to finance this measure by granting credit to energy suppliers to be recouped through higher domestic bills later on.
As if that were not sufficient, the government announced its intention to lift the ban on fracking – a measure bordering on insanity.
Kwarteng’s ‘mini budget’ was greeted with gasps of disbelief even on the Conservative benches in the House of Commons. It spooked the markets and sank gilts. It sparked a run on the pound and sent borrowing costs spiralling upwards, forcing the Bank of England to make a £65bn intervention in the bond market.
Kwarteng was forced to axe the proposal to reduce the top rate of income tax after a threatened rebellion by Tory (yes, you read right!) MPs, who announced that they would not vote for it in the Commons. It was a measure that would have benefited just 1 percent of taxpayers – those earning more than £150,000 a year.
At one point after the budget, sterling was trading against the dollar at a record low of $1.038, following the announcement of a debt-funded £45bn package of tax cuts. While sinking the pound and crashing gilts, the budget raised the government’s borrowing costs.
In tandem with the hostile response on the financial markets, there was widespread anger among Tory MPs and voters. The budget was “a display of wrong values”, said Michael Gove.
The unfunded borrowing in the £45bn tax-cutting splurge caused panic over how pension funds would cope as and when the Bank of England brought to an end its emergency bond-buying programme.
Hardly anyone, except some nutters in the European Research Group of hard right-wing Tory MPs, had anything good to say about Kwarteng’s budget. On the plan to scrap the 45 percent top rate of income tax, former Tory chief chip Julian Smith said: “We cannot clap for the carers one moment, and cut taxes for millionaires months later.”
CBI director-general Tony Danker told Sky News: “If you ask me for thirty measures that are going to drive up growth, I would not put it in the top thirty.”
The government hoped to plug the hole in its finances and balance the books through cuts in departmental expenditure, putting public services under pressure. And real-terms cuts to benefits were also under consideration. “Cutting benefits while at the same time offering tax cuts to the rich was ‘deranged’,” said one Tory MP.
Interest rates are set to rise as the Bank of England tries to bring inflation under control, putting mortgages under severe pressure. In a devastating criticism of Truss’s growth plan, Martin Wolf of the Financial Times, describing Truss as a zealot, wrote:
“The dominant characteristic of zealots is their conviction that reality must adapt to their desires, rather than the other way around” – a characteristic that will prove a disaster for the country, he added.
Markets have rebuffed the zealots, he wrote, “as investors fled sterling and gilts, causing such mayhem that the Bank of England’s financial policy committee was driven to intervene, in an attempt to rescue the government and an ill-regulated pensions industry from their follies”.
Instituting freedom for the bankers and lower taxes for the prosperous would, according to the Truss government’s delusions, would somehow have magically helped to quadruple growth, said Mr Wolf. As a matter of fact, he pointed out, it was a plan for inequality and insecurity, not for growth, involving as it would slashing welfare and public services, shifting income from the bottom to the top of the distribution in the midst of a cost of living crisis, in a country with the highest inequality of disposable incomes in the high-income countries, after the USA.
Describing the authors of this budget as indifferent to reality or simple decency, and unmoored from the British people, and pointing out that they had forced the Bank of England into an ill-timed return to quantitative easing (inflationary money printing), Mr Wolf concluded his article with these ringing words of condemnation of the Truss government:
“These people are mad, bad and dangerous. They have to go.” (Truss’s growth plan is nothing but a magic potion, 3 October 2022)
Following the ill-fated ‘mini budget’, acrimony, infighting and confusion reigned in the Tory party. Kwarteng was forced to axe plans to scrap the 45p top rate of tax by Tory rebels. Ministers were at daggers drawn with each other as party discipline collapsed. The plan to raise benefits in line with average earnings rather than with inflation at a time when earnings are growing by 5 percent a year while inflation stands at 10 percent came under sharp criticism even from highly-placed Tories.
Leader of the House of Commons Penny Mordaunt told Times Radio that she had always supported the maintenance of the link between pensions and welfare payments, on the one hand, and inflation on the other. By linking these payments to income, hurting the already impoverished recipients still further, the Treasury stood to save £11bn a year.
Within weeks of Liz Truss becoming prime minister, most Tories, as well as the general public, came quite rightly to perceive her as “incompetent”, “useless” and “untrustworthy”. There was hardly anyone left to say a good word for her and her administration.
Truss had attacked the media, the Brexit referendum remainers, local communities, north Londoners, podcasters – lumping them all together as anti-growth tofu-eating supporters of wokery.
Writing in the Financial Times, Helen Thomas had this to say: “Truss’s government has shown remarkable commitment to its willingness to be unpopular. It is not clear why the business community would want to join them.” (Liz Truss and business are at cross-purposes, 12 October 2022)
So disgusted were members of the Tory party with Truss and her dwindling group of acolytes that many of them, including Rishi Sunak, cancelled plans to attend their annual party conference or left it early. Truss’s Thatcherite mix of union-busting, privatisation and tax slashing, which left a £45bn hole in government finances, far from appealing to even the business establishment, is no longer regarded by the latter, let alone by tens of millions of working people, as a meaningful way in the present conditions for transforming the British economy and engineering the growth of GDP.
The reaction of the markets to the ‘mini budget’ was eloquent proof of that.
No wonder, then, that the Tories’ poll ratings went into free fall; that even the most reactionary and uninspiring Labour opposition, led by the most boring Sir Keir Starmer, secured a 38-point lead over the Tories, including in the red wall northern constituencies that the Tories had won at the last election.
Truss came to be seen presiding over not ‘Britannia Unchained’ but over ‘Britannia Unhinged’. Right-wing Tories of the Jacob Rees-Mogg variety, who had dreamt of turning post-Brexit Britain into a low-tax and low-regulation economy, came to be seen as ‘right-wing nutters’, and the Tory party membership who had voted for Truss as against Sunak as “a load of loons in Maidenhead”.
Surrounded by market turmoil, disintegrating discipline in her party, and facing annihilation at the next general election, Truss, in order to save her own skin, sacked her chancellor, who had been in office for just 38 days. Even that drastic step did not bring any relief, as the disquiet in the Tory parliamentary party had reached such dimensions that only a change at the top could hope to restore calm.
In the circumstances, Sir Graham Brady, the chairman of the powerful parliamentary 1922 Committee of Tories, told Truss that she would have to go as the majority of Tories no longer had confidence in her.
Contrary to the Tory party’s rules, which provide that a prime minister cannot be challenged for one year after their election, new rules were brought in with the tough condition that anyone wanting to do so had to have the written support of at least 100 MPs. As no candidate other than Rishi Sunak managed to attain the requisite number, he was declared the ‘winner’, and thus became prime minister of Britain on Tuesday 25 October.
Rishi Sunak has had a meteoric rise through the Conservative party. In 2014 he was selected as Tory candidate for the safe Conservative seat of Richmond, North Yorkshire, with the support of the outgoing MP and former party leader, William Hague, and was elected to parliament in 2015.
He backed the Leave campaign in the Brexit referendum and also Boris Johnson for the Tory leadership, and was made deputy to Johnson’s chancellor Sajid Javid. On the latter’s resignation in 2020, Sunak became chancellor; and on 22 July 2022 he resigned, minutes after Javid had resigned as health secretary over what has been dubbed ‘Partygate’, triggering Johnson’s resignation as prime minister two days later.
As for his educational, family and professional background, Sunak attended Winchester, one of the top exclusive public schools and went on to do a degree in Politics, Philosophy and Economics at Oxford university. Thereafter, he completed an MBA at Stanford in the USA and went to work first at Goldman Sachs and then at the hedge funds TCI and Theleme Partners.
At Stanford he met and married Akshata Murthy, daughter of Narayana Murthy, the billionaire founder of the IT company Infosys.
During the prime ministerial contest between Liz Truss and Rishi Sunak, both candidates vied with each other to bring out their most reactionary stance on matters ranging from anti-trade union legislation to asylum seekers and the northern Ireland protocol. The main difference between them was on government finances, with Sunak insisting that budgets had to be balanced and that tax cuts could not be financed through borrowing.
Truss, on the other hand, promised £30bn-worth of tax cuts, for these were, she asserted, essential to ensure economic growth. The very real chance that Truss’s proposed measures might accelerate the inflationary spiral via government finances coming under pressure did not serve to discourage a majority of the members of the Conservative party from voting for her.
Well, it didn’t take long for Mistress Reality to strike and unravel all the Truss government’s plans. Having sacked Kwarteng, Truss appointed Jeremy Hunt as her new chancellor, and within days he had reversed many of Kwarteng’s ‘mini budget’ provisions. What remained of them is sure to be undone in the days to come.
The election of Sunak as prime minister was greeted with a sigh of relief by markets and the establishment alike. It certainly had the effect of restoring a sense of calm and stability, for Sunak was seen to be competent and economically literate.
Sunak’s election to the top job in the British government has not only been received with satisfaction by the British ruling class, but also by black people in Britain, as well as by Indians and Kenyans because of his family’s connections with these two countries.
Not wanting to dampen people’s enthusiasm for Sunak, we simply wish to observe that Sunak has been able to rise up the greasy pole because he is seen by the ruling Conservatives as the person most suited at present to represent the interests of British imperialism, which he will doubtless do, just as Barack Obama, the first black president of the USA, devoted his presidency to the service of US finance capital.
No matter how competent Sunak may be, his in-tray is crammed with urgent problems, which he is in no position to resolve. Public finances are in a dreadful state; public services are seriously stretched; energy and food prices are soaring, with even official inflation close to 10 percent; the balance of payments deficit stood at 4.7 percent of GDP in the second quarter of 2022 and is expected to rise as high as 7.5 percent of GDP in the fourth quarter, threatening a further run on the pound; interest payments on government debt are expected to rise; the economy, which shrank by 0.1 percent in the second quarter of 2022, is likely to go into a period of recession predicted to last at least until the end of 2024.
As if that weren’t enough, various issues consequent upon Brexit, such as the northern Ireland protocol and the related question of getting the northern Ireland assembly working, remain unresolved; there is the ever-present bugbear of British politics – immigration; there is widespread and growing industrial action by workers, whose wages are so low that they have to choose between heating and eating; hundreds of thousands of workers are resorting to receiving handouts from food banks and a growing number of school children are unable to learn because of hunger; and there is the question of whether to keep or scrap the triple lock on pensions, according to which state pensions must rise in line with whichever is the highest of (1) inflation, (2) average earnings, or (3) 2.5 percent.
Then there are the questions of war and peace, of defence expenditure and the level of support Britain provides towards Nato’s proxy war against Russia through the puppet Ukrainian regime; and trade relations with China.
To balance its books, the Sunak government must either raise taxes or cut expenditure. With public services already under severe stress, any cuts will fall heavily on working people, when more than one-fifth of the people of this country are expected to find themselves living in absolute poverty, according to the Resolution Foundation. About 6.9 million households, accounting for 16.4 million people, are expected to suffer from fuel poverty this winter – an astronomic rise from last year’s 4.6 million households.
According to TUC figures, 57 percent of the people living in poverty, accounting for 8.3 million people, live in working households, reflecting the miserable wages they work for – all this in the sixth-richest country in the world!
There is something totally rotten about Britain, 2.5 million of whose children go hungry every day, while the ruling class has no qualms about spending billions on waging wars – from Afghanistan, Iraq, Syria and Libya to Ukraine – and lifting the cap on bankers’ bonuses, or spending several tens of millions on the occasion of the death of one of the most fabulously rich women in the world.
It is not the function of the riches of a country but of a social system to provide for ordinary people. Capitalism is inherently incapable of doing so. It must be got rid of and replaced by socialism, in which planned production takes place for the benefit of the vast majority and not a tiny handful of exploiters.
The conditions are increasingly forcing the working class to resist and rise up against this utterly rotten and outmoded system – or completely submit to the diktat of monopoly capitalism, sink to the lowest levels of utter destitution and eke out a miserable existence. The alternative – the only one – is to pick up the banner of Marxism-Leninism and overthrow imperialism.
To do that the working-class movement needs to master the science of Marxism-Leninism, for without a revolutionary theory there can be no revolutionary movement,
Second, it needs a strong, disciplined and centralised party, a communist party, run on democratic-centralist lines and guided by this revolutionary theory for, as VI Lenin emphasised:
“In the struggle for power the proletariat has no other weapon but organisation. Disunited by the rule of anarchic competition in the bourgeois world, ground down by forced labour for capital, constantly thrust back to the ‘lower depths’ of utter destitution, savagery and degeneration, the proletariat can, and inevitably will, become an invincible force only through its ideological unification on the principles of Marxism being reinforced by the material unity of organisation, which welds millions of toilers into an army of the working class,” which army the rule of decadent, moribund and parasitic imperialism will not be able to withstand.
The sad thing is that the working-class movement in Britain has been long charactised by its disdain for revolutionary theory. In addition, our movement since the late 1950s has been gutted by the ravages wrought by the erroneous theories of the Khrushchevite revisionists and counter-revolutionary Trotskyism. These erroneous trends have to be fought against and defeated.
Unless this is done, the working-class movement will continue to flounder from pillar to post. Notwithstanding the colossal harm done to the working class through its disdain for theory, there are, incredibly, still people who go around saying that any mention of Marxism-Leninism will frighten the working class away from socialism. Such assertions remind us of the hero of Tolstoy’s story – The Fool – who greeted mourners at a funeral procession with the words ‘Many happy returns of the day’.
The British working-class movement can well do without such advice, for it is precisely the disregard for theory which, over more than 150 years, has proved devastating to our movement and turned it into an appendage of the bourgeoisie.
On the contrary, workers must wage a persistent struggle against opportunism, for the struggle against imperialism, as Lenin put it, is a sham and a humbug unless accompanied by the fight against opportunism.
We conclude this article with the following words of Lenin which should serve as a warning against the purveyors of disregard for theory as a route to easy success:
“Unfortunately the British working-class movement promises to serve for a long time to come as a sad example of how the labour movement’s divorcement from socialism leads of necessity to its becoming shallow and bourgeois in character.” (Notes on The British labour movement and the Trade Union Congress, 1905)
