New Left Review I/49, May-June 1968

Ken Tarbuck

The Budget, Gold and the Incomes Policy

This year’s budget was the most severe and deflationary of any since the end of the last war. Altogether, it withdrew nearly £1,000 million of spending power from the economy—an unprecedented amount. The devaluation of last November, the January cuts in Government spending, and the budget in March may produce a fall in living standards of the British working class of an order not seen since the 1920’s. Estimates of the rise in the cost of living arising from devaluation ranged from 3½ to 5 per cent. The budget has added further considerable burdens; estimates of the overall cost of living increase for 1968 are now in the order of 8 or 9 per cent. One only has to contrast this with the Government’s norm for wage increases—3½ per cent. Even allowing for the expected 5 per cent rise in wage rates in the first six months of this year (due to the bulge arising from the period of restraint last year) this will not compensate for the increase in prices. Of course wage rates and earnings are not the same thing. Only a minority of wage earners today take home wages as low as the official minimum rates—their take home pay depends on bonus, piece rates and so on. In the coming months there is every possibility that these take-home wages will either be stable or fall. Therefore the price increases will hit harder than bourgeois economists would have us believe. Nor is this all. Along with the slowdown in housing and other social services, there is the threat of unemployment for those in work and little prospect for those now unemployed of finding work. The British working-class is going to suffer.

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