Frank Rowley examines the future implications of public spending cuts for the youth of today; and the general lack of optimism and hope for the future capitalism produces among the youth and working people.
Recently the government announced that it is attempting to claw back cash for the public budget after the pandemic has blown a hole in their already miniscule spending, the proposed method for this is to both eliminate the pensions tax relief and slashing the pensions lifetime allowance.
For those unaware, tax relief is paid at a person’s lower limit rate of income tax as an incentive to save money. But, Rishi Sunak is considering limiting tax relief on pensions contributions to 30%.
This would affect nearly 5 million workers who pay an eye-watering 40% or 45% income tax. Under a 30% flat rate, a 35-year-old earning £60,000 paying 4% of their salary into a pension could be £50,440 worse off by retirement age.
The Treasury is also considering cutting the pensions lifetime allowance from £1,073,100 to as low as £800,000. The allowance places a limit on how much savers can put into pension pots tax free. Millions will be forced to pay thousands more in taxes if the changes come into force. Anyone with (hypothetically) £1 million in their pension pot would pay £110,000 to the taxman if they were charged 55% and withdrew the £200,000 above the allowance as a lump sum.
All of this, and a new charge on “employer contributions” would deliver a blow to workers overnight.
10 million + people could lose out on tens of thousands of pounds that would otherwise be paid into their pensions by their employer. Adding a charge would also discourage firms from raising the amount they contribute and would create a dent in the amount of money that goes into pensions every month.
This last point is yet another practical example of the insanity that is company-funded social services such as pension, healthcare, etc. When an entity who’s sole goal is to wring dry as much profit off the labour of those working for them are then expected to fork out for services that would improve the lives of their workers dramatically, it is only natural for them to ask ‘why bother?’
Yet again we have become witness and victims to a combined incompetence in the capitalist sense of maintaining discrete class domination and a routine plundering of our combined coffers in the working class sense.
Just as in 2008, we are expected to pay for the clean-up of the mess the ruling capitalist class has made. Just as it was back then, a specific lack of foresight and a malicious resignation to the destructive nature of the capitalist economic system has combined to cause the hot mess we’ve had pinned on us now.
This is a mistake only from a liberal perspective, of not ‘keeping the peace’ and maintaining the system of capitalist class exploitation with an appropriate level of competency. For everyone else, this is yet more of the same. There’s no mistake here.
So what does this mean for young people? Apart from the literal decrease in the value of your pensions, it is another signpost to the theft of the future. The majority of young people today have no illusions about being able to own a home on an average job at any age, let alone by 30.
We have existed for quite a while now without a shared positive vision of the future, almost two generations at this point. This relatively minor injustice speaks to a much larger social trend, one that feeds a specific kind of social anxiety. That is; the fear of the future.
In the past, both the exploiter and exploited classes could at least share in the vision of everything getting better over time if things stayed in the same course. ‘Our children’s lives would be easier than ours, we would have more time to play and enjoy life, and we could expect a sense of security to our lives, no matter what we chose to do.’
Climate change in particular is already one of the primary contradictions of the capitalist world system and will perhaps, finally become the last nail in this system’s coffin.
In such a world, who can be blamed for not being bothered about being cheated on pensions by the state? For most young people the question is not how will I cope at 70, but will I even live to 40?
Generally speaking, taxes as a concept are seemingly universally maligned in the current day from every perspective, and there is good reason to this reaction, even if it is just that. Leaving aside all the neoliberal ideology surrounding the especially US disdain for any and all taxes, the experience of almost every person alive today in regards to taxes has been majority negative.
That is to say, we are told constantly in our capitalist reality that we all suffer under that we are to blame our suffering for the mess it causes. In the case of taxes, we see every month or so massive scandals of fraud, offshoring regarding the taxes of the elite and constant deep cuts to the public services that we all rely on revealed about the British state while inversely being told that all of this is either our, the working class’, fault or are mysterious happenings that defy explanation.
It doesn’t take a Marx to understand what’s going on here, and this reaction manifests a hatred of all things taxes regardless of the context. But, as with most things under capitalism, it doesn’t have to be this way.
Public spending can and should be used to better the society surrounding in and increasing the quality of life for working people and helping those who can’t. The past socialist states provide fantastic models of this from their primes and all their specific expressions of such.
Culturally, too we can see that the past socialist states carried with them a burning hope for the future. Especially in the propaganda (in the neutral sense) of the early Soviet Union and the Great Proletarian Cultural Revolution in China, figures representing the working class towered over all hurdles put in their way and the future was, for the first time in said countries’ histories, bright.
The difference between them and us is that their exploited classes were able to overthrow their exploiting classes in unison through their communist parties. Through establishing a new, workers state and maintaining their domination over the once exploiting, parasitic classes a new reality could be achieved where finally the majority ruled over the minority.
But for this, constant, coordinated class struggle is required.
Frank Rowley, is a member of the YCL’s Kent branch