A few days ago in the House of Commons, Ed Miliband, Labor’s shadow climate minister, gave a brief summary by Chancellor Rishi Sunak, compare it to cryptocurrency: “how similar they are … came out of nowhere, rose in value, looked like the future, but it all turned out to be a giant ponzi scheme.”
This week, inflation hit 9 percent – almost three times the rate at which benefits and pensions have risen this year – but so far the chancellor has not acted properly. People struggle to put food on the table, heat their homes and burn their cars. Even when measures such as £ 150 tax refunds (less than £ 3 a week and only available to those in Band D or lower estates) are taken into account, Sunak’s help hardly touches the pages.
The chancellor, who was once portrayed as Superman during the pandemic, has fallen to the ground and it is clear that the cost-of-living crisis is his kryptonite.
In his speech at the CBI’s annual dinner on Wednesday night, it became even clearer that we have the worst possible chancellor at the worst possible time. Sunak said, “I always knew we were willing to do more,” which is about as helpful as a surgeon standing over a dying patient and saying, “I could do more.”
Sunak asked for impotence: “There is no action any government could take, no law we could pass that could make these global forces disappear from one day to the next.” Let me help strengthen the Chancellor’s determination …
Labor’s proposal for an unexpected tax on oil and gas companies – whose dividends would raise £ 600 to the poorest households – would have brought a welcome respite, but was defeated by MPs on Wednesday. But an unexpected tax alone is not enough. People feel inflation in their bills, their rents, at the pump and in their weekly shop. And what if the energy bill rises by a further £ 600 in October as expected? Are we collecting another unexpected tax? We should go further.
This week’s figures show rents rising at the highest rate in almost 15 years, representing a monthly increase of £ 88 since the pandemic began. The annual increase of over £ 1,000 dwarfs the increase in the energy bill (to date). It is no wonder that Labor Mayor Sadiq Khan is calling for a freeze on rents. A cost-of-living crisis can easily develop into a homelessness crisis if left unchecked. Elsewhere, West Yorkshire Mayor Tracy Brabin has set a cap on bus fares in his area at £ 2.
The one place where the public does not feel inflation is in their incomes. The government scrapped the triple lockdown and increased pensions and benefits by just 3.1 percent. Public wages are not funded to counter inflation (which is expected to peak at over 10 percent). Even the 6 percent increase in the national minimum wage this year is a real cut.
Inflation-proof benefits, pensions and incomes would be an important first step. But Sadiq Khan is right when he also talks about price control. Not only rent but also energy bills. In France, energy is nationalized and the French government has capped increases to four percent. As a result, inflation is not nine percent, but 4.8 percent.
His CBI speech was not the first time the chancellor said “there is no action any government could take”. But there are more. Check rising energy bills, freeze rents and inflation-linked benefits, pensions and salaries – and yes, claim some of it back with an unexpected tax. These are all actions that any government could and should take to keep people safe.
Andrew Fisher was CEO of Labor Party Policy from 2016 to 2019. He is the author of The failed experiment a book on British economic policy and the financial crash of 2007/08