TTurn on the radio or scroll down on your phone and the big headlines belong to Covid. But when this latest version of the plague hits the covers, another story will take its place, and this one will stick around for most of the year, setting the terms of trade at Westminster and possibly deciding Boris Johnson’s future.
The cost of living is about to shape our politics in a way it hasn’t in decades.
You can spot the backlog this week, from Keir Starmer’s warning of a crisis to Tory MPs clamoring for Johnson to act now on high fuel bills. And you can already see the misery in the stories about how the British now wrap themselves in blankets and turn on your hair dryers to keep warm, instead of running central heating. Over the next several weeks, the crisis will only grow.
On February 7, energy regulator Ofgem sets the new maximum price for energy bills. The heads of utility companies warn that the limit could easily exceed £ 2,000, twice what it was last winter. Experts at the charity National Energy Action have warned that energy poverty could rise to its highest levels since John Major was at No. 10, with around 6 million households having to choose between heating and food, or paying the price. bus ticket or buy sanitary napkins.
This means that 2 million homes, which until last fall still kept their heads above water, will sink when the new limit takes effect on April 1. At that time, taxes also go up. National insurance will rise, as will municipal taxes in much of the country, along with a stealth increase in income tax bills. Put all of that together and the Resolution Foundation cautions that the average home can lose an extra £ 1,200 a year. Added to this is the effect of rising gasoline prices. These bills will accumulate as wages and benefits are reduced in real terms. It is a recipe for widespread deprivation and massive political turmoil. It also destroys the electoral coalition that gave Johnson his landslide victory. In true blue woking, just 6% of households are in a situation of energy poverty; In Workington, by contrast, which was conservative in 2019 alone, that proportion is almost 14%.
My bet has long been that boring old economics will inflict much more damage on Boris Johnson than baroque politics. Most of the Sun King’s critics have spent the days since 2019 attacking his breach of the rules, his risky policy with Brussels, his sheer bad behavior. Until the revelations about the matches at No. 10, almost none landed with audiences tired of a political class smashing the rules to fill their boots; just ask the Right Hon member for Greensill Capital. But all of those voters, who haven’t been shaken by the 42-point headlines and poignant opinion pieces, are much more likely to be mobilized by the biggest tax burden in 70 years, sharp cuts in front-line services, and inflation. growing.
No wonder the government can barely quell their anxiety. Business Secretary Kwasi Kwarteng has been meeting with energy chiefs at a series of emergency summits, the last one held on Wednesday, while Chancellor Rishi Sunak’s team has been complaining to journalists about having to deal with something of this. Still, with only a month to go before Ofgem’s announcement, no deal is on the table.
The strange thing is that Johnson himself has promised one of those remedies. Co-writing an article in the Sun less than a month before the 2016 EU referendum, he promised that Brexit would mean the end of VAT on fuel bills. “We can eliminate this unfair and damaging tax”Wrote Mr. Leave. “It is not right for unelected bureaucrats in Brussels to tax the poorest and elected British politicians can do nothing.” Two and a half years since he became prime minister, he has done precisely nothing. This week it was squirmed on television that the VAT reduction was a “blunt instrument” that would not direct aid to those with the most extreme financial needs. What a luxury! If only someone had warned us that this guy breaches a deal.
But if Starmer wants to capitalize on this moment, he must do much better than making petty speeches adorned with abstract nouns and adorned with flags. Labor wants to remove the 5% VAT rate on energy bills, but it’s actually a small change: £ 10 back on a £ 200 monthly bill. Better to ask gas companies for windfall tax and oil, which have been gaining ground as fuel prices rise, and directing that money to the underprivileged. If Labor can take that position early enough and loudly, they will reap rewards when the Conservatives copy them. They can also point to failures in the energy market (the collapse of 26 suppliers and the consolidation of their customer base back into the hands of the big six) as a basis for trying something new: use the public sector to direct more investments towards renewables at the level. national.
This is a generation of politicians who have never faced an inflation shock, but are nonetheless haunted by the mythology of what happened in the 1970s. Rightly so: Thatcher used that episode to finally dismantle the state of Keynesian welfare and exile to the left for more than a decade. The right is already reheating those old arguments about how inflation and higher interest rates should mean reduced public spending, and how taxpayers don’t want to pay for “green trash” and poverty reduction.
It is essential that the left now counter these points. We are not in the 70s and there is no danger of a spiral of prices and wages. This is a workforce that has just come out of the worst downturn in living standards since Napoleon marched through Europe – and is about to enter another. It is not the workforce that is not working: it is the markets and the supply chain. That is what needs to be fixed.
www.theguardian.com
George is Digismak’s reported cum editor with 13 years of experience in Journalism