The Observer’s take on Britain’s growing cost of living crisis | Observer Editorial
The Bank of England released a series of grim economic forecasts last week that said inflation will peak at over 7% this year and real household incomes will fall by an average of £1,000 by end of 2022. Meanwhile, the energy price cap will have increased by hundreds of pounds over the same period. Without another wave of Covid, it is the cost of living crisis and especially its impact on families already struggling to pay their rent, put food on the table and pay their heating bills that will dominate the people’s lives in the next two years.
Yet Boris Johnson remains mired in the depths of the political crisis, weakened in his role as prime minister, while his potential successors are more concerned with their campaigns to succeed him than addressing the challenges facing the country. Westminster politics reached a new nadir when, in an attempt to distract from its own misfortunes, it falsely accused Keir Starmer of failing to prosecute child molester Jimmy Savile, a fabricated claim unfounded in fact. Savile’s victims have speak of their distress at having their abuses politicized by the prime minister in this way and the unfounded insults led to the resignation of his longtime political boss, Munira Mirza, who accused him of “slanderous” behavior.
Johnson is no stranger to misinformation. He has made liberal use of it in the past – the Leave campaign he chaired claimed the UK Statistics Authority subsequently ruled “a manifest misuse of official statisticswhile as Prime Minister he repeatedly spread false information, lying about the implications of his Brexit deal for Northern Ireland. The UK Statistics Authority said its claim made in the House of Commons last Monday that crime had fallen by 14% was false. But for the Prime Minister to try to mislead the country as to why the victims of a pedophile have never seen justice for his own political advantage is despicable and brings shame on the whole nation.
Johnson’s behavior sparked renewed anger among ministers and his parliamentary party. Several senior assistants quit, only to be replaced last night by hastily assembled replacements. And his relationship to the truth is now so loose that it’s unclear how voters are supposed to distinguish between government announcements that are true or false statements designed to distract from the disintegration of his post as Prime Minister.
The government’s measures to deal with the rising cost of energy bills are far from sufficient. Low-income families have borne the brunt of tax credit cuts and benefit freezes over the past decade, with many low-income parents losing thousands of pounds a year in the process. Savings paid for income tax cuts that disproportionately benefited wealthier households; it is a political choice made by successive Conservative Chancellors, supported between 2010 and 2015 by the Liberal Democrats. The cuts have made less well-off households particularly vulnerable to this cost-of-living squeeze and are a big part of why child poverty rates have increased and a growing number of people are using food banks.
Government assistance to help deal with rising energy bills should be targeted to those who need it most, through the system of tax credits and benefits. Instead, the Chancellor, Rishi Sunak, chose to prioritize Conservative voters – and therefore his own leadership prospects – doling it out through a flat-rate, ill-targeted council tax refund. from which 80% of households will benefit; more than 40% of its value will go to households in upper half income distribution, while more than 600,000 low-income households to pass. The £200 rebate for all households will be enforced through a surcharge of £40 a year for the next five years, pushing current cost pressures well into the future.
This assumes that rosier economic times are just around the corner. Yet Brexit, the great unrecognized economic drag, will continue to dampen economic growth for years to come, whether or not voters associate these costs with leaving the EU. Worse still, Brexit is likely to widen the gap in economic performance between London and the South East and the rest of the country. This will only further accentuate the impact of cuts to government subsidies that fund local services, which have hit less affluent areas of the country much harder than areas that enjoy higher revenue from the tax. housing and business taxes. The incremental measures in the government’s “race to the top” plan released last week will do very little to close the investment and productivity gap; in 2021, the equivalent of just £32 per person was granted by the Leveling Up Fund for the North of England, which pales in comparison to the £413 per person drop in council spending since 2011.
This is the alarming situation the country now finds itself in just over five years after a referendum that paved the way for Boris Johnson to become Prime Minister and irrevocably undermine the standards of public life. Whether kicked out tomorrow or months from now, a weakened Conservative party will remain consumed by its own internal politics as many already beleaguered families face the worst threat to their economic wellbeing in many years. This is not what Britain deserves.