OPINION: The next big crisis is already on the horizon - the Government must act
- Credit: PA
While all eyes have been focussed on Covid, the next big crisis to hit the country is already looming over the horizon.
Many people in Britain next year are going to experience the largest fall in living standards for years as the cost of living rockets without incomes keeping pace.
We can already see prices shooting up whenever we go shopping. Many food items are much more expensive than they were a year ago, or you get less than you used to for the same price. Petrol prices are pushing towards £1.50 a litre.
This is reflected in the current official inflation rate of 5.1% but things are going to get much worse in the coming year.
The Bank of England forecasts prices will rise at least 6% and, through a mixture of Government inaction and deliberate policy decisions, most people are going to have less money to pay these increased bills.
Pensioners have already been hit by Rishi Sunak’s decision to scrap the triple-lock this year so their pensions will only rise by 3.1% when prices are rising 6%. This is a real terms cut in their income which is the one thing the pensions triple-lock was supposed to ensure didn’t happen.
The Government has cut £20 a week from Universal Credit and, while it has been increased for some, people on the very lowest incomes – those hit hardest by price increases – won’t see any benefit.
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National Insurance premiums are being increased in April – taxing workers on the lowest earnings more while leaving property speculators untouched.
According to Boris Johnson this tax hike on the low paid is supposed to fix social care “once and for all”. It will do no such thing.
Over the last few years, councils like Conservative-run Suffolk County Council have been adding a stealth tax – the “Adult Social Care precept” – to council tax bills. For the average Band B household in Ipswich this now amounts to an extra £113 a year.
You might have thought that, with the extra tax we’re going to be paying in National Insurance to “fix” social care, that this would now disappear from our council tax bills. It won’t.
Far from getting rid of it, Conservative councillors are actually proposing to increase it by another £11 this year – a whopping 9.5% increase.
But all this is dwarfed by the potential increases in energy bills that are coming in April when the price cap is next reviewed. It is forecast that bills could rise by at least £700 a year.
This is going to push some families over the edge.
The Government must act now to help people out.
It’s not too late to scrap the National Insurance rise and instead raise the money by taxing income from property, shares and capital gains at the same level as earned income.
It’s not too late to restore the pensions triple lock.
In the European Referendum, Boris Johnson said that one of the benefits of Brexit was that we could reduce VAT on energy bills to zero. It’s incomprehensible that, with bills soaring, he hasn’t done this already. Even if VAT is reduced now, it will be too late to help reduce this winter’s heating bills.
Faced with this crisis all we get is the same dither and delay by Boris Johnson. Does he even understand the scale of the problem?
This is a man who complains he can’t get by on his Prime Ministerial salary of £160,000 a year. A man who spent over £100,000 – admittedly of other people’s money – refurbishing his flat.
If he can spend £840 on a roll of gold wallpaper without a second’s thought, then can he really appreciate how much despair many families will be feeling at the thought of a £700 increase in their energy bills?
Is Boris Johnson capable of understanding how much hardship ordinary people in Britain are facing this year?