Poverty is on the increase. We wrote on Monday about how the energy crisis is leading directly to a cost of living crisis and the Chancellor’s methods are totally inadequate. As David Osland tweeted.
Sunak’s Failure
Sorry, David. Sunak’s so-called rescue measure of a £200 loan in October and a £150 rebate on council tax for people living in properties in Bands A to D is even worse than that. To get the loan on your energy bill you have to have a bill in the first place. What about the poorest people who have slot meters and are usually on the highest tariffs? They will include some of our poorest pensioners, who are already on 100% rebates on their council tax. Will they get the £150 on top? And speaking of pensioners, Sunak robbed them yet again by removing the triple lock on pensions for this year. So the already miserly state pension will only rise by 3.1% this year, even though Bank of England warned that inflation could hit 7.25% by April and is unlikely to fall back to normal levels for two years.
Food Price Inflation
The supermarkets are saying that food prices will rise in line with the Bank of England warning. But there’s a catch. The cost of basic food items has been going up rapidly while top end luxury food prices have stayed the same. Jack Monroe exposed this scandal on Twitter last month. Thanks to Howard Thorp for alerting me to this.
This time last year, the cheapest pasta in my local supermarket (one of the Big Four), was 29p for 500g. Today it’s 70p. That’s a 141% price increase as it hits the poorest and most vulnerable households. This time last year, the cheapest rice at the same supermarket was 45p for a kilogram bag. Today it’s £1 for 500g. That’s a 344% price increase as it hits the poorest and most vulnerable households. Baked beans: were 22p, now 32p. A 45% price increase year on year. Canned spaghetti. Was 13p, now 35p. A price increase of 169%. Bread. Was 45p, now 58p. A price increase of 29%. Curry sauce. Was 30p, now 89p. A price increase of 196%. A bag of small apples. Was 59p, now 89p (and the apples are even smaller!) A price increase of 51%. Mushrooms were 59p for 400g. They’re now 57p for 250g. A price increase of 56%. (This practice, of making products smaller while keeping them the same price, is known in the retail industry as ‘shrinkflation’ and it’s insidious as hell because it’s harder to immediately spot.) Peanut butter. Was 62p, now £1.50. A price increase of 142%. . . . And just to add: - an upmarket ready meal range was £7.50 ten years ago, and is still £7.50 today. - a high-end store’s ‘Dine In For Two For £10’ has been £10 for as long as I can remember. - my local supermarket had 400+ items in their value range, it’s now 91 (and counting down)
Housing
The increase in interest rates will push up housing costs both for home owners and those renting from private landlords, who buy to rent and will pass on the cost to tenants. The cost of housing rent in the UK is already rocketing, with the average tenant paying nearly £1,000 a month. According to Zoopla, rent has risen 8.3% in a year during the pandemic.
Tax
National Insurance is a tax. It was raised ostensibly to pay for the crisis in social care. But that will only kick in after two years. It is supposed to be used to clear the NHS waiting lists first. Anyone earning over £184 has to pay it and people on average wages will end up paying more in increased NI contributions than they get back from Sunak.
VAT is another tax. It is charged on gas and electricity bills. So the 54% price hike in the energy cap means a 54% price hike in the tax we pay for our gas and electric. Sunak has refused to reduce VAT on fuel bills. So that’s a nice little earner for the Treasury at our expense. He is giving us very little or nothing and taking away even more.
Inflation
The biggest driver of inflation at present is our energy bills, followed by housing and food. The energy companies are making massive profits and still they insist on passing all of the costs of the price hike onto the consumer. The solution is a windfall tax. Sunak says no. So we face price inflation and no way to avoid it, while the Bank of England warns against inflationary pressures from wage settlements and pushes up interest rates, just to make matters worse!
Let us be clear. When they increase interest rates, it is to reduce demand. But we are not in a boom economy that is heading out of control. Profiteers are pushing up the price of necessities: the roof over our heads, food on the table, heating and lighting. Reducing demand in the current climate means that people are expected to go hungry, to be cold, even become homeless. We are talking about families with children here. Many of them in full time work. And it won’t control price inflation. Shops are already saying they will have to increase prices on the high street to make up for falling demand. In other words, prices will rise because people cannot afford to buy stuff! Such is the logic of capitalism.
Children
As well as the old, it is always the young who suffer at times like these. I was shocked to read today that not every family on benefits is entitled to free school meals. Nearly 2 million kids are entitled and at least another million are denied because, before benefits and after tax, their parents earn more than £7,400 a year. That’s £142 a week!
Fightback
We cannot take this lying down. We have to fight back. And we cannot rely on Labour. Most of their MPs, on Starmer’s instruction, followed the party line and abstained on the cuts to the state pension this week. And it is already one of the lowest pensions in Europe. Which is why I will be in Lancaster on Saturday as part of the national day of protest over energy prices. Go to People’s Assembly to find a demo near you.
Life long socialist. Now retired, I have been an office junior, a bookseller, a docker and a teacher. I write a lot and read a lot more. Committed member of the Society of Authors, English PEN and the National Education Union. Uncommitted member of the Labour Party. Will they expel me before my direct debit expires?