Socialist Worker

Poor paying the price for inflation and wage cuts

by Michael Lavalette, Respect councillor in Preston
Issue No. 2085

The current prolonged economic crisis has increased Gordon Brown’s determination to cut wages for public sector workers.

The prime minister wants to hold down pay increases to 2 percent for the next three years.

Recent price increases emphasise how much of a pay cut, in real terms, this will be.

Last week British Gas announced that it was increasing both its gas and electricity prices by 15 per cent.

British Gas is merely the latest utility company to announce inflation-busting price rises.

The rises are significantly higher than those in other European countries.

The government regulator has accused the utility companies of “working in conjunction” with each other over prices.

The result is that the average bill for gas and electricity is now set to rise to more than £1,000 a year.

Fuel poverty

According to Energywatch, one in six families in Britain (4.4 million households) are now trapped in “fuel poverty” – the highest rate for ten years.

Meanwhile British Gas is expected next month to post annual profits in excess of £1 billion. Food prices are rising faster than they have at any time since the mid-1970s.

The website, which collates supermarket prices daily, puts the overall rise last year at 12 percent.

This means that the average family’s shopping bill has gone up by £750 in a year.

Despite the sharp rise in bills, the government claims inflation is presently just over 2 percent.

Inflation does not impact on all people in the same way.

Price increases in basic foods, housing and utilities have a disproportionate impact on working class families.

Poorer families also pay more for the goods they buy.

The cheapest way to pay for gas and electricity is over the internet via bank direct debit schemes. But many poor people do not have access to the internet or bank accounts.

The most expensive way to pay is via meters – Energywatch chief executive Allan Asher has termed them “poor-pay-more-meters”.

As a global recession looms we are not all in this together.


Under New Labour the top 10 percent of earners now take home 40 percent of all earned income in Britain, while the top 0.1 percent have an average pre-tax income of £780,000.

On this level of income, fuel and food price increases are insignificant.

But for the vast majority, the only way to maintain our existing standard of living is to fight for decent pay awards.

If you enjoy Socialist Worker, please consider giving to our annual appeal to make sure we can maintain and develop our online and print versions of Socialist Worker. Go here for details and to donate.

Article information

Tue 22 Jan 2008, 19:02 GMT
Issue No. 2085
Share this article

Mobile users! Don't forget to add Socialist Worker to your home screen.