By Charlie Kimber
Downloading PDF. Please wait...

Tories refuse to cushion blow of cost of living crisis

This article is over 2 years, 4 months old
Working class people’s living standards are being hammered by inflation and stagnant wages
A protest over the cost of living crisis in London, placards read freeze prices not the poor

Protesters against fuel poverty outside Downing street on Monday (Picture: Guy Smallman)

Energy prices are the sharp end of a broader assault on living standards with rising prices, tax increases and wages falling once inflation is taken onto account.

Annual food bills are going up by around £180. Council tax bills will increase by around £100 in April. Workers will pay higher National Insurance bills from April, when the tax is due to rise by 1.25 percentage points—an extra £255.40 a year for someone earning £30,000.

The Bank of England has warned that households face the worst squeeze on their disposable incomes for at least 30 years, with official inflation rising to 7.5 percent, economic growth slowing, unemployment rising and taxes going up.

The Bank then added to the squeeze by raising interest rates by a quarter point to 0.5 percent, the first increase in rates in consecutive meetings since 2004. It will mean a rise in mortgages and loan rates. None of that is necessary—the rich and the bosses should pay for the failings of their system. For example, taxing the oil giants could provide all the money needed to freeze bills.

A few hours before the price rise announcement last week, British-headquartered Shell said its profits for 2021 had risen to £14.25 billion, up from £3.5 billion a year earlier. Just for the three months to 31 December, Shell’s profits were £4.75 billion. “2021 was a momentous year for Shell,” celebrated chief executive Ben van Beurden. The firm said it would now shower money on it shareholders.

Even the impeccably pro‑business Labour Party called for a one-off windfall tax on profits. But the Tories won’t increase tax on the rich unless there is mass revolt. Trade unions and campaign groups need to unite around a few simple demands.

There have to be demonstrations and political strikes against the price rises. All privatised firms should be taken back into democratic public ownership—which Labour won’t call for. That is the only way to plan for an energy system that delivers power to people without outrageous bills and protects the environment.

Millions going hungry

The number of people who can’t afford to eat properly is growing, and it’s set to worsen. It was a fifth higher in January than six months previously. 

That’s according to a survey that showed people were struggling to feed themselves even before the squeeze on living standards. Data released on Monday by the Food Foundation, a charity, showed in January 4.7 million adults had experienced food insecurity, 20.5 percent higher than in July last year. 

Anna Taylor, executive director of the Food Foundation, said the snapshot gave an “early indication that worse is still to come”. “Too many households are living on the edge and will be pushed further into the stress and anxiety of not knowing if they can put food on the table,” she said. 

The Food Foundation survey found 62 percent of households were already reporting higher energy bills and food shop costs. And 16 percent had cut back on food to afford other essentials. One million reported they had to go at least one day without eating in the previous month because they couldn’t afford or access food.

More turn to Universal Credit

Another 1.3 million workers have begun claiming Universal Credit (UC) since the coronavirus pandemic, research revealed this week. Analysis by the TUC union federation found the huge surge in workers forced to turn to benefits. It warned that ­low‑income workers face a “perfect storm” this spring. 

The TUC study shows that more than 2.3 million workers received UC at the end of last year compared with just over a million on the eve of the pandemic in February 2020. 

TUC estimates the value of UC has plunged by £12 a month in real terms when measured against CPI inflation compared to just before the pandemic. And it says that rises to £21 a month when measured against the more accurate RPI inflation.

Bank toff—‘accept the cuts’

Andrew Bailey, the Bank of England governor, told workers they had to accept pay cuts last week.

Asked if the Bank was also asking workers not to demand pay rises, he said, “Broadly, yes”. Bailey, on half a million pounds a year, said that while it would be “painful” for workers to accept that prices would rise faster than their wages, he added that some “moderation of wage rises” was needed.

“In the sense of saying, we do need to see a moderation of wage rises, now that’s painful. “I don’t want to in any sense sugar that, it is painful. But we need to see that in order to get through this problem more quickly,” he added.

Getting though the problem means fighting for rises of at least 10 percent and fighting the bankers, bosses and politicians who try to cut living standards.

Bosses make us pay

Workers will not only be hit by a big tax rise in April. They are also likely to face bosses trying to pass on tax rises that they face.

The Office for Budget Responsibility predicts that 80 percent of the equivalent increase on employers’ contributions will be “passed through to workers via lower nominal wages”.

That’s in addition to the 1.25 percentage point National Insurance Contributions rise directly imposed on most workers from 1 April. The remaining 20 percent rise on companies’ tax bills will be shouldered by “consumers via higher prices”, according to an OBR assessment. Wages down, prices up even higher, profits protected—unless there’s a fightback.

Sign up for our daily email update ‘Breakfast in Red’

Latest News

Make a donation to Socialist Worker

Help fund the resistance