Top Tories are panicking that tax increases on workers’ pay and soaring price rises could generate widespread anger.
Jacob Rees-Mogg, leader of the House of Commons, told the cabinet on Wednesday that the national insurance rise set for April could not be justified at a time of rising inflation.
One government insider told the Financial Times newspaper that Rees-Mogg felt “finding savings would be more frugal and responsible” than raising taxes. In other words, he wanted to attack workers in a different way through cuts.
There’s no doubt about the crisis.
The energy price cap, which limits how much people pay, is set to rise from £1,277 a year to around £2,000 just as national insurance goes up.
The National Energy Action charity says around 6 million households will have to choose between paying for heating or spending money on food and other basics.
And people are already struggling with the bills. Last month Catherine Geddes from Keighley told the BBC, “I very rarely put the heating on. Basically I wrap myself up in a blanket and I will use the hairdryer to warm me up.
“My anxiety levels are so high. It is just a nightmare.”
On the same day that Rees-Mogg made his cabinet move, business secretary Kwasi Kwarteng met energy bosses to look at schemes to reduce the price increases slightly.
The corporations want green levies, which add over £100 to bills, to be scrapped.
They also want giant loans so they can spread the cost of the increases over a longer period.
Their other plan is for the government to directly subsidise the privatised firms so their profits are protected.
Other Tory MPs are backing the Labour Party’s policy to scrap VAT on fuel bills. And some are calling for an extension to the warm homes discount scheme.
All of these solutions are utterly inadequate.
VAT makes up only 5 percent of bills, so removing it would take just £8.30 from the typical £166 a month bill from April. That would still be unaffordable for millions of people.
The warm homes discount is just £140 for the whole of the winter—not £140 a week as Boris Johnson told the Commons twice on Wednesday.
And spreading the cost of the rise won’t reduce the total by a single penny.
Much more is needed. The whole privatised system is rotten.
So far, 26 British energy suppliers have gone bust since the start of August. The government’s response is to try to keep these profit-hungry corporations afloat by bunging them cash.
In December the regulator Ofgem approved £1.8 billion of costs linked to rescuing companies that had gone bust. These will appear on household bills in April.
The rescue of Avro Energy, the second largest supplier to fail after Bulb, is so far costing bill-payers more than £680 million according to Ofgem findings.
The whole sector should be renationalised under democratic control. Ordinary people shouldn’t pay for company profits, obscene executive pay and bonuses, shareholders’ dividends, competitive advertising and all the other costs of the market.
But whether it’s tax rises or spiralling bills only a major increase in struggle—strikes, protests, occupations and riots—will stop workers paying the price.
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