The cost of living crisis will bring hunger, cold, debt and potential loss of homes to the people of Sheffield

I suspect I need not explain that was the day fuel prices rose by around £700 for most households. It was also the day National Insurance charges rose and the day water charges rose. Food prices are already rising. On top of that, interest rates are going up, so some people with mortgages will also see that cost increase. If that’s not enough, headline inflation has now reached around 8% a year, with the possibility it could rise further later this year as household energy costs are thought to rise by up to £1,000 additional per year in October, when the next price review takes place.

I’m old enough to remember the last such cost-of-living crisis. It was the 1970s, and I was a student at the time, but from a purely professional point of view, I can say with confidence that things were very different back then. Not only were the causes of inflation different from those we suffer from now, but strong unions protected the wages of many people while we had governments determined to solve the problems caused by inflation. Now trade unions are rare outside the public sector and the government is creating much of the problem we face.

I realize this is a contentious claim, so let me substantiate it. First, certain government policies have contributed to the crisis we face. Like it or not, Brexit is one of them. This has made it more difficult for the UK to trade, as international statistics show, and this has a consequent cost which is reflected in UK inflation. This is not a political commentary: it is an observation.

Register to our daily newsletter

The newsletter mute the noise

Richard Murphy is Professor of Accounting Practice at Sheffield University Management School

Second, while overall the government has done a reasonable job of managing the economic impact of Covid, it has not anticipated the difficulties that reopening the economy would create which some (myself included) have commented on writes endlessly before it happens. The warning that it would be more difficult to reopen the economy than to shut it down was ignored and no apparent attempt to manage the problems that have arisen, particularly due to gas supply shortages, has been made. . It is these shortages due to the end of the Covid restrictions that have given rise to the current price increase, which has nothing to do with the war in Ukraine.

The government’s mishandling of its relationship with Russia, which has been widely reported, however, meant that it too failed to anticipate this crisis. It is the shortages created by the war that will cause energy price increases in October.

On top of that, even when he knew the current price increases were on the way, he still anticipated the National Insurance increases and the cut in Universal Credit while encouraging the Bank of England to raise interest rates. interest. He took all these measures because he claims to be facing a debt crisis, with the national debt now having to be paid off due to Covid costs.

These claims are completely unjustified. The £400billion cost of Covid was not paid for by taxes or borrowing. The money was instead created for this purpose by the Bank of England through what is called the process of quantitative easing, and there is absolutely no obligation for the government to repay this. Indeed, if this debt is owed to anyone, it is to the Bank of England, which belongs to the government and therefore to us, and I do not hear anyone claiming the reimbursement of this money.

“Millions of families across the UK began to slide into food and fuel poverty on April 1 following decisions made by the UK government”

Despite this, for reasons well known to themselves, the government has decided that paying off this debt is more important than worrying about millions of people falling into poverty in the UK. I think this decision is wrong. I really think it’s cruel.

Moreover, the government’s inability to do anything more to address this problem, whether to increase the value of Universal Credit, to provide additional tax cuts, to reduce the rate interest rates from the Bank of England to reduce the cost of mortgages, or simply to reduce the rate of VAT so that the cost of the things we buy would be reduced, which would reduce inflation and therefore the pressure on the household budget, is also wrong in my opinion. Some or all of these were possible and affordable, yet nothing was done.

In this case, as I suggested at the beginning, it is a cost of living crisis which will impose hunger, cold, misery, debt and the potential loss of homes on countless people in Sheffield and beyond. totally unjustifiable and totally unnecessary economic decision-making.

The government doesn’t come any worse than that. Remember the date it started. Never forget it. And please don’t forgive those who do this.

Richard Murphy is Professor of Accounting Practice at Sheffield University Management School, Chartered Accountant and economic justice campaigner. He blogs at and tweets @RichardJMurphy. He is not a member of any political party.

Source link

John A. Bogar