“This is a comprehensive crisis driven by government policy… It is successive Tory-led governments who created a rigged system, a charter for privatised highway robbery.”
Diane Abbott MP
By Diane Abbott MP
The forecast that next year annual average household energy bills will reach almost £4,300 is the latest grim reminder of the scale of the attack on living standards that is currently taking place. While it is a scary level of costs for most people it also highlights everything that is being done to enrich giant firms at the expense of ordinary people.
We are living through what is generally called a cost of living crisis. But it is not really accurate. It is an attack on the living standards of ordinary people, a policy choice not a natural phenomenon. This is highlighted by the surge in energy prices itself and these are worth examining.
First, the so-called energy price cap is nothing of the sort. Prices are soaring. It is instead indicative guidance to the energy companies as to where to set prices. This completely negates the argument that privatisation has introduced competition, as generally the energy companies congregate around the same prices, and switching is far from transparent, easy or risk-free.
At the same time, there is an element of licensed extortion from the price level itself. We have had vastly higher energy price increases than in other comparable countries. This is partly owing to the failed laissez faire model of energy purchasing that the government has imposed, but also the licensed rip-off allowed by the regulator, acting under government instructions.
The net result has been a growth in fuel poverty and debt which is set to get substantially worse as winter approaches. At the same, and completely related is the surge in obscene profiteering by the main energy companies. Very little of this vast windfall is being invested in Green energy sources, or in electric public transport, or in retro-fitting homes to bring bills down.
What is true for the energy sector is true for the economy as a whole. The recent forecasts unveiled by the Bank of England were eye-wateringly grim.
The Bank reckons that inflation could run over 13 per cent. It also believes inflation will be above the current level of 9 per cent this time next year.
At the same time, it now predicts a prolonged recession. On this analysis the slump is set to last more than 3 years and unemployment will rise to well over 6% before the end of 2025.
Tory economic policy has produced ‘stagflation’, which is actually quite rare, almost difficult to achieve. It is disastrous for workers, for anyone on benefits, for people on fixed incomes such as pensioners and for the army of people who will be made newly unemployed. In fact, it is good for everyone except the profiteers, their cronies and their political representatives – the 1%.
This is a comprehensive crisis driven by government policy. It was the government that left the workforce hobbled in the pandemic with deaths, Long Covid, and wages people could not live on. It was the government that imposed an austerity budget in March when it was clear people were already struggling. And it is successive Tory-led governments who created a rigged system, a charter for privatised highway robbery.
Labour must end it. We need a bold, radical programme that meets the seriousness of the crisis. Judging by the opinion polls it is also a programme that chimes with public opinion.
First, we need inflation-matching increases in pensions and welfare. The poor and the elderly must not be made to pay for this crisis. Secondly, we also need the same for wage increases in the public sector for anyone earning up to twice the national average. The minimum wage must be increased to the living wage.
But we also need to ensure that none of this is frittered away with further prices rises. That means taking control of the major privatised industries initially through regulation of prices, investment, pay and shareholder dividends. We should nationalise those who cannot cope with an unrigged system.
We also need a major programme of public-led investment, including a National Investment Bank, to ensure the stupidities of privatisation and under-investment are reversed.
The mantra that ‘there is no money left’ is false. We just need to tax the money in idle hands and put it to good use for the 99%.
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“ It is disastrous for workers, for anyone on benefits, for people on fixed incomes such as pensioners and for the army of people who will be made newly unemployed. In fact, it is good for everyone except the profiteers, their cronies and their political representatives – the 1%.”
Is that a typo? Surely it should read ‘it is disastrous for everyone except the profiteers…’