“There is an answer to this cost-of-living crisis, and rather than just wait for economic growth to recover and inflation to fall, we need to lift pay and cut prices.”
By Beth Winter MP
For all the time and space the ongoing cost-of-living crisis continues to take up in Parliament and the papers, there are still too few advocates of some stark solutions. We need to lift pay and cut prices.
This cost-of-living crisis is driven by energy and food price inflation thanks to supply measures, and not driven by wages, which continue to lag behind.
That is why I believe we need to address pay, and address prices.
With regards to pay, many will recall, In February this year, Andrew Bailey, the Chief Executive of the Bank of England, said “we need to see restraint in pay bargaining.”
The same month he told the Treasury Select Committee, that public sector pay settlements needed to account for the fact that “inflation is going to fall very rapidly.”
Well, it hasn’t done so yet. Prices continue to outstrip pay and have been doing so for many months. We are seeing a growth in in-work poverty. The government fails to take action on poverty wages.
Millions of people, particularly in the public sector, are having pay awards imposed that are below the rate of inflation.
The ongoing – and now escalating – public sector pay disputes show the government has no interest in the material wellbeing or the mental health of public servants.
In health, the BMA junior doctors have joined the RCN nurses. In education, the ASCL head teachers have joined the NEU teaching staff. And in the civil service, the FDA union of senior civil servants are joining the PCS and Prospect in taking action.
This is an ongoing public sector pay crisis which started in 2010.
So with inflation outstripping pay month, after month, after month, it is an urgent priority to inflation-proofed pay deals, as a short-term measure to deal with the cost-of-living crisis, and I will support trade unions seeking to do so.
The other area in need of urgent action is food price inflation. The Office for National Statistics reported last week that food prices are now running ahead of CPI inflation.
The cost of food increased 19.2% over the past year. But key staples increased by much more. And on the supermarket shelves, it is own-label budget brands rising more rapidly than luxury lines.
The impact of this is clear. Food banks in my constituency are seeing more and more people arrive looking for support.
The local foodbank where I used to volunteer has seen an astronomical growth in demand. That is why I worked with the local Trades Union Council to raise over £2500 for local foodbanks in the past month.
Not a solution, but some temporary support to keep them helping families.
And yet the supermarkets are doing very well. Tesco alone has paid over £1billion pounds in dividend payments to shareholders – when others are struggling to make ends meet.
Unite the Union has reported that the top three supermarkets – Tesco, Sainsbury’s and Asda – made combined profits of £3.2 billion in 2021, nearly double pre-pandemic levels.
Whilst in food manufacturing, eight of the UK’s top food manufacturers made a combined profit of £22.9 billion, up 21% since before the pandemic.
So what can we do to control food inflation?
A month ago, in France, the French Finance Minister Bruno Le Maire, announced a ‘trimestre anti-inflation’ or an ‘anti-inflation quarter.’
This is a three-month period, where major supermarkets are voluntarily signing up to offer ‘the lowest possible prices’ – which should cost them hundreds of millions of euros.
This is the most moderate of measures, a three month voluntary commitment to limit prices on a basket of goods. There is every chance it will be insufficient to deal with the cost of living crisis. But it is a step beyond any taken in the UK. So I will be asking the Government here, whether they intend to initiate similar measures.
It is not right that the oil and gas giants make super profits at the expense of ordinary households and so it is right a windfall tax, however flawed, was imposed.
At the same time, it is not right that supermarkets continue to make hundreds of millions in profits at the expense of ordinary households.
There is an answer to this cost-of-living crisis, and rather than just wait for economic growth to recover and inflation to fall, we need to lift pay and cut prices. The discussion on controlling prices needs to begin now.
- This article is a published version of the speech given by Beth Winter MP in the opposition day debate on the Cost of Living Crisis held on April 25th, 2023.
- Beth Winter is the MP for Cynon Valley and a regular contributor to Labour Outlook, you can follow her on Facebook, Instagram and twitter.
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