The cost of living crisis 

Mike Davies and Malcolm Christie argue that the Tories have no plan to help Britain’s poorest families weather a perfect economic storm

Britain is suffering critically high inflation – the worst for forty years. Double digit price rises will be with us for years. Millions are already finding they cannot afford essentials like food and heating. Benefits, pensions and wages lag well behind rising prices. All of us face shocking increases, with no help from the government, even for the poorest. The governor of the Bank of England correctly describes it as an ‘apocalyptic’ crisis.

The government has no plans to deal with this problem – not the faintest idea. No plans to reduce inflation; no plans to seriously limit its impact; certainly no plans to protect the poorest in our society. The immediate causes of the crisis include the covid pandemic and the world’s chaotic attempts to emerge from it, the war in Ukraine, Europe’s dependence on imported energy, and Brexit’s disruption of trade. All of these are made worse by the global but market-driven nature of the economy. Relying on ‘the market’ to make the global economy work smoothly is sheer folly.

The market for energy is global and out of our control. For years, the Tories have had no energy policy except to hope it will be alright. We have no reserves and no back-up sources. So, when prices soar, that feeds straight through to our pensioners. Of course, the real answer is to reduce our energy demands, so many of which are unnecessary. A nationwide programme of house insulation would be a start. For the energy we do need, the easy and obvious solution is immediate huge investment in onshore wind power, an established, cheap source. Plus research and rapid development of tidal and wave energy. The last thing we should even consider is more nuclear: extremely slow to build, very dangerous (Three Mile Island, Chernobyl, Fukushima etc), and leaving a 10,000-year legacy of radioactive waste for our descendants.

We use a lot of fuel for travel. There will always be some need for private travel. However, a big investment in public transport – cheap or free, efficient, widely available – would directly cut both fuel use and pollution. Not vanity projects like HS2 but more, vastly improved, bus and regional rail services. The Tory farce of 5p off petrol duty is irrelevant. It is also, like so many Tory policies, targeted to benefit the richer rather than the poorer. 

The cost of food is strongly affected by the cost of energy, both by the cost of manufacturing fertiliser and by the cost of transporting food. The government should strongly encourage more natural farming less dependent on high-cost artificial inputs. It should also encourage, by a mix of subsidy and tax, far more local production and consumption. We really do not need to fly in raspberries from Africa and avocadoes from South America. Indeed we have corrupted sustainable economies in many less developed countries in order to provide stuff for us. We must also eat less meat, a hugely inefficient form of food.

As a civilised country, we must protect our citizens – particularly the poorest – from the deadly effects of this crisis. We must significantly improve benefits such as Universal Credit: restoring the £20 cut would be a start. We must directly cushion poorer people against the huge hike in the cost of energy to heat homes. We should cut VAT which is a hugely regressive tax, hurting the poor far more than the rich.

Where would Britain find the resources to do all this? The broad answer is by taxing the rich. The Tories (and New Labour) have presided over cuts in taxation for the rich and increases for ordinary people. This must be reversed. 

One immediate way to raise money is the government’s £5-billion windfall tax: UK energy companies will now pay an additional 25% tax for the next 12 months. This is such a no-brainer it is surprising how long the Tories resisted it. Companies like Shell and BP have increased their profits by billions of pounds, simply because of global price rises. But the one-off tax doesn’t go far enough. We should stop profiteering in the energy sector and use the extra billions constructively, not to enrich shareholders who did nothing to earn the bonanza.

The roots of this crisis lie in global capitalism, its needs and its limitations. Capitalism depends on ever-growing consumption of stuff, regardless of whether we actually need any of it. It requires and drives endless, unlimited growth. Yet it has no answer to fact that we live on one, finite planet with finite resources. We must stop destroying our own, common home and move from a consumerist and throwaway culture to a sustainable economy.

This crisis is indeed apocalyptic – but if we address it in the right way, it could also be an opportunity. Everything we do in response to the crisis should also aim to stop or reduce global heating, pollution and the other human-made threats to the ecosystem on which we all depend. We should do nothing that makes these worse. Let us not just survive this crisis but use it to save our future.

The Alliance for Green Socialism makes the following demands:

  •  Implement urgently a nationwide, government-funded home insulation programme to reduce energy wastage
  • Massive development of wind power, offshore and onshore
  • No more nuclear power; no more oil & gas exploration 
  • Invest heavily in public transport (not HS2) taking rail, bus and coach into public ownership
  • Subsidise sustainable cereal and vegetable production; cease subsiding meat production
  • Restore the £20 cut in universal credit; uprate benefits to match inflation immediately
  • Reduce VAT by 5 percentage points
  • Put a windfall tax of 90% on the excess billions made by the oil & gas companies
  • Raise taxes on incomes over £100,000
  • Close the tax loopholes that allow tax avoidance and refocus tax laws and processes to ensure collection

Mike Davies and Malcolm Christie are AGS Chair and Treasurer respectively

Photograph by Dan Burton/Unsplash

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