Rishi Sunak has claimed there’s nothing he can do about the external global circumstances driving the cost of living crisis, but he’s dodged the real question: how can he best respond, and avoid an escalating crisis and a costly recession? In fact, there are fair, green solutions to this crisis staring us right in the face.
Consumer spending drives the economy. If people are struggling to pay their gas bills, they have less money in their pockets to spend on the high street or a restaurant meal. Which is why, as the CBI’s director general, Tony Danker, has said, Sunak’s first step should be investing in social security via increases in universal credit and legacy benefits to prevent families falling into destitution. This would also help to stabilise the economy, not fuel inflation.
We’ve got inflation. So, sending more of the economy to those who spend all their cash, not save any of it, will not fuel inflation?
Umm, now wait a minute. When we’ve a recession, then we’re told that we should send money to the poorer because this supports demand because they spend it all, not save any of it. Inflation is the opposite of a lack of demand – it cannot be true that the answer is the same then, can it?
Second, we need a serious industrial strategy to boost confidence
Presumably a strategy designed by those who perform the above failure of macroeconomics?
Third, rather than continuing to slip on our green ambitions, we must double down. Every home newly insulated and each wind turbine erected across the UK will reduce household fuel bills. We need to make this investment before 2050 anyway – so let’s do it now, to support the economy and bring down electricity bills sooner. As Danker said, non-inflationary, green investment opportunities
Why is increasing demand through greater investment not inflationary?
In fact, companies can reduce their profits too, to keep prices down
We should increase investment by reducing profits.
Instead of forcing workers to take the strain, companies should show profit restraint and cut their dividend payouts.
We should beat inflation by raising wages?
Finally, as fossil fuel companies pile up huge, unexpected profits from the very crisis that is pushing millions into absolute poverty, it’s fair for the government to redistribute these into welfare and income support.
We’re going to tax supply at a time of dearth.
As I’ve said before about folks at the IPPR it’s amazing that they remember to breathe at times.
This is a general rule of political discourse.
“We must do [my preferred policy X] because [argument that demolishes case for policy X]”.
It’s as rock solid a rule of political discourse as:
“The benefits of my policy are X and the costs of the opposition’s policy are Y”.
Finally, as fossil fuel companies pile up huge, unexpected profits from the very crisis
And I suppose that those nice “green” wind and solar generating outfits are altruistically feeding their “incredibly low cost” electricity into the grid either free or at cost??
Yeah… Right… They’re the feckers who are really coining it in! But will they get
robbedtaxed??Sigh. I see the “home insulation” zombie has lurched from its grave, put on its running shoes and is off for another trip around the block.
Third, rather than continuing to slip on our green ambitions, we must double down. Every home newly insulated and each wind turbine erected across the UK will reduce household fuel bills. We need to make this investment before 2050 anyway – so let’s do it now, to support the economy and bring down electricity bills sooner. As Danker said, non-inflationary, green investment opportunities are there for the taking, but government must “confirm them, launch them and fund them”.
This guy is a criminal – An immediate tax needs to be levied on all environmental groups who have brought us to this pass. Asset seizures on all supporters of XR, IB and JSO (loss of pensions if in the public sector) – that’ll go some way to alleviating this issue. We need to repeal the ‘Net Zero’ target and the Climate Change bill – both of which will send huge signals to increase investment in real energy solutions (I.e not Green ones)
High energy prices have been the policy of successive governments both left and lefter. ALL green initiatives have made prices higher still, because renewables are not cheaper overall. Net Zero is impossible while retaining a post-18th-century way of life.
And there is no climate catastrophe coming, even the IPCC doesn’t claim there is. It isn’t even getting warmer.
All this nonsense ought to be challenged at the level of reality, not by accepting the premise of a lunatic hypothesis.
“we need a serious industrial strategy”: and here’s mine. Close The Guardian, the Beeb, and other confidence-sapping “industries”. Stop HS2. Then happy campers across the land will work, save, invest, spend, and consume. They will love their spouses and their children. Joy will be unconfined.
On the other hand, the government can change climate and control sea levels in the age when men without wombs can give birth. Manipulating inflation should be a doddle.
“…each wind turbine erected across the UK will reduce household fuel bills…”
Bwa Ha Ha Ha Ha …
It would be hilarious if there were not millions of people who actually believe this.
We’re doomed, aren’t we?
I have vague memories from doing my Saturday supermarket job back in the early to mid 70s. There was something like “phase 4 pay restraint” running. It meant that wages went up every week to match inflation. Every week there would be a few extra coins in my pay packet. Back then I had no idea how it was supposed to bring inflation under control. I still don’t.
The “this won’t fuel inflation” bit is wrong, but I would prefer the government to tackle the (sadly genuine) problem of people unable to pay for food/heating by being more generous with UC, rather than by the “inflation busting” method of imposing arbitrary price caps. Prices work if people are exposed to the cost of their choices – they can decide then whether it’s worth reducing the thermostat by a degree or improving their insulation or paying out for a different heating system.
If the point of the benefits system was so people could live to what we deemed a minimally acceptable standard, and the current burst of inflation means we need to update how much cash is needed to achieve that, then so be it. Once inflation is in the 10% region, then clearly annual reviews are rather less satisfactory than when inflation is nearer 2%. People could reasonably be expected to take the pain of twelve months of price rises while waiting for the next uplift if the increase is only faintly perceptible. Tightly balanced budgets will get wrecked by prices going up 5% and then we are expecting people to cope for months while prices rise further… Quarterly or six-monthly reviews would be more sensible in that economic climate.
The only bills reduced by wind turbines are the ones sliced off any unfortunate ducks that fly in to them.
One could, of course, abolish the sanctions on Russia and Iran, start fracking now, abolish the regs that stifle nukes, abolish the subsidies to windmills and solar panels.
Unfortunately, to get all this through, you’d first have to introduce my policy of burning all the idiots as bio-fuel.
Of course in Oz, we’ve just elected a government that’ll be even worse than the last one. I attribute this to the pollsters and analysts gaslighting ScMo into believing that the plebs want more, more, more leftist muck. So he should emphasise this in his election campaign.
I couldn’t think this just because I’m a white haired old bastard who doesn’t keep up with modern fashions, could I?
First line error. Consumer spending does NOT ‘drive the economy’. Production must precede consumption.
Twats.
Second, we need a serious industrial strategy to boost confidence
I have a 2 part serious industrial already prepared:
====================================================================
BiND’s Serious Industrial Policy
1. We have no industrial policy.
2. Intentionally left blank.
Nothing Below This Line
===================================================================================
Stating having no policy is a bit circular but it is a policy and I’m serious about it.
legacy benefits = previous bribes we can’t seem to get rid of.
serious industrial policy = central planning
double down on green ambitions = this time socialism will work
millions in absolute poverty = all those people in the third world (there’s noone in UK in absolute poverty) who are starving because of covid lockdowns, our idiotic energy restrictions, etc. Do they think diverting British taxpayers’ money to Somalis is going to be a vote winner?
(takes a deep breath, scratches head, arse)
‘ Rishi Sunak has claimed there’s nothing he can do about the external global circumstances driving the cost of living crisis…’
He can when he is helping to cause them!
millions in absolute poverty = all those people in the third world (there’s noone in UK in absolute poverty) who are starving because of covid lockdowns, our idiotic energy restrictions, etc.
The UK poverty industry, realising that we haven’t had any real poverty since the 60s, introduced the concept of relative poverty – waah, he’s got more than me, ‘snot fair! To make the numbers as scary as possible, anyone earning less than 80% of the median was said to be in ‘relative poverty’. Since we’ve all pointed out that having to make do with last year’s model of trainers and iPhone wasn’t really ‘poverty’, they have introduced the concept of ‘absolute poverty’, defined as earning less than 60% of the median.
‘Absolute’ poverty defined relatively. Only possible for Guardian readers.
Just to correct slightly. Less than 60% of median household income – adjusted for household size – is relative poverty. Less than 60% of median household income in 2010/11 similarly adjusted for household size is absolute poverty.
The reason it’s 2010 is that it used to be 1999. And economic growth meant that absolute poverty by this measure was disappearing so fast that they had to rebase it to make sure there still was some.
Wouldn’t say there’s no “real” absolute poverty in Britain, there are rough sleepers for example, but a lot of what there is linked to issues of addiction and mental health. Doesn’t mean that nothing should be done about it, but it isn’t a problem that is amenable to easy solutions and it will likely never go away entirely. Shouldn’t be the sole lens you view society through.
The definition of “absolute” poverty is stupid. The current bout of inflation is going to have genuinely nasty effects for a lot of people at the bottom of the pile but I’m not sure what the best way to measure it is. There are people who live in deeply sub-standard accommodation (if it’s council or employer provided there may be little they can do about it) and people who skip meals to make ends meet. They’re definitely “poor” by any reasonable UK-specific definition.
I wouldn’t want to be living in a place with crap insulation next winter if my finances were already tight. “Just insulate more” can’t be the only answer to that, because most places that can be done, have been done already. Some places can’t be. And if you’re a tenant, there’s not much you can do about it anyway.
@MrVeryAngry – “Production must precede consumption”
Not necessarily. If you stream a song the stream is produced on demand at the same time as the consumption. And, for economic purposes, if you buy and pay for something before taking delivery, the effects of consumption can preceed actial production.
each wind turbine built in the UK will INCREASE household bills because Ed Milliband (remember him?) decreed that they would be subsidised and the cost of the subsidy would be added to household bills.
How to solve inflation and high energy costs:
Remove all green subsidies – inc hidden ones and retrospectively, call it a windfall tax
Frack and Drill
Let free market decide as with organic & vegan food
PS: Food banks are moaning about supermarkets giving them lots of unsold fad/vegan foods millenial virtue signallers can no longer afford: Gluten Free, Quinoa, Quorn etc. Why? Ordinary folk don’t want it
Food banks are moaning about supermarkets giving them lots of unsold fad/vegan foods millenial virtue signallers can no longer afford: Gluten Free, Quinoa, Quorn etc.
Doesn’t surprise me at all. Last time I was in the UK, doing some shopping for my mother, I was amazed at the amount of veggie/vegan prepared foods. I couldn’t believe that a northern provincial town could have enough food faddists to justify it all.
Mind you, I would be surprised if vegans want to eat nasty slush masquerading as burgers, chops etc….