WE have all become accustomed to Boris Johnson’s false “bumbling” manner in public appearances and interviews as he tries not to cement his place in history as the PM who made Britain the laughing stock of the world after “getting Brexit done”. However, his and the Chancellor’s woefully inadequate handling of the economy, which has been battered by the pandemic, catastrophic events in Ukraine and spiralling energy prices, are in danger of leaving the UK stuck with the tag, “the poor man of Europe”.
Inflation in the UK is currently as 6.1 per cent, with the Bank of England expecting it to top 8 per cent and the Office for Budget Responsibility (OBR) forecasting an 8.7 per cent rise in the third quarter of this year, a 40-year high.
But how much of the cost of living crisis has been caused by corporate greed, and could that unflattering soubriquet have been avoided had the Tories acted with some humility instead of keeping their big money backers onside?
Price hikes on basics are not confined to the UK. Worldwide oil and gas prices have been rising since the economy began to recover from its first bout of Covid in late 2020 – when the collapse in demand drove prices down. However, when Russia invaded Ukraine, prices shot up to unprecedented levels hitting the whole of Western Europe.
In the UK – which imports only 8% of its fuel products from Russia – around 22 million homes were facing energy prices rises of £700 per year from the beginning of this month, when the energy price cap rocketed by 54 per cent.
Rishi Sunak did announce a temporary 5p per litre reduction in the duty on petrol and diesel, down from 57.95 per litre; and a cut in income tax in two years’ time, prompting widespread criticism, including from the Resolution Foundation, which said only one in eight workers would see their tax bill fall.
The impending financial crisis has promoted hundreds of thousands of words of comment and many guides on how people can cope, so how are the governments of our European neighbours helping their populations?
In France, the government cut the cost of fuel by 15 cents a litre and gave six million households a €100 (£83.50) energy voucher to cope with soaring costs. Compare that to the £200 loan being given to UK households, which will be paid back in instalments on future bills
All taxpayers in Germany are being given a €300 (£250) payment to help with their cost of living rises, with a further €100 (£83.50) for each child and a similar amount for anyone on state benefits. A three-month public transport ticket has been slashed to €9 (£7.50) to encourage people to use low-carbon travel.
The Irish government is giving every household a €200 (£167) energy rebate and public transport fares have been cut by a fifth until the end of the year to help people with rising travel costs.
In Northern Ireland, public transport fares have been frozen, while in the UK, rail fares rose by 3.8 per cent at the beginning of last month.
Spain has seen inflation rise to almost 10 per cent, but the government has still tried to ease the burden on its citizens. It is subsidising fuel by 20 cents until the end of June and pledging to tax excess profits. It has also capped rent rises at 2 per cent.
Sunak’s spring statement came nowhere close to helping lower income households, and the Institute for Public Policy Research said they still faced an average cash shortfall of £320 this year. The IPPR said his statement was biased towards higher earners – who, it estimated, received four times the support that lower-income households did.
Oil giants have reaped huge benefits from the pandemic and the Ukraine crisis – Shell’s and BP’s combined profits last year totalled $32bn (£24.5bn), triggering calls for a windfall tax to be levied.
Following the privatisation of our utility and transport companies, started by Maggie Thatcher, we have seen them make billions in profits as they push up the prices of energy, water and other commodities. The National Grid, for instance, pays out more than £1bn a year to its shareholders.
Pharma giant GSK, with sites at Irvine and Montrose, has been embroiled in a dispute with the Unite union over a pay offer of 2.75 per cent, while its chief executive Emma Walmsley, received a 17 per cent rise last year, taking her remuneration to over £8 million – prompting claims of “cast-iron corporate greed”.
If an entrepreneur becomes a millionaire, that’s great, they took the risks, founded a business and created jobs. Large corporate salaries involve no real risk, as the economy has been restructured to ensure their success and often that they don’t even have to pay taxes.
There’s no getting away from such examples of apparent avarice and, despite the fact that similar claims are much more prevalent in the US, they deserve to be addressed in public on these shores.
But Johnson and Sunak etc are unwilling to do anything to upset their super-rich friends, family members and supporters. This leaves us with two key questions firstly, when exactly does the UK qualify as an oligarchy? And secondly, if Scotland can produce 100% of its energy requirements from renewables in 2022, which is the cheapest form of energy, when will people realise that the cost of living crisis is not only a cost of greed crisis but a cost of remaining in the UK crisis.