By Andrew Allison, Chief Executive
The cost of living crisis is going to be number one on the list of priorities for most voters. Last week we heard that the Government plans measures to ease the cost of living crisis, but we don’t know what those plans are. The Government is either deliberately keeping its cards close to its chest, or (more likely) there are divisions on what should be done next.
Some of the economic problems we are suffering at the moment are home grown; many more are faced by other countries around the world. But governments are always blamed when voters are feeling poorer. They always want politicians to do more. Right and wrong do not matter.
In an experiment never tried before, we closed down our economy for many months in response to Covid-19. We restricted the economy for over 18 months. To fund this, the Government borrowed heavily, and the Bank of England, whose primary job is to keep inflation under control, now owns between a third to a half of Government debt. Because most countries around the world also embarked on the same experiment (some much more harshly than we did), they are in a similar position to us. Supply chains are broken, and demand is outstripping supply. It is hardly surprising that inflation is now out of control. It is hardly surprising that the UK’s economy is predicted to go into recession.
The Government has to do more to alleviate the suffering many are going through now, and many more will be going through in the months to come. If now is not a good time to cut taxes, then I don’t know when it is.
VAT on gas and electricity should be scrapped, and the green levy should be removed from bills. The rise in National Insurance Contributions should also be scrapped, but National Insurance threshold uplift should remain in place. This could save some families thousands of pounds a year and will make a real difference.
The next general election is expected to take place in the spring of 2024. We don’t know if Boris Johnson will still be Prime Minister and leader of the Conservative Party then. We don’t know if Sir Keir Starmer will still be leader of the Labour Party. We don’t know how high inflation is going to be, if the economy will still be underperforming, or how hard the cost of living crisis will have bitten millions of people. To paraphrase the late Donald Rumsfeld, there are many known knowns; there are many known unknowns, and there are unknown unknowns. Although I still don’t think that Labour will form a majority Government, it is all to play for. Those who are gifted at reading political tea leaves will be in great demand!