On Wednesday, Chancellor Rishi Sunak will announce his mini spring budget. As the Mirror reported yesterday, “The Chancellor is expected to lay out the sheer scale of the cost-of-living disaster hitting poor Brits”.
None of this is going to come as a surprise to those already struggling. With predictions that inflation could rise above 8 percent, families will see an even greater squeeze on their finances.
Poverty and the cost-of-living crisis
Anti-poverty campaigner Jack Monroe gave evidence to the work and pensions committee last Wednesday where she articulated how bad, indeed how desperate, it is for some people in our communities. Writing for the Guardian, Patrick Butler said “Monroe described the situation faced by millions of children living in poverty as ‘already untenable’, having become increasingly so over the last decade. She called for social security benefits to be uprated in line with inflation”.
As it is, energy bills are rising astronomically alongside the new national insurance rises making April a month to reckon with for many.
Some of this could have been ameliorated by the government. I recently wrote about the impact of ending the triple lock on pensions and the consequent decision to link pensions to the inflation rate of 3.1 percent. That was a political decision, as was the decision to axe the £20 uplift on universal credit last October. In other words, both were avoidable. The inflationary pressure of the war between Ukraine and Russia is less so.
Sunak is running out of wriggle room. He has consistently rejected Labour’s calls to cut VAT on energy bills or impose a windfall tax, and he shows little enthusiasm for raising any benefits above 3.1 percent, which will mean a real-term cut for those who are most in need. Rises to public sector wages – due every April – will be wiped out by inflation.
Business leaders have stressed that the planned 1.25 percent increase to national insurance should be cancelled or delayed, in order to soften the impact of these price rises, but this is seen as unlikely.
Rapid intervention needed
No doubt, the hope is that the government can ride this through until the autumn when things may have stabilised internationally and inflation brought back under control, but the reality is that a rapid intervention is needed to lift many people out of truly horrid circumstances.
Of course, it’s not just down to the government to help. Some of the biggest employers continue to make healthy profits, with many still are failing to close the gender pay gap. Estimates from the Office for National Statistics last year showed female workers in Sheffield were paid an average of £12.36 an hour against £15.11 an hour for men, an overall pay gap of 18 percent. Out of the ten ‘core cities’ – Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham, and Sheffield – wages in Sheffield for women are the lowest.
Post-Brexit deregulation to undermine workers’ rights
But it’s the recent shenanigans by P&O that is the more sinister tale of our post-Brexit times. The company’s decision to sack 800 of its staff on the spot has brought into sharp relief the whole issue of job security and the morality of indiscriminately sacking staff so they can be replaced with cheaper agency staff (often the same people via fire and rehire policies). And it’s not just about mortality, it’s about economics. As Labour MP Diana Johnson said on Friday, P&O’s actions will have a “major economic impact on places like the Humber”.
This is what deregulation looks like. Cut the so-called red tape of good employment practice and regulation, and it’s suddenly a race to the bottom with wages, pay and conditions. Just as inflation rises and the cost-of-living crisis starts to be felt. But as Tim Bale notes in the recent UK in a Changing Europe report:
“It remains hard to see how the labour-market and standards deregulation, originally touted as the key to unlocking economic growth, can actually be implemented when it would hit many of the new Tory voters of 2019.”
And herein lies the real conundrum for both the chancellor and the prime minister. The voters that returned Boris Johnson his significant general election victory are fickle beasts. More than 40 percent of those who switched from Labour to the Conservatives between 2015 and 2019 still identify with the Labour Party. Their vote may well have been sealed by Brexit, but according to Johnson Brexit is now done – so where will their vote go at the next election?
Brexit and voter behaviour
According to recent polling (below), of those who would vote ‘leave’, the percentage who identify as Conservative has fallen from 74 percent in December 2019 to 54 percent now. That’s enough to turn a significant chunk of seats in the red wall back to Labour. The Tories know they need to hang on to these leaver voters to hang on to power.
Dr Alan Wagner reckons that explains Johnson’s rather bizarre spring conference speech when he compared Ukraine’s fight for freedom to “the British people voting for Brexit in large numbers”. Wagner, who is a research with UK in a Changing Europe, tweeted:
Johnson will need to keep pushing the Brexit button in the vain hope it will keep those floating floaters from floating away. But with so few Brexit benefits apparent, a pandemic that is anything but over, and a cost-of-living crisis, this may mean little.
Chickens coming home to roost this Easter
And there you have it. Chickens may be coming home to roost this Easter. Little has been done to ease the significant burden for those who will be suffering the most and who lent their vote to the Tories. On Sunday morning, money-saving expert Martin Lewis predicted that about ten million people could end up in fuel poverty. “I am virtually out of tools to help people now… we need political intervention.”
In Wednesday’s budget, expect perhaps a cut in fuel duty and a raising of the threshold at which people pay national insurance. But also expect more smoke and mirrors together with repackaging of existing policy announcements – in other words, more over promising and under delivering.
The populist right-wing thread that is the glue of Johnson’s Conservatism is beginning to be severely tested with inflation and the cost-of-living squeeze – and may yet lead to him and his government coming unstuck.