The Cost of Living Crisis – it’s time to act

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There’s been frequent talk of and demand for emergency budgets through the year as the cost-of-living crisis has worsened.  Earlier I argued that we shouldn’t be panicked into doing what this or that politician or former prime minister demanded and that rushing to hold an emergency budget wasn’t the right response.  Because the main driver of the crisis is now an energy crisis, the worst of the pain will hit in the winter. So, we need measures in place before then. So, we didn’t need to rush to act but nor did we want Governments making short term panic responses to each shock wave until we had the bigger picture of what was going on.

However, as we come into the Autumn, now is when things need to be put in place and I hope that the Government have been using the summer to plan things through carefully and to talk to the big players such as the energy companies and the banks. On worry is that due to the leadership contest that they have not.  I hope to see an early budget in September and these are the kinds of things that I believe should be in it and in other statements from the Government and other key players.

  1. The primary driver for increased energy costs is that demand will outstrip supply because of Putin’s stranglehold on oil and gas supplies. Therefore, we need to prioritise reducing dependency on Russian energy supplies not just here but across Europe.  That means identifying alternative sources of gas and oil as well as looking at nuclear renewable energy. It means looking at ways of helping people to become more energy efficient. One aim should be that Britain becomes a net energy supplier to Europe in order to reduce the dependency of countries like Germany on Russian gas. However, all of these things are going to take time.
  2. We need measures in place that will support the most vulnerable in society. That is primarily going to mean some form of increase in benefit payments. Universal credit, housing benefit and child benefits/tax credits all need to be increased. Some energy companies set aside a percentage of their profits to run hardship funds for those struggling.  The Government should also encourage them to increase the size of these funds and use them to set in place social tariffs so that those who have less pay less.
  3. We want to encourage a society where people look out for each other.  I’ve argued that the proposal for “warm places” or “warm banks” is unlikely to work and won’t help here, However, encouraging people within the community to watch out for one another, to share warm space and fuel costs, just as we’ve encouraged lift sharing is a good idea.
  4. We need to remember that before the cost of living crisis, we’ve been living with and failing to deal with a long term and growing debt crisis. Attention over the austerity years was on Government deficits but there is so much domestic debt. Money spent on repaying debt is not available for fuel and food.  After the credit crunch a lot of help was given to the banking sector and austerity has at least in part been caused by that event. So, it’s time for the banks and loan companies to give back. I believe they should use a proportion of their profits to cancel significant amounts of debt. Imagine if 5% was taken off the average mortgage and focused in to a reduction of £200 per month for every mortgage payer.  But it’s not just about mortgages, there are other forms of debt such as pay day loans that affect many people who are not on the housing ladder.
  5. The Government needs to commit to not adding to the cost of living and the cost of fuel, instead it needs to find ways to ease the pressure on household finances. I believe that this primarily needs to come through tax cuts.   Now, the poorer and most vulnerable families are not paying income tax, so the focus should be on fuel duty and VAT. However, we should not forget that this crisis is increasingly like a tsunami so many middle income families risk being dragged into hardship because of their fuel bills rocketing.  So income tax cuts to help those middle earners would be welcome too.

I believe that each of these proposals whilst small on their own will combine to create a significant response to the crisis. However, there is no guarantee that any measures will work, just as everything we tried during the pandemic could not prevent the significant spread of COVID-19 with resulting suffering and death.  We must be ready for the real possibility of significant suffering over the next few winters. Our trust is not in Governments to fix things and stop crises. So, whilst I am sharing my views on what should be done practically, my first responsibility and that of all Christians and churches is to keep pointing people to the hope we have in the one we can cling to in the storm.

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