As Woody Allen pointed out, “money is better than poverty, if only for financial reasons”. But there are plenty of other considerations, as anyone, or at least anyone who has ever been short of the stuff, will tell you. Almost all aspects of wellbeing, from health to education, opportunities and freedoms, are enhanced by money and constrained by poverty.
Which is unfortunate, because there are bad times just around the corner. You may think they’re already here, what with food prices rising at their fastest rate for over a decade, domestic energy bills about to double, several years of effective wage cuts (they’ve risen, but by less than the cost of living) and petrol and diesel well over £1.50 a litre in most areas, but it’s hardly started.
As well as the heating, grocery and fuel bills, we’re about to get hit with a National Insurance hike which might sound modest when described as a percentage point – 1.25 – but actually amounts to nearly 10 per cent for lots of middling earners. Oh, and all manner of other inflation’s back with a vengeance, we’ve still to begin recovering from (and paying for) the economic devastation wrought by Covid, and there’s a war in Europe.
All of this is even worse for those – chiefly the young, though by that I now mean people well into their thirties and even forties – who live in parts of the country where the cost of housing makes owning their own place an impossible dream, and who have no option but to fork out a huge percentage of their income on rent.
Despite the understandable desire to pin all of this gloom and doom on single causes, this has been brewing for a long time. Yes, much of Continental Europe is significantly – and as we can now see, recklessly – dependent on Russian oil and gas, but the UK actually only imports 3-4 per cent so, although the government will make noises about that being the reason for huge spikes in energy and fuel costs, it predates the war. Similarly, though Ukraine is a major provider of wheat, the rising cost of, for example, pasta, is largely to do with poor harvests in Canada last year.
The mishandling of Brexit has certainly not helped, but inflation and transportation problems are a global phenomenon – supply issues are, if anything, rather worse in the USA where – to put our own £2.2 trillion-worth of indebtedness into perspective – the national debt has risen to $30 trillion, well over 100 per cent of GDP and more than $90,000 for every man, woman and child.
It may now look, with hindsight, as if much of the money flung about during the pandemic was wasted, and that the consequences of lockdown were even worse than those of the disease, but that is, I think, the one area where people will be inclined to excuse politicians their decisions – and one where, in any case, the whole world was in the same boat.
Given this dire outlook, it would be nice to imagine that the Chancellor, Rishi Sunak, would have some sort of decisive plan of action to unveil when he delivers the spring statement on Thursday. Given the major plank of the government’s programme (until Covid came along, and everything went out the window) was going to be “levelling up”, you’d imagine that would include some imaginative means of easing the burden on “hard-working families” (remember them?) and the “squeezed middle”, which were mostly the same folk.
For a start, he’ll surely announce that the NI rise (previously correctly described by the Tories as “a tax on jobs” or a “stealth tax”) is a dead duck. It will, after all, disproportionately hit lower- and middle-income families. And its justification – to fund social care to the tune of £13 billion – was constructed so that older, already wealthy voters wouldn’t have to dip into the (often eye-watering) cash locked up in their mortgage-free houses. But all the signs are that he won’t.
There is one good political reason for this (there is, naturally, absolutely no case for the policy itself – especially from the position that you would normally expect Conservatives to operate from). That is that it’s been announced, but people haven’t yet felt the effects in their wallets, so the Chancellor won’t get all that much credit for binning it. You won’t feel, or be, any better off; it’s just that in a couple of months you’ll be much worse off.
But it used to be a Conservative principle that cutting taxes is, in and of itself, a good thing. First, because it’s right that people should keep as much of their own money as possible, and after that, because there’s abundant evidence – from every developed nation in the world – that it creates growth and raises living standards. By contrast, the rationale that clearly lies behind it – protecting the property values of Tory voters, and getting people who work and pay taxes to subsidise those who, for the most part, don’t – is profoundly unConservative.
The current Tory party seems to be under the impression that its job is to keep property prices high, and to spend loads on vanity projects, but minimise borrowing by funding that spending through taxation. But the party’s own history ought to demonstrate to them that their greatest electoral, and economic, successes have come when they’ve done exactly the opposite. It was opening up housing supply, not raising prices, and lowering taxes, rather than increased public spending, which once made them popular.
If they want anyone currently under the age of 40 to vote for them, they need to do something urgently about housing. And they should want to, because it’s hard to think of anything more likely to boost economic activity. We should be tearing up planning regulations – as they seem happy to when it’s a windfarm or solar array being built, rather than houses – and hugely increasing supply, since that’s what you do when demand has driven prices beyond most people’s reach.
Slashing fuel duty or VAT – about half the cost at the pump – would be another obvious boost to the economy. We should be letting people keep more of their own money, so that they’re in a position to buy. Alas, we probably won’t get any of this. Which raises the question of what point there is to an unConservative Conservative government.
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