The cost-of-living emergency has arrived and it’s even bleaker than we anticipated. When I wrote an article about its effects on local people in the Cotswolds, earlier this year, I stayed in touch with the people whose plight was so shocking. This is an update in the context of the new government’s reckless budget blow-out.
Inflation was at 4.8% in the 12 months to December 2021. The latest figures show that inflation rose to 8.6% in the 12 months to August 2022. The Resolution Foundation’s analysis of the latest data in August says that it was even higher for the poorest tenth of households – at 10.9%. This figure is driven primarily by rising food prices, which are rising at a rate of 12.7% (up from 9.8% in June). This is the highest monthly increase since May 2001. Inflation of course is set to rise even further as the impact of much higher energy bills start to bite.
Budget blow out
Meanwhile we have a new government in place. Liz Truss, a prime minister without a mandate, except for a small number of Conservative Party members, is clear what her priorities are: economic growth underpinned by far-right ideology, a brand of Thatcherite politics on steroids. ‘Trickle down’ economics is an old idea now discredited, but reheated for these dark days.
Our friends at East Anglia Bylines have just published an excellent article on the fiscal event, by Martin Waller. Once upon a time fiscal prudence and paying down debt were the core of Conservative thinking. No more. The new mantra is that government needs to be smaller, regulation lighter, taxes lower, incentives higher, benefits worse, education cheaper and work harder. Environmental protection is dumped. And bow they have lost control of the economy with the débâcle of the Bank of England having to intervene in order to avert economic meltdown.
Gone is any notion of ‘levelling up’ – the much vaunted Johnson policy – which in reality was characterised by incompetence, mere rhetoric and lots of dressing up. Instead, some areas will be turned into low-tax, deregulated enterprise zones. Fracking is to start again, here in the Cotswolds too, strongly supported by the secretary of state for business, energy and industrial strategy, Jacob Rees-Mogg who argued vehemently in the House of Commons that opposition to it was “sheer ludditery” and in some cases, he added, financed by Vladimir Putin. “It is safe”, he said. “It is shown to be safe. The scare stories have been disproved time and again.” This is not a widely-shared view.
The only people to really benefit from the new chancellor’s ‘fiscal event’, are the most well off, bankers, people like Crispin Odey, who once again will be stuffing his mouth with gold as he once infamously told the BBC. During Brexit, he bet that the market would collapse in the event of a leave vote. When it did, he made £220mn. According to a Reuters piece, his hedge fund has soared 145% on bets against UK bonds. Odey was once Kwasi Kwarteng’s boss.
The Sunday Times has an article which sheds light on the overturning of economic orthodoxy by Truss and Kwarteng. It also alleges that at a dinner which Truss-supporting hedge fund managers attended a week ago, “every one of them was shorting the £. Several made small fortunes”. Another Sunday Times article claims that after delivering his shock ‘mini-budget’, the chancellor attended a champagne reception with financiers, telling them severe cuts in public services would follow.
Mouths stuffed with gold
Rees-Mogg – a noted climate science denier – has received £22,000 in donations from Odey and has close connections with this doyen of ‘disaster capitalism’. As a former founding partner at hedge-fund, Somerset Capital Management, which enjoys fossil fuel ties, Rees-Mogg is allegedly in line also for a nice little earner, a windfall, from the possible sale of the company.
So it really pays to have these connections – the old Etonian boys’ club. But what about the people at the sharp end of the current economic disaster? Early analysis of Kwarteng’s ‘mini-budget’ points out that it is a huge risk, ‘casino economics’. The £45bn package of tax cuts at the centre of the plan favours the rich and give little to most hard-working ordinary people. Next year, someone earning £200,000 will gain £5,220 a year, rising to £55,220 for a £1mn earner. Those on £20,000 will gain just £157. There is a big regional disparity too, with the South East and London doing much better out of the budget than any other area.
What about those in our society who through age, disability or misfortune are most vulnerable? I have caught up with such people again and here are their experiences.
Very sadly, Jim has been suffering serious illness since we last spoke. He is 90 years old now and largely confined to his home. He is waiting for social care, as are a lot of very elderly and frail people. A couple of neighbours rally round, cooking meals because he doesn’t eat properly otherwise, taking him to appointments and keeping him company.
Without the kindness of such souls, Jim would not survive. His house is still cold and damp, with black mould on the walls and faulty double glazing. He has not used his heating for a long time, he is so afraid of the cost. He lives in a community of older persons’ bungalows, owned by a Housing Association. Where once such places had on-site support staff, ‘wardens’, these were let go when funding by the county council was pulled as a result of austerity cuts by Tory governments.
He told me that no one from the Housing Association has seen him since before the pandemic. Jim is a proud man who served his country in the Korean War. Nobody should have to spend their final years in such miserable conditions.
Josie lives with a neurological condition which limits her mobility and has affected her eyesight. She has a range of symptoms which mean that she has to heat her home even during the warmer months. She has received some cost-of-living support from government but says such payments are quickly eaten up by her bills. She heats her home with oil-fired central heating, as the village is not on the gas grid. She said, “The price cap announced doesn’t make it affordable for me. I have cut back on everything I possibly can, and still can’t balance my budget”.
More than one million UK households that rely on oil heating to warm their homes risk overpaying due to an under-regulated market that gets too little political attention – and right now, prices are at an all-time high. The government has announced households that use heating oil and LPG to heat their homes will get an additional £100 to help with energy bills this winter. The regulator, Ofgem, doesn’t have any responsibility for heating oil.
Josie simply cannot afford to fill up her oil tank again. So once the colder weather comes, she will be relying on expensive plug-in-heaters to keep warm. Like so many, Josie told me she just doesn’t know how she will be able to pay her energy bills this winter. She has contacted her energy supplier but little help of any substance is on offer.
As a single parent with two young children, Tom had a tough summer. Needing to look after them in the school holidays prevented him from taking much work as a van driver. His main problem is an insecure income. He works as much as he can, even at weekends when the children go to their grandparents, but he finds it difficult, wanting to spend as much time as he can with them as they miss their late mother so much.
When we spoke, he said that he was particularly worried about the chancellor’s plan to tighten universal credit sanctions. Claimants will face stricter requirements to hunt for work and to extend their working hours or face sanctions. The DWP has repeatedly failed to publish research on the effectiveness of such measures. This will add more misery onto lower income families. Tom still relies on the local food bank to feed his family when he can’t afford the bare necessities of life. “Every week my food bill goes up and we don’t always have enough in the cupboard to last the week.”
Tom is also worried about his family’s housing situation. He currently rents from a private landlord who could at any time serve a ‘no fault eviction’ notice. Such evictions are becoming increasingly common. Close to 20,000 households in England were made homeless by landlords using section 21 notices in 2021/22, up from almost 9,000 the previous financial year, alarming new government figures reveal; there was also a 24% surge in the number of households with children asking for help from councils to prevent them becoming homeless.
The real problem is the scarcity of affordable housing. Tom has been on the housing list for several years. Tom isn’t just worrying about heating his home this winter but whether his family will have a home.
Here in the Cotswolds, and in the West of England generally, lack of affordable accommodation is a serious issue. Rents are very high and the situation is exacerbated by the number of second homes and the growth of AirBnbs. A massive new development on land owned by the Earl Bathurst is currently being built on the edge of Cirencester providing some 2,350 new properties. Yet the number of affordable homes being built is very small: only 70 homes will be for ‘social rent’ while it will have 703 ‘affordable rented homes’ with a rent based on 80% of the open market rent. One might ask if this is ‘affordable’ for people on low incomes.
Broken Britain’s real life effects
It may surprise readers that the beautiful Cotswolds has pockets of severe deprivation like everywhere else in the UK. The local people I spoke to cannot wait for the ‘trickle down’ of promised economic growth, putting it bluntly, to survive. They are already in a frighteningly precarious position which the government has done nothing to help, along with other 40% of those on the lowest incomes. I draw your attention to this article by Claire Jones: The Compassion Gap. It goes a long way to explain the thinking behind the Conservative government’s desire to reward the rich at the expense of the most vulnerable. There is something very wrong at the heart of government.
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