I have an article in The Daily Mirror this morning (both the printed version, and on the web) in which I discuss what Rishi Sunak should do in next weeks spring statement. I cannot reproduce the whole article here, but this is the five point plan that I recommended, and the conclusion:
So what can Sunak do?
1. Be very bold next week. Tinkering will not do. Nor will adjusting benefits be enough, although restoring the £20 universal credit cut would help. Too many households that get few or no benefits are also going to be hit
hard by this.2. So, Sunak must first of all declare a crisis and say he will spend whatever is needed to prevent UK households going bust in their millions. That means spending whatever it takes, as we did during Covid, and creating the money to pay for this using quantitative easing. None of this need cost taxpayers anything, just as Covid did not.
3. Then he has to cut road fuel prices to prevent them pushing all other prices up. That means cutting VAT and other taxes to keep these prices at 2021 levels. That's the price we need to pay to beat inflation.
4. After that, he has to take the energy companies on. He has to introduce an excess profits tax. Energy companies must be made to pay up.
5. And then he has to be really radical. We need subsidised household energy prices. That means requiring that the price of energy consumed by an average household should be put back to their 2021 levels. The government must subsidise that cut in costs. If this was done only larger houses should be required to pay the market price for whatever energy they consume above average use. This would encourage energy saving measures by them and suit the green agenda. That makes this fair, affordable and green.
If we do these things we have a chance of balancing most UK household's finances in the next year. Without these measures the pain is going to sink millions into debt, and worse. If Sunak cares about that he has to act right now.
I note, with thanks, that I was influenced by Clive Parry, who comments here, when making the fifth suggestion.
I have already done an LBC interview on the back of this.
My point is a simple one: unless Sunak smells the coffee he's heading us for recession.
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Any signs of living cortical cells in the Treasury
Any ? was the one I intended
France’s government is limiting electricity increase to 4% and gas to 12% – why can’t UK ?
It could
Owning the energy companies helps.
Unfortunately the Uk sold its stakes.
https://www.lrb.co.uk/the-paper/v34/n17/james-meek/how-we-happened-to-sell-off-our-electricity
The problem with ad hoc hand outs to the energy suppliers is that they get pocketed by them and prices still go up.
Take back control!
I think he’ll head us into recession come what may. There maybe some ‘bauble policies’ put in – a bit of window dressing which in line with John Warren’s theory will just be for appearance and not reality.
But let’s face it – the City loves a recession – loads of assets to be swallowed up from the chaos and market re-formation.
Of course – I WANT to be wrong.
But when you ask ‘Qui bono?’ well, it’s the usual suspects who are ‘making their own world’. Again.
Richard, In other situations you are a convincing opponent of hypothecated taxes. I think you need to be equally opposed to hypothecated tax rebates. Cutting the price of gas will do nothing to reduce its use. Using the inverse of the argument you make elsewhere, it would be better to give a fixed cash rebate, which can be used for food or other essentials as well as gas. It won’t cure the problem, but it will reduce consumption a little, and it will give help where it is most needed
Nothing else is going up in price by 150%
Shall we do the politics of the real world?
And have you not noticed that for many households there is going to be a massive incentive to cut consumption in this?
Tim Watkins is worth reading on all of this: https://consciousnessofsheep.co.uk/2022/03/17/island-of-fools/
Wow, thanks Mark, that really is quite an article – the dollar being knocked off its perch is looking more and more likely, as Richard says, nothing will be the same
Thanks. I don’t always agree with what Tim Watkins says, but he writes well and is often proved right.
Kind of you to mention my name – “flattery will get you everywhere!!”; however, I can’t claim it as an original idea.
What I do think is that this may have wider applications (water obviously) and is a way to get a much more progressive tax system that might be politically easier than higher income tax rates or a wealth tax.
So, as you know, I never miss a chance to wheel out a classic quote….
“Politics is the art of the possible” – and I think this IS possible.
I would also add into (1) a rise in tax at the top of the income scale. I know MMT says we don’t need it and there are better ways to tax…. but it is, perhaps, the clearest way to signal to the country that “we are all in it together” and that “broadest shoulders must bear the greatest load”.
I was only given limited space….there will be more tomorrow
A possible response to to high energy prices is to give everyone a energy allowance, akin to a tax allowance, each person, say has 1,000 kWh of electrticity and 2,000kWh of gas at a subsidised price. Usage above that gets progressively more expensive. It would help those in fuel poverty and those with larger families.
This is, effectively, what I have proposed
Sound list, although I would prefer direct cash transfers to households (and better yet, a Basic Income) rather than subsidies to #FossilFuels. This would strengthen the incentive for more households to economise with insulation or turn down their thermostat by 1-2 degrees.
Sadly I also agree the government now wants on a recession. Ironically Brexit is part of the reason. Since they removed migrant labour as an easy way to hold down wages, workers now hold some bargaining power for the first time in decades. The Tories will pick a big jump in unemployment, in preference to letting workers catch up some of the inequality gap. “Levelling up” in wages is the opposite of what they want. Watch them now sit on their hands over P&O, all the while saying on TV how dreadful it is!
There is plenty of incentive in this
And I am dealing with the crisis first
I’ll get to the after-crisis demands tomorrow, I hope
Has Sunak ever dealt with any problem facing the economy in a decisive manner first time out? Even by accident?
I still remember how it’s only a couple of years since he was making half-arsed and piecemeal announcements seemingly most days about how government support for jobs following onset of the pandemic and (the late) lockdown. He got there in the end in most measures, but more by luck than judgement!
I will admit I don’t understand how the nations finances work. But time again I hear if we just print lots of money we all have to pay it back increasing our debt. I hear this all the time from my conservative friends. I understand the wealth of the nation is how much we make and provide services e.t.c. so can we afford to dish out more money?
I suggest reading me free ebook – from here https://www.taxresearch.org.uk/Blog/2021/04/14/mfnamtff/
Gareth Evans. Also, even quicker, this 10 min video from Stephanie Kelton. Although from the US, equally applicable in the UK. Richard will agree, I’m sure.
https://www.youtube.com/watch?v=mmuysv17T9M
Health warning – contains clip of Margaret Thatcher.
I know this is ‘off subject’, but within the last week Douglas Ross MSP the leader of the hapless Scottish Conservatives objected to the Scottish Government retaining mask wearing in shops and public transport as a protection measure against the rapid expansion of the BA2 Covid variant in Scotland. Ross complained: ““The Government said last month these would be removed on March 21, but now that’s being delayed, Why won’t the First Minister trust the Scottish public to take the steps they think are right to protect themselves and their families?” The real implcit argument was that England had abandoned virtually all restrictions, yet Scotland had a higher infection rate, even with more restrictions. Almost certainly the reason for the difference was the more infectious BA2 variant, with Scotland being more widely affected, earlier than England. Today the Evening Standard is reporting infections up in London by 50%, in a week; and hospitalisations up 28% over the same period.
The repeated exploitation of pure, politically motivated propagnda by Scottish Conservatives, cynically to infect a Scottish Public Health policy and divide public opinion in Scotland (a tactic that has been repeated endlessly, every time Scotland departs from Westminster health policy in any way whatsoever), is utterly, unforgivably shameful.
Albeit OT, I confess to having been amused by how quickly the BBC in Scotland went gung-ho on this same strategy, neer an hour passed without a Radio or TV slot attempting to convince the Scottish public SG were wrong, to your “repeated exploitation of pure, politically motivated propagnda by Scottish Conservatives” you may add HMS James (I’ve seen the emails) Cook.
Even the Scotland and Politics web-pages were heavily promoting a piece entitled “Covid in Scotland: Mask rules will stay in force until April” on the 15th with Comments open for a remarkably short 8 hours, despite the piece still being in prime position over 24 hours later.
It still lurks in 7th position on the Scotland Politics web-page 5 days later, such is Scotland’s politics as viewed through the Pacific Quay prism.
At least James Robertson was being humorous… https://youtu.be/ZhL57cjN8xY
Commercial or Whatever:
Look – All I’m saying is that anything to do with ‘commerce’ these days is tainted: whether it is banking & finance, Companies House, P&O Ferries, profit gouging by energy companies, accounting standards mostly everything – to me its all shit and could do with re-purposing and reform.
And what’s worse is that we still think that those who are good at moving money around from the many to the few should be advising us on what to do.
Can we at least agree upon that?
Jesus!