There was a lot of coverage yesterday about the ‘Awful April' about above-inflation bill rises that people are now facing on things such as:
- Energy prices
- Mobile phone charges
- Road tax
- Council tax
- Water charges
- Stamp prices (although how many people buy stamps now?)
- TV licence fees
And , more remotely:
- Stamp duty
There are, of course, compensations:
- Pension increases
- Benefit increases
- Minimum wage increases
But, the reality is many people are facing significant cost increases, without necessarily having increased means to make payment.
I have a lot of points to make.
First, the legally permitted increase in charges for phones now make no sense. The right to increase prices in this way should be removed. If the companies cannot make money on the resulting prices, they can hand back their licences.
Second, energy price increases that simply increase energy company profits make no sense. People in the UK are being ripped off, and pricing should change.
Third, water needs to be nationalised. There is no point debating this any more. This industry is bankrupt in its current form.
Fourth, road tax need not have risen.
Fifth, most council tax increases are the result of the government refusing to accept a national duty to equitably fund additional demand on council services.
The other charges are not material to most people.
But, all this being said, it remains the case that there are much bigger problems that should attract attention.
Fourteen per cent of UK GDP is represented by rents. Ten per cent is, admittedly the deemed value of rents paid by owner occupiers to live in their own properties, and just four per cent is actual rents. However, even the notional costs proxy actual costs. No one is pointing out this massive expense is being inflated by interest rates that are too high, which directly inflate rent and deemed rental costs.
And talking of interest, UK banks are believed to have had total interest income of around £200 billion in 2024. This is around 7 per cent of UK GDP.
The percentage figures I note may not be completely additive for all sorts of reasons - not least because GDP itself is a dubious number - but they imply that more than twenty per cent of UK GDP is represented by rents extracted in the form of interest and rents, both of which are heavily overstated as a result of the excessive rates set by the Bank of England.
People might be angry about Awful April price increases, but they are insignificant compared to the massive upward redistribution of wealth that these unnecessary excess interest charges represent.
The obvious point is, if the Bank of England is worried about inflation it can, in real terms, solve that problem by cutting interest rates.
I think we can be quite sure it will not do that.
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The smokescreen quandary:
If the BoE board are actual economists, they’ll know the folly of having interest rates up to 2% above inflation. But in doing so, they would publicly go against current 11 Downing street policy.
Instead, they come up with more bs excuses to do s.f.a. – thus highlighting the fact they’re not independent and simply following nr 11’s policy.
I think some of the media have mentioned it but there has not been much analysis as thankfully you offer.
All I see is that these issues are an extension of austerity, that are also opportunities for capital accumulation higher up in the income band.
Britain is open for business and your meagre earnings are up for sale to the highest bidder by a Labour government.
We have literally been thrown to the wolves.
In the social housing sphere, our development costs have rocketed. We beat ourselves up for not thinking about every last detail in the projects but the truth is, is that the Government is not putting enough money in it – a policy it advocated. Costs are shall we say so mobile that you can do a business appraisal 1 week and because the numbers are in their millions, its out of date within a couple of weeks (they used to have a 6 month ‘shelf-life’). Trying to explain that to a bunch of local councillors out of their depth is a nightmare. Labour councillors – already weak – just get weaker, whilst Tory and Reform think that we are either crap public sector workers or just under pressure from immigrants. Lib-Dems just wait in hiding, like trap door spiders.
The whole thing is just bullshit.
We definitely need more journalists to talk and write about this, people are oblivious about how BoE is hurting our economy and our future
Stamp duty is a horrendous tax and should be abolished.
Why?
Not abolished, but it does not make any sense than when I sell my first house to buy another one I pay a higher tax than the first time
It’s ironic that a government that steadfastly refuses to put to taxes will quiet happily let this happen.
I pay about 25% of my net income on loan repayment (mostly mortgage). if this went down and my tax bill went up it would most likely balance the main difference being that the government could use the money for good rather than the bank hoarding it.
Its interesting to read Pikettys comments on Jane Austen, the monied classes were living in the interest from the National Debt.
We are heading back to that era
One of the clearest examples of Starmer and Reeves completely missing the point is the failure to bring central funding for Local Authorities back to where it was in 2010. It is probably the single biggest set of cuts that explain not only why the country feels like it is simply not working, but looks it too.
The metric I thought they’d have in mind for services and spending should have been 2010, but they’ve ignored this.
Agreed
Driving is subsidised by those who don’t drive while resulting in many negatively externalities. I don’t see why increading VED is not ok. If public transport costs keep going up then so should driving, which shouldn’t be cheaper.
I had to think long and hard about this. Like, proper chin-stroking, thousand-yard-stare, existential-crisis-in-the-biscuit-aisle kind of thinking—while doing the weekly shop, listening to my good lady spiral over the price of olive oil and coffee like we’d just been told beans were now a luxury item.
Yes, Awful April is living up to its name. Energy bills? Up. Water charges? Up. Council tax, phone contracts, stamps (who exactly is keeping the Royal Mail in business?)—all rising like sourdough in a heatwave. It’s like the entire economy got together, threw a party, and said, “Don’t tell wages—they’re not invited.”
But the real kicker? This isn’t even the main event. This is just the overpriced trailer before the blockbuster robbery.
Because while we’re busy rage-scrolling through direct debits and praying the standing charge doesn’t rise again, one-fifth of the entire UK economy is quietly disappearing into rent and interest payments. That’s 20% of GDP going not to schools, hospitals, or anything remotely useful—just straight into the hands of landlords and banks, who are basically the economic version of a tapeworm in a tuxedo.
And let’s not forget the Bank of England, heroically battling inflation by… handing £200 billion in interest income to banks. It’s like trying to put out a fire with petrol and then charging us for the match.
Water? Should’ve been nationalised yesterday. The only thing flowing freely is raw sewage. Phone companies? If your business model relies on gaslighting customers into annual inflation-plus hikes, hand back your licence and take up crochet. And council tax? Up again—because central government has rage-quit local services like a teenager rage-quitting a group chat.
And then there’s rent. The quiet killer. Whether you’re paying it to a landlord or “imagining” it for yourself because some economist said you live in your own home too happily, the system is designed to wring you out like a damp flannel.
We’re not just being squeezed—we’re being slow-roasted, garnished, and served on a platter to the gods of capital, labelled “Best Before Interest Rates Hit 8%”.
So yes, I’ve thought long and hard. And now I want to lead a conga line straight to the Bank of England—with flaming torches, sarcastic placards, and a PowerPoint titled: This Is Not Fine (And No, It’s Not Just The Price Of Coffee).
Stamp Duty as currently structured is unfair in the way property sales and other financial sales are treated.
People should hardly be penalised because they live and work in the expensive south east.
Vat instead should be applied. Percentage chosen to be reasonable and not impact social mobility people moving for reasons of job schools etc or indeed older folk trying to downsize and enhance their often meagre pension.
Richard, does this make sense?
I think so, my worry would be thinking through the winners and losers. I would hate to see stamp duty replaced by VAT and it makes the above situation even worse for young people or older ones.
Both are sales taxes baased on value.
I am not sure what the advantage of VAT would be – and it was never designed to apply in this way, and would not end up looking like VAT at all if it were adapted for such purposes. If we are to have tax on land tranmsactions, stamp duty might be better.