The scale of the rise in costs that working people are being expected to ‘adjust’ to is staggering. Comparing simple CPI inflation rates, it’s claimed this is the highest rise in the cost of living since 1992. What this fails to account for is that we have been faced with a decade of stagnating wages, rising prices, and the gutting of the welfare system people could have relied on for some support.
According to ONS figures, the median wage in the UK in 2020 was 10% higher than in 2010, while the general cost of food and services covered in the CPI rate has gone up by 20% during the same period. Not included in this, among other things, are housing costs. During this period average house prices have gone up close to 50% and rents have gone up an estimated 35%.
What this means is that even before the sharply rising prices, the national insurance hike, or the doubling of energy bills, working people in the UK have faced a steady decline in purchasing power—and therefore living standards—since the Tories came to power.
The distribution is far from even. In her viral exposé which has forced even the ONS to accept its methods as unrepresentative of reality, Jack Monroe showed how prices relating to the poorest in society are substantially higher than those better off. A recent study by the New Economics Foundation concluded that the impact of the expected energy bills rise will hit the poorest families 7.5 times harder than the richest.
When you consider this, it’s not hard to then understand why rough sleeping has at least doubled between 2010 and 2020—tripled in London in 2017/2018—and why the Trussell Trust reports a 2.5x increase in foodbank use in just the last five years.
Throughout the pandemic, the realities of the deeply entrenched class inequalities of our society have repeatedly come to the fore. From the impact of the actual virus on poorer people living in crowded housing to the amount people working from home were able to save compared to essential workers (who also make up some of the lowest paid workers), there have been numerous examples of how unequal our society is.
So when Molly-Mae Hague says ‘we all have the same 24 hours in a day’, or when Kirstie Allsopp believes anyone could buy a house if they just cancelled Netflix and drank less coffee, they are completely out of touch with reality. But when the millionaire Chancellor tells us to simply ‘adjust’ and the Bank of England Governor Andrew Bailey on his half-a-million-pound annual salary tells workers not to ask for higher wages, it can only be seen as an assault on working people by those making the decisions that are pricing them out of living—and something we have to resist.
Aside from the audacity, Bailey is simply wrong in asserting that higher wages are contributing to inflationary pressures. Rising prices are primarily being driven by supply-side issues, not demand. ONS figures show that while there has been increased retail demand since the end of the lockdowns, it is still only marginally higher compared to pre-pandemic levels and has been levelling out in recent months.
Meanwhile, food and energy supplies have been affected as a result of the pandemic and the effects of climate change, exacerbated by supply chain and distribution issues. The logistical challenges posed to production and international transport because of the pandemic, leaving containers of goods stranded on the wrong side of the world for example, along with a domestic shortage of HGV drivers and distribution workers, was compounded by neoliberal just-in-time supply chains which could not meet existing demand—let alone increased demand—with the smallest chink.
Sunak and Bailey’s misguided approach to rising costs means they’re setting policies which will not only do nothing to curb inflation, but will be detrimental to millions of people. The Bank of England has doubled interest rates from 0.25% to 0.5%. The classical economic thought behind this is that increasing the cost of borrowing will reduce demand which will slow down inflation.
Even if this had the desired effect, it would not solve the supply problems which are actually driving prices. What’s worse, however, is that food and energy are income inelastic—i.e., they are essential, and a reduction in disposable income won’t reduce demand for them, short of huge swathes of people dying from malnutrition and hypothermia. So all the interest rates rises will actually do is deepen household debt.
Actually, that’s not the only thing—they have the added bonus of increasing the returns on savings for the richest.
And where does the extra money that’s being spent go? A clue to answering this can be found in energy companies Shell and BP posting profit forecasts of almost £40 billion for 2021/2022. Both companies paid zero tax on North Sea oil and gas drilling in the last three years, and as if we weren’t in the middle of a climate emergency, Sunak is set to approve drilling licenses for six new oil fields. Meanwhile, in the same week as announcing the energy price hike and a week prior to voting in a real-terms cut to Universal Credit, Sunak announced a £4 billion reduction over five years in taxes for banks.
The upward redistribution of wealth being organised by the Tories couldn’t be clearer. Working people, and especially the poorest, are being made to pay what they don’t have to keep the rich profiting.
According to Oxfam, billionaires globally have increased their wealth by $5 trillion since the pandemic began, with the collective wealth of the ten richest men doubling while over 160 million people were pushed into poverty. Elon Musk alone saw his net worth go up nearly 13 times, from around $30 billion at the start of 2020 to $277 billion at the start of 2022.
Early in the pandemic, when the government went on a spending spree to mitigate the impact on the economy, some economists including on the left were quick to announce the end of neoliberalism. We had returned to an era of big state spending, we were told, and that austerity was over.
They were very clearly wrong. Apart from the vast majority of the money spent on the furlough and other income support and on the NHS going directly into the hands of private companies and landlords, the plan was always to make us pay for it.
Listening to the flood of phone calls that have filled radio stations in the last week describing the desperate situations people are in, it’s clear that the cost of living crisis is already hitting hard and wide, and will only get worse.
We shouldn’t accept this onslaught from the Tories. There is clearly a far better understanding of the class society we live in and widespread anger at the brazen robbery and corruption from our government.
This anger needs to be channeled into organised resistance. The People’s Assembly protests around the country this Saturday will be an important part of that, and they should be a launchpad for further protests. We must demand the government caps energy bills and brings in a windfall tax on companies and individuals with super profits, raises Universal Credit and minimum wage, renationalises the energy companies, and invests in the infrastructure necessary to actually deal with the supply crisis driving up prices.
They also have to be linked to the industrial fightback that has been growing in the last year. All over the country, workers are taking a stand against fire and rehire and attacks on pay and pensions. This is a systemic issue, and workplace struggles must be part of the wider political struggle on the streets. The Tories are aiding unscrupulous bosses by pushing the cost of living crisis onto us to protect their profits, with their anti-trade union legislation which limits workers’ ability to organise, and with their planned Police, Courts, Sentencing and Crime Bill which will give the police greater powers to stop protests and picket lines.
Last week, we commemorated the 50-year anniversary of the Battle of Saltley Gate, a pivotal moment in the 1972 miners’ strike, when engineers and activists joined the miners and closed the gates. The struggle today is different for many reasons, but the key lesson to learn is the importance of solidarity, and how our united action can win.