The cost of living remains the critical battle ground in British politics and was the focus of Prime Minister’s Question again this Wednesday.
The economy is clearly recovering from the deepest recession in living memory but Labour argues that the richest are benefiting but not the poorest. The Government responds that its policies are working, the UK economy is growing faster than any other in Europe, unemployment continues to fall and more people are in work than ever before. In his Autumn Statement the Chancellor even claimed that living standards are rising but this Wednesday the Labour Leader claimed “that is just not the case”.
Since 2010 gas and electricity prices have risen, as have housing and travel costs. Benefit rate increases have been capped at 1% whilst inflation is running at 2.7% and is expected to rise to 3% in the New Year. For some this could mean a choice between heating and eating this winter. Weekly household spending has dropped to an average of £489, the lowest level for a decade. At the same time average household debt, including mortgages, was £54,141 in October. Of course there are huge differences both between rich and poor and north and south. The picture is also confused by the different choices consumers make. For example, it is reported that the average household now spends £8 per week more than a decade ago on clothing and shoes.
The Opposition claim that the Government should have stood up to the energy companies that increased their prices by an average of 9% and say they would freeze these prices for 20 months if they win the 2015 election. The Prime Minister repeated the Institute of Fiscal Studies comment that, “It would be astonishing if household incomes had not fallen, but the fact is that it is the legacy of what Labour left us”. He also reminded the House of Commons that when the Coalition came to office Ministerial pay was cut by 5% and frozen for the duration of this Parliament. Like the other party leaders he also rejected as unacceptable the 11% pay rise proposed for MPs by the Independent Salaries Panel. The Government’ austerity measures have kept mortgage rates low and raising the income tax threshold to £10,000 has taken the poorest two million people out of the tax altogether. He recognised that the recovery still has way to go and creating more jobs is the solution to poverty not borrowing to cut taxes and increase benefits.
The help churches are giving the poorest people with food banks and debt counselling is an important expression of ‘neighbour love’ but only a temporary expedient whilst the economy recovers and tax and spending policies can be reviewed in the medium to long term. The politicians will also have to tell us before the 2015 election their visions for the future in relation to the responsibilities of Government, individuals and communities and how we all learn to live within our means.