Lurching from crisis to crisis
After Sunak's windfall tax budget, keeping up the pressure on living standards
Just weeks after his Spring Statement, Rishi Sunak has been forced back to Parliament to announce a package of measures in response to the cost of living crisis – including a u-turn on the windfall tax. Huge emphasis will be placed on the positive content of yesterday’s package, which would not have happened without massive pressure. But his measures are not enough.
Sunak’s statement has inevitably led to discussion of its implications for the Opposition and how it now positions itself.
Andrew Marr, for the New Statesman, has argued that the “bigger problem is now Labour’s. In a matter of minutes it lost the only truly sizeable, widely understood and popular policy that currently divides the party from the Tories.”
It is true that Labour’s policy platform had been organised around the windfall tax and had developed significant traction. Labour does have to regroup but the cost of living crisis is not going away.
Even with what has been announced, the cost of living will dominate peoples’ lives. James Meadway of the Progressive Economy Forum wrote yesterday that “Sunak’s announcement today will not cancel out the cost of the price cap rise and will prove to be inadequate.”
Inflation has not been abolished by Sunak’s statement. After Sunak’s statement, Rachel Reeves pointed out that the economy faces problems such as “Britain having the highest inflation and slowest growth in the G7 next year.” Wages will continue to fall behind inflation, causing real financial hardship as incomes are cut in real terms. At the same time those workers who are able to do so will seek to rectify this through their collective organisation at work. Although Sunak’s packaged was focused on households, inflation is working through in other ways, as Duncan Weldon commented yesterday:
“the impacts of soaring energy bills on firms – and also schools and other parts of the public sector – should not be forgotten. ONS survey data puts energy bills as the second most cited worry from private firms at the moment and that can only be expected to rise. It is always worth remembering that firms, unlike households, are not subject to a price cap. Anecdotally I am hearing of SME after SME getting absolutely clobbered by rising bills. Not to mention schools being forced to cut back in other areas to keep the lights on.”
For all these reasons the government will continue to be pressed heavily over incomes, services and living standards. The General Secretary of the TUC, Frances O’Grady, tweeted that “the govt still doesn’t have a plan for giving families long-term financial security. Without proper pay rises we’ll keep lurching from crisis to crisis.” Last night at the Northern TUC’s rally in Newcastle, the deputy general secretary of the TUC Paul Nowak stressed that the government’s announcement was “too little, too late”. John McDonnell has argued that “despite all the hype, Sunak’s package won’t be enough to meet people’s needs & I predict we’ll be back here again.”
This view is not limited to the labour movement. James Forsyth, the political editor of the Spectator has argued today in The Times: “there is a recognition among cabinet ministers that, come the budget in October, the government will have to do more,” and that the “living-standards crisis will go on long enough that it won’t be the final intervention that ministers will have to make.”
Tories would be mistaken to believe that Sunak has solved their problems. For one, the government now looks even more incoherent - attacking a policy for months only to adopt it. More importantly, for millions the living standards squeeze has not been removed. That squeeze will continue to place huge pressure on people in their daily lives, and into politics.
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