In January inflation hit 5.5% – a 30 year high – as a result of soaring energy prices and the disruption of global supply chains, made worse by the Johnson government’s terrible Brexit deal. It is forecast to reach almost 8% in April, fuelled by an eye-watering 54% increase in the energy price cap, spiralling living costs and tax and national insurance increases.
This is a catastrophic prospect for millions of people, for most of whom wages are stagnating. The average family is set to lose £1200 a year, with lower earners and pensioners especially hard hit. Food banks nationally, who have already experienced a massive increase in demand during the pandemic, fear they will be forced to turn away hungry families as they face soaring demand and supply shortages. The Resolution Foundation thinktank says cases of fuel stress – where energy bills in a household exceed 10% of disposable income – will double to 5 million in April.
The government response has been woefully inadequate. The measures to relieve fuel poverty announced by Tory Chancellor Rishi Sunak have been widely criticised for being badly targeted and offering too little support to those most in need. When Buxton Labour Party ran a street stall in Spring Gardens recently people overwhelmingly said the government is not doing enough to help people get through the crisis.
Right now Labour is calling for VAT on energy to be scrapped for a year, an increase in the Warm Homes grant for the 9.3 million people who need it most and a windfall tax on the obscene profits of North Sea oil and gas producers. We need to regulate the energy market, reinstate gas energy reserves and massively speed up progress on renewables, nuclear and insulating our homes. Labour is also calling for the planned increase in National Insurance, which will disproportionately affect working people on low earnings, to be scrapped.