Photography by Tom Parsons on Unsplash.
By Jack McGrath
Despite apparently infinite sleaze and deceit, the ‘Great’ British government somehow slouches on, its thin veneer of shame sufficient to stave off collapse. (Each week that veneer takes a slightly different form – one-week complete disregard, another week half-hearted apology, and, in yet another, it nearly takes the form of crocodile tears. Absurdly, this government’s shame has become a matter for calculation.) It is as if they are propelled forward by their boundless and blatant contempt for anyone ‘beneath’ them. (Of course, people used to say that Johnson’s blundering was ‘priced-in’ to his election. I highly doubt that, now. His blundering, and the government’s disregard for decency, is the fuel for their enterprise.) How long the government will stay afloat is anyone’s guess, but one thing is for certain: the ‘upcoming’ living crisis (as if there is not already one) has the potential to be their wreck.
As things stand, inflation has already risen to 5.1%. Real wages have stagnated and are expected to fall for the rest of the year. This should be enough cause for concern. Yet, of course, the reality is worse. According to Ofgem, once the next government-mandated price cap is set on energy prices, households can expect to see a 40% rise in energy costs. Indeed, all things considered, it is entirely possible that households will see a doubling of their bills in the next year. As things stand and as they will come to stand, then, many, many households will be utterly crippled or simply collapse under the financial strain they are about to experience.
Now, Rishi Sunak has announced a supposed £9 billion support package for a solution. But its components are misguided. Key to it, for instance, will be the provision of a £200 loan for households. The assumption that such a policy would go any substantial distance to really helping the poorest households (or, indeed, middle-income households) is ridiculous. (What is more, Sunak did not even seem to understand that his policy is, in fact, the provision of a loan and not, as he chose to frame it, a bill ‘discount’. Of course, in actuality, he does understand – this is just one of his turns at the government’s long game of infinite deceit.)
At the very least, the government should be implementing a windfall tax on the exorbitant profits enjoyed by oil and gas companies in the past year. To put those profits in perspective, Shell’s pre-tax profit reached £12 billion in the last three months of 2020, rising from £886,000 in the previous quarter. Of course, Shell CEO Van Beurden claims that, as opposed to being taxed, the best way Shell could help the upcoming living crisis is by “staying in business”, suggesting, unbelievably, that a windfall tax might be the company’s end. Since it has to be said: oil and gas companies did not collapse in 1982 when the then-Tory government implemented a windfall tax on their profits, they would not collapse now. In any case, what baffles the mind most of all is the abject lack of potential solutions on the table. Aside from the £200 loan, other suggestions have been: a temporary VAT cut, price subsidies for the poorest households and a return to austerity as soon as possible.
What strikes me about all these proposals is how boring they all are – how dull, lifeless, and grey. The problems we are facing are changing – the solutions must change, too. Why we assume the same set of solutions will be appropriate for every problem we face is a maddening thought. (Who knew, I suppose, that such a wonderful fiscal and monetary skeleton key was being hidden from us all in 11 Downing Street.) No doubt, some of the responses to the reality of the pandemic were somewhat creative. But, if we were being creative then, why stop now? Why revert back to an approach that may have worked (though, I would wager that it did not) in a world gone? On the other hand, if we were not being creative then, why are we still not now?
We cannot slump into a financial policy that time should have buried. VAT cuts, subsidies and loans, and return to austerity cannot be the way forward. If we are to have any hope at steering a calm course through an otherwise tumultuous decade, we must rethink the structures of our society and financial system. We must, in the first instance, rethink our taxation system. And we must, at the same time, rethink our welfare system. If we do not, it will not just be this government’s ship that will be wrecked. They will drown, no doubt, but so will we all.