Soaring inflation spells more trouble for Osborne

The UK now has the highest inflation of any EU country except Estonia.

The latest inflation figures are shocking. The Consumer Price Index rose 0.7 per cent last month to 5.2 per cent (the target rate, of course, is 2 per cent), the highest level since September 2008, while the Retail Price Index, the traditional measure of inflation, rose to 5.6 per cent, up from 5.2 per cent in August and the highest figure since June 1991. The UK now has the highest inflation of any EU country except Estonia. And all this before the Bank of England has injected £75bn worth of quantitative easing (QE), with inevitably inflationary consequences. It's nothing compared to the 1970s - when inflation rose above 25 per cent - but it explains why almost everyone is feeling the pinch.

The causes are wearily familiar: the depreciation of sterling, the VAT rise and rising energy prices (voters' number one concern, according to opinion polls). Average gas and electricity bills rose 7.5 per cent between August and September. But over the last year, excluding bonus payments, wages have risen by just 1.8 per cent, meaning millions are suffering an effective pay cut.

So, to quote Lenin, what is to be done? There is a (correct) bipartisan consensus that lack of growth, not inflation, is Britain's biggest problem. Hence George Osborne's support for a second round of QE (described by him in 2009 as "the last resort of desperate governments") and the government's tacit agreement with the Bank of England that interest rates will remain at record lows. A premature rise in the base rate (currently 0.5 per cent) would strangle growth. Similarly, Ed Balls and Ed Miliband continue to believe that sustained monetary stimulus is essential for the health of the economy.

In addition, all sides both hope and expect that inflation will come down next year as temporary factors such as the VAT rise and the surge in oil prices are discounted. Indeed, the Monetary Policy Committee's biggest fear is not inflation but deflation.

But none of this will prevent Labour delivering some potent attack lines. Here's Rachel Reeves, the party's new shadow chief secretary to the Treasury and a former Bank of England economist:

It's now clear we have the worst of all worlds - high inflation, rising unemployment and a stagnant economy since last autumn. When Britain now has the highest inflation of any EU country except Estonia, families and pensioners feeling the squeeze want out of touch Ministers to take some responsibility and take action now ... The Bank of England has been put in an impossible position by George Osborne. It has been left to do all the work to support the economy, while spending cuts and tax rises that go too far and too fast have crushed growth and the VAT rise has fuelled inflation too.

The stark reality for Osborne is that, under his stewardship, the UK now has one of the highest rates of inflation in the EU and one of the lowest rates of growth. As low and middle earners (11 million of whom have seen no rise in their real incomes since 2003) are squeezed by rising prices, falling wages, higher taxes and lower benefits, the pressure will intensify on the Chancellor to offer some relief.

George Eaton is political editor of the New Statesman.

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If the SNP truly want another referendum, the clock is ticking

At party conference in Glasgow, I heard Scotland’s governing party demand a future distinctly different from the one being sketched out in Westminster. 

Nicola Sturgeon described Glasgow as the “dear green city” in her opening address to the SNP party conference, which may surprise anyone raised on a diet of Ken Loach films. In fact, if you’re a fan of faded grandeur and nostalgic parks, there are few places to beat it. My morning walk to conference took me past chipped sandstone tenements, over a bridge across the mysterious, twisting River Kelvin, and through a long avenue of autumnal trees in Kelvingrove Park. In the evenings, the skyline bristled with Victorian Gothic university buildings and church spires, and the hipster bars turned on their lights.

In between these two walks, I heard Scotland’s governing party demand a future distinctly different from the one being sketched out in Westminster. Glasgow’s claim to being the UK’s second city expired long ago but I wonder if, post-Brexit, there might be a case for reviving it.



Scottish politics may never have looked more interesting, but at least one Glasgow taxi driver is already over it. All he hears in the back of his cab is “politics, fitba and religion”, he complained when he picked me up from the station. The message didn’t seem to have reached SNP delegates at the conference centre on the Clyde, who cheered any mention of another referendum.

The First Minister, though, seems to have sensed the nation’s weariness. Support for independence has fallen from 47 per cent in June (Survation) to 39 per cent in October (BMG Research). Sturgeon made headlines with the announcement of a draft referendum bill, but read her speeches carefully and nothing is off the table. SNP politicians made the same demands again and again – devolved control of immigration and access to the single market. None ruled out these happening while remaining in the UK.

If Sturgeon does want a soft Brexit deal, though, she must secure it fast. Most experts agree that it would be far easier for an independent Scotland to inherit Britain’s EU membership than for it to reapply. Once Article 50 is triggered, the SNP will be in a race against the clock.


The hare and the tortoise

If anyone is still in doubt about the SNP’s position, look who won the deputy leadership race. Angus Robertson, the gradualist leader of the party in the Commons, saw off a referendum-minded challenger, Tommy Sheppard, with 52.5 per cent of the vote.

Conference would be nothing without an independence rally, and on the final day supporters gathered for one outside. A stall sold “Indyref 2” T-shirts but the grass-roots members I spoke to were patient, at least for now. William Prowse, resplendent in a kilt and a waistcoat covered in pro-indy
badges, remains supportive of Sturgeon. “The reason she has not called an Indy 2 vote
is we need to have the right numbers,” he told me. “She’s playing the right game.”

Jordi McArthur, a member for 30 years, stood nearby waving a flagpole with the Scottish, Welsh and Catalan flags side by side. “We’re happy to wait until we know what is happening with Brexit,” he said. “But at the same time, we want a referendum. It won’t be Nicola’s choice. It will be the grass roots’ choice.”


No Gerrymandering

Party leaders may come and go, but SNP members can rely on one thing at conference – the stage invasions of the pensioner Gerry Fisher. A legendary dissenter, Fisher refused this year to play along with the party’s embrace of the EU. Clutching the
lectern stubbornly, he told members: “Don’t tell me that you can be independent and a member of the EU. It’s factually rubbish.” In the press room, where conference proceedings were shown unrelentingly on a big screen, hacks stopped what they were doing to cheer him on.


Back to black

No SNP conference would be complete without a glimpse of Mhairi Black, the straight-talking slayer of Douglas Alexander and Westminster’s Baby of the House. She is a celebrity among my millennial friends – a video of her maiden Commons speech has been watched more than 700,000 times – and her relative silence in recent months is making them anxious.

I was determined to track her down, so I set my alarm for an unearthly hour and joined a queue of middle-aged women at an early-morning fringe event. The SNP has taken up the cause of the Waspi (Women Against State Pension Inequality) campaign, run by a group of women born in the 1950s whose retirement age has been delayed and are demanding compensation. Black, who is 22, has become their most ­articulate spokeswoman.

The event started but her chair remained unfilled. When she did arrive, halfway through the session, it was straight from the airport. She gave a rip-roaring speech that momentarily convinced even Waspi sceptics like me, and then dashed off to her next appointment.


Family stories

Woven through the SNP conference was an argument about the benefits of immigration (currently controlled by Westminster). This culminated in an appearance by the Brain family, whose attempt to resist deportation back to Australia has made them a national cause célèbre. (Their young son has learned to speak Gaelic.) Yet for me, the most emotional moment of the conference was when another family, the Chhokars, stepped on stage. Surjit Singh Chhokar was murdered in 1998, but it took 17 years of campaigning and a change in double jeopardy laws before his killer could be brought to justice.

As Aamer Anwar, the family’s solicitor, told the story of “Scotland’s Stephen Lawrence”, Chhokar’s mother and sister stood listening silently, still stricken with grief. After he finished, the delegates gave the family a standing ovation.

Julia Rampen is the editor of The Staggers, the New Statesman’s politics blog

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood