With every fare rise and fee increase, the government decides to defy the inflation hawks

This year and next, a full 0.6pp of inflation will be because of direct government decisions.

Last week, I wrote about how inflation is worst for those who spend a large proportion of their income on essentials. The cost of essentials, defined as food, housing, energy and travel, increased by 3.7 per cent last year, well above CPI's 2.8 per cent increase. Since the recession, essentials have increased in price by more than 33 per cent, while nominal incomes have gone up by just 10 per cent.

A large driver of that increase, however, is the direct effect of government policy. For instance, council tax, road tax and almost all public transport fares are set by the state, as are most of the costs of highly-taxed goods like alcohol, tobacco, fuel and heating and power.

Now, the weekly briefing note produced by Deloitte's Chief Economist, Ian Stewart, makes clear that a similar effect is happening to the headline rate of inflation. Stewart writes:

In its latest Inflation Report, the Bank noted that one of the reasons behind persistently high inflation was higher 'administered and regulated prices', i.e., prices affected by government or regulatory decisions. Of these, a key contributor has been the rising price of education, largely reflecting rises in undergraduate tuition fees. Another contributor is higher domestic energy prices as a result of current climate change and energy policies and further investment into the UK's gas and electricity distribution networks.

According to the Bank, these two drivers have, together, amplified UK inflation by 0.4 percentage points last year and will do so by 0.6 percentage points this year and the next.

The latter reason is something you hear a lot about from inflation hawks, given the frequent coincidence of climate scepticism and fear of inflation; the former, not so much. When it comes down to it, one way to keep inflation low would be to fund essential public services through general taxation or deficit spending, neither of which tend to be routes advocated by inflation hawks.

Stewart also pokes the Bank of England about whether or not it is strictly applying its mandate. Technically, the Bank has only one role: to keep inflation as close to its 2 percentage points target as possible, and certainly within one percentage point either side. But instead, under both Mervyn King and, it is expected, Mark Carney, the bank has refused to take actions to bring down inflation if they would harm growth. Stewart writes:

This approach has led some analysts to point out that the Bank now seems to place greater emphasis on growth than on its explicit inflation target. It is not just that, in the words of the Bank's governor Sir Mervyn King "policy is exceptionally accommodative to growth". A debate is underway as to whether the Bank of England, and indeed other central banks, should run even easier monetary policy, possibly risking higher inflation in the long term, in order to bolster growth. In December, the US Fed set itself an additional target of bringing down the US unemployment rate to below 6.5%, before it considers raising interest rates.

Mark Carney, the next governor of the Bank of England, has recently said that central banks should consider radical measures, including commitments to keep interest rates on hold for extended periods of time or scrapping inflation targets, to boost growth.

Needless to say, the fact that the Bank of England is not crushing our already anaemic growth to bring inflation down from around 3 per cent to around 2 per cent is a feature, not a bug, in the system. Regardless of what the inflation target actually is, the fact that the Bank tends to be run by extraordinarily talented individuals who are working for the financial health of the country means that they are prepared to make sensible decisions even if they aren't necessarily the prescribed ones. But the choices raise further questions about whether the monolithic inflation target is the right way to run a central bank in the 21st century.

A hawk. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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This is no time for a coup against a successful Labour leader

Don't blame Jeremy Corbyn for the Labour Party's crisis.

"The people who are sovereign in our party are the members," said John McDonnell this morning. As the coup against Jeremy Corbyn gains pace, the Shadow Chancellor has been talking a lot of sense. "It is time for people to come together to work in the interest of the country," he told Peston on Sunday, while emphasising that people will quickly lose trust in politics altogether if this internal squabbling continues. 

The Tory party is in complete disarray. Just days ago, the first Tory leader in 23 years to win a majority for his party was forced to resign from Government after just over a year in charge. We have some form of caretaker Government. Those who led the Brexit campaign now have no idea what to do. 

It is disappointing that a handful of Labour parliamentarians have decided to join in with the disintegration of British politics.

The Labour Party had the opportunity to keep its head while all about it lost theirs. It could have positioned itself as a credible alternative to a broken Government and a Tory party in chaos. Instead we have been left with a pathetic attempt to overturn the democratic will of the membership. 

But this has been coming for some time. In my opinion it has very little to do with the ramifications of the referendum result. Jeremy Corbyn was asked to do two things throughout the campaign: first, get Labour voters to side with Remain, and second, get young people to do the same.

Nearly seven in ten Labour supporters backed Remain. Young voters supported Remain by a 4:1 margin. This is about much more than an allegedly half-hearted referendum performance.

The Parliamentary Labour Party has failed to come to terms with Jeremy Corbyn’s emphatic victory. In September of last year he was elected with 59.5 per cent of the vote, some 170,000 ahead of his closest rival. It is a fact worth repeating. If another Labour leadership election were to be called I would expect Jeremy Corbyn to win by a similar margin.

In the recent local elections Jeremy managed to increase Labour’s share of the national vote on the 2015 general election. They said he would lose every by-election. He has won them emphatically. Time and time again Jeremy has exceeded expectation while also having to deal with an embittered wing within his own party.

This is no time for a leadership coup. I am dumbfounded by the attempt to remove Jeremy. The only thing that will come out of this attempted coup is another leadership election that Jeremy will win. Those opposed to him will then find themselves back at square one. Such moves only hurt Labour’s electoral chances. Labour could be offering an ambitious plan to the country concerning our current relationship with Europe, if opponents of Jeremy Corbyn hadn't decided to drop a nuke on the party.

This is a crisis Jeremy should take no responsibility for. The "bitterites" will try and they will fail. Corbyn may face a crisis of confidence. But it's the handful of rebel Labour MPs that have forced the party into a crisis of existence.

Liam Young is a commentator for the IndependentNew Statesman, Mirror and others.