The Tories' cost of living offensive starts with a whimper

The pledge to cap rail fare increases at 6% is unlikely to impress commuters who have suffered 11 years of above-inflation rises.

At the Conservative conference last week, both David Cameron and George Osborne used their speeches to deride Ed Miliband's focus on the "cost-of-living crisis" on the grounds that it was a distraction from the primary task of 'fixing' the economy. But while doing so, the Tories have also recognised that the Labour leader is onto something. 

The day after Cameron's speech it was briefed that the party would soon launch a "blitz" on the cost of living and that Osborne had "identified water bills, rail fares and bank fees as areas where the government can act to help with household bills." After previously dismissing Miliband's proposed energy price freeze as "a gimmick", Cameron notably acknowledged on ITV's The Agenda that the Labour leader had "struck a chord" with the public. 

With real incomes not expected to rise until 2015 and not expected to return to their pre-crash levels until 2023, Tory MPs are rightly warning their leadership not to dismiss the living standards crisis as a temporary ailment that will pass now growth has returned. A recent ComRes survey found that voters think the Tories are more likely to maintain economic growth (42-33%) and to keep public spending under control (47-28%), but also that they believe their own family would be better off under Labour (41-31%). If one party takes a decisive advantage before 2015, it is likely to be that which wins the trust of the public on both issues.

The Tory fightback has begun today with the announcement that rail fare increases will be capped at 6%, with companies barred from raising individual fares by more than 2% above RPI inflation, rather than the current limit of 5% (provided that the average rise is 1% above inflation). Ministers say that the move could save commuters around £20 a month but with fares still set to rise above inflation for the eleventh year in a row (while average earnings fall for the sixth year in a row), it's rather small beer. Labour has been able to hit back by pointing out that the move doesn't go as far as its pledge to limit all fare increases to 1% above inflation and former transport secretary Andrew Adonis has noted that the cap is "less tight" than the one he imposed in 2009-10. 

The Tories are promising "week by week" announcements in the run-up to the Autumn Statement but they'll need to do better than this to wrest the initiative back from Miliband.

David Cameron leaves Number 10 Downing Street on October 7, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.