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21 March 2022

Why the Tories can’t blame the Ukraine war for the living standards crisis

Households were already facing the biggest squeeze in 70 years before Russia invaded Ukraine.

By George Eaton

Boris Johnson would never admit it publicly but the war in Ukraine has been a political blessing for his government. It has knocked “partygate” off the top of the news agenda and has ended speculation over his leadership. Perhaps even more crucially, it has provided the government with an apparent excuse for the approaching living standards catastrophe. 

As Liz Truss, the Foreign Secretary, recently declared: “our hardships are nothing compared to those endured by the people of Ukraine… In Britain, and around the world, we’re prepared to suffer economic sacrifices to support you, however long it takes.”

In case anyone missed her point, Kwasi Kwarteng, the Business Secretary, was swift to echo it. “People are willing to endure hardships in solidarity with the heroic efforts that the people of Ukraine are making,” he said.

In other words, the living standards crisis is the result of the war and no one will (or should) complain because their pain is for the good of the Ukrainian people. This might appear a persuasive narrative but, unfortunately for the government, it’s nonsense.

UK households are facing a dystopian combination of higher prices, lower wages, higher taxes and lower benefits – yet all of this was the case long before Russia’s invasion of Ukraine. It was the British government that cut Universal Credit by £20 a week (which amounts to £1,040 a year), that approved an energy price cap of £1,971 (an increase of £693), and that resolved to increase National Insurance (a move that will cost a worker earning £30,000 an extra £214 a year). Average real wages, meanwhile, have already fallen back below their 2008 level. As a consequence, even without the war in Ukraine, households would be facing the biggest squeeze in living standards for 70 years.

To recognise as much is not partisanship. As Martin Lewis, the respected founder of Money Saving Expert, has remarked: “I am slightly worried that we are seeing what may be potentially a deliberate narrative shift, that effectively says the entire cost-of-living crisis is due to Ukraine, and therefore we all need to make sacrifices. And that is not correct. What has happened in Ukraine has exacerbated the situation. But the rises in energy, heating oil, water, council tax, broadband and mobiles, food, National Insurance, were all in place before [Russia invaded] Ukraine.”

This, however, is unlikely to dissuade Boris Johnson and his cabinet from pushing their new narrative. Back in 2010, when the Conservatives returned to government, they used the budget deficit to justify radical austerity, blaming the last Labour government and insisting that “there is no alternative”. This wasn’t true – as Keynesian economists repeatedly pointed out, spending cuts were an ideological choice, not an economic necessity. But the Conservatives still went on to win a majority at the 2015 general election.

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Now, through a similar rhetorical sleight of hand, the Tories aim to absolve themselves of responsibility for the living standards crisis. Should they succeed then – as with austerity – it is the British people who will pay the price.

[See also: Blaming Putin for energy prices is a cover for the government’s own mistakes]

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