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26 April 2022

Why the cabinet’s cost-of-living drive won’t be enough

Trying to address the crisis without new government spending gives Labour an opening.

By Freddie Hayward

Boris Johnson will ask his cabinet to come up with solutions to the cost-of-living crisis today in a clear sign that it has become an enduring problem for the government. The Prime Minister will urge ministers to “ease living costs without solely relying on new government spend” amid concerns about “high levels of public debt”. The plans are largely limited to encouraging people to check their eligibility for pre-existing support such as tax-free childcare.

The move suggests No 10 doesn’t think Rishi Sunak, the Chancellor, did enough — or at least wasn’t seen to be doing enough — at the Spring Statement in March. It also suggests that the government is unlikely to announce major new proposals that increase government spending before the Budget in the autumn. The cabinet will be instructed to focus on “non-fiscal” measures, which bolsters Sunak’s campaign to limit government spending and bring down borrowing.

[See also: Are you better off? Conservatives may come to fear “the Reagan question”]

Such an approach could prove risky for the government. The issue creates an opportunity for Labour to burnish its policy proposals and Keir Starmer has already called for an emergency budget. Indeed, the public are now more likely to trust Labour to manage public spending and reduce their cost of living than the Conservatives, according to a poll last month. Perhaps most importantly, 86 per cent of people said they were following the rise in cost of living closely.

It will be tricky to attribute the result of next week’s local elections to any single issue, not least because local factors will play an important role in many wards. Yet the government’s light-touch approach to the cost-of-living crisis is storing up problems for it down the line. Today’s instruction to the cabinet is a sign the government want to be seen to be addressing the problem, having got the message people didn’t think the Spring Statement cut it. The problem for the government is that, without significant support, that might not be enough.

This piece first appeared in the Morning Call newsletter; subscribe here.

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