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8 August

The real reason our zombie government isn’t taking action on the cost of living

Better to wait and make political capital out of rescuing people when they’re on the brink.

By Anoosh Chakelian

When he first became chancellor, George Osborne had a favourite phrase: “Fix the roof while the sun is shining.” Prepare the public finances for crises ahead, he argued, while the Sensible Tories nodded.

Cutting the state, as he did during his time at the Treasury, hardly achieved this goal, but it is telling of how the Conservatives style themselves in government. Prudent, risk-alert, taking the long view. The repetitive promise of a “long-term economic plan” was, after all, a slogan that did a lot to secure David Cameron a surprise majority in 2015. 

So why, now, are Tory ministers whiling away the summer holidays doing nothing to prepare for the sudden jump in energy bills we know is coming in October? Why are they spending weeks on a leadership election that feels as though it’s taking place in a parallel universe in which only the price of Claire’s Accessories earrings and the future of greyhound racing matter? Why is a man who was prime minister 12 years ago more concerned about financial ruin around the corner than the one currently in No 10?

Gordon Brown has called for Boris Johnson and his potential successors Rishi Sunak and Liz Truss to meet this week and agree on an emergency budget, ahead of the “financial timebomb” in autumn. If they refuse, he argued, parliament should be recalled to force them to do so. Martin Lewis, meanwhile, the popular consumer rights expert who carries as much weight in the public’s mind as the crash-era ex-PM, has also urged Johnson, Sunak and Truss to “urgently intervene” together. 

When the energy cap increases in October, bills are expected to hit £3,400 by some forecasts. We know that the support already introduced by government is not enough – it’s based on a previous, lower prediction of bills reaching £2,800. In fact, according to the anti-poverty charity Joseph Rowntree Foundation, the average amount that households owe their energy companies is £375 – which is more than the first emergency payment to lower-income families of £326, which was paid out in July.

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Governing in a period of spiralling inflation is hard, but ministers have the advantage of knowing almost the exact size and coordinates of the iceberg we’re hurtling towards, and the precise date of impact. Why, then, are they waiting before changing course?

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Because of one very simple reason: if you introduce help too soon, the argument goes, people will stop noticing it by the time bills go up and you’ll miss out on the political capital. It’s better, politically, to do a big show of rescuing people once they’re at the brink. As a force of circumstance, Sunak did this with the furlough scheme and other emergency measures within days of Covid-19 shutting the UK down: he became the most popular Westminster politician in the country. 

Ministers also prefer to ignore the very obvious lever for protecting the poorest households: raising Universal Credit payments. This works, and Sunak knows it – he increased payments by £20 a week at the start of the pandemic. The governing party, however, is reluctant to put benefits up and will try everything it can (as it has shown with its council tax rebate and energy bill subsidies) to avoid this. 

Yet currently the greatest obstacle to immediate support is how completely adrift the government is from the population. Focused almost exclusively on themselves and the denizens of Tunbridge Wells et al, the Conservatives are stuck in a long leadership contest in which neither candidate is promising direct help for the worst off: Truss is ruling out “handouts” while Sunak wants to replay the old Tory classic of balancing the books on the backs of the poor. All the while, Johnson and his understudy Chancellor, Nadhim Zahawi, are absent from the public conversation – “working from holiday” (paging Jacob Rees-Mogg…) and leaving it to the Bank of England to take the blame. 

“Essay crisis” government might have worked in the pandemic, when a lot of policy and legislation had to be concocted last-minute, but there is little excuse for procrastination now. Then again, it’s not the occupants of No 10 or No 11 – whoever they may be come autumn – who will be huddling in council-run “heat banks” to keep warm.

[See also: How can Boris Johnson and Nadhim Zahawi be on holiday at a time like this?]

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