Families are facing the biggest hit to living standards since records began, and under the Conservatives the economy has simply stopped working. The Resolution Foundation has found that the typical household will be £1,100 poorer as a result of the government’s policies over this parliament. A typical family looking to re-mortgage will face a £2,000 annual hike.
For months our shadow chancellor Rachel Reeves has been pushing the government to get a grip on the crisis. Labour has led the way on championing policies to support people with the cost of living. For example, we have been calling for a fairer deal for those paying a premium on energy prepayment meters since last August.
In his Budget of 15 March, the Chancellor finally gave in. And not just on prepayment meters. Whether it’s the freeze to fuel duty, a plan to help over 50s get back to work or better childcare – where Labour leads the Conservatives follow.
But this is all too little too late. Of course, we welcome the freeze in energy prices. But in the Spring Budget, the Conservatives chose yet again to protect the energy giants’ windfalls of war. By failing to backdate the windfall tax to January 2022 and end the fossil fuel investment allowance they have left billions on the table, leaving ordinary families paying the price.
[See also: Labour’s fiscal paradox]
The only surprise in the Budget was a multi-billion pound tax cut for the richest 1 per cent of pension savers. This sums up the Conservatives’ basic approach: handouts for the richest few.
Labour would always put ordinary families first. That’s why we have committed to reversing this expensive cash giveaway to the wealthiest pensioners. The government could create a targeted scheme to encourage doctors to work overtime and not to retire early which would cost a fraction of this proposal.
And that’s why we would also scrap the unfair non-dom tax status – which costs the UK more than £3bn every year – in order to pay for free breakfast clubs and the biggest ever expansion in the NHS workforce. Fundamentally though, we understand that the UK needs a long-term economic plan to boost living standards for working people.
This crisis has exposed structural problems in the British economy. Under the Conservatives we have become trapped in a cycle of stagnant growth, low wages and high taxes. The fact that the UK is experiencing the slowest post-pandemic economic recovery in the G7 is a scandal. But all the Chancellor had to offer was more sticking plasters.
The consequences of this complacency will be devastating for working people – the Office for Budget Responsibility has now confirmed that Britain will have the weakest growth in the G7, not just this year but also in 2024. But we don’t have to go down this path of managed decline – Britain has the potential to be a world leader.
That’s why a Labour government’s first mission will be to secure the highest sustained growth in the G7, to deliver productivity growth and well-paid jobs in every part of the country. We’ll achieve that through an active partnership with business and our modern Industrial Strategy, while our Green Prosperity Plan will drive bills down and let British businesses and workers compete in the global race for the jobs and the industries of the future.
The alternative is stagnation. While the US has passed the Inflation Reduction Act and the EU its own Net Zero Industry Act, the Conservatives’ complete lack of ambition has seen the UK fall behind.
In contrast, our economic plan will get the UK growing again, boosting living standards and wages for working people. Only Labour has a serious and patriotic strategy for national renewal.
This article appeared in the Spotlight special policy supplement on the cost-of-living crisis. To read the full report click here.