by A Pollock
The cost of living has become a talking point and is now picking up energy. We have all heard the economic forecasts that our heating bills will rise by £700 a year, but what does this mean to ordinary families?
Firstly, with the myriad of benefits that are now available to the working poor, a large number of the working class, have failed to appreciate that the cost of living has depreciated their status. The stealth manoeuvres of this Government have slowly whittled away at the family purse, and the last big rub is the cost of a home-worker heating their home.
The categories of lower-middle and upper-working class no longer matter. A family in Newham explained that with a trade union convenor and a charity working mum; working on Zoom; they are able to make the sort of incremental changes to their lifestyle that can put pennies back in the bank. Taza commented “I will just have to cook more and tell the kids not to get a McDonalds on the way home. They get £20 a month pocket money and they will have to learn that that is their lot”
Put plainly, with inflation on retail prices running at an estimated 5% to 7.8% and wage depreciation at a solid 6% (lagging far behind the wage recovery in Germany and France) British people face their worst crisis in home finances since the 1930s. Added to this is the pressure on families to care for over-sixties with no pension or job, and this care and wage crisis becomes a “quiet-storm” brewing around the cost of living. The war in Ukraine could push inflation to an all-time high of 8-9%.
The RPI is no accurate guide to the real inflation rate experienced by workers
Inflation has been based on the Retail Price Index (RPI) since before the Second World War. The cost of energy does not really feature in the RPI. Numerous changes have been made since Thatcher, the price of Woodbine cigarettes is no longer a government concern, and a loaf of bread is anomalous. However, our class-divided society means it is no longer possible for economists to quantify what an ordinary family buys. The decision by the Bank of England to raise the interest rate to 0.5% will surely be passed onto renters and mortgagees alike.
Natalie Shilling a mother of 2 who works as a Teaching Assistant, recently discovered that her Child Benefit is now taxable, asked if this will impact her family finances she commented “£20 a week doesn’t go far, especially when they are babies, which is the time you are most likely to be at home and not working. Maybe the Government should means-test benefits, but I don’t think extra-help should be rolled into Universal Credit as not all parents are entitled to this, but all children should be entitled to some benefits”
Tinkering with the benefit system is no solution for the working poor
Her point raises the issue of entitlement and how the Exchequer can fairly deal with the cost-of-living crisis. Both the middle class, and the working class, are crying out for some parity in their expenditure now. The Government’s proclamations on energy subsidies and the pensioners traditional winter-fuel payment is confusing and political. For the Tory “Wets” there is mileage in “levelling-up” and an acknowledgement that Storm Arwen left many Northern families with no consistent energy supply for months. But tinkering at the edges of social security and benefit is not going to solve the issues faced by the working poor.
Men who may not do the shopping may have been insulated from the realities of the household cash squeeze. A disabled grandfather in his early 50’s commented “I’m not heavily affected as I live with my partner who works and has a good job (and pays the bills)”. This contrasts with Asafa, a single mum from Newham who has recently felt the pinch. She supports four children by working as a Special Needs Teaching Assistant. She states “I’ve had to give up make-up and I’ve switched to 99p sanitary towels from the pound shop. I can no longer buy the stuff the children enjoy, we never have take-aways and we have started shopping for out-of-date food.”. The only silver lining for her is that she recently received a £50 cheque towards her energy bill from Newham Council, which the Mayor Rokhsana Fiaz has been able to gift to residents following the Conservatives decision to give Levelling-Up money to the poorest boroughs in England. But this is a piecemeal bit of popularism.
With Boris Johnson now diverting his attention to the Ukraine, the rising energy prices will inflate as surely as the price of a cheap take-away. Clearly, as long as this new Winter of Discontent lasts in Europe it will be a tough one for all.
