Understanding the human impact of price rises
When he was PM, David Cameron was famously asked if he knew the price of a supermarket loaf of bread. He didn’t have a clue, and waffled on about owning a bread-maker. Johnson didn’t fare much better when pressed by Jeremy Paxman on the cost of a pint of milk. Conservative MP Nadine Dorries described them as “Posh boys who don’t know the price of milk”.
We get ours from the milkman, 75p a pint. Call me retro, or just keen on supporting small businesses, but it comes in handy when your teenage sons have drunk the fridge dry. A quick press on an app, and more milk appears on the doorstep next morning.
Inflation running at 5.4% is a rough indicator of how hard prices will hit people’s wallets. But statistics can hide the real world impact. Anti-poverty campaigner Jack Monroe points out that last year the Smart Price pasta in her local Asda was 29p for 500g. Today, it is unavailable, so the cheapest bag is 70p. A whopping 141% inflation rate for people who are at the bottom end of the income ladder.
Reciting grocery prices is less important than understanding the human impact of price rises. Chancellor Rishi Sunak is worth around £200 million. He built a £400k leisure complex at his North Yorkshire mansion. It’s not even his main home – that’s his £7 million house in Kensington. And if he runs short, his father-in-law is worth £3.8 billion. In 2020, Mr. Sunak failed to declare £430 million of his wife’s shares on the register of ministers’ interest. It’s not relevant, he said. I’m guessing they don’t need to empty the loose change jar at the end of the month to put food on the table.
His insistence on raising National Insurance Contributions (NICs) penalises the very people who do all the work in our country. If you’re earning £30,000 a year from work, a full 9% of your salary will go in NICs. When the energy price cap is lifted in April, gas & electricity tariffs are forecast to rise by 50%. Typical energy bills will rocket £700, to £2,000 a year. If you’re on an average wage, this price hike will swallow up 10% of your income. For a care worker on minimum wage, fuel alone eats up two months’ take home pay. The effects will cascade through our economy. Less disposable income hits local shops and leisure business still struggling from Covid.
If you’re lucky enough and prudent enough to have built up some savings, they’re being eroded too. Inflation is running 4% higher than you’ll get on a cash ISA or savings account. This is a real worry for many, especially the elderly. Your money is evaporating.
We’re doing what we can in the North of Tyne. We’ve protected over 2,600 direct jobs through the pandemic, and are creating over 4400 new ones. Good jobs, with full time, secure contracts and decent wages, backed by our Good Work Pledge. Our Child Poverty Prevention programme is tackling poverty at the sharp end. Working with families discreetly, and with dignity, so kids don’t get labelled and bullied for receiving help. We’ve supported over 1,700 local firms. And we’ve brought big firms here, paying salaries in the £40,000s and £50,000s.
But we don’t have the levers the Chancellor has. Britain should have a wealth tax. There is no economic reason not to. There’s a raft of research on different proposals. The basic idea is you pay a very small percentage of your total assets above a threshold. One example is 1% of everything above £3.4 million. So if your house, savings, and that spare Picasso in the downstairs loo total up to £3 million, you don’t pay a penny. If you’re worth £4 million, you pay 1% of the amount above the threshold. 1% of £600,000 is £6,000. I reckon if you’re worth £4 million, you can afford £6,000 a year.
A group of 102 millionaires and billionaires have started the “Tax us now” campaign, calling for a wealth tax. I confidently predict that Rishi Sunak will not be joining them. A wealth tax is one policy that he personally would “get”.
Originally published in the Journal and Evening Chronicle 31 Jan 2022