23rd March 2022 will be an interesting day. It’s supposed to be chancellor Rishi Sunak’s big day in the sun, the spring statement where he gets to boast about how great the economy is doing and how the sunlit uplands are now within dazzling reach. Sunak’s path to popularity was lined with gold, or rather free money. When Covid-19 struck and the government instructed us to stay at home, Sunak literally handed out the cash. Quite apart from the fact that he handed many billions to fraudsters and organised criminals which he has quietly written off, his easy going manner and affable smile convinced many that he was A Good Guy. Not many think that today and after his spring statement I suspect his popularity ratings will be through the floor.
People who understand these things far better than I believe that 2022 will be the year when millions who thought themselves to be immune from financial hardship, basically the middle classes, really feel the pinch. And what a pinch it is going to be.
Inflation measured by the Consumers Prices Index (CPI) will soon hit 8% (the old measure, the Retail Prices index (RPI) will be closer to 11%), and stay at least 6% for the rest of the year, interest rates will rise to try to slow it down and within these truly scary figures lay potential disaster for millions. The energy price cap will increase by 54%, meaning that gas prices will be around £2000 a year for most people. But that’s just the start of it. By the autumn, the price cap could rise to around £3500 a year, put simply an extra £68 a week or nearly £300 a month. There is no prospect of wages, benefits and pensions rising by a sufficient to offset these rises and just to make things even worse, Sunak has ‘lent’ us money to help with this year’s bills which will be hauled back from us over five years at a cost of £40 a year.
When we saw our latest gas bill, it was a “fucking hell” moment. An enormous increase which we know will have to be covered from somewhere. By the autumn, the current bill will look very modest. We will be dreaming about the good old days when utility prices were merely a rip off. This is the royal scam.
We will probably get by, although there will be a level of belt-tightening. Some ‘luxuries’ like eating out and other forms of entertainment, like TV packages, will need to be slimmed down. For many, the hardship will be far more substantial than not going to the cinema: it will be failing to meet bills, being unable to eat, having the gas and electric cut off.
Imagine you are on the minimum wage or living off disability benefits. Tell me this: from where do you find an extra £300 a month to keep the heating on? If prices are going up by 8% and your income isn’t, you know the rest. And there is more to come.
It’s best not to drive anywhere at the moment with the price of fuel at unprecedented levels. Last week alone, the price of unleaded petrol rose to an average of £161 a litre, a rise of 8p in a week. Diesel is coming in at an eye-watering £1.70. (I have seen prices in Bristol much higher than that.) Not only will this drain the pound in your pocket, it will increase the price of everything you buy.
The government website says this: “From 6 April 2022 to 5 April 2023 National Insurance contributions will increase by 1.25%”. This is a lie. In reality, it is a 1.25 percentage point increase applied to existing National Insurance rates. For workers, this will mean a tax rise of more than 10%. A rise of 1.25% doesn’t sound like much, does it, but a 1.25 percentage point increase certainly does. This is what governments do, especially Boris Johnson’s. Liars one and all.
Think of everything you do and it’s going to cost more. Travel anywhere, whether by public or private transport, these increases will be passed on to you. Buy anything in the shop and you will pay more for it being taken there. Enjoy a leisure facility of any kind – the pub, the shopping mall, the theatre, the cinema, the football, your holiday – and you will see the impact. For many of us, something will have to give.
Sunak’s big day in the sun won’t, can’t, just be a spring statement. He can’t pretend everything is hunky dory and tell everyone to tighten their belts because there are people who already can’t tighten them anymore. And this shouldn’t be about politics, as it always has been with Sunak, who is an ambitious, publicity driven politician whose every move is planned for his inevitable succession to Number 10. If millions are driven to poverty, as businesses go bust, people lose their jobs and they can’t afford to heat or eat, I suspect even the usually accepting of anything Brits will say they’ve had enough.
I won’t be planning any major new financial commitments for the foreseeable future because the future is so unclear and potentially precarious. Sunak will have to act bigly, as Donald Trump might put it, to literally save the economy, especially if Putin’s war on Ukraine rumbles on. if he doesn’t, he will pay an enormous political price but that’s nothing compared to those lower down the food chain who stand to lose everything.
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