Britain’s leading politicians have been accused of coming up with ‘pure fantasy’ solutions to the country’s problems amid the worst cost of living crisis in decades.
At the same time, the government has been denounced as “missing in action,” distracted by the Conservative Party leadership race to determine who will replace Boris Johnson.
The outgoing prime minister’s office confirmed on Monday that he had started a week of vacation, his second break in a fortnight. Downing Street said last week that it is up to “the future prime minister” to take new measures.
Liz Truss and Rishi Sunak, the two remaining contenders to succeed Johnson, have focused on winning party members to vote for the new leader this month.
It comes at a time when the economy is facing a prolonged recession and UK inflation is the highest in the G7, reaching a 40-year high this summer. It rose to 9.4% in July and the Bank of England expects it to hit double digits in October, when household energy bills will rise again.
Paul Johnson, director of the Institute for Fiscal Studies, is unimpressed by the economic plans of both the Tory leaders’ rivals and those of the Labor opposition.
“We (economists) tend to look at difficult things like costs and benefits, tradeoffs, pros and cons. Our political leaders seem less and less willing to recognize that such tradeoffs even exist. Apparently, we can have our pie and eat it he wrote in an article published on monday.
Truss, the secretary of state, has said she prefers tax cuts to “handouts”, and has not committed to increasing direct payments to consumers.
Sunak, the former chancellor (finance minister), has backed “urgent aid” to allow people to pay bills, without giving details. “If we don’t do this, millions, including many retirees, would find themselves in a state of poverty,” he said on Saturday.
Earlier this year, he approved a payment of £400 (€475) to offset the fuel bills that all households will receive this autumn. He opposes immediate tax cuts, but has vowed to cut the basic income tax rate by 20% by 2029.
“We’ve had a torrent of cakeism lately. Both the 2019 Labor and Conservative manifestos were full of it,” said IFS’s Paul Johnson. “Both contenders for Conservative leadership are guilty of this. They seem to think they can promise tax cuts without any indication that this could affect the quality of public services or the level of loans and debt.”
Paul Johnson also criticized British opposition leader Labor after calling for a freeze on the energy price ceiling on Monday.
“Keir Starmer has now suggested that we ‘suspend’ the energy price cap. In other words, seek more than £30 billion (€35.6 billion) to subsidize energy bills,” he wrote.
“The fact remains that if we want to buy gas on the world market, we will have to pay much more for it than we are used to. We are competing for that gas in a world where demand is rising faster than supply. That’s why the price is rising.”
However, Johnson acknowledged that “Labour has gone way beyond the conservative leaders” in providing details on how to pay for its plans. Starmer said his party, if in power, would extend a windfall tax on oil and gas companies in the North Sea to raise £8.1 billion (€9.6 billion).
Analysts Cornwall Insight have: predicted that a typical annual household energy bill in January could reach the equivalent of $5,000. The energy consultancy auxilione has suggested the figure could approach $6,000 in the first half of 2023.
Early last week, Scotland’s Prime Minister Nicola Sturgeon called for a meeting of the leaders of the UK’s four nations to develop an urgent plan. “Westminster’s current paralysis cannot continue,” she says tweeted.
Martin Lewis, a consumer champion who runs the popular Money Saving Expert website, warned that “we are facing a potential national financial disaster,” with millions unable to heat their homes this winter.
Meanwhile, British former Labor Prime Minister Gordon Brown, who was in power during the 2008 global financial crisis, called on Boris Johnson, Truss and Sunak to come together and prepare an emergency budget in preparation for a “financial time bomb” in October.
“It’s not just that they’re sleeping behind the wheel – there’s no one behind the wheel at the moment,” he told ITV broadcaster.
Last Thursday, Boris Johnson and senior ministers held indecisive talks with energy companies under mounting pressure to help consumers.
Thereafter, the outgoing leader insisted that “major tax decisions” should be left to his successor. Later, he tried to allay the concern.
“What we’re also doing is trying to make sure there’s more support by October, in January and what the government will do, whoever the prime minister is, make sure there’s extra money to help people.” he said.
The winner of the Conservative leadership race – who will also become the next prime minister – will be announced on September 5.
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