‘Stability, Growth and Public Services’, according to Jeremy Hunt’s Autumn Statement. But what does that actually mean? Let’s take a look.
The Chancellor of the Exchequer Jeremy Hunt said on Thursday 17th of November:
“There is a global energy crisis, a global inflation crisis and a global economic crisis. But today with this plan for stability, growth and public services, we will face into the storm. We do so today with British resilience and British compassion.
“Because of the difficult decisions we take in our plan, we strengthen our public finances, bring down inflation and protect jobs.”
Firstly this crisis in the management of the UK economy happened well before an energy crisis or any other kind of global event. This was a homegrown crisis. Successive UK Governments have been underfunding the NHS, social services and all public services. Energy companies are reaping massive profits and on an advisory referendum where 2 countries out of 4 in the UK voted Remain, the UK left the world’s largest free trade market with a slogan on the side of a bus.
The weekly shop for the most basic of food stuffs has seen a rise in prices eating into household budgets already struggling with their heating bills. Food Insecurity Sees Many Scots Running Out of Food
The largest upward contributions to the annual CPIH (Consumer Price Index including owner occupied housing costs) inflation rate in October 2022 came from housing and household services (principally from electricity, gas, and other fuels), food and non-alcoholic beverages, and transport (principally motor fuels).UK Government’s Office of National Statistics
The UK Government introduced the Energy Price Guarantee (EPG), which at its current level will be in place from 1 October 2022 until 31 March 2023.
But, “In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago.”
And for your weekly shop, “Food and non-alcoholic beverage prices rose by 16.4% in the 12 months to October 2022, up from 14.6% in September 2022.”
In Scotland we have devolved government, which means the taxes we pay go into the UK Treasury and then a portion of them are sent back to be managed by the Scottish Government. The Scottish Government has to work within this budget – it does not have borrowing powers like the UK Government has. Out of this fixed pot of money the Scottish Government has to deliver services for the people of Scotland.
UK general government gross debt was £2,436.7 billion at the end of Quarter 2 (Apr to June) 2022. At 101.9% of GDP, UK general government gross debt at the end of Quarter 2 2022 was 15.5 percentage points above the EU average.
The rise in prices to heat homes has increased even more in Scotland. The highest rates of fuel poverty are in the Highlands and Islands of Scotland, exporters of clean green renewable energy but the whole of Scotland will see millions not being able to heat their homes to an adequate level. On 3rd of December there will be a UK Day of Action on Fuel Poverty
The UK Chancellor’s Autumn Statement included extending the Energy Price Guarantee from April 2023 with the cap rising to £3,000, protecting the Triple Lock on Pensions and increasing the National Living Wage by 9.7% to £10.42 an hour.
This will be nowhere near enough to offset the horrendous rise in energy and household prices.
For food shopping the items where the lowest prices rose at the fastest rate between September 2021 and September 2022 were:
- Vegetable oil (65%)
- Pasta (60%)
- Tea (46%)
The UK economy, weakened through the mismanagement of successive governments, is failing to deal with the continued fallout of Brexit, a Covid pandemic and the profiteering of energy companies.
Scotland’s Deputy First Minister John Swinney said that £1 billion in savings have had to be found in the Scottish Government’s Budget to help those who need it most.
“Households across Scotland are paying a steep price for the economic mismanagement of the UK Government, with average household disposable incomes forecast to fall by 7% in real terms according to the Office for Budget Responsibility. This would erode just under 10 years of growth in living standards, taking them back to levels not seen since 2013-14, meaning they would not recover to pre-pandemic levels until after 2027-28 – a devastating indictment of the UK Government’s management of the economy.
“I am pleased the Chancellor has finally listened to our calls to tax more of the windfall gains in the energy sector, but he should have gone further to remove the poorly targeted investment allowance, which only serves to encourage short-term investment in fossil fuels rather than promoting long-term, sustainable energy solutions.
“This leaves me with the difficult task of setting Scotland’s Budget for 2023-24 with no hope of financial flexibility to make a real difference in the lives of those who need it most.”
Click on this link for: Help during the cost of living crisis