Opinion: ‘Rising prices putting pressure on those who can least bear it’
Councillor Shaz Nawaz, Labour Group leader on Peterborough City Council, writes...
As an accountant, I can see how energy prices will hit many companies’ bottom lines. There are other shortages: for example, we have a lack of lorry drivers,
which is causing our distribution networks to operate far more slowly than previously. Shortage almost always triggers a rise in prices. Increased costs follow on from a rise in National Insurance contributions for most people.
Memories of 1970s are somewhat lost in the haze of history. Inflation was a big issue back then for a very simple reason: to keep up with rising prices, wages must go up, which then, in turn, causes prices to go up again as costs are passed on. The term for this situation is a “wage-price spiral”; no one wins in such a scenario, and furthermore, in the 1970s it was accompanied by slow growth.
The trigger for inflation 50 years ago was a sudden increase in the price of oil; Middle Eastern oil producers engineered this situation. Now we are dealing with price increases due to shortages in gas and other fossil fuels. The effect is the same: rising prices are making us collectively poorer. They are putting pressure on those who can least bear it.
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We have reached the part of the year in which thoughts start to turn to December and the festive season: there is already talk of Christmas being affected, whether that includes a shortage of turkeys or even a lack of toys to fill children’s stockings. It looks like we are facing a grim, austere season in which the holiday’s usual abundance is denied to us.
What can the government do? First, we should ask what they did to prepare for this eventuality. It should have been clear as the year progressed that post-Covid recovery was going to require unsticking supply chains. Second, we should ask how Brexit was implemented: what was the point in making it more difficult for lorries to do their work? Why was there no plan just in case transport was hit by a labour shortage?
We should also ask what they are doing now: the government is likely to have to perform a bailout of some kind. The present talk is of propping up smaller energy suppliers; however, what about the people?
The people of Britain have been asked to prop up banks for example, but who is propping them up? Not everyone is fortunate enough to have energy prices locked in for a while, hopefully long enough to ride out the shortages. What do we intend to do for the less well off? Will there be a subsidy?
Will the government do something to get more gas into the country? Or are they going to merely throw up their hands and blame market forces while ensuring corporations survive?
The recent reshuffle of cabinet ministers may indicate that we are headed towards a General Election within the next year or so.
It is rather curious that the Conservatives may be thinking this way, given that their record in both local and national government represents an oscillation between panic and complacency.
When it came to the pressures on the people of Peterborough, we have had the complacency; the panic is likely to follow.