The government is worried about the persistent inflation rate in this country, at a time when we really need to cut interest rates to stimulate the economy and take some of the pressure off borrowers.
It has the answer to the problem under its own influence, as much of the high inflation rate is coming from public sector taxes and prices. Today we hear of the campaign to resist the 2p extra tax the government is proposing this April on petrol and diesel. This follows a totally unnecessary extra 2p on fuel last autumn.
These increases are vengeful against motorists and hauliers. The governmentâ€™s tax take on fuel has soared anyway, thanks to the big increases in market prices which gives the government more revenue automatically from the ad valorem tax. If the government still believes fuel burn by travellers is the only part of the carbon dioxide problem it wishes to curb, it should recognise just how far its taxes and the Middle East oil situation have jacked prices up. People now need to be given time to adapt, to buy their more fuel efficient vehicles and scrap the older ones. They cannot afford to change their vehicles because the government is squeezing them too much, and they cannot afford the sky high train fares either.
The government has also stoked the inflationary fires by its mismanagement of the nationalised industries. Postal charges have surged, as a result of the government taking so much other government business away from the Post office. The very well paid management they have put in has decided that using monopoly pricing power is the easiest way to pay their bonuses, so the rest of us are suffering.
The nationalised railway track company has pushed up its costs and charges hugely since it came into public ownership. This is now being partly passed on in much higher fares to passengers for many journeys. The nationalised railway is no longer thought a suitable means of carrying much of the post around the country. We have the ridiculous sight of one nationalised industry refusing to use another on grounds of cost and efficiency, with the Minister when I last asked explaining to me that was the reason! You would have thought a government which defines being green as going by train would at least make the nationalised post go by train.
A whole series of fees and charges are regularly shoved up by more than inflation as the government seeks back door ways of taxing people. Local government too is on to the same trick, with its planning, building regulation and other fees. Council taxes are just about to go up by much more than the 2.1% inflation rate of the governmentâ€™s official figures.
So what should the government do, to curb inflation? Instead of penalising us with high interest rates for its own inflationary actions, it should have a period when the costs government imposes go up by less than 2.1%, not by more. They could start by:
1. Announcing no further 2p increase in fuel taxes this spring.
2. Cutting fuel duty by the amount needed so the total tax take came out in line with the original budget figure, before the huge increases in prices we have seen in recent months swelled the total.
3. Telling Post Office management they should cancel the postal price increases and make up the money by efficiency gains. If they cannot, they should change the management to someone who can. It would not be difficult to do so in such a badly led organisation.
4. Putting the railway track company back under private sector discipline, to grapple with its bloated costs and inefficient use of contractors. In the meantime tell the regulator to prevent the above inflation fare increases, and stop the attempts by Network Rail to charge the rail operators too much for its poor service.
5. Reducing the costs imposed on local government, by cancelling much of the performance and best value regime, which in total cost Councils much more than £1 billion a year. Then demanding that they get their Council Tax increases down.
6. Putting a freeze on all other costs and charges imposed by the public sector for the next thirteen months to assure people the public sector is turning off its inflation machine.
Only if the government takes action like this can we regard it as serious in its stated wish to curb inflation. Only if it does this will the Bank of England have sufficient scope to lower interest rates, as it needs to do to tackle the Credit Crunch. We live under a rip off government. Please give us a break.