Talk of a cost of living crisis often degenerates into an attack on the businesses which supply us with energy or other basics. It rarely looks at the architect of many of the high prices, government itself. Nor does the debate regularly include the evidence which shows the worst falls in real incomes occurred at the end of the last decade during the Great Recession.
Take the case of energy. Almost two thirds of the price of petrol and diesel is tax. The last government had a policy of increasing this regularly. The Coalition cancelled the escalators but left in place the high levels of tax already reached as it needed all that revenue from motorists and businesses delivering our food and other needs.
One of the main reasons our domestic fuel bills have been going up is the EU and Labour government policies to shift electricity output from cheaper coal and gas fired plant to very expensive renewables. Delay and opposition to extracting domestic gas and oil has also impeded the arrival of cheaper energy, such that we now pay so much more than the US for fuel to power our factories and warm our homes.
When it comes to the cost of housing, this government has increased Stamp duties. The previous government presided over large rises in Council tax, which have been abated by the present government’s policy of financial help to Councils who freeze their bills. They remain frozen at the much higher levels achieved under Labour.
Extra government borrowing is simply deferred taxation. Those of us who want to complete the job of deficit reduction, and want to see more progress in improving the cost effectiveness of public services do so because we realise that the UK has been suffering from a cost of government crisis. This lies behind the fall in living standards.