The Great Squeeze: Cost of Living Crisis 2022

[AstroDan]

I figured that although there's an energy price topic, a Covid topic, and various others - there's nothing for the wider cost-of-living crisis.

The National Insurance rise is still scheduled to hit in April - and will cost many of us hundreds of pounds a year. This, on top of the great squeeze as inflation hits 6% and could rise more, pay is failing to keep pace (and in some cases is frozen).

It truly boiled my you know what this morning when I watched Liz Truss on Sky. When challenged about the cost of living crisis, she replied that "yes it is difficult" but... "the UK economy is the fastest growing in the G7". I then had to scoff whilst wondering how this assertion (which is questionably accurate anyway) could possibly help people on low and middle incomes with the rising cost of living hitting them from every angle.

We have seen nothing like this in my life time and, after a decade of austerity - and now this - pay just isn't going anywhere near as far as it did.

I was so enraged with Ms. Truss earlier, that it spurred me on to write to my local MP, the former Tory Chairwoman Amanda Milling.

Anybody else got any views on this?

I am not per-sé against tax increases but there is surely a better time than this.

 

[BarryZola]

HS2 ain't gonna pay for itself.

 

[JAperson]

The national insurance rise is wrong however I don't think there's much else that can be done, if there where I'd be right on it because this government is about the worst since the second world war. The government should be providing support and shouldn't be trying to increase taxes however I don't think they've completely caused the crisis (well apart from brexit contributing)
It's happening in pretty much every country and it's causing lots of problems. I hope it settles down as it's concerning. I'd like to think our government would support us however I have so little faith in this administration although they did pay for our meals when we went out to help out or whatever that was called.

 

[Matt.GC]

Tories always do this. It's one of the reasons they lost to a landslide in 97. Every time they were asked about poverty, homelessness, the blight of ex industrial areas, crumbling schools and hospital waiting lists they would just real off numbers about how "well" the economy was doing. Mainly for their mates and doners of course who were doing very well at the time. Similar in the 2010's with all the lies being told, pretending we were going to go bust like Greece and "1 step away from going to the IMF" as a smokescreen to implement ideological cuts.

Anyway, these are not ordinary times and this is not an ordinary government. A prime minister splashing the cash to stay in power because he's waste deep in personal sleeze. The changes to the economy after Brexit. The eye watering bill for Covid that continues to rise as the NHS backlog grows. Queues at Dover as we grapple with Brexit. The drumbeats of war alienating our main Gas supplier Russia. An opposition so ineffective, they've only just managed a double point lead even with how unpopular the government is.

What happens next will depend on what happens to Boris. I think he'll survive and if he does I think he knows that Implementing the NI rise will cause him major damage in the old red wall seats no matter how much he bribes them with his infrastructure promises. The MP's in these seats and hard-line Tories are lobbying hard for the rise to be scrapped.

But even if it is, I can't see any way out of the inflation problem. My energy costs are about to treble next month once my deal ends, and my mortgage will go up later in the year when that deal also ends. I've had no pay rise this year. I'm looking at making some pretty aggressive cutbacks like selling my car until the economy recovers to pay off the finance, I can't imagine how this must be for people on the bread line. It must be awful.

 

[JAperson]

Tories always do this. It's one of the reasons they lost to a landslide in 97. Every time they were asked about poverty, homelessness, the blight of ex industrial areas, crumbling schools and hospital waiting lists they would just real off numbers about how "well" the economy was doing. Mainly for their mates and doners of course who were doing very well at the time. Similar in the 2010's with all the lies being told, pretending we were going to go bust like Greece and "1 step away from going to the IMF" as a smokescreen to implement ideological cuts.

Anyway, these are not ordinary times and this is not an ordinary government. A prime minister splashing the cash to stay in power because he's waste deep in personal sleeze. The changes to the economy after Brexit. The eye watering bill for Covid that continues to rise as the NHS backlog grows. Queues at Dover as we grapple with Brexit. The drumbeats of war alienating our main Gas supplier Russia. An opposition so ineffective, they've only just managed a double point lead even with how unpopular the government is.

What happens next will depend on what happens to Boris. I think he'll survive and if he does I think he knows that Implementing the NI rise will cause him major damage in the old red wall seats no matter how much he bribes them with his infrastructure promises. The MP's in these seats and hard-line Tories are lobbying hard for the rise to be scrapped.

But even if it is, I can't see any way out of the inflation problem. My energy costs are about to treble next month once my deal ends, and my mortgage will go up later in the year when that deal also ends. I've had no pay rise this year. I'm looking at making some pretty aggressive cutbacks like selling my car until the economy recovers to pay off the finance, I can't imagine how this must be for people on the bread line. It must be awful.

I agree and I think the reasons you mention are one of the reasons there won't be an early general election of a commons confidence vote. The red wall tory MP's know they are going to loose there seats and so want to hold onto power for as long as possible, The cost of living crisis will likely have a big impact on the election as will the governments handling of the COVID pandemic. The next General Election will be an interesting one that's for sure.

 

[Jb85]

We’re all screwed

Makes you think - did China create Covid, and release it to the world as a form of economic war?

 

[JAperson]

We’re all screwed

Makes you think - did China create Covid, and release it to the world as a form of economic war?

No I think it came from a lab but not for economic reasons. As much as you won't see it because of China's grip of the media within it's borders it's effected there economy significantly too and it could have serious consequences for them.

 

[Thameslink Rail]

I wouldn't normally say this but I would be fine if major infrastructure projects such as HS2 or the Trident replacement were shelved so long as the money that would have been spent on those projects went straight towards tackling the cost of living crisis perhaps by subsidising fuel.

 

[AstroDan]

I wouldn't normally say this but I would be fine if major infrastructure projects such as HS2 or the Trident replacement were shelved so long as the money that would have been spent on those projects went straight towards tackling the cost of living crisis perhaps by subsidising fuel.

The thing is - it is never a question of "don't spend on this" so you can "spend on that". I agree that if we were at a pre-construction phase, HS2 should be delayed. But HS2 is already well underway supporting thousands of jobs itself now.

The government could raise the funds necessary in different ways, most certainly. But they won't - because it will p**s off their mates.

 

[NuttySquirrel]

Yes I'm concerned. I'm in a senior-level job but in one of the lowest-paying sectors there is (book publishing) and my salary isn't even rising with inflation this year - in fact it isn't rising at all! I'm also having to deal with a lot of disgruntled freelance suppliers whose pay from us hasn't increased since 2016 even though the work they do now is far more technically complex. Fortunately I'm married to a software engineer and we do alright, and thanks to his foresight we were able to lock in a good 5-year mortgage deal before the Bank of England started putting interest rates up in December - although we had to pay our mortgage lender a big fat early repayment charge to be able to do it.

I'm irritated about the national insurance increase though - it will affect both of us negatively and we will have less disposable income. Our energy bills have increased by something ridiculous like 250% in a year. Obviously coronavirus was expensive for the government but all it really showed up was a lack of preparation for something that was probably inevitable, and a huge lack of investment in both the NHS and the social care sector that should have been dealt with years and years before. And of course there was Brexit. Those Downing Street parties couldn't have been cheap either!

I think we'll be fine, but if I were living on my own or if we had children then I think we would be struggling. It's clear I'm going to have to get out of publishing as well - the poor pay is making it unviable and as an industry it's proving far too slow to embrace things like flexible and remote working that might actually make people want to stay.

 

[Alsty]

The government could raise the funds necessary in different ways, most certainly. But they won't - because it will p**s off their mates.

Well that's the thing. Take energy price rises for instance... the government could tax the energy companies and use that to subside prices for domestic consumers, but taxing corporations isn't the Tory way.

 

[Rick]

The National Insurance rise is interesting, it's a blatant breaking of a manifesto commitment but I imagine the defence will be that the pandemic has made it impossible to stick to.

When you look at the numbers associated with government spending during the pandemic, I find it hard to come to the conclusion that there doesn't need to be some response, but for all sorts of reasons, I am not sure this is it. Not least because having worked for the NHS for many years, I am not sure this will fix the issues we are seeing.

 

[JAperson]

Oh there is a lot of ways the government could generate more income without targeting the working class like they are doing with the national insurance rise. An example would be a rise in income tax in higher brackets or something similar for large companies. Amazon for example could pay double what they pay tax wise in this country and still make an absolute killing so I see no reason why they shouldn't. I understand we need companies making money and investing more than ever however if done carefully you could just increase the tax on the massive companies that are going to make a massive amount of cash anyway.

 

[BigT]

Oh there is a lot of ways the government could generate more income without targeting the working class like they are doing with the national insurance rise. An example would be a rise in income tax in higher brackets or something similar for large companies. Amazon for example could pay double what they pay tax wise in this country and still make an absolute killing so I see no reason why they shouldn't. I understand we need companies making money and investing more than ever however if done carefully you could just increase the tax on the massive companies that are going to make a massive amount of cash anyway.

I think if it was that easy then even this government would of done it, huge corporations just move their registered offices and you end up with nothing.
You could put a windfall tax on the energy companies but then these are owned mostly by pension funds by way of shares, so again in the long term counter productive.
Tax higher rate payers more? Well they already pay a lot more, the top 50% of earners pay around 90% of all income tax already.
There isn’t an easy solution but I’d bank that these increases are temporary, the whole world is coming out of a global pandemic, raw material is in demand so the prices have gone up, it’s a temporary phenomenon but the reason the government is pressing on with the increase is to help fund Heath and Social care, not to pay back the cost of the pandemic, that’s still to come.

 

[JAperson]

help fund Heath and Social care, not to pay back the cost of the pandemic,

But part of the issue is that they should’ve funded the NHS properly from the start along with the other public services. They’ve just done a bad job the whole time they’ve been in office and the pandemic has just exposed and increased the problems.
I agree there’s no really easy solution however there not payed there salaries to just do an easy days work they are payed them to run the country no matter how tough that might be.

 

[Matt.GC]

Loads of ways of raising and saving cash. Means testing pensioner benefits (half the benefits bill is spent on this, not the lies of benefit "scroungers" that they peddle), nationalising social care as it's more expensive to lay the burden on the NHS, tax rises for those on £100k+ per year, Super VAT rates on extra luxury goods like jewelry, Super Stamp Duty on luxury properties, not sending arms to Ukraine.

None of those are Tory vote winners. Cuts to schools, hospitals and benefit claimants are.

 

[rob666]

Thatcher decided that "Greed is good".
She lied.
All you need to do is scrap National Insurance, increase inheritance tax and bring back realistic levels of taxation on high earners and businesses.
Many have said they are willing to pay more if the system was made more fair.
"Oh no, business leaders will take their businesses elsewhere."
Business inertia and the "new Europe" means running off to avoid tax isn't as easy...
Bring in positive taxation instead of regressive ones.
Tax alcohol for home drinking at a far higher rate, to increase the nations health, reduce alcoholism and increase the chances of pubs and clubs actually making a profit.

 

[BigT]

But part of the issue is that they should’ve funded the NHS properly from the start along with the other public services

That’s true but they have to start some time otherwise they will always be underfunded.

As for taxing people on £100k a year more, they already pay more tax and take less out of the system, how is it an incentive to earn more if you just pay more tax on it?
I agree NI should be scrapped altogether though and a fair level of taxation applied, that doesn’t necessarily mean a big hike for the top earners though.
The loop hole that allows SME businesses owners to use dividends to avoid the higher rate of tax should also be closed at the same time, this is where majority of the income tax revenue is lost in this country.

 

[jon81uk]

As for taxing people on £100k a year more, they already pay more tax and take less out of the system, how is it an incentive to earn more if you just pay more tax on it?

They have the option not to earn any more then.

Tax alcohol for home drinking at a far higher rate, to increase the nations health, reduce alcoholism and increase the chances of pubs and clubs actually making a profit.

Yep I think the minimum unit pricing in Scotland and Wales is good, but the extra cash should go into taxation.

Loads of ways of raising and saving cash. Means testing pensioner benefits (half the benefits bill is spent on this, not the lies of benefit "scroungers" that they peddle), nationalising social care as it's more expensive to lay the burden on the NHS, tax rises for those on £100k+ per year, Super VAT rates on extra luxury goods like jewelry, Super Stamp Duty on luxury properties, not sending arms to Ukraine.

None of those are Tory vote winners. Cuts to schools, hospitals and benefit claimants are.

All of those are decent ideas but as you say, aren’t the things tories do.

 

[Matt.GC]

As for taxing people on £100k a year more, they already pay more tax and take less out of the system, how is it an incentive to earn more if you just pay more tax on it?

Maybe to earn more money still? I don't understand what you're getting at? When I had a big pay rise a few years ago, I didn't tell my employer to have it back because I started paying 40% because I still had more money at the end of every month. I'm friends with a lot of big earners and although some of them moan about paying a lot of tax, not a single one of them has been disincentivised to turn down pay rises.