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The Great Squeeze: Cost of Living Crisis 2022

It is now strongly suspected that Liz Truss’ government will be freezing energy bills for the next 18 months: https://news.sky.com/story/cost-of-...and-pay-back-difference-over-decades-12691063

In terms of the specifics; it is thought that details will be announced on Thursday, but the rumoured details are that bills could be frozen for 18 months, the cap could be around £2,500 (but would lower to around the current level once the already promised £400 payment comes into effect in October), and could cost up to £130bn (for some perspective, furlough cost £69bn).

It is thought that the government’s spending will be funded primarily by borrowing (or “fiscal loosening” as new Chancellor Kwasi Kwarteng calls it) so that the government can live up to the “low tax” reputation that Liz Truss promised during the leadership campaign.
 
Alsty said:
So instead of the energy companies who've made billions in profit paying a windfall tax we can all pay for it instead?
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Apparently the consumer is shielded from it, and it will just be added to the national debt. Kwarteng has insisted that we are in a position to be able to add a little more to our national debt.
 
WillPS said:
Who pays the national debt off do you reckon?
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That’s what I’m not sure on. Will this mean increased taxes in the future, do we reckon?

The part that confuses me is that Liz Truss has been very adamant about having low tax… will taxes raise a lot in the future (after Ms Truss’ tenure is over) in order to pay off the national debt?

Or does she intend to pay it off in a different way, I wonder?
 
Matt N said:
That’s what I’m not sure on. Will this mean increased taxes in the future, do we reckon?

The part that confuses me is that Liz Truss has been very adamant about having low tax… will taxes raise a lot in the future (after Ms Truss’ tenure is over) in order to pay off the national debt?

Or does she intend to pay it off in a different way, I wonder?
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Taxation is what pays debt, yes.

Of course if we had a government who focussed on driving growth (== more tax revenue) then you wouldn't neccessarily need to increase taxes. If you monofocus on that debt, ala austerity, then growth is lost and the only option becomes putting up taxes. So yes, as long as there is a Tory government who are restricting growth, the only way that could be paid off is via increases in taxation.
 
Energy companies are making big windfall profits and rather than eat into them with windfall taxes we'll let them keep making big profits and the tax payer can foot the bill instead.
 
Truss said in her inauguration speech that she has a radical plan to focus on growth, though, so perhaps she won’t need to resort to tax rises to pay off the debt.
 
I can think of one thing that would help with growth. Join the Single Market. However that won't be on the table so we'll just be rearranging the deckchairs on the Titanic for the next two years instead.
 
Matt N said:
Truss said in her inauguration speech that she has a radical plan to focus on growth, though, so perhaps she won’t need to resort to tax rises to pay off the debt.
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The Tory’s have had a radical plan for increasing growth for 13 years.

What she means is cutting workers rights and safety/ environmental protections. There are already rumours she is going to cut legal minimum annual leave and fair firing policy.
 
Matt N said:
Truss said in her inauguration speech that she has a radical plan to focus on growth, though, so perhaps she won’t need to resort to tax rises to pay off the debt.
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Yeah, the "radical" plan is basically dusting off the failed Reagonomics handbook. There's nothing new here, just the same old discredited small state, trickle down wealth crap from the past.

Everything that comes out of this vile woman's mouth backs this up. She couldn't even get through that inaugural speech without repeating the the tired old lie of lowering taxes to "incentivise" hard work. Translation = lower taxes for higher paid people. Because everyone knows that millions of normal people willingly turn down payrises due to tax don't we?

I'm glad @Dave mentioned the forthcoming bonfire of workers rights. That'll be another part of this "radical" plan for growth. The reason the economy isn't growing has nothing to do with people not having any money. No, it's because workers are too hard to sack, take too much holiday and have a right to not work over 48 hours per week. Can you think of a single country close by that has similar laws to our current ones, works less hours and is more productive than us? Because Truss can't. That or, as is usual for her ilk, she's just ignoring the facts due to being blinded by her lust for a certain type of ideology.

This is all in that Britain Unchained book she co-authored in 2012 by the way.
 
The situation in France with fuel is interesting.

The government discount on fuel has increased this week from €0.18 to €0.30 per litre. In addition, after a bit of a spat with the government, who threatened to take Total's profits away, Total have added a further discount of €0.20 per litre.

As a consequence, Total forecourts in France are selling unleaded as low as €1.35 a litre (£1.17).

Some Esso forecourts have temporarily ceased trading due to a lack of customers.

Add in the 4% gas/electricity rise and you really do see a country taking action for its people.

5p off our fuel here in the UK. Wow.
 
So, if we threatened to tax the hell out of BP's unexpected excessive profits unless they lowered their prices, they'd prefer to just reduce them and their competitors would have to do the same to compete with them?

Well, who'd have thought?

Not the Truss plan though. No, just spend £100bn of OUR money on ensuring these companies can keep their cash in this broken sector of the economy. How generous. Oh, and let us not forget the £30bn of unfunded tax cuts that she wants to implement at the same time.

Surely we all know where this is going don't we?
 
Matt.GC said:
Not the Truss plan though. No, just spend £100bn of OUR money on ensuring these companies can keep their cash in this broken sector of the economy. How generous. Oh, and let us not forget the £30bn of unfunded tax cuts that she wants to implement at the same time.
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In fairness, she is freezing energy bills at their current level. As much as her plan may add some additional taxes in the future for years to come, I’d still guess that the pain from that will be far less for most than if she’d done nothing.

A windfall tax would have gone against her pledges for low taxes.
 
Matt N said:
In fairness, she is freezing energy bills at their current level. As much as her plan may add some additional taxes in the future for years to come, I’d still guess that the pain from that will be far less for most than if she’d done nothing.

A windfall tax would have gone against her pledges for low taxes.
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It doesn't make it right.

Sent from my SM-G991B using Tapatalk
 
Matt N said:
In fairness, she is freezing energy bills at their current level. As much as her plan may add some additional taxes in the future for years to come, I’d still guess that the pain from that will be far less for most than if she’d done nothing.

A windfall tax would have gone against her pledges for low taxes.
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You see, I knew this would happen. A whole summer of doing nothing whilst they indulged themselves in a beauty contest makes people feel so desperately worried that when they feed us the scraps underneath the dinner table they'd get gratitude for it. As if they're shining white knights riding in to save us all!

She can raise taxes from excess profits on these companies. She can pass legislation to regulate the way they operate. She can nationalise them if the public cheque book is open.

I am looking at this "in fairness". She's a Prime Minister who is accountable to and paid by me, you and everyone else. We've seen all this failed ideology before, it was wrong then and it's wrong now.
 
Matt.GC said:
You see, I knew this would happen. A whole summer of doing nothing whilst they indulged themselves in a beauty contest makes people feel so desperately worried that when they feed us the scraps underneath the dinner table they'd get gratitude for it. As if they're shining white knights riding in to save us all!

She can raise taxes from excess profits on these companies. She can pass legislation to regulate the way they operate. She can nationalise them if the public cheque book is open.

I am looking at this "in fairness". She's a Prime Minister who is accountable to and paid by me, you and everyone else. We've seen all this failed ideology before, it was wrong then and it's wrong now.
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The way I see it is that she has adopted the same plan as Labour has suggested and that many European countries have adopted, which will surely be very beneficial and save us from the worst of the energy crisis in the short to medium term. For that, I will happily applaud her and her government. Freezing energy bills is far more than Truss had to do; she could have gone for a very minimal support package, but she really is going all out in terms of the scale of support! The only thing that really differs is how she plans to pay for it; Labour and many European countries support a windfall tax, while Truss is leaning upon borrowing (or “fiscal loosening”, as new Chancellor Kwasi Kwarteng calls it).

Admittedly, the method of payment might make a difference in the long term, but Truss has promised to grow the economy through attracting business investment, stimulated by tax cuts and “reform”. In that sense, the greater amount of business investment in the UK that Truss is promising should mean that the taxpayer doesn’t experience any additional strain. More additional business investment in the UK will mean that more people are paying taxes, therefore the government revenue can be the same without the individual taxpayer needing to cough up any extra money.

I’m not a Conservative supporter, but I have full faith that Liz Truss knows what she is doing.
 
Liz Truss is saying to the energy companies, "Don't worry. You keep making your excess profits of over £170bn", and then coming to you and me and saying "You'll have to pay for this instead".

Don't try to pass it off as being even remotely equivalent to Labour's plan.
 
I apologise. I must admit I don’t really have the best grasp of economics/fiscal policy.

So would it be fair to say that Liz Truss’ plan will help in the short to medium term, but could be problematic in the long term if her promised economic growth through investment is not attained? If businesses don’t invest in Britain in a high enough quantity, then surely the taxpayer will foot more of the bill? But if they do, taxes can stay low across the board because there are more people and corporations paying those taxes?

On an aside; a lot of people are rubbishing Liz Truss’ economic ideas, which focus on low taxes and “reform” in order to attract business investment into the UK so that the economy grows. Surely she’s still growing the economy, just in a different way to how Labour would?

I was always told that the Conservatives typically liked to pursue top-down economics, where the focus is on attracting big business and letting them make profits, with the benefits of this investment from businesses trickling down and benefitting the people, thus resulting in economic growth.

I was told that Labour, on the other hand, typically liked to pursue bottom-up economics, where the focus is on higher taxation in order to fund public services that help people first, with the benefits of this trickling up and attracting big business, thus resulting in economic growth.

As I say, I’m not particularly informed on this topic, so forgive me if I’ve got this wrong, but surely what Truss is doing is simply pursuing top-down economics to grow the economy rather than bottom-up economics? Surely the end result will be the same?
 
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