Boris has reached his peak of ‘cakeism’ – and we are all paying the price

Yesterday’s Cabinet meeting in Stoke-on-Trent will have been a council of desperation. The idea was to think about solutions to the cost of living crisis, but ministers have no tools: they can’t control inflation any more than they can control the weather. They can control taxes and try to stimulate economic growth. But the lockdown has left Britain with Europe’s worst economic hit and one of the slowest recoveries – made all the slower by what is, now, the highest tax rate since 71 years.

Much worse is to come. The Bank of England thinks inflation will soon exceed 10%, with near-zero growth over the next three years. He sees a future of rising unemployment and, possibly, outright recession (the economy contracted in March). Already, the statistics are translating into stories of real human misery: yesterday, we heard of a woman who asked to be evicted in order to be entitled to social housing. A food bank manager at Rhondda Cynon Taf in Wales said he had seen three months of customers in three weeks. And it is with the rise in food prices which has only just begun.

And what are the conservatives saying? Ideas so far have been ridiculously weak or criminally old. One idea is to delay MOT on cars to say every two years, in theory to save £50. Put aside the AA’s fear that it would cost motorists more by encouraging them to continue with inefficient cars. The average petrol bill, incidentally, has risen from £900 to £1,200 a year – half of which is pure tax: something that is certainly within the government’s control.

Another idea floated is to deregulate childcare to allow caregivers to care for more children. A good idea: the costs faced by British working parents have long been among the highest in Europe. But that’s what Liz Truss claimed in 2010: a dozen years in power do not seem to have inspired better policies. This is the biggest problem for conservatives: they look exhausted, out of ideas and sometimes downright desperate.

The big cost-of-living promise in their manifesto was not to raise taxes. But that commitment was reneged on when National Insurance was increased last month, cutting another 2.5% from wages. It will only bring in £6bn: a sum that could have been easily found by savings elsewhere. So huge political damage for minimal financial gain. Rishi Sunak hopes to cut taxes before the next election, with an apology, but the damage to the Conservatives’ credibility is done.

The official excuse that “a global pandemic was not in anyone’s manifesto” is fallacious. The tax hike aims to subsidize care home costs for wealthier families, thereby protecting inheritance. It is a hugely expensive policy that is deeply unfair (taxing the working poor to support the rich) and has been deemed unaffordable by all previous prime ministers. It’s still unaffordable. Johnson had thought an alternative would present itself — such as the ability to borrow more money — to avoid a painful choice. But in the end, nothing works.

He’s not used to this. His career has been based on rejecting the idea of ​​choice. In situations where most lesser mortals would have one, it has two (jobs, women, political office). As he so aptly put it, “My cake policy is pro-having and pro-eating.” But his cake-ism has now reached its limits because it does not – and cannot – apply to economics.

Long and hard confinements – or a rapid post-Covid recovery? He wanted both. Low taxes or high expenses? He always wants both.

The CEO of Eon estimates that fuel poverty rates will soon double, affecting almost a third of all households. Essex County Council thinks 93 per cent of its single elderly households will end up in fuel poverty this winter. Similar estimates will soon be heard across the country – and this time there is something easy ministers can do. Green taxes make up about a quarter of the average electricity bill: reduce that, and there will be a lot less pain.

But that would mean an overhaul of net zero policies, estimated at £60billion a year – or £1,800 per taxpayer. This whole program was designed when wholesale gasoline prices were a fifth of current levels, before retirees bussed in to warm up.

Energy affordability is now the most important priority: accumulating zero net incremental costs would be politically unthinkable. A new reflection is therefore necessary. Germany’s Greens have decided to drop their opposition to nuclear fuel – saying that when the facts change, they should change their minds too.

The facts have also changed in transport. The lockdown ended nine months ago, but commuting has not returned. Trains are still 20% quieter, the London Underground has a third fewer passengers on weekdays than before the pandemic, and offices across the country say they will never return to work five days a week. So surely it’s time for Johnson to reassess his proposal for mass transit madness, given that old plans were based on now-outdated projections.

It’s not just HS2 (which most of his cabinet opposes) but various regional projects where he wants to repeat the infrastructure bonanza he oversaw as mayor of London. Reviewing all of this in light of the new realities of travel could save colossal sums.

Those who have spoken to the Prime Minister say he refuses to accept that commuting is not bouncing back because he wants to salvage his transport plans. But if he wants to save money, he’s an obvious target.

There has not (yet) been a financial crash; the markets aren’t forcing the Tories to cut spending like they were in 2010. The pressure this time comes from the biggest drop in living standards since records began, and the most obvious way to help is reduce government costs.

As the economy collapses, the prime minister has a choice: tinker and leave the current course broadly unchanged? Or will he cut taxes, stimulate growth and choose another direction?

If so, it will have to be paid for by cutting government spending. As Nigel Lawson said: to govern is to choose. This time, there really is no third way.

Leave a Reply

Your email address will not be published.