Addressing the cost of living “crisis”
If you’re feeling broke, you need to know that you’re not alone, and it’s very possibly not your fault.
(Note: the economy is obviously a massively complex beast, with countless interrelating variables, so this short post is necessarily simplistic, and does not pretend otherwise.)
The charity Debt Justice reported in March this year that a record 6.7m people in Britain are in financial difficulty. Nearly 30% of 18- to 24-year-olds have missed three or more credit or bill payments.
The Insolvency Service’s figures showed 10,136 British people entered insolvency in February 2024, a rise of 23% on the same month last year.
Behind these statistics lie real people suffering the stress and sleepless nights of financial anxiety.
If you haven’t been there, I can tell you – having no money and no financial safety net undermines confidence, comfort, and peace of mind. It’s hard to be happy when you’re broke. (And see my previous post on the explosion in the need for food banks.)
The Resolution Foundation reports that real wages grew by an average of 33% per decade from 1970 to 2007, but growth fell to below zero after the Conservatives came into power in 2010. It took until 2023 for wages to get back to where they were in 2008.15 years of lost wage growth has cost the average worker £10,700 a year.
Combine this with the inflation that is only just now coming down, and no wonder your pay packet doesn’t seem to go as far as it used to.
Meanwhile, those at the top are doing very nicely, thank you. The pay of low-paid UK workers is one third of 1% of the pay of their CEOs.
Put another way, looking at FTSE 200 companies, by 1pm on 4th January 2024, the typical CEO had already earned what one of his/her workers would earn in the entire year. (source)
So yes, the cost of living crisis may have been exacerbated by the war in Ukraine and the pandemic, but the causes are deeper-rooted, have been around for longer, and are more systemic than that. It’s not so much a crisis as an inevitable result of austerity that has been many years in the making.
So what to do about it? The Lib Dem pre-manifesto states:
“Liberal Democrats believe that no one should fear for their future, struggle to put food on the table, or heat their home. Our aim is to make the UK the best place in the world to work, raise children and enjoy retirement by ensuring that proper support is in place for those that need it.”
How?
By reversing the Conservatives’ cut to Universal Credit, using carrots rather than sticks to get people back into work, and setting a target to end deep poverty within a decade.
By providing incentives for businesses to invest in training, take up digital technologies, and become more energy efficient.
By fixing the skills and recruitment crisis by investing in people’s skills and increasing the availability of apprenticeships and career advice for young people.
And possibly by introducing a Universal Basic Income, which may sound radical, but pilot schemes have shown to make economic as well as societal sense, with half the cost being recouped in ease of administration. It has been discussed and passed at Lib Dem conference, and I trust it will be in our manifesto.
Plus, when people have the means necessary to live a decent if basic life, you save money on policing, justice, social services and healthcare, while also allowing people to reclaim their most precious commodity – time.
Time to do work they enjoy, time to spend with family, time to take exercise, cook proper food, and stay healthy.
Time, in short, to live the life that Conservative-style capitalism has been promising us for so long, but has failed to deliver. It’s time to try something different. It’s time for a fresh start.