After the financial shockwaves caused by the omnishambles of the Tory Mini Budget, yesterday’s announcements by Chancellor Jeremy Hunt offer little hope of prosperity for the people of Croydon, writes ANDREW FISHER
Buckle up. It’s going to be rough.
Living standards face the largest fall on record. That is the headline that should dominate the coverage of Jeremy Hunt’s autumn statement. Our living standards will fall by 7per cent over the next two years.
The real disposable income of the average household in Britain will be 7.1per cent lower by 2024. This fall will be, according to the Office for Budget Responsibility, which independently assesses the government’s plan, “the largest since… records began in 1956-57”. In other words, we face the worst recession in living memory.
Jeremy Hunt’s soporific delivery couldn’t mask the news that we are in recession now and will remain so throughout 2023. The Bank of England has also forecast a “prolonged recession”.
Inflation stays high, real incomes fall, unemployment rises, repossessions increase and businesses collapse.
Real incomes are falling as inflation hits 11.1per cent. Average pay settlements are currently 6.6per cent in the private sector and just 2.2per cent in the public sector. That is a huge real-terms cut in income with ramifications throughout the economy.
Hunt announced that the minimum wage will rise by 9.7per cent next year – again below inflation, so a real-terms cut, leaving the minimum wage well below the living wage needed for households to make ends meet.
Added to which, Hunt froze the income tax thresholds – the amount at which people start to pay tax – and so pulled more of people’s income into the tax bracket. So not only will we be paid less in real terms, people will lose more in tax. In the middle of a recession, this measure will suck even more demand out of the economy.
The government has made it clear it will walk by on the other side while people suffer. Nowhere was that more obvious than on energy.
Next April, they are increasing the energy price cap to £3,000. This year it was £2,500 but with a £400 universal payment reducing that to £2,100. So our net energy costs will rise by 43per cent.
And counterintuitively and unjustifiably, that situation is even worse for pensioner households and those on means-tested benefits. This year, pensioners got a £300 discount as well as the £400 payment – meaning pensioners face their net energy costs rising from £1,800 (£2,500 minus the combined £700 discount) to £2,700 next year (no universal payment and just a £300 pensioner discount). That is an increase of 50per cent.
Age UK research shows that 4 in 5 Londoners aged over 60 say they are turning the heating on at home less than they did this time last year, and 56per cent are shopping less. Over one-third of over 60s in London say they are already struggling to make ends meet. And that is before even higher energy costs hit in April.
Households on means-tested benefits like Universal Credit will see a 45per cent increase in their net energy costs this year.
Hunt didn’t clamp down on the profiteering energy companies. His £14billion windfall tax is a pitiful gesture when a leaked Treasury document in August showed that energy companies will make £170billion in excess profits over the next two years.
Hunt has chosen to protect energy companies’ dividends at the expense of households struggling in the deepest recession on record.
And while his measures on energy were inadequate, his measures on housing were entirely absent. In the last year, mortgage possessions orders increased by 496per cent. Landlord possession orders rose by 164per cent. Those numbers are only going get worse as more people struggle to make ends meet over the next year.
There was no mortgage protection scheme for homeowners, no rent freeze for tenants, as there is in Scotland. Nothing.
All of this sucks demand out of the economy. Every pound that goes into higher energy bills, higher rents or on higher mortgage payments is a pound less spent in local economies – sounding a death knell for local businesses and the jobs they sustain. Putting more people out of work, more people needing the help of benefits, more people less able to spend locally.
Retail sales have been falling since the summer of 2021, as people tighten their belts. We’ve seen the first uptick in unemployment in September when 127,000 workers were laid off.
Hunt bizarrely claimed to be saving 70,000 jobs, when the OBR forecasts that unemployment will rise by 505,000, to 1.7 million. The Bank of England is even more pessimistic in its outlook, forecasting that unemployment will peak at more than 2million.
Even if we take the more optimistic scenario, that unemployment only increases by 505,000, that would equate to an extra 2,330 people in Croydon out of work.
That is bad news for anyone thinking Westfield or anyone else will revive interest in regenerating Croydon’s high streets. No sensible business invests when consumer demand is falling. The only outlets that are booming are the food banks.
Croydon South MP Chris Philp, one of the architects of Kwasi Kwarteng’s disastrous Mini Budget, hadn’t (by 9am this morning) tweeted once about Jeremy Hunt’s autumn statement delivered nearly 24 hours earlier. That suggests a real lack of confidence in Conservative plans, or perhaps a belated recognition that his name is best kept away from economic discussions.
Labour’s Sarah Jones, the MP for Croydon Central, highlighted that the UK is the only major country in the G7 whose economy is smaller now than before the pandemic: “Living standards predicted to fall by 7per cent and national debt £400billion higher than expected: 12 years of low growth and the self-inflicted damage of the mini-budget.”
Torsten Bell, of the think tank the Resolution Foundation, succinctly summarised Hunt’s autumn statement: “Higher energy bills next year; higher tax bills forever; and worse public services in the years ahead.”
He could have added lower pay, fewer jobs, and more homelessness.
Buckle up. It’s going to be rough.
- From 2015 to 2019, Andrew Fisher worked as the Labour Party’s Director of Policy under Jeremy Corbyn. He is the chair of the Croydon Central Constituency Labour Party. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes regular columns for InsideCroydon in a personal capacity
Some of Andrew Fisher’s recent columns:
- The £30m in the balance for Croydon in Chancellor’s Budget
- #TheLabourFiles: It’s long past time to clean up the Party
- ‘Rabbit hutch’ flats and the Chief Secretary: Philp’s conflicts
- Forde Report exposes racism, bullying and factionalism in Labour
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