Energy prices up, transport fares up, water bills up, Council Tax up… ANDREW FISHER says that the government’s failure to tackle the cost-of-living crisis could have lasting political impact
In December last year, Keir Starmer set out his “Plan for Change”, one of the now regular relaunches of his flagging premiership. The Prime Minister set out six “milestones”, the first of which was “raising living standards in every part of the UK”.
The prospects of achieving that do not look good in 2025.
This month water bills in London rose by an eye-watering 31%, as Thames Water hiked prices after years of bumper dividends and underinvestment.
‘Years of bumper dividends and underinvestment’: Thames Water has just hiked its charges in London by 31%
Thames Water is a monopoly supplier with a customer base of 16million. Since privatisation in 1989 it has hiked bills above inflation, paid out billions of pounds in dividends to shareholders, pays champagne cork-popping bonuses to its executives… and yet is nearly bankrupt.
Its incompetence makes Croydon Council look like a paragon of managerial virtue.
One might wonder what the environment secretary, Steve Reed, Streatham and Croydon North’s MP, has done about this. The answer is nothing, but he has been boasting this week that he has legislated to ban bonuses “for water bosses who pollute rivers and seas”.
Thames Water has given Reed’s plan short shrift, stating it will boost basic pay if bonuses are capped or denied. So Labour’s policy gimmick is revealed for being just that, a gimmick, and impotent. Banning bonuses will do nothing for polluted rivers or for ripped-off consumers.
When the water companies are universally derided, and even a majority of Tory and Reform voters want them to be renationalised, it is staggering that a Labour Secretary of State has not only ruled that out, but has sat on his hands as Thames Water and Southern Water have hiked their charges – Southern Water by 47%!
On a war footing: but Prime Minister Keir Starmer is losing the battle against inflation
Overall inflation is 3.0%, but is forecast to rise to 3.7% later this year. If you’re a public sector worker, the government has budgeted for a 2.8% pay rise from April.
Benefit claimants will only get a 1.7% rise in April – so the poorest in society will be worse off in real terms, deepening the poverty and destitution that has been rising across the country for several years.
In April, Council Tax in Croydon will rise by 4.99%. Our borough’s is now the second highest Council Tax in London. Neighbouring residents in Merton pay £400 less per year for a Band D household. In Lambeth, they pay £500 less than we do.
As has been the case for several years now, we’ll be paying more and getting less – as the council sinks deeper into debt and cuts more services. But there are no cuts to the Mayor’s allowances or the higher-than-the-Prime-Minister’s-pay of Chief Executive Katherine Kerswell.
This week, Ofgem announced that energy bills will rise by 6.4%, having rocketed by 10% in October 2024, and another 1.2% in January. So in just six months, energy bills have increased by more than 18% – six times the inflation rate.
URGENT! Regular rail users in England, consider buying a season ticket now (before 2 March) as prices are rising 3.8% – this could be a difference of £100s. Full info… http://www.moneysavingexpert.com/news/2025/02…
— Martin Lewis (@martinlewis.moneysavingexpert.com) 2025-02-26T21:17:13.064Z
Energy bills in Britain are the highest in Europe – in part because Ofgem’s formula links them to gas prices, the most expensive input. This has helped 20 major energy companies post combined profits of £483billion since the start of the energy crisis.
From Sunday, rail fares will increase by an average of 4.6%. What warrants this above inflation hike is not clear. On the most recent data, cancellations were up and punctuality was down. Still, if you purchase a season ticket before Sunday then you could make significant savings.
On the upside though, the Mayor of London has noticed that there’s a cost-of-living crisis and has frozen bus and tram fares until 2026.
Private rents across London have risen by 11.0% in the last year, eating up more of people’s incomes. Despite calls from Sadiq Khan, the Labour government has ruled out any form of rent control to help struggling tenants.
With rents, Council Tax, rail fares, water and energy bills all going up faster than inflation, people will be tightening their belts, which is bad news for local businesses like shops, pubs and restaurants.
Disapproval ratings: Fewer than 1-in-4 surveyed think that Starmer is doing a good job
Less disposable income in people’s pockets will hit consumer demand, just at the time that government’s hike in employer National Insurance hits in April, too. Higher energy bills also push up costs for businesses, in turn fuelling higher prices for consumers.
The coming months are looking particularly tricky for a government that has already slumped in the polls, and for a Prime Minister whose personal approval ratings this month sank to a new low of -43.
While people suffer the cost-of-living crisis, Starmer’s poll ratings reflect the government’s failure to tackle it.
As Bill Clinton’s campaign team were told to emphasise in 1992, “It’s the economy, stupid.”
- As well as his column, Andrew is also conducting podcast interviews, in-depth and informed with specialists and national figures, sharing their expertise with Croydon, and available on Inside Croydon’s Spotify channel
Listen to his latest informed and in-depth interview, with former shadow Chancellor John McDonnell MP, by clicking here (subscription required)- From 2015 to 2019, Andrew Fisher was the Labour Party’s Director of Policy under Jeremy Corbyn. Fisher is also the author of The Failed Experiment – and how to build an economy that works, and now writes columns for InsideCroydon, the i newspaper and is a regular pundit on BBC and Sky News programmes
Andrew Fisher’s recent columns:
- Labour’s letting water companies take the pee with rising bills
- The public knows what matters to them. But does PM Starmer?
- Government must act to end the chaos, austerity and decline
- Grievances not solutions: Tories are going full-on Trumpian
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Because they’re not taxing the wealthy. They’re the continuation of a previous government. We’re steadily marching towards Reform taking the majority and a total collapse of this country.