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Thursday briefing: The cost of living strategies that could actually work | Cost of living crisis

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For one measure of the clarity of the government’s plan to alleviate the cost of living crisis, consider the rollercoaster ride of its view of a windfall tax on oil and gas profits yesterday: first Dominic Raab said it would be “disastrous”. Then Boris Johnson said it was a “tax on business”. Then Rishi Sunak said “nothing is ever off the table”. All of this a day after the PM asked his cabinet for solutions he could put in place for free.

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For today’s newsletter, then, we’re asking: what are the measures that could help the people most affected by this crisis – and is getting your MOT less often one of them? The Guardian’s economics correspondent Richard Partington answered my questions about it all, and then I wrote it up in a way that made me sound more knowledgable than I am. Perk of the job.

That’s it from me this week – Nimo Omer, our assistant editor, will be bringing you tomorrow’s newsletter. Here are today’s headlines.

Five big stories

1. Ukraine | Vladimir Putin warned of a “lightning fast” retaliation if western countries intervened in Ukraine. UK foreign secretary Liz Truss last night said the UK’s goal was “to push Russia out of the whole of Ukraine”.

2. #MeToo | The former BBC DJ Tim Westwood has “stepped down” from his Capital Xtra show until further notice, following the allegations of sexual misconduct made against him by multiple black women.

3. Climate crisis | Human damage to the planet’s land is accelerating, with up to 40% now classed as degraded, UN data shows. A report said that half of the world’s people are suffering the impacts.

4. Politics | The government chief whip is investigating complaints that a Conservative frontbencher watched pornography next to colleagues in the chamber. The news follows reports that 56 MPs from across parliament are facing sexual harassment complaints.

5. Coronavirus | The government’s policy of sending untested residents back to care homes in England at the start of the pandemic was illegal, a court ruled. Bereaved families said their loved ones had been “thrown to the wolves”.

In depth: The price of fixing the cost of living

The increase in the cost of living is already at the very top of most people’s list of worries, and it’s only just beginning to bite. In September last year, with post-pandemic demand rocketing, we were already calling the situation a “perfect storm”. “And then the war in Ukraine started,” Richard said. “And because of Russia’s position as a huge exporter of gas and oil, the problem got bigger.”

Last month, the Office for Budget Responsibility said that with inflation going up fast, it expected living standards in the UK to fall at their fastest rate since the 1950s. So who is hurt when a perfect storm gets even worse, and what might the government do to help people?


The problem

The really crucial thing to understand about the cost of living crisis is this: its biggest impacts are on the worst off. Even if the impacts were evenly spread, the poorest would obviously feel them most – but this time “it’s particularly severe because lower income households spend more of their income on energy,” Richard said.

The Joseph Rowntree Foundation has produced some stark analysis setting this out: in March, they estimated that as the spike in energy costs bites, middle-income households will spend about 7% of their income on energy costs, against 19% for low income families. For single people on low incomes, it’s just under 50%.


The offer

Let’s do the serious bit first, if only because the less serious bit may annoy you so much that you stop reading. In his spring statement, the chancellor Rishi Sunak set out a series of measures – like a cut in fuel duty, and a £3,000 increase to the income threshold at which you start to make national insurance contributions – that he said would help. That was on top of an energy package of council tax rebates and repayable loans announced a month earlier. It added up to £17.6bn.

“The Office for Budget Responsibility said that would offset about half the blow to household finances from higher energy and fuel bills,” Richard said – or a third of the overall fall in living standards they would otherwise have faced.

That leaves a big gap to fill, and here’s the less serious bit. This week, the prime minister had a big idea: a cabinet brainstorming session. Ideas would have to be ‘fiscally neutral’ – another term for ‘free’ – to introduce, just as it’s fiscally neutral when estate agents try to increase the value of a house by rearranging pot plants for the photos. Here are some of the cabinet’s pot plants:

Let childminders care for more children at the same time to bring costs down
Reduce the frequency of MOTs from once a year to once every two years
Remind phone and broadband companies to let people know if they could be on a lower rate

Let’s bear in mind that £17.6bn worth of measures covered a third of the increase in the cost of living. Where would this cornucopia of freebies get us? Richard pauses, sounding genuinely a bit baffled for the only time in our conversation, and then talks to me kindly and slowly, as if to a small child. “It’s tiny,” he said. “What’s an MOT, fifty quid? It’s tiny. And they’re not aimed at the people who need help the most.”


The solutions

So waiting until next year to check your car isn’t going to crash *may* not be the panacea for massive inflation that you thought. What might actually help? Richard helpfully explains the obvious once more: “The most powerful way of targeting people who need it is the benefits system.”

One big lever the government could have pulled, Richard says, is the upcoming increase in universal credit, which was pegged to inflation – 3.1% – in September last year. “We were already at 7% in March, and it’s forecast to be 9% in April, which is when the increase in benefits will actually come in,” he said. The Resolution Foundation thinktank said last month that raising benefits by 8.1%, rather than the dated 3.1% benchmark used by the government, would cost the exchequer an additional £9bn. “That would have had a substantial effect in protecting the poorest.”

Rishi Sunak’s newfound openness to a windfall tax on oil and gas profits, which Labour says would raise about £1.2bn, is described by a Treasury source quoted in the Telegraph this morning as “a warning shot”. In the meantime, he has about £30bn to play with to stay within his own fiscal limits.

But he wants to leave “fuel in the tank” – partly, many observers suspect, so he can cut taxes closer to an election, but also because the cost of servicing the national debt could be forced up by inflation. “And he has an argument,” Richard said. “We’ve already seen some of that headroom eroded.”

Yet there is a plausible alternative story – about a chancellor and a government who have prioritised crowd-pleasing general measures and gimmicks above easing the pain for the very worst off. “The targets he has set himself – chancellors for decades have missed them when they’ve had to,” said Richard. “It still comes down to choices in the end. The sky isn’t going to fall in. But it feels like that isn’t part of the debate.”

Sport

Cricket | Ben Stokes will be named the new captain of the England test side on Thursday. The all-rounder succeeds Joe Root after a disastrous winter for the team.

Football | Liverpool turned their dominance into a 2-0 victory over Villarreal in the first leg of their Champions League semi-final at Anfield.

Football | Women playing in the Italian top flight are finally to be deemed fully professional, removing a pay cap of 30,000 euros a year. The move was described as an “epochal change”.

What else we’ve been reading

  • You might have seen Martin Chulov’s piece yesterday about how two academics hunted down a Syrian war criminal, or heard the first half of a Today in Focus two-parter from Michael Safi and Alex Atack on the story. The second episode of the podcast is out this morning, and it’s just as stunning a piece of work. Archie

  • I loved this introspective article by Courtney Maum on her relationship with a race horse that was abandoned and abused. It’s a really touching story that explores the limits of human generosity. Nimo

  • Bernadine Evaristo’s piece about older Black women “totally smashing it” in the arts is, unsurprisingly, beautifully written. Stick around for her interesting reflections on why she’s glad she didn’t win the Booker sooner. Archie

  • As exam season approaches, George Monbiot asks: “why are we doing this to our children?” Monbiot persuasively argues that exams do little more than preserve privilege, urging people instead to call for a system that doesn’t make inequality worse. Nimo

  • Today in NSFW internet dystopia: Rolling Stone interviewed the woman whose obvious Twitter joke started a surreal moral panic over Snickers removing… well, read it to find out what, and don’t say you weren’t warned. Archie

The front pages

Guardian front page, 28 April 2022
Guardian front page, 28 April 2022 Photograph: Guardian

The Guardian’s lead is “Fear of energy price crisis as Russia cuts gas supply” while the Times says “Truss fears Ukraine war could carry on for years”. The Telegraph has “Energy firms face threat of windfall tax”. It also has the porn in the Commons story, which is the splash in the Mirror, “Sleazy party’s new low … Tory’s porn shame in Commons” – as well as the Express, “Tory MP ‘caught watching porn in Commons’” – and the Metro, “Porn MP exposed”. The i has “20 warnings missed to stop Covid slaughter in care homes”. The Daily Mail’s top story is “Police review over Starmer’s lockdown drinks”. The Sun’s front-page lead is “Gospel truth: I’m done” about Tyson Fury saying he is hanging up his gloves. The Financial Times has “Gas price soars as Russia turns off taps to Poland and Bulgaria”.

Cartoon of the day | Martin Rowson

Martin Rowson’s cartoon.
Martin Rowson’s cartoon. Illustration: Martin Rowson/The Guardian

Today in Focus

The now deleted Anna S Facebook page
Photograph: Facebook

A genocide researcher investigating a 2013 atrocity committed in Syria creates an alternate online identity – the character of ‘Anna S’ – to entice a military commander to confess to war crimes. But how far can she push? And how long can Anna go on?

The Upside

A bit of good news to remind you that the world’s not all bad

Fashion designer Bobby Kolade.
Fashion designer Bobby Kolade. Photograph: Ian Nnyanzi/Buzigahill

Ugandan fashion designer Bobby Kolade is helping to address the industry’s sustainability crisis, and curb the seemingly endless flow of second hand clothes to Africa with his new brand “Return to Sender”. As the name suggests, Kolade’s brand is made up entirely of second hand clothes sent from western countries to Uganda that he then sells back in the global north. Kolade’s ingenuity has landed him critical acclaim, helped revitalise Uganda’s textile industry, all while remaining eco-friendly.

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