Cost of Living Crisis

[david63]

I read in the news that Starmer is urging the Government to have an emergency budget to tackle the "cost of living crisis" - even though much of this is outside of the Government's control.

This raises the question of how much should any Government intervene in the normal economic processes that take place all the time? Are we in danger of ending up with the China/Russia model where the Government end up controlling all of our lives in an attempt to have a "level playing field" - something that has totally failed in those countries where there are the extremes of wealth and poverty?

Since time began there have always been those who have struggled to make ends meet but in many cases they have done something about it by getting another job or moving to an area where their circumstances would be improved.

Now I know that most (if not all) on here are in the fortunate position of not being in such a dire situation so we probably find it difficult to put ourselves in the position of many, but the question remains - where does personal responsibility end and Government intervention start?

[Mervyn and Trish]

It's a fine line isn't it. If we go too far down the path of government intervention, through benefits etc, as previous Labour governments have, we reduce the incentive to work. And it spirals.

There is no doubt some families are having a genuinely tough time. Others I've heard saying they have a choice between heating and eating and might have to cancel their Sky and Netflix subscriptions. Not sure my taxes should be supporting those lifestyle choices.

The one area I think they should help is energy prices, which is probably the biggest pressure on families. It angers me that the big energy companies are making huge profits from their wholesale divisions by charging high prices to their retail arms who then pass it on to consumers. I'd certainly like to see a windfall tax on those profiting from the crisis.

[david63]

I'd certainly like to see a windfall tax on those profiting from the crisis.

Whilst I don't all together disagree the problem is that such a tax is, by definition, something that cannot happen until some point in the future when the profit is declared and these companies if they know about will be able to "massage" their profits.

[Manoverboard]

I do not support the Government interfering with the economic ups and downs and I certainly do not expect them to intervene because our kitchen rolls have increased in price by 25p or whatever.

However ... the cost of fuel in the home is becoming outrageous and most of the increase was caused by Offtwat or whoever they are because they failed completely to properly regulate the energy industry. They encouraged a free for all and allowed complete idiots without experience to set up as an energy supplier. A large number predictably went bust but the other energy suppliers had to pick up their debts and in turn ' we ' are now paying the price. I think these excesses should be paid in full from the Taxation pot rather than by the general public.

[david63]

from the Taxation pot rather than by the general public

Isn't it the general public who create the taxation pot - either directly or indirectly?

[Manoverboard]

from the Taxation pot rather than by the general public

Isn't it the general public who create the taxation pot - either directly or indirectly?

Of course but those of us who pay tax should be helping the less well off to get through this ridiculous situation.

[Stephen]

All donations gratefully received please.

[towny44]

The current inflation rate and the massive hike in energy costs will undoubtedly have a big impact on the lower paid, but how or even if the govt should intervene is open to much debate.
I do think that the impact the energy increase is having does need a more targeted policy, rather than spreading it out over nearly everyone. But equally it does require those affected taking a close look at their priorities, I would expect them to cut back on "luxury" items like expensive phone contracts, sky, Netflix, Apple, amazon prime etc, as well as smoking drinking and nights out.
However if there is to be a further major increase in October then a much improved means tested subsidy will need to be implemented, if families are to be able to both heat their homes and put food on the table.

[Onelife]

Some good points David most of which have a counter argument. I will give you my opinion on why some will fair less favourably than others during this crisis. It is as you say since time began that we have had disparities in living standards, but in my life time I can’t remember any time when the gap has been as great as it is now. Your suggestion that “Since time began there have always been those who have struggled to make ends meet but, in many cases, they have done something about it by getting another job or moving to an area where their circumstances would be improved” My observation is that the majority of families deemed to be on the poverty line struggle to get accommodation in the worst areas of our country let alone be in a position to up sticks to a different area. I do blame this Government and that of previous Governments because they have failed to recognise and do something about what is at the root cause of disparities in society today.

Our whole social structure is geared up to keeping the poor, poor and the more well off able to ride out these down turns in the economy. I would agree that there are opportunities out there which could improve their standard of living, but those opportunities are for the most out of reach for the poorest in society, this is due to several factors, such as area, employment opportunities, poor wages, and the lack of educational opportunities that can be encountered in areas that have wide ethnic ranging teaching requirements.

I truly believe that if we want to create a fairer society then we need to address the route causes which is to understand that poverty arises where governments have turned a blind eye.

[Kendhni]

Now I know that most (if not all) on here are in the fortunate position of not being in such a dire situation so we probably find it difficult to put ourselves in the position of many, but the question remains - where does personal responsibility end and Government intervention start?

Sunak made a big mistake when he decided to only tax workers (with an NI rise instead of an income tax rise ... but that was a political decision). There are also other things he could have done rather than dish out a couple of hundred quid that has to be repaid. A couple that have been mentioned were removal of vat from energy (something they had promised to do), or maybe remove the green taxes on energy (which accounts for up to 25% of the bill) ... but others did not like this. Other suggestions included governmental austerity (not the make believe austerity we had a decade ago .. but something whereby every department has to justify expenditure). Maybe significantly increase IHT ... possibly even to 100% to help reduce debt. Tax on windfall gains should also be used and, curiously, reducing ISA allowances.

I think this government has got the balance wrong because it is out of touch with the people it is meant to represent. It has a cabinet full of extremely wealthy people that probably do not realise, or have forgotten, what it is like for those with much less money. Unfortunately, as before there is a belief that we should just pass on this debt to the next generation and plough on regardless ... I believe too much of that has already been done and it is reckless.

I see the expectation of a revolt by the next generation and a refusal to repay the debt, created by their parents/grandparents, was in the news again a couple of weeks ago ... I first saw this being reported over a decade ago with an expected realization date of mid 2020's.

Irrespective, we have a huge amount of debt and it is going to have be brought under control. I saw one report that our interest payments on our debt amounts to something like £83bn per year (that is about £225million per day just to service our borrowing). We have been shaking the magic money tree for too long ... the coffers are truly empty.

[Jan Rosser]

Interesting you should post this today as I am taking part in a survey at the moment by the ONS called “Living Costs and Food Survey” which so far has compromised a telephone call from an ONS interviewer asking lots of questions about my income and expenditure plus I am keeping a diary of anything I spend over a two week period. Apparently 12,000 households are chosen at random - not compulsory but if you refuse you will not be replaced by someone else. The aim is “to identify how and where the Government should be using public resources and checking how different groups in the community are affected by existing policies and to inform future policy changes”.

I was asked if I had noticed increases in food/fuel/household items/clothing etc to which I of course said “yes” - she followed up with did I intend to cut back or go without anything and I had to say “no” because I am fortunate enough to be able to cover these extras. I will probably be surprised at just how much I do spend but honestly don’t think I will change my spending habits.

I do think that people’s priorities differ and sometimes when watching a news item about people not affording to heat their homes and eat I notice the lady is sporting a set of false nails - there is a giant tv in the room and no doubt they have Netflix/Amazon Prime/Disney+ - the mind boggles

I do however think the gas/electricity costs are unbelievable and to think in this day and age people have to choose between fuel and food is scandalous. I do wonder whether some of the elderly people interviewed are getting the benefits they are entitled to or even aware they are eligible for help - no one today should have to make such a choice.

[Kendhni]

I do wonder whether some of the elderly people interviewed are getting the benefits they are entitled to or even aware they are eligible for help - no one today should have to make such a choice.

There was one elderly lady being interviewed on our local news. She was saying what a struggle it was ... she was asked about claiming additional benefits but she stated that she wasn't entitled to any benefits because her savings were too high. The commentator asked her why she didn't use that, and the answer came back "that is for the children when I go".

Very sad that a lady feels she cannot spend money, to keep herself comfortable, because she wants to leave something behind. I have seen that before with the winter allowance, were the money was spent on the grandchildren's christmas presents instead of heating the house or buying food.

[david63]

I think that one point that gets overlooked is that it is not always "cutting back" but searching out a better deal/price.

Just recently both the car and house insurance were due for renewal and by shopping around I managed to trim about £30 a month off those bills - almost half the predicted fuel cost rise.

The same applies to everything - by looking at what you buy in the supermarket you can save several pounds by buying a smaller size pack/cheaper brand/product on offer - although the supermarkets have a lot to answer for in the way that they force you into buying more than you need at times.

[Jan Rosser]

I agree David with your point about searching for a better price - my house insurance renewal price was silly so I renewed elsewhere and will do the same with my car insurance later in the year.

It’s automatic for me to look at the unit price of items in the supermarket and I’m not into BOGOF items - it’s false economy for me to do this - I end up throwing out perishables. I understand the temptation these offers can be for people but they are often unhealthy food choices - cooking from scratch is not the norm today unfortunately

[Meg 50]

Everyone says cut back on phone contracts/ netflix etc etc. But often people are locked into a fixed term contract from which there is no escape w/o incurring penalties

[david63]

I’m not into BOGOF items

Although it does make sense if it is a product that you use regularly and will not go out of date. If a product that we use is on offer, say coffee, then we will buy extra.

there is no escape w/o incurring penalties

But those penalties may be less than the cost of keeping the contract - it all depends on the contract.

[Ray B]

I do not support the Government interfering with the economic ups and downs

However ... the cost of fuel in the home is becoming outrageous and most of the increase was caused by Offtwat or whoever they are because they failed completely to properly regulate the energy industry. They encouraged a free for all and allowed complete idiots without experience to set up as an energy supplier. A large number predictably went bust but the other energy suppliers had to pick up their debts and in turn ' we ' are now paying the price. I think these excesses should be paid in full from the Taxation pot rather than by the general public.

Woods, who set up Bulb, one of the energy firms to go tits up, is still being paid £250,000 pa.
Asked if it was "morally justifiable" that taxpayers continued to pay his salary after the company had gone bust, Mr Wood said: "I think everything we are doing right now is to try and complete a sale of the company so that we can minimise the cost to taxpayers and minimise the disruption to consumers.".
How do you sell something when there is nothing there to sell.

[Manoverboard]

One of the ' new ' energy suppliers I mentioned earlier was a dentist and another was Nottingham Council, neither knew anything about buying in energy so paid top dollar and made a loss. They even took on new customers at a rate that was less than they could get it for.

[Manoverboard]

I’m not into BOGOF items

Although it does make sense if it is a product that you use regularly and will not go out of date. If a product that we use is on offer, say coffee, then we will buy extra.

It makes very good sense to us too. I search for ' Offers ' within our ' Favourites ' on every weekly shop. I buy whatever we can to top up the stock levels of freezable / store-able items within our 7 week Menu system. Including wine a saving of less than 10 - 15% off the bill is a poor week. With wine we buy at the discounted price when the ' Buy 6 for a further 25% discount ' applies.

Storage and organisation is the key but the savings are there if you look.
.

[Mervyn and Trish]

I agree David with your point about searching for a better price - my house insurance renewal price was silly so I renewed elsewhere and will do the same with my car insurance later in the year.

It’s automatic for me to look at the unit price of items in the supermarket and I’m not into BOGOF items - it’s false economy for me to do this - I end up throwing out perishables. I understand the temptation these offers can be for people but they are often unhealthy food choices - cooking from scratch is not the norm today unfortunately

Now that some supermarkets have rationed cooking oils to 3 bottles per customer I expect there will plenty put there panic buying three bottles they don't need to chuck it away when it passes the best by date! In the meantime storing it with their stash of 2020 toilet rolls and Jerry cans of diesel.

[towny44]

Everyone says cut back on phone contracts/ netflix etc etc. But often people are locked into a fixed term contract from which there is no escape w/o incurring penalties

I do not understand why people who are on poverty level wages ever think they can afford these items. We were dirt poor when first married, and had to do without these sort of luxuries until our income increased.

[Stephen]

I agree David with your point about searching for a better price - my house insurance renewal price was silly so I renewed elsewhere and will do the same with my car insurance later in the year.

It’s automatic for me to look at the unit price of items in the supermarket and I’m not into BOGOF items - it’s false economy for me to do this - I end up throwing out perishables. I understand the temptation these offers can be for people but they are often unhealthy food choices - cooking from scratch is not the norm today unfortunately

Now that some supermarkets have rationed cooking oils to 3 bottles per customer I expect there will plenty put there panic buying three bottles they don't need to chuck it away when it passes the best by date! In the meantime storing it with their stash of 2020 toilet rolls and Jerry cans of diesel.

I hear Onelife has surplus stock......of everything

[Jan Rosser]

I’m not into BOGOF items

Although it does make sense if it is a product that you use regularly and will not go out of date. If a product that we use is on offer, say coffee, then we will buy extra.

It makes very good sense to us too. I search for ' Offers ' within our ' Favourites ' on every weekly shop. I buy whatever we can to top up the stock levels of freezable / store-able items within our 7 week Menu system. Including wine a saving of less than 10 - 15% off the bill is a poor week. With wine we buy at the discounted price when the ' Buy 6 for a further 25% discount ' applies.

Storage and organisation is the key but the savings are there if you look.

I can’t argue with either of you - your comments make sense but buying for one person has its limitations. I’m not saying I don’t stock up on discounted items - Sainsbury's were doing a price comparison today with Aldi and I picked up a few store cupboard items cheaper than normal but living on one’s own I simply don’t use up some perishables quickly enough and for me it is false economy to throw stuff away and it is surprising how many items cannot be frozen. I don’t drink enough wine to buy in bulk as you do Moby

[Onelife]

Everyone says cut back on phone contracts/ netflix etc etc. But often people are locked into a fixed term contract from which there is no escape w/o incurring penalties

I do not understand why people who are on poverty level wages ever think they can afford these items. We were dirt poor when first married, and had to do without these sort of luxuries until our income increased.

That’s the problem John, people don’t understand how those on either side of the poverty line see each other’s situation. Those on the poverty line who choose Netflix as their evening entertainment are probably envious of those who can afford a family visit to the cinema, or in our case a visit to the theatre once in a while. Those who see a holiday as a day trip to the seaside are probably envious of those who cruise once a year.

I do know of one person who watches Netflix in preference to having to pay for a tv licence, perhaps there are more?

[Manoverboard]

I can’t argue with either of you - your comments make sense but buying for one person has its limitations. I’m not saying I don’t stock up on discounted items - Sainsbury's were doing a price comparison today with Aldi and I picked up a few store cupboard items cheaper than normal but living on one’s own I simply don’t use up some perishables quickly enough and for me it is false economy to throw stuff away and it is surprising how many items cannot be frozen. I don’t drink enough wine to buy in bulk as you do Moby

You could perhaps try a little harder