Hywel Thomas Column – ‘We need a Recession Summit to cut household bills’

February 6, 2012 1 Comment »

There has been much talk over recent months about reducing the Government’s budget deficit and the implications of these savings on public services and spending.

The same discussions and ensuing protests have been taking place the world over. When the global recession hit, it hit hard and fast, leaving devastation in its wake – bringing down big institutions whose financial power dwarfed that of some small nations.

And, as these bloated giants fell, few would escape the shockwaves – construction sites were abandoned, mortgage foreclosures spiralled, and company after company went into administration. The latest casualty being Peacocks, which employs 10,000 people in the UK.

With some countries facing the unthinkable – bankruptcy – the priority for most governments has been to attempt to stabilise their respective economies.

Against this backdrop, which has seen unemployment in the UK reach 2.68 million and a freeze on public sector pay, energy prices have continued to rise as have many other goods and services.

But beyond the rhetoric, proposals to help struggling families through the recession by putting money back in their pockets have been thin on the ground.

It’s telling, perhaps, that in the middle of the biggest economic crisis since the Great Depression that Education Secretary Michael Gove felt that now would be a good time for the taxpayer to find £60m to fund a new yacht to mark the Queen’s Diamond Jubilee.

His staggeringly poor judgement not only shows the Government’s detachment from reality – from the suffering of families across the UK – but explains perhaps the absence of a cohesive strategy to help people through these difficult times.

This situation is not helped by a seemingly rudderless opposition at Westminster whose indecisive economic policies were recently exposed in a way that would test the loyalty of the most loyal of Labour followers.

After a year of mobilising the unions and party supporters in opposition to George Osborne’s proposals to reduce the budget deficit, the opposition’s policy collapsed in the most spectacular fashion.

The Shadow Chancellor, Ed Balls, who had opposed the Tories’ public spending cuts so vehemently, threatening to overturn them in the event of Labour being re-elected, suddenly, in an awkward public statement, accepted each and every one of them.

Weak opposition in politics as in sport does little to improve the performance and quality of the team at the helm. Strong opposition provides effective scrutiny, challenges and pushes the Government to deliver and to innovate. In these conditions, the public can at least hope to be better-served by the politicians.

But with a Westminster Government seemingly out of touch with the electorate and an opposition party lost at sea, where does that leave the people?

Who will fight for them? There are 650 MPs at Westminster and they need to make their voices heard, to step forward from the back benches with some tangible steps to help people through the recession. There are a raft of measures that the Government could seek to facilitate that would ease the effects of the failing economy on struggling families.

To this end, the Government should convene a Recession Summit with representatives of the big six energy companies, the big supermarket chains and high street banks.

The Government would act as a conduit between these industries to deliver a range of measures aimed at reducing household expenditure.

While the Government has no legal mandate to insist on the participation of these organisations, it should remind them of their moral obligation to help their customers through these difficult times.

Leading by example in this collective Recession Package, the Government would abolish VAT on domestic energy bills – a regressive tax where, according to the Institute of Fiscal Studies when it was first proposed in 1993, “poorer households would face an increase in the tax burden which is a higher proportion of their spending than for better-off households and they will also economise the most on fuel even though they consume the least”.

The big six energy companies would be invited to improve on the 5% reduction in domestic fuel bills announced by some suppliers effective from this month. This would more reasonably reflect the 9.2% fall in wholesale gas prices since November.

The big supermarket chains would contribute to the recession package by offering free dairy products, namely bread, butter and milk, to families where one or more of the adults are unemployed and entitled to unemployment benefits.

High street banks should be encouraged to introduce a freeze on charges for overdraft facilities.

These are all deliverables and would offer the kind of support that people need right now – above words of sympathy – putting money back in people’s pockets – demonstrating through actions that the Government and big businesses are doing what they can to help.

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One Comment

  1. Gigi February 8, 2012 at 8:24 pm - Reply

    Hywel Thomas really knows his subject. Great column. Smart. Let's hope the governemnt take you up on your idea.

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