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Coffee House

Labour sets about warning of a "cost of living crisis"

27 February 2011

1:32 PM

27 February 2011

1:32 PM

Ed Balls has been warming up to this one for a while, and now it has finally come: an
all-out attack over rising prices. In an interview with the Sunday Times (£), the shadow chancellor
warns of Britain’s "cost of living crisis," and demands that George Osborne reverse the VAT increase. Much of his pleading is made on behalf of motorists, who – as I pointed out a couple of days ago – face punishment at the petrol pumps. He doesn’t even mention
spending cuts once, especially not where his own party’s are concerned. Rising costs, clearly, are the new weapon of choice.

And it’s not just Balls. Ed Miliband is giving a speech tomorrow for the Resolution Foundation – a think tank which specialises in the burdens felt by low-to-middle income earners, and which
has written for Coffee House before now. He will echo his more pugnacious
colleague with the words, "my fear is that more and more families will face a cost-of-living crisis that will see them left behind even as the economy eventually recovers." This is that
familiar theme – the "squeezed middle" – gone into overdrive. It may even stop being quite so nebulous. Perhaps.


This is fertile terrain for Labour. For many people – although not, of course, everyone – the spending cuts remain an abstract concept. They are happening, but to someone else. Whereas
the rising cost of living is something that is writ in black and white across every single store receipt and petrol pump counter. Whether it is a 25 per cent rise in the price of salmon fillets, or
unleaded fuel at £1.30 a litre, this is something that most people will feel. And, in time, the government is likely to catch the blame for all that, whether it deserves to or not.

The other joy for Balls & Co. is that there are few straightforward solutions on offer to the coalition. Thanks to the independence of the Bank of England, it has about as much control over
interest rates as it does over oil supplies in the Middle East. And the policies that it could implement – a fuel duty stabiliser, for instance, or Balls’s requested VAT decrease – have
clear political and fiscal costs attached to them. Nevertheless, you can expect to see something on this in next month’s Budget, even if just a postponement of Alistair Darling’s 1p hike in fuel
duty. And Balls will no doubt try to claim the credit.


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