Published:

6 comments

A dominant theme of the Majority Conservatism agenda launched by Tim this week is the need for Conservatives to show they understand voters' worries. As the so-called Misery Index (inflation and unemployment) continues to rise, the Prime Minister and his senior colleagues are under pressure to demonstrate that they have grasped the causes of our anxiety. Better still, they should be giving us the confidence that they have practical solutions in mind, and that they are making some kind of progress towards them. It is an irony that in this era of focus groups, political marketing and sophisticated polling techniques, many Conservatives in government still don't seem to connect well with day-to-day concerns. Last week in this column I urged health ministers to talk about patients, not systems. This week I'm perplexed by the government's reaction to three pressing (and interconnected) problems: rising energy bills, soaring inflation and – as ever – the Eurozone.

First, energy bills. It was a disappointment to watch the Prime Minister call an energy summit, sell it to the media as a mark of his concern about fuel poverty, talk to all the big suppliers and conclude that the best way for people to reduce their bills is to switch suppliers and – wait for it – use less energy. Changing suppliers is a time consuming merry-go-round: you have to keep repeating it to take advantage of those “new customer” deals. The reasons people don't keep switching are because they don't have the time to do this and/or they are inherently sceptical about the long term price gains. More transparency, although welcome, won't fundamentally change that. As to using less energy – do you know anyone who spent last winter turning up the thermostat just for the hell of it? The rule in our house is don't complain you're cold until you've put on four layers of clothing.


Couldn't the government treat us like grown ups and explain that Labour's 13-year failure to plan for our energy needs, combined with the premature adoption of expensive and inefficient renewable technology, means that prices will rise inexorably, whichever supplier we sign up with? And whilst it's too late to put right the first of these mistakes, the squeeze on incomes and growth provides the perfect opportunity to re-think our renewables policy, cancel expensive wind projects and reprieve existing UK power stations until new cheap sources of fuel are ready to replace them.

Energy prices have in turn contributed to inflation, which we're now seeing at a twenty year high on the Retail Price Index. Since incomes are rising at about half that rate, inflation is making most of us feel poorer. Most anxious of all are savers and pensioners, whose funds are simply shrinking. But I've yet to hear any reassuring words from the government about the future trajectory of prices, or some alternative savings vehicles. Both the Prime Minister and the Chancellor have told us in the last month that they are “monetary activists”, which presumably is code for approving of the latest round of QE. But do they agree with the Governor of the Bank of England that QE won't create more inflation because deflation is, in fact, just around the corner? Or do they worry that Mervyn King's record on forecasting inflation has, so far, been pretty dreadful?

Does the government's monetary activism mean that it will at some point intervene if the £75billion just injected into the economy fails to spur growth and simply fuels inflation? Indeed, how much inflation is the government prepared to tolerate? Will the Treasury re-introduce index linked savings products to enable people to preserve the value of their savings? And is it worthwhile even trying to save for a pension? Answers to a few of these questions might provide some reassurance to baffled voters, who would like to feel that the government has at least a clue about what will happen next. Treasury Minister David Gauke is no doubt a decent chap but his tour of the news programmes over the last few days did not inspire confidence.

Maybe the honest answer is that most of these matters lie beyond our control, in the hands of European politicians. Which brings me to my third anxiety factor: ministers tell us that unless the Eurozone solves its problems, Britain will be dragged down with it. Hence the need to chuck a few more £billion in the direction of the IMF. But it's not yet clear whether our government is attaching conditions to any such support. The German finance minister Wolfgang Schauble does seem to have been rattled by suggestions that Britain is looking for treaty changes; maybe that's because George Osborne gave him a handbagging over their dinner together earlier in the week. And maybe the Chancellor has also had a quiet word with Christine Lagarde, to let her know that any help we offer to the IMF will be conditional on the eurozone coming up with an orderly withdrawal plan for Greece. Let's hope so. Because if there's one thing that really ratchets up the anxiety index, it's the feeling that we live in a country that cannot control its own destiny. Being helpless bystanders while the European project unravels is a seriously depressing prospect.

Come to think of it, surely that's one very good reason why the Prime Minister should positively embrace the idea of a referendum on the terms of our engagement with Europe. It would enable him to show that he is more interested in the views of British voters than those of the Euro elite. It might even make us feel a bit less depressed.

6 comments for: Jill Kirby: Can the Coalition provide reassurance in the Age of Anxiety?

Leave a Reply

You must be logged in to post a comment.