- By Laura Kuenssberg
- Moderation, Sunday with Laura Kuenssberg
1 hour ago
image source, Getty Images/`
when will you feel better
How politicians answer this big question will set the terms of the next election. The answer is certainly not this week.
Prime Minister Rishi Sunak may have told MPs, “We’re halving inflation,” but repeating this political slogan in the lower house doesn’t make it true. In fact, he was wrong – just like the economists were wrong.
The message to workers, businesses and families this week is grim – your costs are rising, but don’t ask for a raise or raise your prices if you’re a business.
There is no shortage of evidence of how difficult it is for millions of families to pay the bills. According to the Treasury Department, “inflation is choking growth and eroding family budgets.”
And its effects can be long-lasting. As a German economist said: “Inflation is like toothpaste. Once it’s out, it’s almost impossible to get it back in.”
That being said, even this important item has risen significantly, with a famous brand raising the price of a tube from £3 to £4.
What the government is hoping is that next month and the month after and the month after the number eaters get it right and inflation comes down pretty sharply by the end of the year and the toothpaste eventually goes back into the red pipe.
But a slowdown in inflation doesn’t mean prices will fall. Politicians and the public have to deal with the fact that there can be many years when voters feel bad.
- On this week’s show are Leveling-up Secretary Michael Gove and Labour’s shadow culture secretary Lucy Powell
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For this week’s show, we asked Richard Hughes — the country’s number cruncher who runs the independent Office for Budget Responsibility — how he would answer that big question. If you’re being squeamish about your finances, you might want to look the other way now.
He told me we’re in the midst of “the greatest squeeze on living standards we’ve seen in this country on record” — but it could also be five or even six years before people begin to feel wealthier again.
As he put it, “people’s real purchasing power does not return to pre-pandemic levels even after five years, even into the late 2020s.” gulp.
There’s also a separate and tricky conversation about the influence of his organization, the OBR.
Her work, famously ignored by Liz Truss and Kwasi Kwarteng when they were in power, tells governments how much they can spend and borrow if they want to play by their own rules about when to balance the country’s books .
The idea is that with an independent body publicly verifying ministerial arithmetic, the public can have confidence in what is being done.
But their forecasts, as Mr. Hughes readily admits, often turn out to be wrong and change every six months. Still, they can have an enormous impact on what politicians decide.
For example, several sources told me the government only decided to expand childcare in the most recent household because the OBR told them more than half the cost would be covered by the benefit of getting some parents back into work.
They can, like many politicians, believe in the merits of an independent expert scrutinizing the numbers, but also have vague concerns about how the OBR can through no fault of its own push the boundaries of political talks – dramatically change that.
Whether you ask an economist, a politician or just look at your own account balance, the general assessment will probably not change – times will be tough for the foreseeable future.
Inflation – politicians’ nightmare – is likely to ease by the end of the year, but Rishi Sunak and Keir Starmer will have to lure you to the ballot box in 2024 if the country is still feeling heavy.
We can already see the outlines of the Conservatives’ script. If inflation (hopefully) falls and the economy (fingers crossed) avoids a recession, ministers believe there will be signs that the country’s fortunes have turned and they can persuade faltering voters to hold on .
As one minister says: “The argument we want to make is: ‘I’m just starting to feel better, don’t risk it’.”
video caption,
Watch: So we just have to accept that life is getting harder, Chancellor?
We’ve been through unprecedented hard times, they’ll argue, and things are getting better, so don’t risk anything new.
The aim is also for ministers to be able to start cutting taxes again – perhaps this autumn, or more likely next spring.
A former cabinet minister says voters will feel better once a Conservative government is re-elected because they hope they can say during the election campaign that “inflation is lower, wages are outperforming inflation” and get a “clear Plan” have for the economy”.
Even if Rishi Sunak becomes an expert in political gymnastics, it’s unlikely Conservatives will avoid taking a flak over the thumping revenues they’ve raked in during their tenure.
But you can expect ministers to be more regular over the coming months to highlight the aid already on offer – be it cheaper bus fares or the hugely expensive energy price guarantee.
If you ask Labor politicians when the country will feel better, the answer is also far in the future.
A shadow minister says the drop in living standards has been “brutal”, while another says “people are nowhere near feeling better”.
Even as inflation slowly slows, for many families the harsh economic reality gives them a political advantage if they believe polls showing Labor well ahead give them a political advantage.
As strongly as Conservatives argue they have had to deal with unprecedented pressure, distressed voters are not inclined to reward those responsible. But wise Labor leaders know only too well that successful oppositions do not simply say ‘we are not the others’.
That’s why we see the leadership spend so much time and effort trying to make it feel like they’re spending taxpayers’ money wisely and repeatedly talking about how they would make the economy grow.
The Shadow Secretary believes that Labor tends to win when it “offers hope after years when the Tories look a bit battered”.
So when we ask “when are you going to start feeling better?” The answer is “not much, if any, until the next election”.
It is likely that a vote will take place unless there is much money in our own pockets or in the public purse.
And we face a conversation in which Conservatives use any signs of progress to claim change is not worth the risk, while Labor highlights the hard times we’ve been through and says it’s time for something different .
Just like economic forecasts, political forecasts can prove miles away. And of course how we make our living and how the country pays for its living is not the only factor that determines how people vote.
But after years of hardship, the general election will ask you who you think will help you be better off.
The answer given by millions of voters will likely determine who takes No. 10.
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