The cost of living crisis: international, national, regional and local responses

National headlines have been dominated by Brexit and Covid 19 in the past few years: now it is the turn of the war in Ukraine and the subsequent fuel crisis which have led to what is seen as the worst cost of living crisis in living memory. Every TV show, radio broadcast, newspaper and website ushers in unrelenting predictions about the fate of the nation this winter. The “heat or eat?” question has become an immediate one.

Penny Post is, as ever, keen to inform readers about the help that is available (see the note at the foot of this about how we plan to expand this post and how you can contribute to it). First, it’s worth setting the scene and trying (and in some cases failing) to understand what is going on and why.

The international and national picture

Although many local organisations including councils have plans in place and many are taking action now, the problem is so colossal that clear leadership (and funding) from central government is needed. This was announced on 8 September (perhaps as much as £150bn being spent capping domestic bills and £2,500 until 2024, though with rather less help for business). You can read more here on the BBC website.

Should more have been done sooner? probably, yes. However, with the unerring bad timing that often attends the worst catastrophes, there has been a power vacuum in Whitehall since mid summer and, due a series of mounting scandals, political paralysis for several weeks before that. Boris Johnson resigned on 7 July and it was over eight weeks before Liz Truss was announced as his successor on 5 September. Russia invaded Ukraine on 24 February, at which point it might have been clear that something bad was going to happen to energy prices.

To what extent the energy crisis could  have been predicted and what could have been done about it are questions for another day. If there is to be an enquiry, it will need to take its place in the queue behind the unfinished investigations into the Covid response and partygate.

An inter-connected world

Our inter-linked life gives us a lot of benefits when things go well but when one place sneezes we all catch a cold. “In today’s world, there is no longer someone else’s war,” Ukrainian President Volodymyr Zelenskyy prophetically told the UN in September 2019. “None of you can feel safe when there is a war in Ukraine.” This excellent summary from the BBC’s Ros Atkins shows how all the major problems of the last few years are connected. Increasingly we rely on stuff that comes from elsewhere. Covid and climate change are no respecters of national frontiers. Putin’s war is equally insidious and viral. Without even leaving his country, Russia’s President has managed to carry the conflict into every household in Europe (perhaps with the exception of France which has a lot of nuclear power stations) simply by turning off the tap. Indeed, the energy war with Europe is perhaps the one that he was planning all along.

The forecasts suggest that the market on its own won’t provide a quick solution. This rather harrowing chart in the New Statesman on 26 August suggests that the situation will get markedly worse by the spring on 2023, the October 2022 price cap of c£3,500 rising to over £6,600 by April next year. It’s as if council tax were doubled every six months but without any extra services to show for it. As this article in iNews explains, the price cap is designed to protect consumers so businesses are likely to fare even worse. Even before this, energy was one of the biggest costs for small- and medium-sized businesses. It’s also in most cases essential for their operation. We can survive by using our oven less often but that’s not an option for a baker.

Making hay

Where is all this money going? To the energy producers, who are making hay while the sun shines and set to make even more when it shines less during the colder winter months. Bloomberg claims that the UK’s oil, gas and electricity generators are set to make £170bn of excess profits over the next two years. Centrica (formerly British Gas) saw its profits quintuple in the first six months of 2022. This has led to an increase in dividends – good news if you have Centrica shares or if your pension fund does – but The New Statesman asserts that a large majority of the equity is held by overseas investors. The article points to a further problem. Ofgem encouraged small energy suppliers to enter the marker from 2010. Many have since failed and Centrica (which was effectively a supplier of last resort) took them on. As a result, the magazine claims, “the taxpayer is subsidising Centrica’s acquisition of hundreds of thousands of new customers, potentially at a price of its choosing.” Whichever way you look at it, the system seems broken.

An alarming paradox

The UK only bought 4% of its gas from Russia in 2021 and in the first quarter of 2022 produced over 45% of its electricity from renewable sources. Many might think that this would have insulated us from the worst effects: it seems not. One might also think that Germany, which relies heavily on Russian gas, would be even worse off than us. Again, it seems not. There are factors at work here which I, and perhaps others, are very far from understanding. Please get in touch (or use the Leave a Reply box at the foot of the post if you can shed any light on this alarming paradox.

A hellish in-tray

Few PMs would have taken over with such a hellish in-tray. Liz Truss said in her opening speech on 6 September that she “would take action this week to deal with energy bills and to secure our future energy supply” (this was only second on her list of priorities, the first being “getting Britain working again” ands the third being the NHS). The government’s 8 September bail-out will be funded with borrowing rather than a windfall tax. It’s an irony that a PM who came to power on a platform of low taxes and small state should, on her very first day in office, be promising subsidies and interventions in the market which may well dwarf those of her defeated opponent Rishi Sunak during the pandemic. Strange times indeed.

The good news

It seems worth now looking at the good news.

The first is that, as mentioned above, the PM has reacted swiftly to deal with the immediate consequences of the crisis now (although, if this is funded by borrowing there will be a huge hangover to come). The other two are in some ways positive legacies from Covid. At this point we must drop down to the county level to see what help and support we can expect

The regional picture

Local councils have long been regarded by Whitehall as necessary evils which need to be tolerated but not encouraged in their ambitions,(despite frequent lip-service being paid to local democracy). As events during the pandemic proved, handing matters such as test and trace over to local councils produced a significant and immediate improvement in performance. I don’t agree with everything that our local council, West Berkshire (WBC), does: but in my view its response during the dark days of Covid was pretty good. Perhaps the fact that it was an apolitical problem helped. WBC dealt well with discharging the various support schemes mandated by Whitehall, including the council tax rebates and the household support grants. A spokesperson for WBC told me on 6 September that 98% of the former and 89% of the latter had been distributed.

The problem faced by WBC and most other councils is that their finances have been torpedoed by a number of issues including inflation, Covid and central funding cuts. In early September 2022, WBC predicted a £8m overspend for the year 2022-23. So, unless there is (as there should be) a generous adjustment of this in the financial settlement due to be announced in December, it’s unlikely our councils will have much autonomy in supporting their residents with anything more than signposting, advice and guidance. If the government is planning any locally administered schemes similar to the Covid ones it’s hoped this will be agreed sooner rather than (as was the case in the pandemic) later.

All the local councils in the area have already set up dedicated web pages which provide support and guidance and which are frequently updated (click on the links for the pages for West Berkshire CouncilVale of White Horse CouncilSwindon Council and Wiltshire Council). West Berkshire, and doubtless the others, are re-purposing the various structures and systems that they set up to deal with Covid and to administer the various government schemes. I have a reasonable degree of confidence that WBC and other councils will be able to do a similarly decent job if asked.

Indeed, West Berkshire Council was quick off the mark, announcing, in conjunction with Greenham Trust, “a £100,000 Emergency Cost of Living Crisis Fund to help charities support those affected by unaffordable hikes in energy prices and double-digit inflation” on 8 September. You can read more here. A good start.

I apply the same hope to parish councils and local community organisations: so our third piece of good news is having a look at what they can be expected to provide.

The local picture

One of the most inspiring and heart-warming aspects of writing about local events in recent years was reporting on and publicising the parish-level organisations which either started up or were re-vitalised as a result of the sudden viral emergency. As with Covid, we can wait a long time for effective measures to come from Whitehall and district and county councils need funding and guidance to accomplish anything that’s both effective and compliant. Parish-level organisations, however, exist largely outside this official cycle and can move quickly to help respond to immediate local concerns. This can involve asking those who have money or goods to spare to donate, via the organisation, to those who do not. This “from each according to their means, to each according to their needs” approach is (or should be) the basis of an equitable taxation system. At a national level, this a very blunt instrument. At a local level and in times of crisis it can work very well indeed. It does crucially depend on there being trusted local organisations to receive donations of whatever kind and use these to help provide what people need.

Many of the organisations in this area which will be able to help with the cost-of-living crisis were born out of, or were energised by, the pandemic. Fortunately for us, there are many examples of these in West Berkshire. Let’s start with what the Lambourn Valley has to offer.

• The Lambourn Valley

Lambourn Parish Council will not know what it might be asked to do and what if any funding it will receive to do until after a meeting with West Berkshire Council on 21 September. Implementing these may need to wait until its Parish Council meeting on 5 October.

Lambourn Junction

However, while those in authority have had their hands tied, other agencies and individuals have been able to be more proactive. It will be no surprise that Lambourn Junction, which came to the rescue during the pandemic, is once again at the forefront of community action.

The Junction’s food bank, which offers a non-means tested service, is located in the car park behind The Universal Stores. It will be open as usual on Mondays, Wednesdays and Saturdays from 11am to 1pm. It is regularly approaching supermarkets to keep its shelves full, and increasingly exploring other supply options. Director, Julie Blogg explained that she hopes  to be making soup to distribute free from the Junction, and will let villagers know on the Community Facebook page when this will start. Similarly, Helen Noll, who works for the charity, explained that “no stone is being left unturned to find new ways to support the vulnerable” and once these new opportunities have been verified, the village will be informed immediately.

Businesses

As mentioned above, businesses are feeling the pinch very sharply. Manjit Vohra, owner of Universal Stores, explained that his costs are soaring and he can only survive by increasing his prices, which increases the burden on his customers. As he candidly remarked, “ We are caught in a vicious inflationary cycle, I have no idea where this is going to end without some government intervention.”

Of course, every independent business in the village will be subject to similar pressures and yet rely wholly on local support to keep their enterprises afloat. Ryan at The Lambourn Food Hall has set up a WhatsApp group for customers who want to stay informed of any offers he will be able to supply on particular goods, for precisely this reason. Subscribe to ‘LFH Deals and Specials’ on WhatsApp to stay in the loop.

Graham Jones at the Lambourn Pharmacy identifies with other retailers’ positions, but is thankful that he can buffer his over-the-counter medicines with his NHS services and products, which do not have quite the same pressures. Graham was also keen to remind his customers that there were very often generic products that retailed more cheaply than branded ones and that his staff were happy to give any advice in this regard. Graham re-iterated that the staff were there to help in exactly the same way they were, and are, with Covid.

Racing Welfare

Lambourn stands proudly by its slogan of being the “Valley of the Racehorse” and Racing Welfare is reminding anyone in the racing industry of its various support systems. Last winter, anyone in the industry could apply for a £300 fuel allowance and they are awaiting confirmation that this will be available in the coming months once again. Their mental health helpline, which is open 24/7 has been a lifeline for many and will come into its own again in the coming months. Ring 0800 6300 443 for free and confidential support, whenever you feel stressed, confused or low.

St Michael’s Church

In fact, on chatting with Vicar Julie Mintern, it was clear that looking out for each other in the times ahead will be as important as it was during lockdown. While St Michael’s Church would love to offer a warm refuge for those in trouble, the church is subject to exactly the same price hikes as everyone else and the cost of warming such a large space is prohibitive. However, Julie emphasised that she is always happy to chat with anyone who is struggling and can signpost folk to a variety of agencies that can be of real value in the weeks and months to come.

In conclusion, for anyone looking for certainty, in this landscape, the outlook is bleak. But – and unfortunately it is a big but – the village negotiated the Covid catastrophe admirably and the same people who were instrumental in that success are driving the solutions in this drama too.

Many thanks to Suzy Cairns for the reporting on the Lambourn Valley section.

Note: if any readers have any comments on anything in the post, would like to provide updated information on any of the organisations mentioned or wish to suggest others that should be included, please us the “Leave a Reply” box at the foot of the post. We shall aim to keep this updated in the light of new developments, policies and initiatives. Over the next few weeks we shall also be adding coverage of similar local initiatives in the seven other areas we cover (Hungerford, Newbury, Thatcham, Compton & Downlands, Burghfield. Marlborough and Wantage). Please email brian@pennypost.org.uk if you have any information about these areas that you’d like to see included.

 

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