The coming weeks are decisive for the Conservatives – not just because of the frustrating wait for Sue Gray’s report on Downing Street parties. As we head towards a spring of tax hikes and soaring prices, the prime minister and chancellor will come to a major crossroads in the cost of living crisis. The truth is it couldn’t be a worse time for a government to be paralysed by its own drama. For months, inflation has spiralled out of control. The cost of a weekly food shop is up. Gas and electricity bills are skyrocketing. Everyone is noticing the difference. The government’s answer? Painfully whacking up national insurance contributions for working people and businesses. To know how to fix this, you have to look at why we’re here. It’s partly down to disruption and extra red tape from the government’s patchwork Brexit deal, one that’s left businesses, workers and consumers facing shortages, delays and higher prices. But it’s not just over the last year that Tory failures have taken hold. It’s over the last decade. Their incompetence and inability to plan over the last 11 years for shocks such as the global gas crisis have left us uniquely exposed, a reason many other countries are faring better than us. It’s why last week the International Monetary Fund (IMF) forecast that the UK will grow at half the rate as the advanced economy average over this parliament. The Conservative failure to regulate the energy market, their decision to close gas storage, their achingly slow progress on renewables, nuclear and insulating homes has left bills mounting to unbelievable levels. There is much that could give immediate relief from this – measures Labour has called for over many months. By cutting VAT on home energy bills and spreading some of the costs from suppliers gone bust, you can save most households across the country £200 off their bills. With the Resolution Foundation saying that the average household will feel a hit of £1,200 in April, many will benefit from that. But as fuel poverty rises, lower earners and pensioners will be hit especially hard. That’s why Labour would target extra support to those who need it most, giving those households an extra £400 – that’s £600 off bills in total – enough to cancel out the total expected energy price rise in April. We’d pay for all this with a one-off windfall tax on the profits of North Sea oil and gas producers, who have made a fortune this year, as well as using higher than expected VAT receipts and North Sea oil and gas receipts to keep bills low. The government could provide that relief now. They could start insulating more homes and build more sustainable and secure energy supplies as Labour will do. But distraction and deceit seem worth far more of their time. They don’t have an answer to the cost of living crisis, because they are the cost of living crisis. If you don’t grow the economy as they haven’t, you get trapped in a cycle of high taxes to pay for public services weakened by 10 years of austerity. Not only Labour, but now Tory MPs aplenty and cabinet ministers themselves are calling on Rishi Sunak and Boris Johnson to abandon the damaging national insurance rise. But the Conservatives are now a high tax party, because they have become a low growth party. To add insult to injury, at the very same moment the chancellor is knocking on working people’s doors for more, he’s casually writing off £4.3bn of taxpayer cash lost to fraudsters and organised criminals. There’s no map for economic recovery, no looking beyond the end of another Tory leadership race.
To get out of this crisis, and to create a stronger economy, we must plan for the future. We’ve got to grasp the possibility of industry and innovation simmering across the UK, meet our potential and seize hold of tomorrow. Instead, we’re faced with a government out of ideas and out of energy, too worn out by its own games to do the hard work when it matters. Labour wants to tackle the cost of living crisis so people’s everyday economies thrive. We want to stop waste because we respect taxpayers and we respect our public services. That’s why the next Labour government will grab hold of the opportunities and tackle our challenges, to grow our economy, make it stronger and spread prosperity across the UK. Rachel Reeves is a Labour MP and shadow chancellor of the exchequer