The double whammy has landed

We're all familar with Labour's higher taxes.  The second punch of Labour's double whammy is now being felt across the land: Higher prices.

Campaigning in London today, David Cameron has published a dossier detailing Labour's failure to protect families from the pincer movement of restricted earnings and higher prices (already documented by Charlie Elphicke).  The Conservative leader issued this statement:

"When Gordon Brown and Alistair Darling claim that inflation is running at only 2 per cent a year, you have to ask where on earth they do their shopping. For most families in Britain, the real cost of living is going up and up. Since Gordon Brown became Prime Minister, the price of basic foods like bread, butter and eggs has gone up by around 30 per cent, while petrol has gone up by eight per cent, and electricity and gas bills have gone up by 10 per cent.

Of course in a modern market economy the government can't control the cost of living directly. But it can avoid making it worse. Sadly, Labour now seem so out of touch with the lives of working people that they keep on making things worse, with an extra £110 of taxes a year in the Budget for the average family. Why is Labour kicking families when they're down? Why won't they understand that life is getting really tough for people - council tax has doubled since Labour came to power, train fares have gone up by a third and the cost of running a car has risen by a half. On top of that we have the highest interest rates in the developed world, making mortgages, student loans, and business credit more and more expensive. The last thing Britain's families need now is more tax from Labour.

Everyone can now see the truth about Labour's economic incompetence. They took our money and they blew it. They didn't put enough aside in the good times to prepare for a rainy day. And they didn't do enough to improve the way public services are run, so we're not getting good value for all the money we've put in.

I won't make short-term promises to cut the cost of living - that's the kind of old-fashioned spin that undermines trust in politics. But I can promise this: a new Conservative government will be on the side of working people, with a long-term plan to fix the country's finances and make sure public money is spent properly. That way, over time, we can cut taxes and the cost of living."

Download a PDF of the Tories' full Cost of Living Report.

Comments

[Alan S]

Are we returning to 1970s "stagflation" (stagnation + inflation)?

And when will see DC comparing two baskets of goods (Thatcher-style); one before Brown and one after.

The pound in your pocket and all that...

[Will Stobart]

It's funny really, we seem to be going in a circle. Winter of discontent in 2009? Then 18 years of Tory Rule?
I'm up for it :)

[Tony Makara]

Its great to see the truth about inflation at last. We can expect inflation to get worse once the overvalued Pound starts to sink, particularly in relation to the Euro. All those EU foods in the supermarket are going to become even more expensive.

[Mavis Davis]

Whilst i accept that some prices have gone up ahead of inflation. We must also accept that many prices have fallen (helped by using cheap labour from china etc)

Are we Conservatives suggesting that if we were in power now DC would reduce the price of butter.

Are we now to subsidise the list of products you have listed?

Yet more government spending and more tax.

[Margaret Hemmings]

I too enjoyed watching Margaret Thatcher cutting that £1 note in two infront of a basket of goods. Those were the days. (Although Shirley Williams actually pulled that stunt before Mrs T)

I've never really understood why we got rid of the pound note frankly. I well remember Isaac Newton. We need to return to thos good old tory days.

[Monetarist]

Inflation is the responsibility of the Bank of England. The Conservatives praised Blair and Brown for this policy. Cameron and Osborne pledged to maintain Bank of England independence.

Is Cameron now promising to take monetary policy back under the control of the Treasury or is he, yet again, being intellectually and politically dishonest?

Is a clear and definitive policy on controlling the money supply and government spending too much to ask of Cameron's Conservatives? Sadly, on this evidence, it is.

[Tony Makara]

"Inflation is the responsibility of the Bank of England."

Monetarist, you may recall that in Gordon Brown's open letter to the BOE in May 1997 he stated quite clearly that the government reserves the right to intervene in BOE policy if it feels it is in the national interest. In other words if the Labour government doesn't like the decision of the MPC. How can the BOE possibly be independent with such a threat and public humiliation hanging over it? I feel it is a mistake for us to believe that the BOE is independent.

[Robert McIlveen]

Monetarist - the key phrase is "Of course in a modern market economy the government can't control the cost of living directly. But it can avoid making it worse." Remember when inflation went over 3%, after the effects of a fuel duty increase fed through?

And of course the government does control some of the things which are going up - council tax most obviously, as well as the normal things taxes are increasing on (alcohol, tobacco etc).

If a Conservative government reins in those costs it does control then the cost of living can be dented a little.

[Margaret Hemmings]

@ Robert Mcllveen

But surely we have said we will increase alcohol prices (alcopops/binge drinkers etc).... vote blue go green... higher green taxes on cars/planes.

I agree we should scrap these policies but you need to tell DC & GO.

Telling me and others on this site is preaching to the converted.

[David Belchamber]

"Inflation is the responsibility of the Bank of England. The Conservatives praised Blair and Brown for this policy. Cameron and Osborne pledged to maintain Bank of England independence" (Monetarist at 12.08).

Well, up to a point, Lord Copper!

As Tony Makara points out, Brown et al like to claim that the BoE is independent, when, as I understand it, only the Monetary Policy Committee is and even then it has to work within certain parameters laid down by ....?

You've guessed it, Gordon Brown! And what index of inflation is he working to? The CPI which is about half the RPI. Talk about cutting inflation at a stroke!

Is there anything that this man is straight and transparent about?

Good on Cameron for saying it as it actually is.

[Dick Wishart]

Its not the fact that inflation is happening, which cannot always be governed by those in power, its the blatant lies Brown is telling that the Tories are at last getting to grips with.
If you cannot/refuse to acknowledge that inflation is growing you will not be able to even start to control it, has history taught this useless government nothing.
Keep up the good work DC.

[Modern Monetarist]

Does anyone seriously think targetting the monetary base is a good idea? Seriously? After all the crap with the Ms in the early 80s?

The fundamental problem for Cameron is that he has not understood that his green tax policies - rises in indirect taxation - will
mean inflation in lots of goods will skyrocket.

The student loans thing is a bizarre footnote.

The stamp duty policy is economically illiterate. It will mean FTBers have an advantage in competing with non-FTBers, but won't reduce the cost of housing. The only way to do that is to reduce the power of councils to block building.

All in all, quite unimpressive.

[Iain]

"Inflation is the responsibility of the Bank of England. The Conservatives praised Blair and Brown for this policy. Cameron and Osborne pledged to maintain Bank of England independence."

Yes but printing money is still in the hands of the Government, as their budget deficit shows.

[CCHQ Spy]

Also Iain, the Tories have pledged to tighten Bank of England independence.

[asquith]

COMMENT OVERWRITTEN.

YOU ARE WELCOME HERE AS A LIBDEM ASQUITH BUT NOT IF YOU ABUSE OTHERS PERSONALLY. PLAY THE BALL, NOT THE PERSON PLEASE.

[asquith]

Sorry editor, I shouldn't have done that. I'm just childish sometimes. Thanks for having me, anyway. I'm not trying to be a troll.

[john]

fantastic document - more good work from cchq and the treasury team. if we can keep up this pressure then labour can only fall further behind.

[Editor]

Thanks Asquith - you're very welcome here.

[Mike Routhorn]

I think that this is a message that will resonate with the public.

2% inflation? It's an insult to the intelligence.

[James]

Maybe the Conservatives should do a spoof of this February 1974 Labour Party Broadcast. With before Brown and after Brown instead.

http://tinyurl.com/yr856w

[Oberon Houston]

Well, I'm confused, this must be the real cost of living increase (adjusted for average wage increases), but even that doesn't fit.

Labour have been in power for almost 11 years, so if we compound inflation at 2% we get 22% increase, if its 2.5% its 28% increase. The actual variable averages close to 3.0% giving a 35% increace.

So that means the rises above are relatively modest, but petrol has increased by 100% since 1997, from about 50p/l to 100p/l.

[David Sergeant]

"The fundamental problem for Cameron is that he has not understood that his green tax policies - rises in indirect taxation - will mean inflation in lots of goods will skyrocket."

The fundemental problem with "Modern Monetarist, and so many like him (e.g. "monetarist"), is they don't listen to what Cameron says. It is also worth pointing out the economic fact that indirect taxes do not increase inflation. But realising that requires economic literacy.

[David Bodden]

Since inflation in energy and food items is up to 40%, will the Conservatives put pressure on the government to increase pensions and benefit by an amount to keep up? Nah, I didn’t think so.

The inflation rate for pensioners and benefit claimants is huge. Those least able to do anything about it are having their standards of living collapse. Cheaper DVD players and foreign holidays don’t help most people in our position.

Before some self-righteous arse says, “get a job”, I’d love too. Does anybody know of anything in London? I used to have good financial (front-office) software development skills but they are unused since 2004 and I must disclose I am nearly 50, a bankrupt and have mental health problems. So if anyone needs a rusty, old, skint phyco; I’m your man.

[Tony Makara]

James, thans for the clip. Interesting to see the contrast between the populist approach of Williams and the staged gravitas of Healey. Of course Healey like Kinnock lost any claim to be remembered as a serious politician after being an apologist for the Blair years. Of the old guard least Hattersley had the honesty to go public and say that he felt Blairism wasn't working. Sadly for Mr Hattersley Gordon Brown is still surrounding himself with the likes of James Purnell, who incidently, has promised to move 2.3 million off benefit during his time at DWP! There can be no doubt that we currently have inflation of 7-10% and that it is certain to increase if the MPC cuts interest rates weaking the Pound against the Euro. Bad news for the millions who do their weekly shopping at EU-stocked supermarkets.

[Tony Makara]

David Bodden, just a thought but whatever happened to Gordon Brown's promise of job-matching. It was announced to a fanfare last year and like so many of Labour's promises it disappeared from the radar almost immediately. Looking at your skills David it should be possible for JCP to job-match and help get you into the work that you clearly want. Once again we have an example of the Labour government promising to help people find work and then doing nothing about it.

[Mike A]

Er...

"the economic fact that indirect taxes do not increase inflation. But realising that requires economic literacy."

You're being a bit unfair.

Yes, inflation is a function of how much money is chasing however many goods and is separate from the idea of price levels. To that degree "Modern Monetarist" is wrong.

However, lots of the examples of "cost of living" increases will be made worse as a deliberate policy of raising the cost of cars etc.

Confused vocabulary, but he's groping at a fair point.

[Oberon Houston]

Just been looking at the stats for unit wage costs. They are about the same as inflation. So I'm pretty sure that the charge that inflation was a problem under a Labour Govt. so far has been a problem. And given that inflation at the start of Major's second term was much higher, I think we are playing with fire here. What we should be telling people is this:

1. Low inflation has been a global trend, so don't believe Labour when they try to take the credit for it.
2. Brown has increased taxes in-line with growth, hiding the pain of this from most taxpayers. Much of the increased tax take has been irresponsibly spent on the pet projects of Brown who controlled policy at the treasury.
3. As well as taxing more, the Labour Government have been borrowing money at record levels. This will need to be paid for by YOU at some point, most likely after Labour are voted out. This means less money in you pocket and poorer public services before the benefits of any Conservative policy can take effect.
4. PFI commitments will be paid by taxpayers under a Conservative Government. This means less money in your pocket and poorer public services before the benefits of any Conservative policy can take effect.
5. The Labour Government spin machine has two messages. Firstly, the high taxation and borrowing is always called investment. Levels of spending however are irresponsibly high. This will be paid for by ordinary working British families both in the public and private sector. Secondly Labour will remind you that in the early 90's inflation under the Conservative Government was higher. This is true, but Gordon Brown supported the policies that led to this, as did all the major parties. After this point spending was less, public services were better and inflation was lower before Labour were elected.

[David Bodden]

Tony M, ‘Job-matching’ mmmmmm very funny. I was perfect match for many jobs back in 2003-2004 but the government took bribes and allowed fraudulent work-permits to be issued so that foreigners could be hired instead of British people. Did the Conservatives appose this corruption? Did they heck.

I was not the only one to suffer; at one point it was estimated that over 60,000 IT professionals were on the bench, but permits were being, and continue to be, issued at a rate of over 100 per day. I could not survive because I had recently returned from abroad and have no home or family here to help me. I ran out of money, became homeless and have made several suicide attempts. The last one resulted in me being locked up in a mental hospital for nearly two weeks half of which I had to live in the vomit covered clothes I was detained in. I have BEGGED for proper medical treatment and help getting back to work but have been refused both. Hell, I cannot even get a community grant so I can have a proper bed to sleep on.

That evil filthy scumbag Galloway, my MP, refuses to do anything because he only helps people in a certain social/racial group and I fall outside his selected few. I tried to get help from the leadership of the other parties too but they won’t touch another MP’s constituents.

However, I am sure that once I have had a spell on Grayling’s chain gang picking up dog mess in the park, I will be a far more attractive candidate for any job.

[michael mcgough]

"That way, over time, we can cut taxes and the cost of living."

where time = period of next government(4-5yrs)

If you can't wait,emigrate.

[Tanuki]

...petrol has gone up by eight per cent, and electricity and gas bills have gone up by 10 per cent.

My electricity has gone up by 18%. Heating-oil by 20%. Diesel about 15%. And under Darling I'm going to be paying an extra £600/year on car-tax in 2010. Add in the hike in NI contributions [around £700 for me] this coming tax-year. I'm pretty typical in being one of the average-imcome-earners who is being *seriously* stiffed by Labour.

But will the Conservatives actually reduce my tax-bill? Will they revoke Darling's sumptuary taxation on nice cars? Cut the tax on road-fuels? With their claimed shift to embrace 'green' tax nonsense I rather doubt it.

In my book, 'green' means naiive and uninformed. Some of us are not as 'green' as Cameron thinks we are.

I drive. And I vote. Remember this.

[Tony Makara]

David Bodden, its a disgrace that there is no support structure to help you. Sounds like you have been through a lot of stress. I've recently been watching a TV programme about homelessness and mental illness in Los Angeles and I was struck by the fact that there was no support mechanism, no state-organized pathway to get people back into the mainstream. The programme said that 80% of those on the streets are in need of mental health treatment but have fallen out of the system because they have had their benefit stopped etc because they couldn't work and the authorities believed they were choosing not to work. This ought to be a warning when dealing with welfare reform. There are people suffering from depression, which is a real illness that effects day-to-day functioning and is not simply a case of 'feeling fed-up' as many headline catching politicians seem to think.

[Geoff]

@ David Bodden (various)

As someone who has the misfortune in life to be cursed to run an IT company I'm still pleased to say that I'd not give a pathetic moaner such as yourself any job.

Socialists believe in self pity, Conservatives believe in getting off of your backside and doing the best you can achieve.

TM might be sympathetic but I'm not. Send me your CV but to be fair I'll probably just shred it. Help yourself and then others will help you.

Show me a positive example of self-motivation, initiative or self-learning then print that CV off a second time and I might just read it. I wish you luck.

[David Bodden]

Geoff: Self-Motivation/Initiative/Learning – setting up an office single handed in a foreign country involving legal requirements, procuring telecommunications, setting up computer networks and loads of other things I’ve never done before. I worked my wot-nots off trying to make things work.

I tried to do everything that could be expected and beyond in the ideal of ‘getting off your backside’ and being ‘self-motivated’. I came back to the UK to do the proper thing by getting some consultancy work to keep the project going and I find the government pull the rug out from under me and the whole thing collapses.

I have enough problems with the nuLieBore regime stabbing me in the back; I don’t need self-righteous idiots like you kicking me when I’m down and spitting over my body. Despite your claims to ‘run’ a company, I doubt that you’ve done one tenth of what I have and certainly never taken a risk only to be betrayed.

[Chris Ryder]

So is Dave talking about us humble plebs, who are one step from a court summons or a baliff visit to recover that outstanding rip off price for a loaf of bread along with everything else in our baskets?, ..well in that case hello big boy you've got my ears!, ..hmmm?, just one question though before I erupted in to a moment joy at the thought of a politician on the people's wave, is there an election coming or something? ah! yes the May local elections of course I should have spotted it sooner!, in that case then I'll go back to sleep as I couldn't seriously believe for a minute this was real in taking an interest in the welfare of us plebs and the empty state of our picked pockets by Messer's McGoon brothers for nothing, never mind it had me going for all of a microsecond.

[bluepatriot]

The double whammy has landed.

Clever title!

[Roger Kingston]

After 15 years the Tory Party seems to be reconnecting with the average man in the street, I work with them every day, if defeating McBrown and his festering government is what DC wants, then all he has to do is listen! And at last he seems too!
Pensions, cost of living, high taxes, high rates, crime, NHS, education is all that really matters to peoples everyday life. McBrown has failed on every single issue - GO GET HIM DAVE.

[Londoner]

Geoff's comments are uncalled for and unedifying. His insensitivity to the effects of mental illness is breathtaking and shaming, even if he claims he would look at David Bodden's CV at the end of the same post in which he abuses him. I am not an employer, and not in IT, so I cannot help; and I am not sure this site is the best place to advertise for work anyway. But I hope I speak for the majority here, or the majority anywhere for that matter, in wishing David good fortune in both his personal and economic recovery. For Geoff to slag off someone in David's position is appalling.

On a lighter note referring to further up the thread - we should all be charitable to Asquith by assuming that his lapse requiring a deletion was a result of Bank Holiday squiffiness.

[rbcoomer]

One thing that the headline inflation rates hide is the disparity between the various household costs over the last 10 years. If you look at goods that are 'non-essential' then yes, costs have fallen - furniture, clothes, white goods etc are all relatively much cheaper than probably at any time - certainly in my lifetime (40). Essentials however show a much different story, and it's here that will be Labour's undoing because when funds are tight people notice these most. Look at the essential costs for an average family - council tax has doubled, petrol/diesel doubled, food & heating prices soaring etc etc. Those with large disposable incomes won't notice so much, as the saving in one area offset massive rises elsewhere but those that are struggling certainly do! My solution to restore the balance would be to increase VAT to 20% (or 25%?) and slash fuel duty by half. The greens will moan (they like to anyway :-) but the increase in fuel use will probably be negligable. On the other hand, the extra tax raised from our insatiable desire for gadgets and white goods will more than compensate plus probably do more to save the planet! Personally, I don't belive that tax should be applied to taxes and duties anyway so why not abolish fuel duty altogether and introduce a 50% rate of VAT on petrol/diesel of which only half can be recovered by VAT registered businesses? We'll all still be better off on the fuel price at the pump, and the impact on the ecomomy would be positive with much of the increased goods cost being offset by reduced transport costs. We're too obsessed with taxing the motorist and not obsessed enough about the 'disposable society' in which we live. How much more efficient would a new car have to be to compensate for the 'carbon footprint' of it's manufacture?

[Christina Speight]

Tony Makara " We can expect inflation to get worse once the overvalued Pound starts to sink, particularly in relation to the Euro."

When I last looked the Pound HAS fallen much more than it did on the mis-called "Black Wednesday" (18.3 -14.2%,) That';s 14,2% on the cost of all eurozone goods, Cut your VWs buy Swindon-made Hondas (or Toyotas, or Nissans)

If Cameron doesn't say something concrete about tax cuts we'll all go down the plug hole

[Graeme Pirie]

The bottom line on taxes is that since 1997, CPI, Browns measure of inflation, has gone up by 16.7%.

During the same period taxation has increased by 75%.

They've had FAR too much money to spend, resulting in their interference in every aspect of our lives.

Cameron needs to get right on top of this - lets hear some figures shouted out in Parliament.

What I and many others are dying to hear is a politician who will COMMIT to lower taxes AND improved services. Lets face it, with the mess the UK is in now, it can't get any worse.

Get rid of "tax credits" and double the tax thresholds. That's an immediate tax cut at no risk to any services.

And promise us that the target is to get taxes below 30% of GDP. Squeeze the money and the service will improve.

[Chad Noble]

One point though, Brown was right that the highest *overall* tax burden came under the Tories.

Tax freedom day this year, awful, terrible, appalling though it is will be 2nd June. 11 of the 18 years in power were *worse* than this.

OK, so the Tories were fixing the mess left by Labour some will say (fairly to some extent), but even by 1996, at its very best, a year before they lost power, it was still only a week better.

We do need to kick Labour out, but to suggest that Cameron will at any stage create a lower *overall* tax burden is misspeaking at its finest.