The Government must help the whole economy
The Government is 'fire fighting' to help the banking sector, but it is not just the bank sector that needs help from the Government the whole economy needs a boost from a change of thinking at the top. Inflation has hit as 16-year high and like everyone else in the country, residents of West End and Southampton are suffering from rocketing food and energy prices.
The government's own figures show that bread is up a fifth, butter and eggs by over a third and potatoes by over a quarter. Local councillor David Goodall joined forces recently with the Liberal Democrats' Shadow Chancellor Vince Cable MP to highlight the real increase in the cost of living. They took a supermarket basket of basic groceries which together cost less than £10 last year. The same basket now costs over £12, a quarter higher.
David Goodall said :-
"People are feeling the pain of the credit crunch and rocketing prices. The government is doing too little, too late to help people get through the hard times. We need to put money back in the pockets of people who are struggling to make ends meet. Liberal Democrats are calling for a 4p cut in the rate of income tax, paid for by upping taxes on pollution and closing tax loopholes used by the rich."
And he continued :-
"We would also get tough on unnecessary and wasteful government spending, and use some of the money saved to cut taxes even further for those on low and middle incomes. And energy companies should be forced to use the £9 billion profit they have made from the Emissions Trading Scheme to cut bills and fight fuel poverty."
The real cost of living on everyday items is rising at a greater than the latest 5.2% head rate as demonstrated by David Goodall and Vince Cable. The downturn in the economy is affecting the whole of the country and the Government must come forward with a plan to address the whole situation as the Liberal Democrats have done.
The Liberal Democrats have published the "Liberal Democrat Fairer Future Economic Recovery Plan". This is existing party policy which will address the problems of the economy as a whole.
1. Action on the housing crisis - stop unnecessary repossessions and provide more social housing
- Allow families struggling with repayments to sell all or part of the equity in their house and rent it back from a housing association or private firm to help keep them in their home
- Introduce a statutory Code of Practice for mortgage lenders to ensure that repossession is only ever the last resort
- Allow councils and housing associations to borrow against their assets to buy up unsold properties and land from building companies in order to replenish the social housing stock
2. Action to put more money in people's pockets - tax cuts for people on low and middle incomes
- Cut basic income tax by 4p in the pound, paid for by upping taxes on pollution and closing tax loopholes used by the rich
- Get tough on unnecessary and wasteful government spending, and use some of the money saved to cut taxes even further for those on low and middle incomes
3. Action to limit the excesses of the City
- Firm up the policy of stopping destabilising short-selling of bank shares by hedge funds
- Require banks to hold more capital in periods of boom and less in recession, helping to prevent the boom and bust cycle characterised by extremes of irresponsible lending
- Decisive action to curb the bonus culture using regulation where necessary to stop large payments which destabilise the financial system by encouraging reckless risk-taking
- More effective regulation of those institutions, like hedge funds, that are not subject to the same degree of security and transparency as others.
4. Action to deliver future economic stability
- Include house prices in the considerations of the Bank of England when setting interest rates to manage inflation
- Independent monitoring of the Government's fiscal rules
5. Action to cut energy bills and fight fuel poverty
- Compel energy companies to re-invest the £9 billion profit they have made in kind from the Emissions Trading Scheme into cutting bills through -
- The roll out of social tariffs to over two million vulnerable customers
- Installation of smart meters, which show consumption costs
- A £500 million a year rolling programme to make sure homes are properly insulated
6. Action to help people with debt problems
- Roll out a national network of free independent financial advice centres, to ensure that individuals with debt problems can seek assistance promptly and professionally
- Expand the social fund, increasing the amount of short term emergency affordable loans, to help low income families pay off high interest debt
7. Action to help people who lose their jobs
- Personalised help to suit jobseekers' individual needs
- Increase the cost of work permits for foreign workers, and direct the money to fund more training for low skilled and unemployed workers already in Britain
8. Action to deliver 'green-collar' jobs and energy independence
- Big investment in renewables, home insulation and railways will create thousands of jobs
9. Action to reinvigorate global trade
- Work within the EU to unlock the stalemate on agricultural trade between the rich and the developing world, and bring down prices worldwide
Only by following the above steps will the economy truly recover and prosper in the both the short and long term.