Cost of governments to blame for cost-of-living crisis - Brian Monteith

Politicians with acute political antennae should not require focus groups to tell them the most important issue facing voters today is what has rather quickly become known as the “cost-of-living crisis”. People are experiencing it already; they can feel the pain of the price of fuel at the forecourt pumps, prices in general are rising and in particular areas – such as domestic energy for heating, lighting and cooking – it is significant.

The UK’s Consumer Price Index rose to nine per cent for April year-on-year and there is every likelihood it will soon reach double figures before beginning to fall back next year.

Unfortunately, calling it a cost-of-living crisis is to misunderstand it and rather lets those responsible for what is happening off the hook. It also means that the remedies proscribed are likely to be the wrong ones. It will take us, therefore, longer to get rising prices under control.

It would be far better if we were to call it a cost-of-government crisis, for it is our own governments in Edinburgh and London, as well as foreign powers in Brussels, Washington and Moscow that have, in their own way, contributed to the rising costs we are now facing.

Scotland does not have enough nurses to work in hospitals without using expensive agencies – just one contributory factor in the ‘cost-of-living crisis’. Picture: Getty Images

The cost-of-government crisis is a real tangible thing. There is the rising cost of taxes, because our governments make unfunded promises before elections and then bill us with the true cost after delivery.

Then there is the cost of government incompetence, which by comparative standards is especially bad in the SNP’s Scotland. This is when our politicians bill us with higher taxes for their failure to deliver to the specification they offered or on time – or worse, they bill us for their failure to deliver at all.

Think the lack of lifeline ferries for our islands or having enough nurses to work in hospitals without using expensive agencies, or enough doctors to see us, or enough consultants to undertake surgical procedures, or enough graduates to teach maths, or road improvements to save lives – or having enough locomotive drivers, so the train timetable is not cut by 30 per cent like it was last week.

When you look across the Scottish public sector there can be no doubt there is a cost-of-government crisis. There is a practical cost to our health, knowledge and resilience that comes from experiencing poor and worsening services, and there is a financial cost that requires higher taxes to pay for the huge inefficiency that comes from unnecessary shortages and make-do fixes.

This ballooning cost of government was already apparent in Scotland back in 2019 but it became a great deal worse in 2020 when the UK Government was confronted with Covid-19 and in a panic – encouraged by opposition politicians, 24-hour news cycle broadcasters, and scientists with a reputation for unreliable predictions – chose to go beyond its three-week lockdown to save the NHS and it extended it for months, then had another, and another. We therefore have a government-created cost-of-lockdown crisis.

It was a course that need not have happened. The public health protocols already in place did not call for it and we can now see from a study conducted by the World Health Organisation the international outcomes for those having the most stringent lockdowns – such as Peru – have fared worse while those seeking to protect the vulnerable but let their economies continue to operate near to normal – such as Sweden – fared far better. The UK’s performance, while often being described as one of the worst (mostly by people seeking to justify lockdowns sooner, longer or harder) turned out in like-for-like analysis in the middle of the pack.

There were some, such as this author, who warned lockdowns were likely to result in worse prognoses for those requiring life-saving healthcare, growing mental health problems including suicides, disturbing educational outcomes for our youngest and businesses disappearing never to be seen again – and those costs are now being felt.

A day rarely passes without new data showing the human cost – such as cancer victims, children’s learning abilities or the huge skill shortages that result in huge queues and costly inefficiency – that now has to be put right. These personal tragedies generate costs that will be used to justify tax rises, such as pushing up National Insurance – but worse was the sanctioning of Quantitative Easing, in short the creation by the Bank of England of digital money to fund the extended furloughs, the loans (many written off), the grants and the expense of dealing with the pandemic.

The UK was by a long way one of the most generous worldwide in providing financial support in the hope that its lockdowns did not kill the economy altogether – and that flood of money not generated by productive effort of us working or trading, but simply invented – has meant that prices are rising. More money chasing even fewer goods from our recovering economy means prices rising even faster.

Then there is the cost of “Net Zero” – an uncosted policy already having an impact as the cost of abandoning the cheaper carbon sources of oil, gas and coal when we were not ready to switch to the expensive alternatives is resulting in energy prices rising more generally across Europe. Suggesting we switch to non-carbon alternatives like wind, solar or heat pumps will not cut inflation but drive it up.

This was all before Putin’s invasion of Ukraine started to impact on prices.

The expensive costs of government are all pushing the cost-of-living up. You should ask yourself if you voted for politicians that are causing this pain, especially to the poorest. If you did, then maybe you will want to think twice the next time you vote.

Brian Monteith is a former member of the Scottish and European Parliaments and is editor of ThinkScotland.org