- TransPennine: Another broken Conservative promise
- EU law bill: Conservative Party “devouring itself” while families struggle
- Bank of England: If Hunt doesn’t meet inflation target then he must go
TransPennine: Another broken Conservative promise
Responding to the news that TransPennine Express will be brought under Government control, Liberal Democrat Spokesperson for Transport in the Lords, Baroness Randerson said:
The Government have been forced to take over another rail company. Passengers are angry that services are being cancelled and the Conservative’s failure to stop industrial action is making things worse.
Years ago the Conservatives promised to fix railway services, promising that the new “Great British Railways” would take control and stop disruption. But we still haven’t seen it.
Liberal Democrats are calling for urgent reform of our railways so they can start delivering for passengers once again.
EU law bill: Conservative Party “devouring itself” while families struggle
Responding to the latest divisions in the Conservative Party over plans to scrap EU laws, Liberal Democrat Business Spokesperson Sarah Olney said:
Rather than get on with fixing the NHS crisis and helping families struggling with the cost of living, the Conservative Party is devouring itself yet again.
Rishi Sunak’s position has become increasingly precarious following the Blue Wall wipeout which Conservatives received at the hands of the Liberal Democrats – and now his MPs are in open revolt. This shambles of a political party clearly isn’t fit to hold office.
Bank of England: If Hunt doesn’t meet inflation target then he must go
Responding to the Bank of England’s rise in interest rates and new higher than expected inflation forecasts, Liberal Democrat Treasury spokesperson Sarah Olney MP said:
This is a hammer blow to struggling families who simply can’t balance the books with these endless price rises.
With mortgages and inflation remaining at sky high levels, Jeremy Hunt is frankly failing at his job. He was set one main goal, which was to bring down prices, yet today confirms he is nowhere near achieving that.
The deadly rise in food prices is to blame for this cost of living crisis yet the Chancellor refuses to act.
If Jeremy Hunt doesn’t meet his self-imposed inflation target and bring down food bills soon then he must go. Families and pensioners just want an end to the cost of living crisis, yet Jeremy Hunt looks the like yet another Chancellor who isn’t up to the task.
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12 Comments
The solution to the crisis on the railways is already happening by stealth and it’s renationalisation. As Franchises end or fail they are coming under the government’s aegis. We Liberal Democrats should welcome that as a first stage to reestablishing a unified rail network run for the benefit of rail travellers and not to fill the boots of private shareholders.
The Tories, of course, claim that they will return the now four failed franchises to the private sector, but who would want to take them on? Public ownership of the railways is popular with the voters, so let’s be bold and radical and adopt this as our policy.
There are different models for nationalising transport systems as the Germans and citizens of other European countries know perfectly well. Meanwhile our government has to pretend that it is taking over control on a very temporary basis to keep its backbenchers onside. I suspect many Lib Dems would be content with a model that came with a strong dose of regional accountability.
Good to see TransPennine Express back in public ownership following South Eastern. It’s all well and good to call for reform of our railways but that in itself is not enough. We need full nationalisation if the constant problems for passengers with last minute cancellations and timetables are to be avoided. We also need to restore the network and reverse station closures so that we have credible national railway network again.
I do sometimes wonder about Sarah Olney’s grasp of economics. Does she or does she not support the 1997 New Labour / Gordon Brown decision to hand over monetary policy, and so the meeting of any target rate of inflation, to the Bank of England?
My understanding is that the Lib Dems were in favour of it. If I am correct in thinking this, then she presumably must agree that inflation targets are not Jeremy Hunt’s responsibility and therefore there is no reason to ask him to resign if they are not met.
On the other hand, if she thinks this is all a lot of nonsense, which it undoubtedly is, she has a responsibility to say so!
The increase in the general price level over the past year is not solely a consequence of inflation of the money supply. Supply side shocks arising from the war in Ukraine and lockdowns in China have impacted energy, food and commodity markets across the board. Unlike monetary inflation, these one-off shocks are not continuing increases that inflate year after year and will fall out of inflation figures after a period of time.
Inflation of the money supply is driven by increased lending and increased government deficits that is sustained if a wage-price spiral takes hold.
The government sets the mandate and inflation target for the Bank of England, sets fiscal policy and immigration policy and regulates energy markets.
Brexit and immigration policies are a home grown driver of increased food prices on top of global supply shocks. Food prices are overtaking energy as the key driver of the cost of living crisis. British Retail Consortium (BRC) has called for a proper policy on labour, with immigration to match the needs of growers. Andrew Opie, the organisation’s director of food and sustainability, said: “Retailers will want government to commit to sustainable UK food production – that includes a coherent labour policy, more focus on carbon reduction, and minimising the financial impact of incoming regulations.”Ministers call for immigration and UK food prices to increase
So Sarah Olney is absolutely right to say “The deadly rise in food prices is to blame for this cost of living crisis yet the Chancellor refuses to act.”.
“The increase in the general price level over the past year is not solely a consequence of inflation of the money supply. ”
This is obviously very true. So it’s good to agree for a change.
So why does the Government pretend that it’s solely down to the BoE to hit its inflation target of of 2%?
The BoE says “If we miss the inflation target by more than 1 percentage point either side of the target, we must tell the Government why. So if the Consumer Prices Index (CPI) inflation rate is more than 3% or less than 1%, our Governor writes a letter to the Chancellor to explain why and they set out what we’ll do to get it back to 2%.”
It would make at least some sense if the BoE said that they would discuss with the Government what needed to be done by *both* parties to meet any target or even if the target itself needed to be revised because of the effect of supply shortages. The only tool the BoE has in its box is the hammer of interest rate adjustments.
It can raise and lower rates all it likes but it won’t be able to increase the supply of anything such as energy and food. Nor will it be able to stop the war in Ukraine.
Just what exactly is Ms Olney saying needs to change? What, precisely, would she like the chancellor to do to bring about lower prices?
Peter Martin,
We don’t agree. Inflation relates to inflation of the money supply whether via bank lending or deficit spending and is sustained by a wage-price spiral. Supply-side price shocks are one-off or cost-push inflation and fall out of inflation measures like CPI after 12 months or more once embedded in the index measures.
The increase in food prices in particular is exacerbated in the UK by government policies around post-brexit arrangements with the EU and migrant labour. As the article linked in the earlier comment writes “Farmers and Defra ministers have been lobbying the Home Office to increase the number of temporary visas for agricultural workers, but a senior Defra source said Braverman was “ideologically opposed” to such a move.”
The BofE has to raise interest rates more rapidly and to a greater extent than what otherwise might be necessary to meet the treasury mandated target of 2% CPI inflation as a consequence of government measures around immigration policy and post-brexit trade arrangements with the EU pulling in the opposite direction.
Sarah Olney is calling on the government to get a grip and start listening to Farmers and Defra Ministers.
@ Joe,
“The increase in food prices in particular is exacerbated in the UK by government policies around post-brexit arrangements with the EU and migrant labour”
Maybe you’d like to check your sources?
UK food inflation was reported by “trading economics” to be 19.1% in the year to March.
The same source reports EU food inflation to be 19.4% in the year to April.
So are you saying that “post brexit arrangements” have caused our EU neighbours to have a problem too?
https://tradingeconomics.com/european-union/food-inflation
I’ll not get into another sterile argument about Economic Theory but maybe you might like to write an OP to tell us all what “Money Supply” actually means? It turns out that there are so many different ways of defining it that it can mean just about anything that we want it to mean.
Peter Martin,
nothing above says that “post brexit arrangements” have caused our EU neighbours to have a problem too? The UK no longer has free movement of Labour and Defra Ministers, Farmers and retail associations have cited restrictions on agricultural migrant labour as a key source of the problems they face.
The UK’s inflation rate has been persistently higher on average compared to the US and other large economies in Europe over the past year (Source: Eurostat, Office for National Statistics) Why is UK inflation higher than other countries?.
The money supply (however defined) is what the BofE targets with its interest rate rises.
There are a combination of global and domestic factors feeding into the cost of living crisis. Government policy on post-Brexit arrangements, immigration and BofE delays in responding to persistent monetary inflation are part of the problem.
There are a few Brexiteers still in denial about the self-inflicted damage caused to the UK economy but most others like Nigel Farage are now forced to admit Brexit has failed Brexit has failed. But what comes next may be very dark indeed “Britain is becoming poorer and falling behind its peers. Ours is now forecast to be one of the worst performing economies in the world, not merely seventh in the G7 but 20th in the G20 – behind even a Russia under toughening international sanctions – according to the International Monetary Fund….post-Brexit trading arrangements with the EU threaten the very existence of the entire UK automotive industry, which employs some 800,000 people. Ford, Jaguar Land Rover and the owners of Vauxhall called on the government to renegotiate the Brexit deal. Such demands are getting louder. Next month, a thousand businesses, alongside representatives of farming and fishing, will gather in Birmingham for the Trade Unlocked conference, called to discuss a post-Brexit landscape most say has made commercial life infinitely harder and more bureaucratic.
Joe,
Interesting to note your comment about the Trade Unlocked conference.
I hope we are going to be there. I have registered.
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Now all we need is our Leader to go there with the right message and we can start to get some real benefit from having been right all along.
Thanks,
David
Joe Bourke 20th May ’23 – 1:24pm:
…Brexit has failed…
It’s far too soon to say how successful “Brexit” is. It took a decade before we could safely say that the EU ‘single market’ was a failure for the UK…
‘Policy Brief #2014/02: 20 years of the European single market: growth effects of EU integration’:
https://www.bertelsmann-stiftung.de/en/publications/publication/did/20-years-of-the-european-single-market-growth-effects-of-eu-integration/
That €10 average annual gain in real GDP per capita represented about £500 million in total – less than a twentieth of our then EU membership fee.
By the time we saw sense and left our annual goods trade deficit with the EU had reached £94 billion…
‘Why has the UK trade in goods deficit widened in real terms?’:
https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/articles/whyhastheuktradeingoodsdeficitwidenedinrealterms/2018-09-24
That failure as a graph…
‘Trade in Goods (T): EU: Balance’:
https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/timeseries/l87q/mret
Jeff,
I know some people can be slow on the uptake, often out of an unwillingness to admit they were wrong, but I think you need to get with the times and stop doubling down on a loser. If you start with the maxim “Everything the Conservatives do is overhyped and ill thought out”, you won’t go far wrong.