Last week, the Budget delivered important reforms that will help cushion the impact of a difficult winter on household finances. The £100 household energy rebate, extension of the VAT cut on electricity bills, and reforms to mileage rates will make a difference. These come after action on airline fees, parking charges, subscription traps, and school uniform costs.
These changes, albeit small, are changing the mood music about the Labour government. After two years, the party looks like it understands voters’ cost of living challenges – and are trying to do something about it. This changed perception is a significant driver behind Labour’s recovered polling position.
There are more small measures they can take. Insurance companies could be prevented from charging higher rates to those who pay for their insurance monthly. Energy companies could be banned from charging higher rates if they pay on receipt of bill, rather than by direct debit. And price increases within fixed broadband companies should be prevented.
But the public wants bigger and bolder economic reform. Despite strong support for most of the policy measures announced, Ipsos found the Budget had done little to dispel anxieties about personal finances or the long-term issues facing the country. Of the 80 percent of British adults who consider the economic condition to be poor, two-thirds believe the challenge is so deep that the country must adapt to permanently reduced living standards. If Labour fails to reverse this perception, it will struggle to win re-election – regardless of how divided right-wing parties are.
The government must respond to these deep-seated anxieties and take action on broken consumer markets. Most businesses play by the rules and serve their customers well. But there is a sizable number of businesses whose practices exacerbate economic insecurity and the cost-of-living crisis.
For example, millions of people are charged extra simply because they do not regularly switch essentials like energy, insurance, and broadband providers regularly. Life is busy and stressful, so changing providers is often not at the top of the to do list. Yet these loyal consumers end up paying more, simply because a business can charge them extra.
Regulators too often sit idly by. Regulation is often seen as a technocratic exercise in managing a market, far removed from the realities of people’s lives. Indeed, there is too little conversation about the impact that regulation has on those who live in poverty or economic insecurity. Rather than actively defend ordinary people from rip-off practices, regulators often see them as another ‘stakeholder’ to be managed.
Over the next two years, the government needs to radically reform markets for housing, energy, food, water, insurance and the internet. It needs to take on vested interests in the essential markets, and ensure ordinary people are finally heard when decisions are made. Ministers should be unashamedly populist in putting the interests of those who are being ripped off over those who are using these techniques to pad their bottom line. No longer should people feel they are without anyone on their side.
The Prime Minister’s emphasis on public control is the right starting point. The forthcoming 10-year plan must set out what this means across the markets we all rely on. In terms of its ambition, the interests of ordinary people should be prioritised once again. The government must commit to ending the system that has created unnecessary, additional pressure on family finances. This may require the state to directly own or provide in these markets, or for regulation to be much tougher.
As the government finalises the 10-year plan, it should focus on the broken essentials markets that exacerbate the cost-of-living and economic insecurity. The public interest should be prioritised over companies that use rip-off tactics. The British people are starting to finally feel they have someone on their side leading the country. This is the chance to show them what that really means.