THE forecasts for the British economy and specifically for household living standards continue to deteriorate. Millions of people are going to be worse off, many of them very badly worse off.

As usual with this government there will be scapegoats. At the moment, their preferred target is Russia and its oil supplies. Which is rather convenient as this government, the US and other Nato powers are busy beating the drums of war. 

But we should be clear that the policies making millions of people suffer are home-grown and the product of a Thatcherite ideology which has brought us to this crisis.

On the forecasts from the Bank of England, the British public is facing the biggest fall in living standard since records began. But this is very far from a one-off.

Others, such as the Resolution Foundation think tank, have conducted detailed analysis of this entire period, which has been punctuated by one economic crisis after another. Basing themselves on the official forecasts from the Office for Budget Responsibility (OBR), they arrived at the stark conclusion that “the result of having so many crises in quick succession, without any strong sustained growth periods, means that the 15 years from 2007 to 2022 are forecast to be the worst on record for household income growth.” 

In addition, the OBR itself is forecasting unusually strong pressure on living standards until at least 2025.

This issue is in the headlines now because of the huge rise in energy bills that have just been announced. This is a huge blow to ordinary people in this country and will force more households into choosing between eating and heating.

We can deal with the issue of scapegoating other countries for the crises caused by this government’s policies quite easily. Blaming Russia for the surge is misdirection. The US gets almost zero oil from Russia, but is currently experiencing even higher consumer price inflation, at 7 per cent. 

The real cause of the current crisis has its roots in the same approach the led to the global banking crisis and Great Recession. It is a laissez-faire approach to the energy sector which is at the root of the problem in both countries.

In France where EDF is nationalised, energy prices are set to rise — but by just 4 per cent. And Emmanuel Macron is certainly no socialist.

The dominant ideology in this country going back to at least Margaret Thatcher has been based on false claims about the superiority of private enterprise. She sold BP, which was a huge strategic state asset, effectively as a giveaway.

Norway has a trillion-dollar sovereign wealth fund from its North Sea oil windfall. All we got was the unsustainable Lawson Boom and the crash that followed.

It is this same ideology now which dismisses the demands for energy nationalisation, or the nationalisation of other public utilities. But who else other than the public sector is best equipped to provide public goods?

Instead, we have the current crisis. We should be clear that the current surge in prices us not a natural phenomenon. It is clearly a product of government policy. 

This is the policy we used to call austerity policies. This has rather fallen out of fashion as it was incorrectly asserted by many commentators that Boris Johnson (of all people) had ended it. Those claims now look completely ridiculous.

The surge in prices is accompanied by a run-down of public services as well as  tax measures making ordinary people worse off.
This began as soon as these Tories could, with the March 2020 Budget.

The Budget completely ignored the terrible economic effects of the pandemic, no doubt because Downing Street believed it would soon all be over, just as they do two years later. 

But the Budget did make a large — but one-off — investment because government knew there would be huge dislocation arising from Brexit.

It is this one-off increase in investment which seems to have duped many commentators, who should have known better. Because what they failed to notice was that this one-off boost was to be “paid for” by very deep real cuts in current spending on public services in future years. Those future years are now.

The November 2021 Spending Review made matters worse. There was an overall programme of cuts, which the government tried to disguise with sleight of hand.

In addition, there was a huge and regressive transfer of incomes and wealth from poor to rich and from employees to business. This is the definition of austerity.

So, for big polluters and fossil fuel producers, or bank executives and shareholders, or even arms manufacturers, then this was a good spending round for you. They enjoyed tax breaks, tax cuts and increased spending.

At the same time the poor were throttled as income tax thresholds were frozen and National Insurance payments were increased (which hit the lowest paid workers while the highest paid are exempt). 

In recent days we have a had a triple-whammy of austerity. In addition to the surge in energy bills, this week in the Commons the government also forced though a £1 billion annual cut in taxes paid by the banks.

The third measure has largely slipped under the radar, with was the decision to freeze the threshold for repayment of student loans. Any graduate who does manage to secure even a pay rise below inflation will immediately see their loan repayments rise.

The Bank of England now expects prices to rise even further. It forecasts that inflation will exceed 7 per cent, spelling misery for tens of millions of people. Wage settlements are likely to come in way below that. Pensioners will be hit extremely hard, especially after yet another austerity measure, reneging on the “triple lock” on pensions.

How are they getting away with all this? Tax and price rises for the poor, tax cuts for banks, fossil fuel firms and the rich? The answer is they are using the chaos, confusion and fear created by a pandemic they have unleashed to get away with it.  

Letting the virus rip is the “fog of war” which allows fire and rehire, pay cuts, surging profits for energy companies and all the other attacks.  Struggling households across the country are paying the price. But they cannot afford cruel and inhuman government any longer. We need to fight back.

Diane Abbott is MP for Hackney North and Stoke Newington and a former shadow home secretary.