We must tax profits now, freeze energy prices – and if necessary bring suppliers into the public sector | Gordon Brown

Ttime and tide wait for no one. Neither do crises. They don’t take vacations and politely hang fires – certainly not to suit the convenience of an incumbent prime minister and the whims of two potential successors and Tory party members. But with the country already in the eye of a cost of living storm, decisions cannot be put on hold until a change on September 5, leaving poor families writhing in the wind.

The energy cap must be suspended before August 26, when an increase of around 80% in our energy bills should be announced. Department for Work and Pensions computers, which adjust Universal Credit and legacy benefits, need to be reprogrammed in the coming days if they are to help everyone in need when prices rise on October 1. Voluntary reductions in energy consumption – good for our green agenda – should, as has happened in Germany and France, be agreed now when the weather is good if we are to avoid rationing later when the weather turns nice. spoiled. And windfall profits and bonuses need to be taxed properly now before the money flees the country.

There are two big lessons I learned from the onset of the last major economic crisis in 2008: never be behind the curve but be ahead of events; and get to the root of the problem. And it is not tax cuts or, for now, spiraling wage and price inflation that are the most urgent priorities for action, but tackling soaring fuel prices and food: the cause of half of our current inflation.

It is therefore indeed urgent that the candidates for the post of Prime Minister – and the current Prime Minister and Chancellor – come together to take not one or two but several urgent decisions: to suspend and fundamentally reform the price cap of energy ; agree October payments for those who cannot afford to increase their heating; move towards alternative supplies abroad and open appropriate storage facilities in the country; agree to voluntary energy reductions; and to help pay for these measures with a watertight windfall tax on energy companies and a tax on high levels of City bonuses. Because if we could remove the possibility of avoiding or refusing, as we did when imposing the windfall tax on privatized public services in 1997 and the levy on bankers’ bonuses in 2009, we could lift not just £5 billion, but up to £15 billion. That would be enough, for example, to give nearly 8 million low-income families just under £2,000 each.

All of these measures should be based on a clear set of principles: that the right to warm housing is a human right; that we should do the most for those who have the least; and that no energy retailer should be allowed to profit further from the crisis.

Moreover, British ministers – and no one has yet understood this – should also lead the way, as we did in 2009, by demanding coordinated international action with an emergency G20 in early September to deal with emergencies energy, food, inflationary and debt. . These are global problems that can only be fully solved through globally coordinated solutions.

Cornwall Insight’s Tuesday forecast of an average annual energy price of £4,266 by January is remarkable. This means, as immediate analysis by Jonathan Bradshaw and Antonia Keung shows, that more than half of UK households, 54%, will be fuel poor by October and two-thirds, 66%, by January. A staggering six million households will be forced to pay an unprecedented 25% of their income in fuel costs and 4.4 million will be subjected to a virtually unaffordable 30%.

So, instead of allowing Ofgem to announce an increase on a scale that will send shockwaves through every household, the government should suspend any further increase in the cap; assess the real costs of energy supplies sold to consumers by large companies; and, after reviewing profit margins and considering how to make fixed charges and social tariffs more progressive, negotiate separate enterprise agreements to keep prices low. They should work with companies to reduce their consumption, as is the case in France and Spain, which have imposed their own caps on energy prices, dictated more by what people can afford than by the current wholesale gas price in the market.

And if companies cannot meet these new requirements, all the options we used with banks in 2009 should be considered: secured lending, equity financing and, if that fails, as a last resort, operating their services public sector essentials until the crisis is over.

With one of our main suppliers, Norway, looking to retain its own gas for domestic use and France encountering problems with its nuclear reactors, we are already running out of time to negotiate new agreements with other international suppliers. . And we are already running out of extra capacity from Qatar, which has gone to mainland Europe. Over time, we can and must increase national production and agree on a home isolation program with the same urgency as our vaccination program.

It is true that Britain’s slow growth for a decade, caused by low investment, has left us vulnerable to skills shortages and supply-side bottlenecks and therefore higher inflation than our competitors. But most of the current rise in inflation has been generated by energy and food prices brought about by the war in Ukraine and the consequent removal of the independence of the Bank of England. is only an exercise in denying responsibility, as is the direct criticism of the Treasury which, in my opinion, will be inspired by ministers.

It is the government that sets the inflation target and appoints the Bank’s key decision-makers. And it is the government’s duty in times of crisis to send the Bank an open letter telling it to chart a clear course over the next few years to return to stable prices. Based on an agreed inflation path back to 2%, we should consider agreeing annual wage deals – starting with a flat rate of between £2 and £3,000 this year – so that working families especially those with the lowest incomes, can pay their energy bills without being pushed into poverty.

The truth is that without a plan, the government swings from crisis to crisis, failing to respond to the anxieties of families who see nothing more than pain now and pain later. But there is a way to move from today’s pain to tomorrow’s gain, not only through the immediate relief that I am offering, but in a clear strategy to move us from the 1.4% annual growth that Conservatives achieved a trend growth rate of 2.5%. It is the only way to permanently end the cost of living crisis that British families have had to endure during a decade of austerity.

No one can be safe when millions feel unsafe and no one can be satisfied when there is so much discontent. Churchill once said that those who build the present on the image of the past will utterly fail to meet the challenges of the future. Only bold and decisive actions starting this week will save people from hardship and bring our fractured country together.

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