The gap between the Conservative leadership contest and the crisis facing the country grows more grotesque with each passing week. Liz Truss and Rishi Sunak, the two candidates to be Britain’s next prime minister, are competing over who can offer the most appealing package of tax cuts and deregulation to the Conservative membership who will choose a leader on behalf of the country. Meanwhile, inflation has risen to double figures, energy bills are soaring, raw sewage is washing up on beaches, and hospitals are being instructed to prepare public health campaigns to encourage people to minimise A&E use over winter.
Both candidates have to some degree made tax cuts central to their pitch to run the country. Sunak has pledged to cut taxes by about £23bn a year over the next decade. Truss, who looks likely to win the contest, has gone much further, pledging tax cuts she claims will cost £38bn annually, but which economists believe could actually cost more than £50bn a year. She claims this will promote growth, but these kinds of tax cuts will do nothing to address the real reasons for Britain’s dire productivity growth – a lack of investment in infrastructure, skills and other forms of capital – while significantly reducing the resources available for public services at a time when inflation is eroding the real value of budgets in hospitals, schools and care homes.
Most of the conversation about the cost of living crisis has, understandably, been framed through the lens of household budgets. But it will have just as damaging an impact on Britain’s public services. The NHS has been left scarred by a decade of underfunding, by staffing shortages and by the pandemic. People are enduring intolerable waits for treatment; ambulance response times are getting worse; and hospitals and GP surgeries are having to manage with significant staff vacancy rates. Inflationary pressures, including higher wage bills and energy costs, are predicted to cost the NHS billions this year.
The NHS Confederation last week took the unusual step of writing to the chancellor, Nadhim Zahawi, to warn him that the country faces a “humanitarian crisis” unless the government does more to help people with energy bills, highlighting that growing levels of fuel poverty will put added pressure on the NHS as people increasingly skip meals and turn the heating off to save money.
The situation is no better in schools. Headteachers are having to fund much-needed wage rises and meet increased energy costs from existing budgets. Some schools are reportedly looking at reducing the time children spend in school in order to save money, an unacceptable state of affairs in terms of the impact on children’s education after months of home learning during the pandemic and the cost of additional childcare for working parents.
Rising wage and energy bills are already having a huge impact in childcare and adult social care too. As we report today, the energy bills of some care homes have more than quintupled this year and the Early Years Alliance warned last week that some nurseries are at risk of closure because of staff and heating costs. Across both sectors, the government does not provide sufficient funding for publicly funded places; charitable and private providers have sought to close the gap by cross-subsidising them from private fees, but this will put huge pressure on parents and relatives who are already struggling to afford fees.
Adult social care, in particular, is facing staff shortages as a result of Brexit. There is a risk that growing numbers of older people and adults with disabilities are left unable to source the care they need because care providers go out of business and that parents will not be able to find the childcare places that enable them to go to work. Children’s centres, libraries, museums and playgrounds, already severely affected by a decade of public spending cuts as a result of the financial crisis, will be further squeezed.
As inflation continues to rise, and the economy is predicted to shrink next year, this is the time for the state to lean in, not out. The country needs public investment funded by borrowing to protect households from eye-watering increases in energy and food prices and to shield the parts of the state people will need to rely on more than ever from the corrosive impact of inflation. It is nothing short of madness to pledge a huge programme of tax cuts in this economic climate. It will lead to rising inequality, untold hardship and a significant and further scaling back in the quality of Britain’s education and health services.
Truss is being thoroughly dishonest when she holds up tax cuts as the solution to the country’s economic woes, claiming they will boost growth while failing to come clean about the consequences. But is it any wonder? Both Sunak and Truss are products of a Conservative party that saw no problem in pursuing a costly and painful Brexit while simply pretending away the consequences for the economy and for Northern Ireland. Integrity has become devalued. Neither a Sunak nor a Truss premiership can stop what Boris Johnson started – it will take a general election to do that.