Belfast Telegraph

Friday 29 August 2014

Viewpoint: PM exposed as a man out of touch

Increases in household costs have become the norm in recent months, but no one could have expected a 28% hike in the price of gas. Phoenix will have its work cut out to convince customers that a rise of nearly one-third is justified, even with oil and other energy prices continuing to escalate.

People will be asking if more gas could not have been bought in advance, to lessen the blow or spread it over a longer period.

It is little consolation that Phoenix were able to peg prices over the past year — while home heating oil increased by 30% — now that gas is heading in the same direction.

In 2006, it is bitterly remembered, Phoenix raised its tariff by 52% in a year.

The utility regulator can only scrutinise the company's proposals but, provided they are a straight "pass-through" of international prices, he can do nothing to stop them.

An increase has been deferred since November last, the normal time for a price review, and at least the winter weather is over. Next winter, the full effect will be felt. Electricity is due for another increase, on top of last autumn's 3.9% — which followed a 3% decrease in the spring.

The cumulative effect of the rising cost of gas, electricity, petrol, diesel, food, travel, rates and, presumably, water, will stretch every household budget.

Even those who have escaped the worst of the credit crunch, with no mortgage to pay, will be complaining — and for those with big debts a drop in living standards is unavoidable. No one, anywhere, will avoid some pain and the poorest suffer most.

Governments are able to argue that the problem is beyond their control, because the western world has been living far beyond its means and the east, where the future lies, is catching up fast.

As the economies of China and India grow, they are using up more the world's resources, in terms of materials, energy and food, pushing up prices for everyone.

In the midst of all this domestic woe, Gordon Brown is rightly being castigated for removing the 10p income tax rate, adversely affecting the lowest earners, in order to pay for the 2p reduction, to 20p, in the standard rate.

Suddenly those who had cheered the cut, at a time of increased government expenditure, realise how badly it is playing with Labour's core supporters and are demanding a U-turn.

Once again, the Prime Minister is exposed as someone out of touch with popular feeling and with severely defective foresight, in view of the impending local council elections.

Labour will surely pay for its poor management of the public finances, leaving the ordinary taxpayers, in one way or another, to pick up the bill for a reversal of taxation policy and shoring up the banking system.

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