Is Andy Burnham plotting to base his premiership around a policy of ‘cost of living populism’? That is what is being reported following the publication yesterday of a poll by Persuasion UK – and part-funded by the left-wing Global Fund for a New Economy – which claimed that Labour could win the next election on the back of a programme of measures to target the cost of living.
Carry on as it is going, claims the poll, and Labour would be reduced to 19 per cent of the vote and 95 seats in the next general election. Introduce a package of cost of living measures, on the other hand, and it could win 34 per cent of the vote – exactly what it won in 2024 but this time translating to a lower majority of 66 seats. Persuasion UK says it has tested a variety of cost-of-living policies on 19,000 voters, with the most popular policies being a £1 cap on bus fares, tax cuts on food and drink, renationalisation of water companies, minimum pay and conditions in the retail and care sectors, student loan reforms, rent control and forcing energy companies to charge a lower rate for ‘essential’ energy use.
‘Cost of living populism’ is just an attempt to rebrand Labour’s traditional weakness
It shouldn’t be surprising that these policies are superficially popular with the public. Any politician who offers free beer will be popular in some quarters, at least for a while, until the bill comes in. And there lies the rather obvious snag. Persuasion UK doesn’t seem to have done much to ensure that these policies were put in their proper context: that they have a cost, and that might have a serious impact on our already-crumbling public finances.
You want to subsidise energy bills while cutting some taxes at the same time? If that sounds familiar, that is because it is exactly what got Liz Truss into trouble. Many people choose to remember her disastrous premiership in terms of the abolition of the 45 pence tax rate, but the far more expensive measure – and far more damaging to the confidence of bond markets – was her Energy Price Guarantee, capping the bills of everyone in the country during a period of dramatic inflation.
Moreover, not all of the measures floated in Persuasion UK’s poll are guaranteed to reduce living costs in any case. Many on the Left might suppose that renationalising water companies will help reduce bills, but that is likely to be a forlorn hope.
Tempting as it might be to imagine that you would be able to subtract the profit margins of water companies from household bills, there could be a price to pay in terms of lower efficiency and – to judge by what has been happening elsewhere in the public sector – hefty pay rises for water engineers, customer care staff and so on. Moreover, taxpayers would be exposed to paying interest on the debt required to buy out water companies’ shareholders. If the extra debt spooked the bond markets and drove up gilt yields, the cost could be enormous, given that we are already paying over £100 billion on debt interest.
As for rent controls on private housing, many might assume there would be no cost to tenants, with landlords absorbing all of it themselves. In practice it would lead to yet more landlords withdrawing from the market and an even tighter supply of properties. The experience of rent controls has been negative almost everywhere they have been tried; anyone who thinks Britain would be different is deluding themselves. Bus fare caps, student loan reforms – all have to be paid for, and there is little point in any political party promising handouts without explaining where the money is going to come from, especially in the current fiscal conditions.
Ultimately, voters are not stupid. ‘Cost of living populism’ is just an attempt to rebrand Labour’s traditional weakness: fiscal irresponsibility, followed by steep rises in inflation and interest rates. It might please respondents to an opinion poll now; it won’t once its consequences become clear.
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