Gov't support

sienew

Dolor said:

Handouts to help people pay bills will do nothing for inflation. This is why other countries are electing to cap prices: albeit, at considerable cost. If the Cap is at ‘£X’ today and ‘£X’ in 12 months time, a great chunk of inflation goes away. Trust me, the pain of high inflation is not something you want to live through. My family and I have been there and I was in a relatively well paid and secure job. Like many we ended up in negative equity for over 5 years with mortgages at times in excess of 10%. A large number of people lost their homes when they were re-possessed.

Not really. Because the price paid for the energy is still the same, it's just funded by debt.

If anything people spending all their money on energy this winter would be better for inflation than a buy-now-pay-later scheme.

MattMattMattUK

The_Green_Hornet said:

As the government based their cost of living support on the original Ofgem prediction of £2800 back in May should we expect a further £749 now that the actual figure is £3,549?

I know it a simplistic calculation but then politicians don't tend to do sophisticated.

No, expect nothing beyond the 5% VAT being removed.

sienew

MattMattMattUK said:

The_Green_Hornet said:

As the government based their cost of living support on the original Ofgem prediction of £2800 back in May should we expect a further £749 now that the actual figure is £3,549?

I know it a simplistic calculation but then politicians don't tend to do sophisticated.

No, expect nothing beyond the 5% VAT being removed.

Liz Truss seemed to suggest in the Daily Mail today that more support would be coming and she was waiting for treasury guidance once she wins on the best support package to proceed with.

Tigsteroonie

More support would be coming?!!!

Some of us have yet to receive the support that is already promised - £400 over the winter on our energy bills, I've heard nothing from EDF as to when that starts and how it will be applied; £150 for our son via DLA - sometime towards the end of next month; £650 for ourselves via Tax Credits - sometime next month for the first half, goodness alone knows when the second half will be paid. In the meantime, our cost of living has gone up now.

GingerTim

Johnson has just been quoted as saying that government support is 'clearly now going to be augmented, increased by extra cash that the government is plainly going to be announcing in September'. No details, of course, since he'll be out on his backside shortly, and he has a history of saying anything to please anyone, never mind how unmoored from reality.

https://www.theguardian.com/business/live/2022/aug/26/energy-price-cap-ofgem-cost-of-living-royal-mail-strike-business-live

sienew

Tigsteroonie said:

More support would be coming?!!!

Some of us have yet to receive the support that is already promised - £400 over the winter on our energy bills, I've heard nothing from EDF as to when that starts and how it will be applied; £150 for our son via DLA - sometime towards the end of next month; £650 for ourselves via Tax Credits - sometime next month for the first half, goodness alone knows when the second half will be paid. In the meantime, our cost of living has gone up now.

The support is to fund the increase expected in October and your winter usage. The support hasn't been given yet as it shouldn't be needed/used/spent until the increase comes into effect.

brewerdave

GingerTim said:

Johnson has just been quoted as saying that government support is 'clearly now going to be augmented, increased by extra cash that the government is plainly going to be announcing in September'. No details, of course, since he'll be out on his backside shortly.

https://www.theguardian.com/business/live/2022/aug/26/energy-price-cap-ofgem-cost-of-living-royal-mail-strike-business-live

Don't forget that all these newly created Boris followers (Ministers) will have to be paid their golden goodbyes before Ms Truss hands the public anything !!

MattMattMattUK

[Deleted User] said:

With respect, people are looking at this problem in isolation. There is a cascade effect: higher energy prices lead to higher inflation; higher food prices; business failures, and high unemployment. The cost of Government goes up and unless taxes are increased, there is less money for public services.

I think that many of us are aware of the wider implications, that was perhaps the only merit of Labour's huge subsidy program, that it would in theory at least keep inflation down (but only properly if it was also applied to businesses as well as consumers). We are going into a recession/depression regardless, I am not sure it is possible to calculate the additional depth or length of that based on the impact of direct subsidy to energy prices.

Dolor said:

Trust me, it will not just be the old and vulnerable that will suffer if the Government fails to get inflation under control. For example, you will see millions of young working couples with children struggling to pay their bills. Homeowners ending up in negative equity and so on.

Inflation is bad for almost everyone, at least in the short term. Unfortunately I am not sure it is possible to get inflation under control in the short term, it looks like high inflation will be here for several years, the main factor that the government has power over (either taking direct control, or changing the BoEs mandate) is to stop the interest rate rises which are only going to make this all much worse.

[Deleted User] said:

Handouts to help people pay bills will do nothing for inflation. 

They will make it worse.

[Deleted User] said:

This is why other countries are electing to cap prices: albeit, at considerable cost. 

France only really did it because it is an election year and because it has the majority of it's electricity production from domestic nuclear so in theory there is limited increased input costs for the component from domestic nuclear. In the UK it would require subsidy from general taxation, that would be pointless, giving with one hand whilst taking away with another. 

[Deleted User] said:

If the Cap is at ‘£X’ today and ‘£X’ in 12 months time, a great chunk of inflation goes away. 

Kind of, however to really have an impact it would also need subsidy on business energy usage and it will still find it's way into the market via imported food and other goods.

[Deleted User] said:

Trust me, the pain of high inflation is not something you want to live through. My family and I have been there and I was in a relatively well paid and secure job. Like many we ended up in negative equity for over 5 years with mortgages at times in excess of 10%. A large number of people lost their homes when they were re-possessed.

If your earnings keep vaguely in touch with inflation and you have a mortgage and little savings then inflation is actually a bonus. Negative equity was not caused by inflation, but by the sky high interest rates tanking the housing market. The lesson from that recession is that interest rates should not rise much more than they already have, 2.5% as an absolute limit, unless the BoE wants to damage the economy in a way that will take several decades to recover from. 

MattMattMattUK

sienew said:

MattMattMattUK said:

The_Green_Hornet said:

As the government based their cost of living support on the original Ofgem prediction of £2800 back in May should we expect a further £749 now that the actual figure is £3,549?

I know it a simplistic calculation but then politicians don't tend to do sophisticated.

No, expect nothing beyond the 5% VAT being removed.

Liz Truss seemed to suggest in the Daily Mail today that more support would be coming and she was waiting for treasury guidance once she wins on the best support package to proceed with.

I will wait until I see the actual proposal, or even the proposal in a proper newspaper. 

savers_united

MattMattMattUK said:

The_Green_Hornet said:

As the government based their cost of living support on the original Ofgem prediction of £2800 back in May should we expect a further £749 now that the actual figure is £3,549?

I know it a simplistic calculation but then politicians don't tend to do sophisticated.

No, expect nothing beyond the 5% VAT being removed.

The difficulty with vat is that once removed it will be hard to bring back, and labour again can say they called for it just like the windfall tax and its another Gov't u-turn.

I think it will be £600 instead £400 for everyone and some extra support for those in lowest income brackets. Pensioners have already had some generous handouts so don't expect anymore for them over and above what has already been announced unless they receive pension credit.