HEATING or eating? The grim choice is getting grimmer as Tesco chairman John Allan warns that food prices are on their way up.
An onslaught of price rises and attacks on income faces working-class families.
Inflation causes further inflation, with the Tesco chief pointing out that the main driver of higher food prices will be the rise in energy costs.
Tesco is a profitable firm. It posted operating profits of £1.3 billion last year and predicted a further sharp increase to £2.5-2.6bn this year; it launched a scheme in October to buy back £500 million of its own shares by this autumn, a sure sign of a company with cash on its hands.
It could but it won’t absorb energy price rises at a cost to its profits rather than to its customers. Why should it? It’s a privately owned firm which exists to turn a profit, not to provide food.
The same logic applies to the energy firms themselves. These environmentally destructive behemoths are doing extremely nicely from the soaring cost of energy.
Shell announced this month a massive share buyback of its own and a bigger first-quarter dividend to shareholders as it recorded a 14-fold rise in profits. Exxon-Mobil and Chevron are celebrating similar bonanzas.
But Shell chief Ben van Beurden was quick to counsel against a windfall tax on profits, while asking for our sympathy for the “difficult” situation the company, like “many households,” found itself in because “we much prefer a stable and steady market development rather than the one that we are experiencing at the moment, much like a roller coaster.”
A sudden increase in profits is supposedly as alarming and uncomfortable as a sudden increase in costs.
Of course Shell is resisting a windfall tax: again, it exists to turn a profit. The value of public ownership of energy distribution is abundantly clear since it allows states to protect the public from “rollercoaster” fluctuations like that described by van Beurden. France has done exactly that, limiting energy price rises to 4 per cent and instructing state-owned firm EDF to take the hit.
Given we do not have a political elite prepared to control prices it is more important than ever that the labour movement rejects that elite’s efforts to control wages.
Boris Johnson seeks to distance himself from Bank of England governor Andrew Bailey’s call for pay “restraint,” saying he wants wages to go up.
But his government is imposing below-inflation offers across the public sector and using a new assault on social security (“Way to Work”) to reduce pressure for higher pay in the private sector. The government is pursuing a strategy to force the value of wages down.
That could mean a long-term drop in living standards. Tesco’s chief tried to sweeten the pill of food price rises by noting that spending on food as a proportion of total household spending is just half what it was a century ago. Trying to console us with the fact that people had it worse in the 1920s suggests the decline in quality of life our rulers are prepared to impose on us is drastic.
But it makes sense.
The political crisis that struck Britain through the Brexit and Corbyn years was created by the growing realisation that the system as it stands cannot deliver for ordinary people and without a radical change of direction we were looking at a poorer, harder future.
Both government and opposition believe they have seen off this crisis of confidence in the system. If we want to avoid that future, we have to prove them wrong.
The first priority is to resist the huge corporate and state downward pressure on wages. Britain needs a pay rise. And workers taking action for above-inflation rises in every sector need public support and practical solidarity.
