Delay National Insurance hike or families will be hit hard - COMMENT
THERE is little that the government could - or should - do to control inflation (that is the Bank of England's job), or to set individual prices (that should be left to the markets). But there is more that could be done to protect the most vulnerable households from the cost of living crisis.
People protest against the cost of living crisis in London
It would make more sense to provide an additional, temporary top-up to benefits for those on low incomes, including pensioners. The government has already gone a long way down this route, by extending eligibility for the Warm Home Discount, but could go further, by increasing the amounts paid to each household.
Policies that lower energy bills for everyone (like those in France) are a distant second best. They are relatively expensive, and people that can afford to pay higher prices should be expected to do so.
Nonetheless, the Chancellor could knock another £200 off household bills by temporarily scrapping VAT on domestic energy and by cutting some of the environmental and social charges.
The Treasury is understandably reluctant to do this, mainly because it would cost about £5 billion. Cutting VAT could also be politically embarrassing, both because it has already been proposed by Labour, and because it would be legally difficult to apply the cut in Northern Ireland under the terms of the Brexit agreement with the EU.
However, the Chancellor has already cut VAT on the hospitality sector, and reducing energy bills is surely an even better cause.
In the meantime, the government should delay the increase in National Insurance for at least a year. The rises in incomes and prices mean that families and businesses are already paying more tax than expected, and government borrowing is lower than forecast. There is no good reason to add even more to their burden now.
• Julian Jessop, economics fellow, at the Institute of Economic Affairs