Tuesday, 11 January 2011

Merry Christmas and an Expensive New Year

Quite a short one here, but thought with the backdrop of people complaining at tax rises it might be nice to put it all in perspective. No, I'm not planning on highlighting the plight of the poorer in far flung countries, it doesn't really soothe people. It's too far displaced, them and us, so one needs to present something closer, but worse. Actually it is not even someone else's plight in a slightly worse position I am trying to compare; no, instead I am comparing the causes of the belt tightening.

Now we know about the VAT rise, which I blogged about here, and the New Year increase in fuel duty which have been met with complaint. We know the VAT increase has added just over 2% to some items. The fuel duty perhaps another 1%. So fuel is the biggest riser at about 3%. We also have the general budget cuts which average out at about 5% per annum over the course of the Parliament. Now these numbers are quite small, but of course they must hurt a little and sometimes a lot. I shall not dispute this. I filled up my new grown-up family car yesterday and parted with nearly £100. I nearly cried. I suggested to the cashier that at least Dick Turpin wore a mask, but the blank expression informed me my rapier wit was lost on him. My experience will naturally be dwarved by some people's who are closer to the breadline and more dependent on newly dearer items. However, are these the real culprits behind the New Year's feeling of destitution?

I would say not. As, for example, the employees of the BBC who eat in the corporation's canteen found out these last couple of weeks, sellers all over the country have been hiking prices in the New Year. Perhaps to make up for the loss of profits on all those lovely Christmas sales prices, or just to regain equilibrium after the joyous and giving nature of the festive period, prices have taken a sharp rise. Perhaps they though nobody would notice because the holidays disrupted our thought processes. The BBC example is typical. The BBC canteen has increased prices by up to 25% on some items and on average 12.3%. Look around you, prices are soaring as people use the excuse of VAT or an increase in costs to mask massive price hikes...

O2 text message - up 20%
T Mobile text message - up 10%
Fitness First membership - up 25%
London Congestion Charge - up 25% (after a 60% rise a few years back)

Most of those were all nabbed from the Torygraph, but just check your bills for more examples - train fares (despite terrible service), energy bills, food prices, you name it. In particular it is the smaller items where this rounding up is more prevalent. One can quite easily add 2 or 4% to £1000. It's harder to do it to 10p, so screw it, make it 20%, what's 2p in total between friends? A bucketload when multiplied by the number of texts and users.

So, remember when you hear people complaining about a 2% VAT-induced rise or budget cuts, that that's not the full story; it's just the one that is easiest to score political points with, because it is the one the Government control. Next time you feel the need to lash out at the forces making you poorer, think perhaps of the energy giants increasing prices to boost bumper profits rather than a Government trying to repay someone else's debt to stop a nation going bankrupt.

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