PERSHORE’s MP Harriett Baldwin writes for the Observer
CONSERVATIVE MPs have selected a new leader and we have a new Prime Minister. I offer my heartfelt congratulations to Rishi Sunak. The first task that he will need to focus on will be stabilising the economy and getting energy prices under control. The Bank of England will need to raise rates more to tackle inflation.
This is an issue that I have been focussing on for several years. I have repeatedly questioned the Governor of the Bank of England and his team, during his sessions in front of the Treasury Select Committee, about the risk of inflation from loose fiscal policy and very low interest rates, This was long before Putin invaded Ukraine. The Bank of England is tasked with keeping inflation within the Government’s two per cent target and even without the shock of higher oil and gas prices, inflation has gained a grip.
In May, during a meeting of the Treasury Select Committee, I directly asked the Governor what he was doing to stay in line with the two per cent inflation target, notwithstanding the extraordinary event of pandemic and war. There were some tell-tale signs that the risks to inflation were to the upside. In September 2020, we saw were businesses, such as hairdressers and theatres, putting up their prices quite significantly. And a year before that, in 2021, I similarly asked the Governor about the experience of people in my constituency of timber market and cement market prices rises, which were into almost three digits at that point. I have been on the record as saying that there were some significant inflationary risks in the economy, which I am not happy to see come true.
I support the Government’s action for my constituents on energy bills, but it does leave the country exposed because there’s more borrowing. At a time when the job market is very tight, other tax cuts create more inflationary pressure.
We have Jeremy Hunt in the crucial role of Chancellor to deliver the Government’s new economic strategy plan to bring inflation under control. The reality is that people’s living costs are already spiralling, and the threat of higher mortgage costs is a cause for concern. Inflation is an attack on everyone, especially the poorest. We must all do our bit to get it back into its target range.
