- UK inflation higher than all major economies
- Truss the favorite to become the next Prime Minister
- The town of Runcorn shows the scale of the challenge
RUNCORN, England, September 2 (Reuters) – Britain’s Prime Minister-in-Waiting Liz Truss is taking inspiration from Margaret Thatcher, judging by her photo ops echoing famous images of the country’s first female prime minister.
If Truss becomes leader of the ruling party on Monday, as is widely expected, she will need all the courage and cunning of the Iron Lady as she enters a scene straight out of the 1980s: a recession impending industrial unrest and urban decay.
In a sign of the times, an area straddling the River Mersey near Liverpool that was once an industrial heartland now has a less illustrious claim to fame: families are seeking creditor protection there at the fastest pace in the country.
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South of the river in Runcorn, where business parks and logistics centers sit alongside shops and boarded up churches asking for donations for desperate families, ex-soldier Eddie Thompson is taken aback by what has become of his hometown.
Returning after 38 years in the military, Thompson quickly volunteered to run food banks amid the sight of so many people sliding into destitution, unable to cope with soaring food prices and poverty. energy, took him back to the bitter days of the 1980s.
“I think it’s shocking,” the 57-year-old told Reuters.
When Thatcher came to power in 1979, she inherited a stagnant economy, runaway inflation and waves of industrial unrest which she crushed in the following years, ushering in the free market policies that defined her legacy and persist today.
Rising through the party ranks, Truss was photographed in a tank, wearing a Russian hat in Red Square and sitting astride a Triumph motorbike, all looking like photos of Thatcher.
If Truss defeats former finance minister Rishi Sunak in an election to lead the ruling Conservative Party and becomes prime minister, she will face similar conflicts.
Soaring wholesale gas prices, driven by the war in Ukraine, are hitting countries across Europe, but Britain is particularly dependent on gas for electricity and heating, pushing its inflation rate above of all other major economies.
Growth has stalled, and workers weary from years of non-existent real wage growth – from train drivers to lawyers to nurses – are being spoiled by a fight for higher wages to offset 10% inflation.
During the election campaign, Truss said she would provide help but did not elaborate beyond saying she prefers tax cuts to “handouts”, while Sunak says the support should be more targeted.
‘THEY WILL BE PRAYED FOR’
The cost of the turbulence is evident in places like Runcorn, where ex-Private Thompson distributes emergency packages to six city food banks to help those who can’t make ends meet – many of whom work a full time job.
“I’ve seen people who haven’t eaten for days and the only reason they’ve crossed that line is because it’s starting to affect their dependents,” he said.
Runcorn Food Banks welcomed 3,295 people in 2017/18, but four years later that figure had risen to 5,881 – similar to the workforce once employed locally by Imperial Chemicals Industries (ICI), which dominated the region during the 20th century.
St Michaels and All Angels Church in Runcorn is urging its congregation to purchase an additional item from the weekly shop for donations – deodorants, shower gels, vintage products, baby food.
Bethesda Church offers tea and prayers to those collecting emergency food parcels. “Not everyone will accept the offer, but that’s okay. We’ll pray for them anyway after they leave,” he says on his website.
Food bank staff say many people arrive in tears. A hospital worker wore sunglasses to hide her eyes.
“She was working,” said Anne McPoland, chair of the food bank’s board. “But she was like, ‘I’m so ashamed, I don’t want anyone to see me.'”
Usually food bank visits drop in the summer as people spend less on energy, but this year demand has remained high.
The biggest threat to households now comes from soaring energy prices. Average annual bills are expected to jump 80% in October to 3,549 pounds ($4,130), before an expected rise to 6,000 pounds in 2023, decimating personal finances.
The Trussell Trust, which supports a national network of food banks, says it sees an increase in the number of applicants each time the price cap on energy bills increases. The scrapping of a weekly £20 increase in social benefits, introduced during the pandemic and scrapped last October, led to a similar jump.
The National Institute for Economic and Social Research think tank, meanwhile, estimates that one in five UK households will have no savings left by 2024.
Finance Minister Nadhim Zahawi has warned that people earning 45,000 pounds ($52,000) a year – well above the median of 31,285 pounds for full-time workers – could struggle to pay their bills.
REQUIRED BREATHING SPACE
Thompson’s efforts at Runcorn food banks are being replicated across Britain amid the biggest blow to livelihoods since records began in the 1950s, threatening both low and middle income families .
According to the Resolution Foundation think tank, the richest 10% of households in Britain are wealthier than those in many European countries, but not middle-income households.
They are 9% poorer than their counterparts in France and the fifth of the poorest households in Britain are now more than 20% worse off than their peers in France and Germany.
While millions of people in Britain have benefited from rising house and stock market prices, driven higher by rock-bottom interest rates, those without such assets are entering in recession with little financial protection.
This 15-year change in fortunes has also combined with a global financial crash, four UK elections, highly charged referendums on Scottish independence and the European Union and a global pandemic, to create a almost constant feeling of crisis.
In Runcorn, the downturn is likely to hit hard. Halton local authority, which includes both the port city and Widnes across the River Mersey, was already ranked Britain’s 13th most deprived in 2019.
In recent months, the council has seen an increase in demand for a program that provides breakfast in schools so children don’t go hungry. And the debts are growing.
Halton has the highest application rate in England and Wales for a new ‘breathing space’ scheme which offers debtors up to 60 days of creditor protection.
The two lawmakers representing Runcorn and neighboring areas in parliament say they are getting more and more messages from families and businesses who can no longer pay their bills.
“I’m getting more emails in all caps which is always a bad sign,” said Mike Amesbury of the opposition Labor Party.
“FRACTURES IN SOCIETY”
Derek Twigg, who represented Halton for Labor for 25 years, said the difference between now and the 1980s when he worked for the local council was the number of middle-income families who approached him to get help.
“I don’t remember, other than that period of the 80s, that there was such a traumatic period, starting with the pandemic,” he said. “Inflation is causing real financial hardship. It feels like these fractures in society are happening again.”
Halton’s ability to respond is limited by a 31 per cent cut to the borough council’s budget over the past decade, imposed as part of nationwide austerity measures following the fallout from the global financial crisis.
And more cuts are on the way, forcing greater reliance on charities. FareShare, which distributes surplus food from retailers and farmers, has distributed 40,000 meals in Halton so far this year.
The government has so far responded to the energy crisis with a £37bn package in May, which included a £400 credit for energy bills from October and a one-off £650 payment for 8 million low-income households.
Since then, energy costs have more than tripled.
The gap between people’s wages and their cost of living has already led to widespread industrial action across the country and Runcorn was hit by the fallout when bus strikes made it harder for people to access banks food.
Thompson said local businesses were extremely supportive, but he still felt the country was going back to the 1980s.
“From litter on the streets to strikes, to the unrest and suffering of people in food poverty and energy crisis: they cannot afford the cost of living,” he said.
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Reporting by Andy Bruce in Runcorn and Kate Holton in London; Written by Kate Holton; Editing by David Clarke
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