AS the cost-of-living crisis intensifies dramatically, with even worse to come, it is no surprise at all to see the emotions of trade unions and their members running high.

This is a dismal crisis, the gravity of which seems to have utterly escaped a Conservative Government which has shown itself to be astoundingly out of touch with the everyday realities for households.

One of the few predictable things in recent months, it seems, has been the annual inflation figures consistently coming in even worse than economists had expected.

The Office for National Statistics revealed this week that annual UK consumer prices index inflation had surged from 5.5 per cent in January to 6.2% in February – its highest in 30 years. The median forecast in a poll of economists by Reuters was for a February inflation reading of 5.9%. Annual inflation on the old, all-items retail prices index measure rose from 7.8% in January to 8.2% in February.

As one nasty surprise has followed another on the inflation front, projections of the eventual peak for annual CPI inflation have continued to rise and rise.

The Bank of England, announcing a quarter-point rise in UK base rates to 0.75% last week, said of the CPI measure: “Inflation is expected to increase further in coming months, to around 8% in 2022 Q2, and perhaps even higher later this year.”

No one should be in any doubt – these are eye-watering levels.

And the deterioration in the situation has been dramatic. Last November, the Bank had declared that annual CPI inflation “is now expected to peak at around 5% in April 2022, materially higher than expected in the August report”.

The UK Government, however, appears astonishingly unable to comprehend the impact of rampant inflation on household budgets, assuming it cares about this.

Its apparent lack of awareness and concern, and its failure to take proper action to mitigate the crisis will crucially, utterly lamentably, exacerbate food and fuel poverty. The Johnson administration’s shortcomings on this front will also in a more general sense weigh very heavily indeed on the economy, as even those households which can afford the surge in the price of necessities find themselves with much less discretionary income.

James Lynch, fixed income manager at Aegon Asset Management, declared the latest annual inflation rate of 6.2% “is more of a reflection of the Covid reopening story”. He noted a “broad-based increase in prices of everything from households goods [and] food to clothing” as he warned of worse to come as the energy price effects fed through.

Prices for food and non-alcoholic beverages in February were up by 5.1% on a year earlier. Clothing and footwear prices were last month up by nearly 9% on February 2021. And household goods prices in February were nearly 10% higher than a year earlier.

Mr Lynch said of the February inflation figure: “This is about supply-chain issues and increasing demand, along with what was actually a modest rise in energy prices. By mid-February wholesale Brent oil was $90 a barrel, up from around an average of $80 between October and January.”

Brent crude futures were yesterday afternoon trading around $121.50 a barrel.

Mr Lynch noted the latest upward move in the oil price “has not yet been reflected in official inflation measures”.

He added: “Along with the Ofgem rise in household energy bills it means unfortunately we are now only at the start of a very painful period for price rises in the UK which may well last all year and into 2023.”

The UK Government’s response to the household energy bills crisis has been woefully inadequate.

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Chancellor Rishi Sunak announced an extra £500 million for the “household support fund” in his Spring Statement on Wednesday, with the Government noting this “doubles its total amount to £1 billion to support the most vulnerable families with their essentials over the coming months”. However, this will do little to fill the huge gulf between the £693 per year or 54% hike in the energy price cap for a typical dual fuel customer and the relatively modest support announced by the Government in February. This support amounts to £150 for households qualifying for the council tax reduction measure. The £200 “discount” element of the support package, which has to be paid back over five years, is a loan and should not be counted as assistance. And the extension of eligibility for the £140 a year warm home discount (which is rising to £150 for next winter) is no big deal.

Value-added tax relief for those households which can afford expensive energy-efficiency improvements – announced at some length in the Spring Statement with Mr Sunak trying to claim a Brexit benefit in this context – is of absolutely no relevance to people simply struggling to pay fuel bills.

Crucially, Mr Sunak is continuing with his plan to freeze income tax thresholds for four years, which will result in a hugely increased burden on households given dizzying inflation and consequently significant nominal wage rises. And Scottish Chambers of Commerce was among those to express disappointment this week that Mr Sunak is proceeding with his plan to hike national insurance rates for employees and employers. The Chancellor made a big deal of taking the edge off this move by raising the annual threshold below which people do not need to pay national insurance by £3,000, but the employee and employer rates are nevertheless going up from next month (something curiously dressed up as a “health and social care levy”).

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The 5p a litre cut in fuel duty, while better than nothing, did not seem like anything to be excited about with petrol prices in many places having risen to around 170p a litre before this announcement.

The Scottish Trades Union Congress on Tuesday declared the cost-of-living crisis was “morally repugnant”, as it laid out the contents of a letter it had written to the Chancellor urging him to scrap his plans to hike national insurance rates.

STUC general secretary Roz Foyer said: “As our letter makes clear, it would be unconscionable – if not morally repugnant – that working families will see their national insurance go up whilst those multi-billion-pound profiteers at the top go unchecked.

“Workers did not cause the cost-of-living crisis – government inaction did. Our most vulnerable should not foot the bill.”

Amid the cost-of-living crisis, it is not surprising to see industrial disputes flaring up over pay.

Trade union Unite this week declared bus operation First Glasgow was offering a group of workers including bus cleaners and shunters a 5.5% pay rise over two years and described this as an “absolute insult”. It added that around 60 workers would be “involved in an imminent industrial action ballot in a dispute over pay”.

Last Friday, the GMB trade union declared its members at GlaxoSmithKline’s Barnard Castle site in north-east England would “not swallow [a] real-terms pay cut as GSK CEO Emma Walmsley enjoys [a] 17% pay rise to £8.2 million”.

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The GMB added: “Workers at the company’s Barnard Castle site…have overwhelmingly turned down a below-inflation pay offer of 4%.”

Early last year, 4% might have seemed like a good offer. Annual UK CPI inflation was only 0.4% in February last year.

However, things have changed dramatically since.

The GMB is balloting hundreds of members at GSK’s Barnard Castle site for strike action.

A 4% pay rise does, at the current annual inflation rate, amount to a substantial real-terms cut in pay. And that is before things get even worse.

Unite announced yesterday that more than 50 of its members working for Veolia Water across Edinburgh and the Lothians were set to take strike action in a dispute over pay. It said the strike action, involving plant operatives, and electrical maintenance, mechanical, and administrative staff, was supported “overwhelmingly” by 94% of Unite members in a ballot turnout of 83%.

Unite added: “The Veolia workers are demanding a significantly improved pay offer from the company. With the more realistic cost-of-living RPI [inflation rate] currently running at 8.2%, Veolia’s offer of 2.6% for this year is a pay cut.”

Pay negotiations for companies across the economy and for public sector employers look likely only to become increasingly problematic, as inflation continues to climb.

Emotions are running high, and the strong words from trade unions are perfectly understandable given the massive inflationary pressures facing households. Some businesses will be struggling to fund pay rises anywhere close to the current inflation rate (albeit many will be able to afford it just fine).

It looks set to be a very testing time for industrial relations. Amid the strife, it is difficult to escape the conclusion that ignorance is bliss for some in the Johnson administration who appear dismally unable to grasp, or care about, the true meaning of what is going on for household finances.

However, the UK Government has a duty to households and businesses to wake up to the scale of the crisis, fast, and to take proper action to mitigate the woe.