The New Year has had an inauspicious start. At 7 AM on 3 January 2024, the six-day-long Junior Doctors’ strike in England, the longest-ever in the history of the NHS, began during a peak period of emergency activity in the hospital sector. An underlying malaise in the healthcare sector, currently extending to poor industrial relations within other sectors, is only symptomatic of a nation-wide state of economic ill-health that is proving detrimental to the well-being of so many residents of the country.
Economists and others in the know are predicting a modest growth in GDP of between 0.4 and 0.7 per cent, falling headline inflation, an increase in real (inflation-adjusted) wages, interest rate cuts, and the avoidance of an economic recession in the UK in 2024. Rather than dwell further on these macroeconomic indicators, it seems more pertinent in an election year to reflect on those aspects of the economy that most directly impact on the daily lives of the people.
The effects of the economic downturn are most noticeable on the streets of England’s towns and cities and in its villages. Shops, banks, post offices, pubs, and restaurants have continued to close, while local councils have cut back on libraries, leisure centres, and swimming pools. Many independent shops and big-name retailers have ceased trade. Notable casualties of 2023 include all of budget homeware chain Wilko’s four hundred stores, and some three hundred outlets of beauty and pharmacy chain Boots. Banks and building societies have divested themselves of branches, creating banking deserts in some areas, while providing alternatives in the form of banking hubs, pods, and pop-up services, as well as Post Office counters, in other more fortunate locations. The digitally excluded have been left behind, just as increasing numbers of customers opt for online services and mobile banks in an increasingly cashless society. Pubs and restaurants have fallen victim to high rents, business rates, energy bills, food and alcohol prices, interest rates on loans, in addition to staffing shortages. According to the commercial real estate analyst Altus Group’s pub tracker, 383 pubs closed across England and Wales between 1 January and 30 June 2023, compared to 386 the previous year.
England’s economy is characterised by privatised essential services, including energy (electricity, gas) and water-not to mention trains, local buses, and postal services-all to an extent greater than in almost all OECD countries. Weak regulation of privatised entities has denied a fair deal to consumers. Water supply is an example of a privately-run monopoly, with no competitors, being provided by just the one pipe network. Standards of drinking water may have improved, but rising household water and sewerage bills, continuing water losses from unplugged leaks, and raw sewage flooding of rivers and seas have dented consumer confidence in, and approval of, England’s nine regional water companies. Meanwhile, these companies have channelled their post-tax profits into shareholder dividends, while resorting to debt to fund investment in infrastructure. Privatised energy suppliers have driven up gas and electricity prices in response to energy insecurity from inadequate domestic production and disrupted supply chains, creating fuel poverty. Energy price caps should, at best, only be considered a temporary and reactive measure to deal with the problem. Privatisation of public transport has not fared well, either. Trains are often late, crowded, expensive to travel, and disrupted by aging infrastructure, while services operated by rail franchises are subject to frequent industrial actions and strikes
For individual households, rising prices of food and non-alcoholic beverages have been a major contributor to the cost-of-living crisis. Although food-price inflation fell in December 2023 to 6.7 per cent, down from a peak of 19.2 per cent in March 2023, costs may rise again in 2024 as new border checks for EU imports are implemented. Low-income households have had to resort to food banks, unable to pay for all their domestic needs with wages that have failed to keep up with inflation.
Then there is a crisis in housing. Failure to keep pace with the growing demand for new homes over several decades has led to a shortage of affordable housing, unfair competition in the housing market, high costs of home purchase, high charges for privately rented properties, and increased homelessness.
Across the board, consumers in England have also become victims of poor customer service, which in turn lowers efficiency and productivity as time and effort are diverted away from productive activity to make amends for poor goods and services. Helplines have become difficult to access and navigate, handlers of consumer complaints often lack the relevant skills, and automated systems and impersonal chatbots are in the ascendance.
We need not dwell further on the long-term impacts of the de-industrialisation of England, a shrinking manufacturing output, and a widening skills gap, so far only partly compensated for by the growth of the service sector and of knowledge-based industries. There can be little doubt, however, that whichever party wins the 2024 UK General Elections, citizens will expect radical action, possibly including major structural reforms of the economy and meaningful changes to the tax regime, rather than cleverly worded, but poorly considered, rhetoric that promises much but frequently fails to deliver.
Ashis Banerjee