I was glad to see how the government responded to the cost of living crisis. This is a crisis that has threatened a dramatic drop in the living standards of people on fixed and low incomes, including pensioners who depend on savings.
No one under the age of 40 has ever seen double-digit inflation. No business leader today has had to navigate inflation at this level. The last time inflation was so high, he had just started in the Treasury as a junior economist.
Prior to the chancellor’s statement this week, he had argued that the government should respond to the cost-of-living crisis with the same ambition it had tackled the pandemic: on a scale and pace. Given the urgency and gravity of the situation, an extraordinary tax on energy companies — although not perfect — is a reasonable and valid measure to help pay for the necessary support.
So last week’s £ 15bn package is to be welcomed. Put the money in the hands of those who need it most: the ones that would cost them the most to pay for rising energy and food costs, especially considering Ofgem’s estimate that energy bills should increase by 800 additional pounds in October.
Taken together, the projected increases in April and October energy prices would equate to the equivalent of 10 pence of the basic tax rate for someone with an average salary.
According to the Resolution Foundation, the average earnings from last week’s announcement are £ 823 for the poorest fifth of households, compared to £ 500 for the average fifth of households and £ 296 a the wealthiest.
The increase in revenue will help many retailers, including the 78,000 partners who work for John Lewis and Waitrose (we call ourselves partners because we own the business and have no external shareholders).
As a company, we have doubled the money we make available to partners who are in a situation of economic vulnerability. Since April, we have been paying the actual voluntary voluntary salary to our partners in the UK. We have a long-term partnership with the Fareshare Food Poverty Charity.
Since 2017, we have given 10 million meals to people in need. We also offer leftover food for free to our partners. All Waitrose stores receive customer donations for local food banks, primarily through our partnership with Trussell Trust. We have donated £ 1 million through our shops to charities and organizations to help children suffering from poverty during the school holidays of 2021. We will do it again this year to make sure they have a healthier summer.
The Government package will also help our customers, who are not immune to the cost of living crisis. We have already seen a drop in grocery spending in the UK with food sales down 1.8% in the three months to April, before the rise in food prices began. energy, and people spend less on large items such as furniture, electricity and other household items.
As a collaboration, like other companies, we face strong cost pressures due to higher energy, raw material and transportation bills and are working hard to protect our customers from rising prices. But they cannot be completely avoided.
After the financial crisis of 2008, we saw a flight to trusted brands like ours. We are providing more quality products than our customers expect at prices they may not.
Essential Waitrose is the largest value range in any supermarket and does not compromise on quality. All of our pork, including Waitrose’s essential sausages and bacon, is British and comes from animals raised to industry-leading standards. We are also doing our best to stand by our farmers in this difficult time. We recently announced a £ 16 million financial support package for our pig producers to help them overcome the crisis.
Our Anyday range in John Lewis is proving successful among customers who want to combine clothing and home furnishings at the lower end of the price scale.
But there is no denying that after two years of Covid, these unprecedented inflationary winds will make it a difficult year for retail and business in general.
There has been much debate since Thursday over whether the package – most of which will be paid for with higher indebtedness along with the extraordinary income tax – will fuel inflation. For my money, I think the risk is low.
What the package does is help address what, in my view, is the really big risk to the economy and our collective prosperity: low or no growth. This is the situation that has plagued Japan for years. Recent indicators of consumer confidence and business investment intentions have shown that both have weakened rapidly.
By putting more money in the hands of those who need it most, the government is also helping to give much-needed boost to confidence that should support consumer spending and business investment.
The cost of living crisis is unprecedented and demands unprecedented action.
Dame Sharon White is president of the John Lewis Partnership