Ed Miliband fails to address the cause of rising living costs

Tinkering policies will do little for families struggling to make ends meet

Commenting on Ed Miliband’s speech at Labour Party Conference, Prof Philip Booth, Editorial Director at the Institute of Economic Affairs, said:

“Ed Miliband clearly does not understand the root cause of rising living costs. His speech set out an array of government interventions. It is precisely these kind of interventions which have seen the price of food, energy and housing reach such burdensome levels.

“His tinkering policies will do little for families struggling to make ends meet. Unfortunately the Labour Party has not recognised that the most effective way to reduce living costs and unleash economic growth is to reduce taxes and ease regulation.”

A proposed 20 month freeze in gas and electricity prices:

“Ed Miliband has failed to get to grips with why the costs of energy are so high in the first place. It is only because of repeated government interventions and regulations that household bills have reached such an unaffordable level.

“A freeze in prices will produce yet more uncertainty. The Labour Party would do well to realise that lower energy prices will only come from a scaling back of government interference in energy markets.”

Housing proposals:

“If Labour wants to increase the supply of housing it should focus on removing the strict planning and building regulations that stifle new development rather than imposing new controls. 

“The proposed crackdown on land-banking will introduce extra costs and risks without addressing the fundamental causes of the current shortage.”

Proposals to raise corporation tax to reduce business rates:

“The UK has the longest tax code in the world, yet Ed Miliband seems anxious to complicate matters further. Complex exemptions on corporate taxes for small firms are not the best way to boost enterprise. Lower business rates are desirable but should not be financed by reversing the coalition government’s single most important tax simplification – the aligning of corporation and income tax rates.

“Lower business rates should not come from yet another tax rise, but from a reduction in unnecessary spending elsewhere in government.”

Notes to editors

To arrange an interview with an IEA spokesperson please contact  Stephanie Lis, Communications Officer: 07766 221 268.

In December 2012 the IEA published Redefining the Poverty Debate – Why a War on Markets is No Substitute for a War on Poverty.  This report shows that by eliminating government interventions in areas such as planning, energy markets and childcare, living costs can be reduced dramatically, taxes could be cut, and the welfare state could be reformed to meaningfully address poverty in Britain.
 


The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 



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