What should Liz Truss do in her first 100 days to address the cost of living crisis?

The biggest task for Liz Truss when she steps through the door at Number 10 is the cost of living crisis.

The gap between what people have, and what they need to earn for a decent standard of living is getting bigger. The energy crisis, Brexit, the pandemic, labour shortages and supply chain issues are all contributing to the soaring costs, and it doesn’t look like changing anytime soon.

Inflation has hit double digits and experts predict it will hit a staggering 18 per cent early next year. It’s putting millions in crisis.

“Millions more will face the threat of bills they simply cannot pay, homes they cannot heat and stomachs they cannot fill,” says ​​Katie Schmuecker, principal policy adviser for the anti-poverty Joseph Rowntree Foundation (JRF).

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There’s relatively little the government can do to bring down the rate of inflation, says economist Jack Leslie at the Resolution Foundation, “but there’s a lot the government can do to protect those families worst affected”.

The Big Issue spoke to leading poverty campaigners, trade unions and economists to find out what the next PM should be doing to address the cost of living crisis. We’ve done the same for issues surrounding housing, the environment and levelling up.

Slash energy bills to affordable levels

A typical household energy bill will soar above £3,500 in October, regulator Ofgem has announced. Campaign group Enough is Enough is urging the government to cancel the price hike and return to the significantly lower price cap in place before April. This would mean the cap would be restored to £1,277 a year.

Don’t Pay UK, another campaign group set up during the cost of living crisis, is calling for the cap to be lowered even further, to April 2021 levels, when it was £1,138. It also wants the government to end all enforcement of pre-payment meters. 

So how would this be paid for? One of the more popular options among campaigners is a new tax on the record-breaking profits of energy companies. After much pressure, the government introduced a £5bn levy in May but environmental group Friends of the Earth has said ministers “must impose a much tougher windfall tax on massive oil and gas firm profits”.

The group has also claimed a “nationwide insulation programme would cut bills, reduce energy-use and slash climate-changing emissions”.

Backed by the Big Issue, former prime minister Gordon Brown has called for an emergency budget as families are plunged into a “financial time-bomb” amid soaring energy bills. He said the government should negotiate lower prices with energy companies and any providers which cannot offer lower bills should be temporarily renationalised as a last resort.

Increase the minimum wage

Boris Johnson pledged to create a “high-wage, high-skill, high-productivity economy”, but this dream was far from achieved during his time in office, with wages falling at the fastest rate in 40 years. His successor will have to decide whether to inherit this goal or to let wages continue to nosedive. 

The government’s raised the minimum wage by 6.6 per cent on April 1 but it was instantly out-paced by inflation.

Now different campaign groups are demanding different minimum wage levels. Oxfam and the JRF are calling for it to be increased in line with the real living wage and the TUC are calling for £15.

More and more workers are deciding to strike as their pay fails to keep up with inflation, so whatever happens the new PM is under huge pressure to address the issue.

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Address runaway corporate profits

While the average Brit is getting poorer as wages fail to keep up with inflation, this is not the case for those at the top of the food chain. 

Chief executives are earning 39 per cent more than they were last year. Median pay of FTSE 100 CEOs rose to £3.41m in 2021, up from £2.46m, the High Pay Centre and the TUC found. It means bosses are now paid 109 times more than the median UK full-time worker. 

Unions and the Enough is Enough campaign are calling for a wealth tax and higher taxes on corporate profits. 

“Workers deserve a fair share of the wealth they create but right now, CEO pay is soaring while working people experience the biggest real wage fall in 20 years,” said TUC general secretary Frances O’Grady.

“We need stronger rules to rein in executive pay. This should include worker representatives on the committees that set top pay and elected seats for workers on company boards.”

The Communication Workers Unions wants legislation to introduce a maximum pay ratio of 20:1 between bosses and workers. Linking the wages of those at the top with those at the bottom of a company, would incentivise bosses to increase the wages of those earning the least and therefore increase their own. 

Announce another cost of living support package

The most vulnerable families will face the greatest costs as prices soar, while many more will experience poverty in the coming months, charities have warned. 

Earlier this year the government announced a cost of living package, including a household support fund of £421million for struggling families and money off energy bills. But these measures are a drop in the ocean when viewed in the context of the scale of the crisis. 

Alongside the cut to national insurance, Truss has said she will cancel a planned rise in corporation tax and suspend green levies on energy bills. 

Rebecca McDonald of the JRF, said the new prime minister should “immediately revisit the government’s cost of living support”. Experts at the foundation claim the government will need to at least double its support for low-income families and planning for a substantial support package needs to start immediately.

Increase universal credit

Energy bills could be more expensive than the entire income of universal credit claimants from January. The energy price cap is expected to rise to £4,200 at the beginning of next year, according to forecasts from consultancy Cornwall Insight, yet the standard allowance for a single person on universal credit is around £4,018 a year. 

The JRF is also urging the government to increase basic universal credit entitlements so that, as a minimum, people can afford the essentials. The government removed the £20-a-week universal credit uplift in October meaning a loss of more than £1,000 a year for benefits claimants. Gordon Brown, Enough is Enough and other campaigners have called for the government to reinstate the uplift as an emergency measure in the cost of living crisis.

Sam Tims, of the New Economics Foundation, told the Big Issue in August the “next prime minister should align social security to the cost of living while scrapping the benefit cap, two child limit and deductions from universal credit”.

Expand free school meals

Poverty experts, campaigners and celebrities have also repeatedly urged the government to expand the free school meals scheme as millions of children face poverty. Analysis from the Resolution Foundation has projected a further 500,000 children will fall into poverty by April 2023. That’s on top of nearly 4 million children already living in poverty, according to the Child Poverty Action Group’s most recent statistics. 

Expanding the scheme could mean offering free school meals to all children of families on universal credit, as Marcus Rashford called for previously.