MP's Inflation Concerns

Speaking in the debate on the Budget, North East Herts MP Oliver Heald has highlighted his concern about inflation. Oliver pointed out that inflation particularly hits pensioners and people on fixed incomes. He made reference to the great battles of the 70s and 80s to get inflation under control. He suggested that inflation would be 50% higher over the next two years than it was over the last two and that taken together with international concerns about sub prime mortgage debt, this was a major problem for the financial system. He also criticised the Government’s decision to raise taxes at a time when the great challenge was to stimulate demand in the British economy without fuelling inflation.

“Against that background, the normal remedies would be to have low interest rates and to lower taxes or at least to keep them as low as possible. However at a time when there are concerns about fuel bills increasing and food prices rising – very fast in the last year – is it sensible for the Government to throw oil on the fire by increasing taxes on items, such as a pint of beer, that people have to purchase as that must start to change expectations about wages? The old cycle was that as higher wages, so wage inflation took hold. That cycle started and inflation become the huge problem that it was. I question whether the Budget judgement is right if it involves these substantial tax increases, as they are not in the interests of the economy.”