Rising inflation, increasing energy costs and general economic downturn throughout the UK are creating a cost of living crisis where many families will struggle to get by over the next year. While the effects of this crisis are potentially extremely damaging, the government has the opportunity to bring in measures and policies that address it and help alleviate the pressure on people’s finances. Public policies are programs and plans that are designed to help solve real-world problems.
Policymakers within the government have the potential to make a big difference in people’s lives by making changes to tackle the cost of living crisis and reduce its effects. Creating effective public policies is never easy, and there are a lot of things to consider when drawing up plans. A public policy analysis course will help you learn more about how public policy is designed and the analysis that goes into creating effective policies.
Here are some of the top proposed policies that the government could introduce to help alleviate the strain on UK families:
Lower Costs on Fuel
All fuel sold within the UK is subject to tax which has been introduced to help reduce our reliance on fossil fuels. However, with rising energy and fuel prices, it may be time for the government to introduce a temporary relief by reducing these taxes. This would mean that fuel prices fall considerably and will allow people to reduce their monthly spending even without using less fuel and electricity. In winter, this will be particularly important, as many low-income households may struggle to heat their homes. Additionally, those who live in rural areas and rely on their car for income have been badly affected by the rising fuel costs.
General Tax Cut
A general tax cut such as one affecting income tax or VAT is one of the simplest ways to reduce financial pressure. It allows people to increase their take-home earnings. In the case of a VAT cut, it can also help to encourage spending and stimulate businesses and the national economy. However, an income tax cut would affect the population in different ways. The lowest 10% of earners would be less affected, as would those who are already drawing from their pensions. This could be a good measure if introduced with other policies, but only if it is thought out carefully.
Introducing a Country-Wide Insulation Programme
One of the reasons why energy costs are so high for many households is poor insulation. Homes that aren’t properly insulated require more energy to heat, which costs more while also wasting more resources. The government could introduce a program where it provides subsidized or free insulation to homes, particularly those that belong to low-income families. This will allow it to tackle rising energy costs while also reducing the nation’s carbon production and is more sustainable compared to simply lowering fuel costs.
Removing the National Insurance Rise
National insurance is a mandatory tax on all earnings in the UK and pays into the state pension, which can be accessed on retirement. The 6th of April saw a rise in national insurance contributions, going from 12% to 13.25%. While this is only a small percentage rise, it has made a big difference to people’s finances and has increased the strain on many UK households. The tax increase has been particularly hard on small businesses, and some have said a windfall tax would be a much better solution.
A Windfall Tax on Oil and Gas
With energy prices now higher than ever, oil and gas producers have seen increased profits at the expense of regular people. A proposed one-off windfall tax on oil and gas companies would tax their excess profits, helping to cut household bills and supporting other businesses within the UK. However, some claim that it would reduce oil and gas investment within the UK and might still lead to prices rising further.