THE claim by the Bank of England's top economist that people in the UK need to accept they are poorer is part of a “conspiracy against working people in favour of the wealthy”, a tax campaigner has said.
Huw Pill, the bank’s chief economist who received a £95,000 for his first six months after joining the institution in 2021, told a podcast in the US that requests for higher wages or charging customers more for goods was adding to inflation and there was a "reluctance to accept that, yes, we're all worse off".
But Richard Murphy, professor of accounting practice at Sheffield University Management School and director of Tax Research UK, warned the reasons why the country is poorer include Brexit and deliberate policy choices - by the UK Government such as austerity and increasing interest rates.
Speaking on BBC Radio 5 Live, he said: “The one thing they don’t want to increase is wages – and I am blunt about this.
“This is a conspiracy and there is a conspiracy going on - and the conspiracy is against working people in favour of the wealthy and there is a class war going on in this country right now.
“That class war is by the wealthy on working people and that is something we have to recognise isn’t necessary.”
“We could cut taxes for those who are working, we could increase taxes on wealth to redistribute because that is essential, we could cut interest rates and we could spend more and that is entirely possible.
Pill said that people and businesses have responded to higher bills and costs by asking for higher wages or charging their customers more money, but this adds to inflation, pushing up prices even further across the economy.
Speaking on the Beyond Unprecedented podcast from Columbia Law School, he said: “The UK, which is a big net importer of natural gas, is facing a situation where the price of what you’re buying from the rest of the world has gone up a lot, relative to the price of what you’re selling to the rest of the world, which is mainly services in the case of the UK.
“You don’t need to be much of an economist to realise that if what you’re buying has gone up a lot relative to what you’re selling, you’re going to be worse off.
“So, somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices whether through higher wages or passing energy costs on to customers etc.
“What we’re facing now is that reluctance to accept that, yes, we’re all worse off and we all have to take our share; to try and pass that cost onto one of our compatriots and saying, ‘we’ll be alright, but they will have to take our share too’.
“That pass-the-parcel game that’s going on here, that game is one that’s generating inflation, and that part of inflation can persist.”
But Murphy said the reasons why the country was poorer now included Brexit, which he said was the biggest part of why the UK now has worse terms of trade.
“It is also a big part in the issues around food, for example, because clearly European continental suppliers do not want to send food to the UK because it is simply too difficult, too costly, too burdensome to get through the ports, so that is a massive issue.
"But secondly there is the simple fact we have had two other deliberate policies in place – one is austerity, we have had it since 2010 and austerity is a deliberate policy by the government to reduce the income of the country, that is what it means.
“Quite literally the government will not spend and what the government spends is part of our national income, and it has deliberately crushed its contribution, but by crushing its contribution to our national income, it has reduced the amount that everybody else has had to spend and therefore crushed their contribution as well.”
Murphy also criticised Pill and Bank of England governor Andrew Bailey – who he described as “incredibly well-paid bureaucrats” – for “choosing to cut our incomes” by increasing interest rates.
“It’s entirely untrue that we have now ended the era of low interest rates – that is a political choice, it is a stupid political choice – it does not control inflation because you can’t control the price of oil and gas coming out of Russia by changing the interest rate in the UK,” he said.
“So it can’t control inflation, but it has massively redistributed wealth upwards in our society from those who borrow to those who save, and that is against all known sensible social policy.”
He added: “And at the same time, we have them saying we must accept this – well, I don’t accept this, nor do I accept that the government need to continue with the policy of continuing austerity by saying they must not balance the books. These things are not true.”
