Richard Murphy: It's just not true that Boris Johnson can't do anything about the cost of living

This denial of responsibility by the Tories, whose sole aim appears to be winning power so that they can do nothing with it, has now led us to prime minister’s claim this week that there is nothing more that he or the government can do to help people facing nearly impossible energy price increases.

To be blunt, this is not true. Recent experience provides the evidence of that. When in a rare exception to my general rule, the government decided that it had to close businesses down to tackle the initial Covid crisis not only did it create the biggest change in the way we live for decades, almost overnight, but it also made sure that businesses did not suffer as a result.

What it did was supply almost 1.7 million UK businesses with loans to keep them going when their profits were being hit by lockdown. As a result, most of them survived. The cost was £80 billion, of which we now know a significant part will not be repaid.

But what we now know is that when maybe half of all households across Scotland and beyond are facing bills that they really do not know how to pay the government is saying that there is nothing that they can do to help. What we also know is that the cost of providing the necessary help to prevent all those facing the poverty and despair that energy bills and other costs will create will be less than the cost of the support supplied to business during the Covid crisis. That total cost was not just that of the loans supplied, but also the cost of furlough for their staff, which was as much again, meaning that more than £160 billion was spent during the Covid crisis to help out business.

READ MORE: Nicola Sturgeon: Tory-made cost-of-living crisis is focus of SNP campaign

In contrast, if half the households in the UK as a whole need about £3000 of support a year at present to deal with the unmanageable bills that they are getting then that would cost around £45 billion a year in financial support. If this level of spend (and more) was possible to help business during Covid then there is absolutely no reason why the same spending could not be made now to support families in need. A combination of universal credit and pension increases plus reduced tax for those on average and lower pay, whilst making sure that any benefit was denied to those on higher incomes, could easily deliver this support. To say that this is not possible is simply untrue.

The obvious question that will then be asked is how this assistance might be paid for? The answer is that the same methods could be used as were used to pay for the Covid crisis. In that case, new money created by the government to make this payment could be used. None of the costs of the Covid crisis was paid for by taxpayers. Nor was any paid for by borrowing. Instead, they were paid for with money created using the quantitative easing process. And we could do exactly the same now.

Before anyone says that the debt we already have prevents this, I simply do not agree. The UK Office for National Statistics claimed that at the end of February 2022 that on basis of calculation the so-called UK national debt was around £2,326 billion. However, they also admitted in another calculation which partially eliminated some of the impact of quantitative easing that the figure may be no more than £2,005 billion.

What I simply note is that it is just not possible to claim that a government can be in debt to itself. In that case the whole of the £895 billion of government debt that is owned by the Bank of England has to be taken out of consideration when estimating the national debt, because it has simply been replaced by new money. That means the UK’s national debt is now no more than £1,431 billion in that case.

This figure is 58.3 per cent of the UK’s current national income. To put this in a historical context, and using data available from the Bank of England for the period from 1700 to 2015 (or some 315 years), for 201 of those years the UK’s national debt exceeded 58.3 per cent of the national income. In other words, the current UK national debt is low in historic terms. So too, come to that is the interest paid on it.

So could £50 billion or so a year be created to tackle the poverty so many now face? The simple answer is, yes of course it could be.

So why is that not going to happen? It is because Boris Johnson has reverted to the Tory norm saying that there is nothing he can do about the crisis his government has helped create. That, however, is simply not true. He just does not want to help. And that tells us all we need to know about him.