Alex Salmond: What government must do to tackle the cost-of-living crisis

The refuse dispute with local authority workers has brought matters to head with the memorable and disgusting sight of rubbish-strewn streets disfiguring our capital city during the greatest arts festival on the planet. The reputational damage to Scotland was significant, as is the continuing health hazard to local residents around the country. It should never have been allowed to happen.

Neither local authorities or the Scottish Government handled their workforce relations well. Early on in the dispute they seemed more keen on blaming each other for the initial paltry offer rather than uniting with the unions to secure the funds for a decent public pay settlement from central government. And the people sense it, which is why there has been so much support for the railway and council workers, despite the substantial inconvenience.

Dispute resolution is always more difficult when industrial action is underway, but the course of settlement across the public sector is clear enough. Five per cent is emerging as the pay norm which, in circumstances of double-digit inflation, is hardly unreasonable.

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However, for it to stick and break the inflationary spiral before it carries all of us off to perdition, a united demand of action from workers, councils and the Scottish Government should be forced on the new prime minister. In fact, it will be impossible to expect workers to accept 5 per cent unless there is a campaign to force the action required to bring inflation down to that level by year end.

The action that is required is to directly tackle the headline inflation rate. The only tax cut that makes sense is a general one to VAT – and energy bills should certainly be frozen. This will carry the advantage that every 1 per cent that comes off the Retail Price Index will save the Government a cool £5 billion payout on their £500 billion mountain of index linked borrowing.

A further windfall tax on the obscene and unearned profits of the energy producers is required to help fund the crisis and there should be no automatic bail out of the energy suppliers as part of the price freeze.

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The market competition approach to energy provision has collapsed and the case for public ownership instead of an open-ended private bail out is strong. Take these actions and inflation will soon be on a falling trajectory to 5 per cent and below. Don’t take them and the country will be locked in an inflationary vice of falling living standards, sky high interest rates, small business collapse and widespread fuel poverty.

The current crisis shows British governance as incompetent to the point of being dysfunctional. They have engaged in a proxy war in Europe without any apparent preparations for the economic consequences.

English electricity supply is 50 per cent reliant on gas generation, without securing domestic supplies or sustaining the strategic reserves. They have failed to link lucrative new oil and gas development with an obligation to carbon capture and completely failed to kick start the coming green hydrogen economy. They have allowed the energy regulator (Ofgem) to get lost in its own obscure market theories which bear no resemblance to the reality of energy mix or the ability of consumers to pay. All of these factors were easily foreseeable and yet not one of them was prepared for.

One final point for Scots. We are one of the most energy rich countries on the planet and yet our people are being blanketed with fuel poverty. We have access to the cheapest forms of electricity generation and yet we are (and will be) expected to pay through the nose for the UK government’s gas folly and nuclear obsessions. The time is now to sack the British board and support a peoples’ buyback of our country.