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Asda Chair And Tory Peer Calls For More Government Borrowing To Ease Cost Of Living Crisis

Asda Chair And Tory Peer Calls For More Government Borrowing To Ease Cost Of Living Crisis

Lord Rose has called for further action to tackle inflation

4 min read

Lord Rose, a Tory peer and chair of Asda supermarket, has said there is "no time to be wasted" and he called on ministers to consider further borrowing to provide financial support to struggling households.

Writing for The House, the senior businessman warned the UK was facing a "national emergency" and claimed financial support announced by the government would "only scratch the surface" for struggling households.

A number of Tory MPs have already called for Chancellor Rishi Sunak to take immediate steps to help ease the financial pressure on households as inflation rates and energy bills continue to rise.

But expressing his concern that recent measures announced by Sunak were not sufficient, Lord Rose urged the Treasury to consider further measures in "short order", including further government borrowing.

"During the Covid crisis the government borrowed more than £480bn – half of which was poorly targeted or wasted," he wrote.

"Although the UK balance sheet is seriously stretched, I do believe that other measures, including borrowing, should be considered in short order."

In a further criticism of the approach, the Asda boss suggested the government had been "hesitating" to take tougher action as he insisted the recent £15bn support package did not go far enough.

"Those announced so far will barely cover the cost of the increase in utilities, never mind other cost increases coming through on a daily basis," he wrote.

"It is of course right and proper that help is targeted at those most needy, but this crisis will affect many more than just the lowly paid or those on benefits."

The Asda chairman added that income tracking, conducted for the company by CEBR, found that discretionary disposable spending had already fallen by £40 a week year-on-year. The biggest fall since 2008, and likely to have a significant impact on business growth.

Despite claiming he was "broadly suspicious" of the motives and long-term benefits of the government's windfall tax on energy firms, the Tory peer called for further cross-party work to find fresh solutions.

"I acknowledge that the government has a tricky task balancing the need to maintain growth, employment, and contain inflation. As previously highlighted, this is made doubly difficult because of the global nature of the crisis," he added.

"Surely then, this should encourage the government to consult more widely, not only with businesses but on a cross-party basis to ensure we grip the problem quickly, effectively, and fairly." 

His comments come as the Chancellor attempts to navigate a split among his party, with some calling for further economic support for households, while others warned government spending risked increasing inflation further.

Conservative MP Mel Stride, who chairs the Commons Treasury Committee said that in "general terms" he supported the Chancellor's efforts, but insisted it was vital that any additional government spending should be "carefully examined" to assess its potential impact on inflation rates.

"It will raise consumer demand quite rapidly given that those at the lowest end of the income distribution will have the highest propensity to spend," he wrote in The House.

"Exceptional times call for an exceptional response. What that response will mean for inflation has now become one of the central questions."

Also writing for The House, senior Conservative MP Tobias Ellwood suggested the government should consider re-joining the EU single market as part of a "radical" attempt to boost the UK's economy.

Claiming that recent YouGov polling showed public support for a "course correction" on the UK's relationship with the EU, the Tory MP added: "Political distance has been achieved. This is not up for question. However, economically speaking, there is vast room for improvement.

"The OBR calculates, in its current form, that Brexit is reducing our GDP by 4%. This compares to around 1.5% caused by Covid."

Ellwood added that exiting the EU single market was "not on the ballot paper, nor called for by either the prime minister or Nigel Farage during the 2016 referendum". He claimed the move would remove paperwork and checks worth £7bn from business and boost trade.

He added: "It would require acceptance of some EU regulations. However, UK industry, from food to pharmaceuticals, chemicals to motor manufacturing, says they would be better off working with one common standard rather than having to follow two." 

 

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