In the year of the squeeze, it is time to focus on the long-term causes of inequality

This coming year will – for many people in Britain – be the year of the squeeze. Prices are already surging, and inflation will increase further, driven by energy prices.

While incomes for many people are rising, it will be a lucky few who end the year with higher living standards than at the beginning. As The Independent can report, the Resolution Foundation outlook for most UK citizens is one of pressure and pain.

People will feel this pinch more keenly because it will appear in their pay packets. Bills will go up by an average of £600 – even this may be an underestimate, according to the foundation. Overall, household budgets will be slashed by £1,200, according to economists.

There are further difficulties. The UK housing market remains dysfunctional. We do not build enough homes. Those that we do build are frequently too small; certainly too small if they are to be places in which we work as well as live. And a society in which house prices rise by 10 per cent in a year, as they did in the year to November, cannot coexist for long with one in which pay increases by 5 per cent.

If people cannot save enough to buy their first home – however skilled they are, and however hard they work – our society cannot survive. Something has to change. This is about fairness, and decency, and hope.

So, what’s to be done? There is no escape from the fact that this will be a difficult year. There remain huge uncertainties over the changing nature of the pandemic. There are equally great uncertainties about the progress of inflation. It is really transitory, and likely to fade towards the end of 2022? Or might it become a longer-term problem?

Again, no country can function with prices rising at 5 per cent or more, and banks paying 1 per cent or less on deposits. Why should anyone willingly see their savings depleted at that rate?

It is perfectly true that both the pandemic and inflation are worldwide issues, but that does not take away from the fact that the duty of this country’s government is to tackle them with clarity and competence. Even the most loyal supporters of the prime minister would find it hard to argue that his government has displayed either quality of late.

Looking ahead, there are two priorities. The first is to do no harm. The principle is popularly cited as part of the medical profession’s Hippocratic Oath, though according to the BMJ it is actually taken from the Hippocratic treatise on epidemics, and is “to be useful, rather than cause no harm”. That idea, that a government should seek to be useful – in modern jargon, to add value – is perhaps a better guide.

There are clear areas where this government has added value, for example in its coordination of the vaccine programme. There are others, notably in regard to the housing market, where it has not.

The idea of Help to Buy has made it possible for some people to buy homes they would otherwise have been unable to. But that has been at the cost of increasing prices generally, making it harder for many more.

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The other priority should be to focus on the long-term health of society, rather than short-term populist initiatives. Projects such as the “levelling up” agenda need to be supported by real investment, rather than chopped back when finances tighten.

This is partly about lifting living standards in the short and medium terms, but it is even more about opening up lifetime opportunities for people who, through no fault of their own, face strong headwinds in many aspects of their lives.

Those headwinds will get even stronger this year, as the Resolution Foundation argues. The role of the government should be to seek practical ways in which it can shelter UK citizens from them; to be helpful rather than ideological. And to focus on the long-term causes of inequality, rather than trotting out short-term fixes.