The profound squeeze on living standards has become the defining, explosive feature of British politics. Each week seems to bring more pain in the form of higher bills. Water bills are forecast to rise again next year, on top of the energy price cap that recently increased to £1,755 a year. For rightwing populists, the cost of living crisis is the gift that keeps on giving, allowing them to blame the experience of declining living standards on migrants and perceived “outsiders”. Unless Britain’s crisis of livability is addressed, Labour will probably be the handmaiden of a Reform victory.

We often hear that the cost of living crisis is caused by rising energy prices linked to Vladimir Putin’s war on Ukraine, or by disruption caused by the climate crisis. These factors, while hugely important, are not the whole story. The structure of Britain’s economy amplifies the effects of inflation and makes life more expensive. When external shocks hit our economy, they translate into people paying even higher prices here than they do elsewhere. This is because essential services, such as energy, housing and transport, have been designed as opportunities for profit extraction.

Take the energy sector. Recent analysis from Common Wealth, the thinktank I direct, estimated that a quarter of the typical energy bill in 2024 was profit. That is equivalent to every household paying £416 a year so other people can grow rich. The water industry tells a similar story. Almost a third of the average bill goes towards funding shareholder dividends and interest payments.........

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