This self-inflicted cost of living crisis will bring Boris down

This is a political collapse, quite without precedent. And that is not just because of the Prime Minister’s behaviour, however egregious that may have been. It is because his Government has precipitated a cost of living crisis like no other I can recall.

Not that it will be without equal in its severity – the 1970s will still take some beating on that score – and not because its threat to economic stability will necessarily be greater than previous price explosions. What will make this drop in disposable income – and thus the standard of living – of most of the population so different is that, to a very considerable extent, it has been deliberately created by government policy.

The extraordinary leap in the cost of energy certainly is, as the Chancellor emphasised repeatedly last week, connected to increased global demand. That has always been the inescapable logic of commodity prices: more demand on existing resources means everybody pays more for the product.

But there is also a well-established logic for dealing with such problems: increase the supply of the commodity that is in such great demand and inevitably the price will drop. Unleash production of whatever it takes to make the goods, open the markets to competition, remove any obstructions to the delivery of said goods and bingo – prices fall, the economy grows and almost everybody can find a cost of living level that is bearable.

This is the basic lesson of supply side reform that we thought we had learned in the 1980s. Scarcity is what makes a thing expensive. So you take away the conditions that cause that scarcity – like nationalised rationing or private monopolies, or, in this case, untapped resources – and then make suppliers compete for business.

The purveyors of more expensive goods and services can survive by making themselves more attractive to a selective client base. Others can specialise in basic or minimised services for those who prefer to pay less. Result: a varied and prolific market which is flexible and responsive to the needs of consumers.

But as you may have noticed there is a difficulty with this formula for the Government. Some of the things that are contributing to the increased cost of such necessities as heat, light and food production have been engineered by the Government itself.

Roughly a quarter of your electricity bill cost consists of green levies. A regressive form of taxation that was officially designed to subsidise new climate-friendly industries, it now serves to penalise those who use (“waste”) the most electricity. And that is not accidental. The Johnson Government, like the one before it and, indeed, all the existing major political parties, has adopted policies specifically aimed at raising the cost of using energy – and hence, the cost of living.

This is the terrible realisation that is dawning on the electorate. The Tories, even though they are historically the bearers of the Great Supply Side truth, cannot make use of the free marketincreased supply-lower prices formula because they (deep breath) do not want energy prices to be lower. They want you to understand that using heat and light is a privilege which must be done only abstemiously. Self-denial is the whole point. This is a moral crusade. The extreme climate campaigners are quite clear about this: we’ve exploited the planet and we must be punished.

The only amelioration of this brutal retribution for past sins is directed at the poor or, as modern politics puts it, “the least well off ”. The people who might cause embarrassment by telling television interviewers that they are going without meals are to be given handouts in the form of loans which will have to be repaid.

So a proportion of the money that is currently being taken away from them by government in green taxes will be lent back to them by another agency of government, to be paid back to the energy supply companies over the next four years. Have you got that?

Government has artificially raised the cost of energy for everyone and will now compensate those they believe to be deserving: this is Gordon Brown revisited. All of this handing of money back and forth will cost the usual fortune to administer by central bureaucracy and will be subject to all the messy, accident-prone foibles of any means-tested benefit.

So why not simply remove the green levies, I hear you ask in exasperation? Because that would undermine the theological commitment to Net Zero, which does, in fact, necessarily involve reducing the advantages of prosperity as we have come to know it.

The only clear way out of this – the expansion of supply and the deregulation of its delivery – has been made perversely unavailable by the rejection of fuels like natural gas as “un-green” (although Europe has now decided to re-admit gas to the acceptable green fuel category). The Johnson Government is now making economic decisions that are simply absurd and self-cancelling.

This is nothing new, of course. Governments frequently make economic mistakes, often in the cause of ideology. But what is peculiarly infuriating is that Boris Johnson’s generation of Tory politicians are repudiating precisely the lesson that their own party taught the country within living memory.

Even voters who are not old enough to remember the origins of that great liberation of free market economics are experiencing its advantages every time they choose a new mobile phone or broadband supplier from a vigorously competitive field.

There was a time when Boris Johnson talked like this – quite convincingly. Not anymore.

And it is that – and the consequences it will have for people’s lives – which will finish him. All it needs is for some prospective leader of the party to say out loud what the Tories used to believe, and Boris will be gone.

I doubt it will be long now.

There was a time when the Prime Minister welcomed the free market economy – not anymore. And it is that which will finish him

If some prospective leader of the party says out loud what the Tories used to believe, Boris will be gone