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Brits need to 'tighten belts' as there's a 'post-Covid mindset that everything's free', says Philip Hammond
6 September 2022, 20:19 | Updated: 7 September 2022, 01:03
'Post-Covid we've got into a bit of a mindset where everything's free'
Brits need to accept that they will need to make sacrifices amid the cost of living crisis as there is a post-Covid mindset that 'everything comes free', Lord Philip Hammond has said.
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Speaking on LBC's Tonight with Andrew Marr, Lord Hammond said there is always a "price to pay" when it comes to huge decisions such as sanctions the West have placed on Russia.
People have started to assume that "the government can sort every problem out", the former Chancellor added.
"We need to be honest with people that when we make big, brave decisions - like the decision to cut off imports of many things from Russia - there is a price to pay," Lord Hammond said.
"When we decided to fight the Second World War, nobody pretended that we wouldn't have to to tighten our belts to do it.
"It's important that we link those things in people's minds.
"My fear is that, post-Covid, we've got into a bit of a mindset that everything comes free - the government can sort every problem out - and it won't impact individuals directly."
Lord Hammond 'concerned' over Liz Truss's energy funding
He also slammed productivity across the UK, saying is had been "abysmal for years".
Lord Hammond continued: "I am personally not persuaded that is due to the fact that our taxes are high. Our taxes are high - I'd like to see them lower - but there are many countries that have taxes higher than us and that have better productivity than us... starting with France.
"It's about skills, it's about the amount of capital that there is deployed in the economy - both in public infrastructure and private firms - it's about the underperformance of our cities, which is very much a UK phenomenon... all of those things need to be tackled."
He added: "Once [Liz Truss and Kwasi Kwarteng] have addressed the short term challenges they will want to move on to setting out a vision on how to reignite Britain's economy."
'UK's productivity performance have been abysmal for years': Hammond
Despite commending Ms Truss' work ethic, Lord Hammond was quick to share his concerns over her plans to deal with the energy crisis.
Ms Truss led her campaign vowing to cut taxes, among other measures, to ease spiralling costs.
But Lord Hammond said the risky move could mean inflation rates get even worse.
"If the whole funding of her energy plan is done from borrowing, then there is a risk, firstly, that it starts to spook markets that are already quite fragile in their sentiment towards the UK and, secondly, that it does provide a further inflationary stimulus," he said.
"There's a bit of irony here that we're trying to deal with a problem which is caused by inflation with the super high energy bills and the danger is that the could push inflation still higher - a different type of inflation but inflation still."