19:33 - The House divided: - Ayes: 57 / Noes: 0 - Question accordingly agreed to.
The Chief Secretary to the Treasury (Mr Simon Clarke)
I am glad to have this opportunity to respond on behalf of the Government. The UK economy is roaring back to life following the unprecedented challenges that we faced during the height of the coronavirus pandemic. It may have escaped the attention of Scottish National party Members, but job vacancies have hit record highs while the unemployment rate has fallen sharply. Our GDP has rebounded. We are set to enjoy faster growth this year than anywhere in the G7, and our economy is now bigger than it was before the pandemic.
Job numbers are rising, unemployment is falling and the economy is back to its pre-covid level, but that has not happened by accident. The economy has been able to bounce back so strongly and quickly only because of the decisions made by this United Kingdom Government. Let me remind the House of those decisions. The £400 billion of direct economic support has protected millions of people’s livelihoods in every part of the United Kingdom, with the furlough and self-employment income support schemes safeguarding, in Scotland alone, more than 1 million jobs. The success of our vaccine roll-out has meant that we have retained the most open economy and society anywhere across Europe. And our plan for jobs is creating work opportunities and ensuring that people have the right skills to get into work.
Those achievements are underpinned by the fiscal strength and stability of our economic union. That is why, at the autumn Budget, we confirmed that the devolved Administrations are receiving an extra £12.6 billion of Barnett-based funding this year, taking total block grant funding to £77.6 billion.
Peter Grant (Glenrothes) (SNP)
In that glowing list of statistics that the Minister had prepared for him, does he have a figure for the current level of child poverty on these islands, and if not, why not?
Mr Clarke
What the hon. Gentleman misses is that a jobs-based recovery lies at the heart of this Government’s plan. If he cares to look at this Government’s record, as opposed to that of the Government in Holyrood, he will see that the United Kingdom Government outperforms Holyrood every day of the week on job creation, growth and stability, which, in the end, goes to the heart of all our constituents’ life chances.
Over the next three years, the Government are providing, on average, an additional £8.7 billion a year to the DAs on top of their annual £66 billion baseline. That funding equates to an average of £4.6 billion a year more for the Scottish Government, £2.5 billion more for the Welsh Government and £1.6 billion a year more for the Northern Ireland Executive. It will support the devolved Administrations as they shape the economic recovery and decide how best to invest in the vital public services on which people rely.
We are acutely aware of the cost of living challenges that people face. Inflation is expected to average around 4% this year, 2.6% next year and then to return to target by the end of 2023. It is true that almost every other developed economy is facing similar issues due to increasing global demand after the pandemic and a global spike in wholesale gas prices.
Joanna Cherry (Edinburgh South West) (SNP)
The Minister says that almost every other economy is facing similar issues, but, of course, other economies have not recently left the European Union. The British Retail Consortium has said that labour shortages—shortages of HGV drivers and warehouse workers—which affect the supply chain are one factor behind the increases in food prices that all our constituents are experiencing. What assessment are the Government conducting of the impact of leaving the EU on the huge increase in food prices in our supermarkets?
Mr Clarke
Contrary to that rendering of events, the challenges we face in relation to the supply of HGV drivers are those faced by countries across Europe. This workforce is predominantly elderly, and has been badly affected by the covid pandemic. Industries across the world, let alone Europe, continue to be affected by the same challenges that we all face of constrained supply and rising demand as the world wakes up from the pandemic. This has absolutely nothing to do with Brexit, and it is fundamentally misleading to suggest otherwise.
As I said to the House earlier this month, we are focused on easing the pressures caused by the cost of living wherever and however we can, and of course we are constantly considering what more we can do. I should remind the House that we are providing support, worth about £12 billion in this financial year and next, to help families with those challenges.
Drew Hendry
The Minister has said that the Government will do whatever they can to help people. I have raised this point before. The Government promised people who have been diagnosed as terminally ill that they would ensure that the six-month rule was moved aside so that those people could gain access to their benefits and survive this cost of living crisis, but nothing has been done. The Government are dragging their heels yet again. Will the Minister give a commitment now to taking this issue back and making sure that it is sorted out once and for all, so that those people who are dying, and their families, can have the support they deserve?
Mr Clarke
I recognise the passion with which the hon. Gentleman speaks in this place. I am happy to take away the issue to which he alludes and to look at it with my Department. However, the wider point stands: we are providing £12 billion this year and next. That is a huge package of support, targeted precisely at the issues that face this country and countries around the world.
To help working people, we cut the universal credit taper rate from 63p to 55p—that is a huge reward for making work pay—and increased the work allowance by £500 a year. That is a tax cut for nearly 2 million low-income families, worth £2.2 billion in the next financial year, or, on average, about an extra £1,000 in their pockets. Furthermore, from this April we will increase the national living wage by 6.6% to £9.50 an hour, benefiting more than 2 million workers across the UK. We have also frozen fuel duty for the 12th year in a row, which means that the average UK car driver will save about £1,900 compared to the level in 2010. All that builds on the help we have already provided elsewhere, such as the increase in the local housing allowance. We have increased it significantly Great Britain-wide, so that it stands at the 30th percentile of market rates, and we have made a commitment to keep cash levels at those higher rates in the future.
For those who needed extra help with their housing costs, we provided £140 million for discretionary housing payments in England and Wales this year; about 4 million people are being given help with their council tax bills; and we are investing over £200 million a year to continue the holiday activities and food programme for disadvantaged children in England. We are providing nearly £5 billion to help children and young people catch up on lost learning. On top of that, we are taking a range of further steps to relieve the financial pressures on the most vulnerable: for instance, we are expanding the Great Britain-wide warm home discount to about 780,000 additional households. In September we announced the £500 million household support fund to help vulnerable people throughout the UK with essentials such as energy, clothing and food bills this winter. Of course, we are also giving NHS workers throughout the United Kingdom a 3% pay rise in recognition of their service during the pandemic.
As I have said, the Government are striving to shield families from the rises in the cost of living, but as I also said a moment ago, the best anti-poverty strategy is a jobs strategy. That is why we believe that supporting, protecting and creating employment opportunities, and giving people the skills that they need, is economically right for this country. That vision is being turned into reality through our investment in the plan for jobs, which is benefiting people in every part of the United Kingdom.
Matt Western
May I make two points? One is about jobs. I think the Minister would accept that the kickstart scheme has been disappointing. The target was set at 250,000 jobs, but I think that only 100,000 have been filled so far. If I could draw his attention back to a point he made earlier about our economic performance and growth in GDP, he said that we were the strongest in the G20. But when we look at the statistics on the OECD website, between Q3 2019—pre-pandemic—and Q3 2021, we are the third worst performing country in the G20.
Mr Clarke
If we look at the Office for Budget Responsibility forecasts, we see that they are for 6.5% growth in 2021 and 6% growth in 2022. That is an incredibly strong economic recovery, and one of which we should be very proud. With regard to the Kickstart scheme, we obviously always want to encourage maximum uptake and we continue to work to refine that scheme and make sure it works to best effect, but it must be considered in the context of an unemployment rate that is now only just over 4%. We have a very tight labour market, and that very success is leading to some of the challenges that we face in getting people through every different scheme.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Given the increases in energy costs, can the Chief Secretary tell us how much extra VAT the Treasury is taking, what extra oil and gas revenues are coming in and how much extra is coming in from the increased price of petrol at the pumps? Why are the Government not using that money to mitigate costs for the 6 million households that will be plunged into fuel poverty when the cap rise kicks in in April?
Mr Clarke
I thank the hon. Gentleman for his question. The concept of some kind of VAT windfall is fundamentally misleading. VAT is charged at 5% on energy and if people are spending more of their disposable income on energy and less on issues that are taxed at the full rate, the Exchequer gets less money rather than more, so it is a net cost to the Exchequer.
We have doubled the number of work coaches and we have provided vital help for those who have been unemployed for over three months through the job entry targeted support scheme, which is worth £200 million. Of course, we are not just helping people into work: we are also supporting them to develop the right skills so that they can adapt and thrive in the job market. In the Budget, we committed to increasing skills spending in England by £3.8 billion over the Parliament, and the plan for jobs is therefore giving people the invaluable tools they need to succeed.
Gavin Robinson (Belfast East) (DUP)
This is an important motion as it gives the House an opportunity to debate the cost of living crisis. It would be churlish to ignore some of the good measures that the Government have brought forward, but in talking about support for people to get into work and for those in work, there appears to be some contradiction with the proposed hike in national insurance. There seems to be some prevarication today around that policy and the suggestion that the Government may change tack. Is the Chief Secretary in a position to update us on that?
Mr Clarke
It is good to see the hon. Gentleman back in the Chamber. The reality is that nobody came into politics to raise the burden of tax on our society. We all feel that keenly, but we are equally clear that we face a £400 billion bill for covid costs. We have a clear programme of targeted investment in the NHS and in social care, designed to alleviate the backlog in treatment and the longstanding challenges that we know we face with an ageing society. We owe it to people to be candid that there are no easy solutions to how to pay for that. I certainly do not want—and I know the Chancellor does not want—to put more borrowing on to the books, when we know that those are structural challenges that need to be paid down, and therefore a tax increase is the most sensible and honest way for us to pay for that. In that spirit of total candour, that is why we are bringing that forward, and we believe that it is the right thing to do. The sadness is, of course, that the Opposition did not support us in that, and persistently criticise us for not spending enough on the NHS when they will not will the means for that investment.
Direct financial assistance, help to find work and support for people in every region and nation of the UK are just some of the ways in which the Government are aiming to secure a more prosperous future for this country. I note that the motion tabled by the hon. Member for Glasgow East (David Linden) calls for the Government to spend more. I should remind him that the devolved Administrations already have the power and the money to make spending decisions of their own. The Scottish Government have significant tax and welfare powers, so they can choose to raise more tax if they want to spend more on welfare.
For our part, we have shown unequivocally that we are not afraid to make the big decisions to do right for the people of this country. That is why we are investing £600 billion in the public sector over the course of this Parliament, on our health service, our education system, and securing our borders. That is why, at the spending review, we took the total we have committed to the economic infrastructure to £130 billion. That is why, to respond the hon. Gentleman’s point, we are spending more on the NHS as a result of the health and social care levy as well.
David Linden
The Chief Secretary to the Treasury talks about the big decisions that the UK Government have taken. Of course, part of the reason they can take these so-called big decisions is that they have the ability to borrow; he just talked about £600 billion. He knows fine well that in Scotland we do not have those powers. If he wants people in Scotland to have them, why will he not give Scotland the borrowing powers to do so?
Mr Clarke
This Government have worked very closely and co-operatively with the Scottish Government in Holyrood to make certain that we can, together, provide the most effective, targeted package of support for all our constituents. I have talks with Kate Forbes, the Scottish Government Finance Minister, coming up later this week as part of the fiscal framework. We continue to discuss all the issues that fall within the relationship between Holyrood and Westminster, and we do so on a genuinely open and constructive basis. We are quite clear that we have provided the devolved Administrations with a huge—indeed, a record—Barnett settlement precisely to make sure that all contingencies thrown up by the pandemic can be covered.
The broad context of our need to deliver the right package of support does not come at the expense of our commitment to safeguarding the country’s finances. As I have said to the House before, reckless promises are the privilege of opposition; tough choices are the task of parties that are in government. We cannot fritter away our achievements on unfunded pledges. That is particularly true at a time like this when our level of debt means we are vulnerable to shocks, including changes in interest rates and inflation. In fact, a sustained one percentage point increase in interest rates and inflation would cost over £22 billion by 2026-27. Given that this country has suffered two so-called once-in-a-generation shocks in just over a decade, the case for building a stronger economy with the headroom to guard against shocks is clearer than ever. We must act to build on that headroom now, because to fail to do so would be folly.
I recognise, as do all my ministerial colleagues, the very real pressures that are facing families in every part of the United Kingdom right now. I have set out the comprehensive action we are taking to address those challenges. That is why, as my hon. Friend the Member for Moray (Douglas Ross) said, it is so disappointing that Nicola Sturgeon’s first priority, as the omicron wave eases, is not the cost of living but rather another divisive independence referendum. The SNP’s record of failure in government stretches back years. Before the pandemic, the SNP presided over the lowest rate of job creation in the United Kingdom. Under the SNP, Scottish schools have plummeted down international league tables, denying children a good education. Scotland has the highest drug death rate in Europe, tripling on the SNP’s watch.
Now, instead of supporting Scotland to recover from the pandemic, here we are, on an Opposition day, with the SNP again fixating on issues with the negativity that has become its hallmark. The SNP has entered into a nationalist coalition with the Scottish Greens, taking on extreme policies that will be hugely damaging for Scottish workers, in exchange for pushing ahead with its plans for that divisive second referendum. It is more focused on the break-up of our United Kingdom than on supporting Scotland to recover from the challenges the pandemic has created. By contrast, throughout this pandemic, the United Kingdom Government have taken the difficult decisions necessary to steer the country through the crisis we have faced. We will continue to strive to secure the better and more prosperous future that the people of this country deserve.
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
The hon. Member for Glasgow Central (Alison Thewliss) speaks with conviction —I know that from having listened to many of her debates in the past—but it will be no surprise that I will come to a very different conclusion in my arguments today. Let me begin by thanking all hon. Members who have taken part in this important and sometimes lively debate. The pandemic has been a very challenging time for many. We acted quickly to put in place unprecedented levels of support. Since the start of the pandemic, we have spent more than £400 billion protecting people’s jobs and livelihoods, supporting businesses and public services and providing unprecedented welfare support. That is not inactivity, as alleged by the SNP, and it has been conveniently overlooked by hon. Members, including the hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey).
Universal credit has stood up to the challenge of covid-19, providing a vital safety net for 6 million people, thanks to the hardworking staff in DWP across the nation, including in Scotland. Thousands of work coaches worked tirelessly to ensure that the benefits system did its job. Our successful vaccine programme is providing us with the protection to fight the virus in all its forms.
The latest labour market statistics prove that time and again we have made positive decisions during the pandemic. As has been highlighted during the debate, it is important to put the rising cost of living in context. Prices are rising in countries around the world. I know that Members such as the hon. Members for Ceredigion (Ben Lake), for Glasgow East (David Linden) and for Edinburgh East (Tommy Sheppard) have raised concerns, but we need to look at the issue in context. As the global economy recovers from the pandemic, consumer demand is surging at a time when global supply chains are disrupted. We recognise and understand the pressures that is causing for people’s wallets, and their worries as they see the cost of food, energy and other essentials increase.
The Prime Minister, the Chancellor and the Secretary of State for Work and Pensions—and, indeed, the Chief Secretary sitting next to me—are listening to those concerns. As shown during the pandemic, the Government will do what it takes to support those most in need, and we are looking at the best way to build on the support that is already available. With the economy moving into a higher gear, it is time to focus our attention on getting people into work and progressing in employment. That was ably highlighted by my hon. Friends the Members for Broadland (Jerome Mayhew) and for Moray (Douglas Ross).
Alan Brown
The Minister said that the Government will do everything it takes to resolve the cost of living crisis. What will they do to mitigate the energy price cap rise in April?
David Rutley
We have shown what we can do when faced with challenge. We are monitoring the situation and looking at all the solutions—we will come forward—as, I understand, the Scottish Government are monitoring the situation to see what more they can do.
David Rutley
I will not give way just yet: I will make further progress.
The latest job figures tell a very positive story. There is now a record number of people in payroll employment in the UK, with 23,000 people added to payrolls in Scotland in December alone. With around 1.25 million vacancies across the UK, up 33,000, or 2.7% in a month, and by 467,000, or 58.9% since the start of the pandemic, there are many further opportunities for people to move into and, importantly, progress in work and increase their earnings.
Current estimates also show that the number of online job adverts in Scotland has risen by 13% since the start of the pandemic. We know the importance of employment, particularly full-time work, in substantially reducing the risks of poverty, especially in households with children. That is why the focus of the Secretary of State and the whole DWP ministerial team is on matching people looking for work with those opportunities, which will also boost key sectors and the economy as a whole. As well as getting people into jobs, we are taking action to boost the take-home pay of low-income working households by giving 2 million families an extra £1,000 a year through our cut to the universal credit taper rates and increasing work allowances. Raising the national living wage by 6.6% to £9.50 from April will mean an extra £1,000 a year for full-time workers.
To help people to take advantage of the record number of vacancies, our plan for jobs is helping people at any age and any stage of their career, as the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies), is fully aware. Since the start of the pandemic, we have recruited 13,500 new work coaches to ensure that claimants, no matter where they live across the country, can access support and opportunities to get a job, progress in work and realise their potential. It is good to know that there are 1,200 extra work coaches in Scotland alone. In addition, the flexible support fund is available to remove barriers for anyone looking to access the labour market and is administered by work coaches on a discretionary basis, so it is a great tool to help people overcome their own personal barriers to work. For those who have been unemployed for between three and six months, the job entry targeted support programme provides intensive support to help them bounce back as quickly as possible, and for individuals requiring upskilling to take advantage of a vacancy in a certain sector—Members have discussed particular concerns in specific sectors—sector-based work academy programmes, or SWAPs, provide claimants with those key skills and a guaranteed job interview at the end of the placement.
For young people, who are of course most at risk of long-term unemployment and have been hit particularly hard by the pandemic, we have the £2 billion kickstart scheme, which has seen over 122,000 young people start a six-month work placement across many different kinds of jobs and sectors, with 10,000 starts in Scotland alone. There are youth hubs in every jobcentre to support young people—150 youth hubs have been opened, 19 of them in Scotland—and extra support is available for those aged over 50 as well, to help them find the work they need and help them progress with their career aspirations.
We recognise the pressure people are facing with their household finances and are providing extra support for those who need it in this period of cost pressures. We must of course highlight the household support fund, which has provided £500 million of support across the United Kingdom, with £41 million going to Scotland and the Scottish Government.
We have provided extra support as well over the years, recently by increasing the local housing allowance in cash terms, with an extra £600 on average to 1.5 million households. As we look at the rising energy prices, we are working with Ofgem and the Department for Business, Energy and Industrial Strategy to ensure that we have the correct response to the recent pressures and make the appropriate changes where needed to increase our resilience to future price fluctuations. There is the energy price cap, and the winter fuel payments, cold weather payments, and the warm home discount, all of them making a real difference to people facing energy cost challenges across the country, including in Scotland.
So, we have done a lot. We will continue to do more. We are committed to working with the Scottish Government to help them achieve their devolution aspirations. We look forward to hearing more about them so we can help them in this task, and we are absolutely committed to help those—
Owen Thompson
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main question accordingly put.