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Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Stephen Flynn (Aberdeen South) (SNP)
I beg to move,
That this House warns that households will soon be suffering the worst income squeeze since the 1970s; notes The Institute for Fiscal Studies analysis that households are on course to be £800 worse off; calls on the Government to scrap VAT on energy bills, implement a windfall tax on companies which are benefitting from significantly increased profits as a result of impacts associated with the covid-19 pandemic or the current international situation, and to scrap the energy bill rebate scheme and introduce immediate emergency cash payments for households.
A phrase said to me many years ago has stuck with me, and I believe it is true for this debate on the cost of living crisis: “Poverty is a punishment for a crime you didn’t commit.” For so many people now—in Aberdeen, Scotland and across the United Kingdom—there is a real feeling of helplessness, hopelessness and powerlessness at the situation before them. Their food, fuel and energy prices are soaring, as is the price of their children’s clothes; no matter which way they turn they cannot escape the grim reality of the situation before them.
This issue cuts across all sectors of society. Just yesterday at the Dispatch Box the Chancellor was extolling the virtues of the employment figures going up. That is of course good—everyone irrespective of political party would welcome it—but he did not address the fact that for those in work, energy prices will be some 14 times what their pay rise might be; he did not even acknowledge that that was a fact. Furthermore, he did not address, let alone reflect on or apologise for, the fact that, just a matter of months ago, he took some £20 of universal credit out of the pockets of those who are not in work and are reliant on the state for social security to get by day to day.
Chris Stephens (Glasgow South West) (SNP)
On deductions by the state, it is not just the £20 uplift but the fact that hundreds of thousands of people across these islands have £60 taken off them every month in Department for Work and Pensions deductions, some of them advances and some of them so-called tax credit overpayments.
Stephen Flynn
Absolutely; my hon. Friend is a doughty champion on these causes and makes his point extremely well, and it would be remiss of the Government not to listen to him. He is right to touch on that, as we all are right to touch on the cost of living crisis, because it is a crisis: it is a crisis for households up and down the country.
What we need from the Government in a time of crisis is a response. We need them to take action to improve people’s lives—to protect them, and to insulate them from what is coming down the road—but, sadly, they have been completely lacking in that regard. I am sure that in their hearts of hearts many Conservative Back Benchers—although just a few are present today—recognise that the Government can and must go further, because all we have seen at this stage, despite the exponential increase in the price cap, which could well reach about £3,000 a year by the autumn, is £150 towards a council tax rebate.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The hon. Gentleman is right to draw attention to the price cap, but even before that consumers across the country are facing massive increases in the standing charges, something for which there should be no link to the cost of energy. It is reported that this is because we are having to fund the supplier of last resort as a consequence of the failure of the small energy companies; does the hon. Gentleman share my sense that it is wrong to expect consumers to pick up the tab for what is essentially a regulatory failure?
Stephen Flynn
I welcome the right hon. Gentleman’s intervention and he is absolutely right. The Minister for Energy, Clean Growth and Climate Change is present and I am sure he will address those remarks if he comes to the Dispatch Box later, as I see that he will.
It is not just the money towards the council tax rebate that the Government have put forward, of course, because they have gone so much further: they have given people a buy-back loan for their energy bills—buy now, pay later. That is the best they can do in this time of crisis, and of course that was predicated on the basis that energy prices would reduce over time but the situation has changed and many experts and analysts now suggest that is not going to happen. So the Government need to get real on this matter.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend is making a point about energy price increases, which will be devastating for many families, but people who live in off-gas-grid areas will be crucified by the price increases, because they rely on bottled gas, oil or wood, all of which are going up in price, and they are of course currently using more of that expensive energy. Does my hon. Friend agree that this Government need to take action now to adopt regulation for people who live off the gas grid, so that they are treated more fairly and before there is a crisis for rural communities?
Stephen Flynn
Absolutely—I could not agree more wholeheartedly with my hon. Friend on that. He makes an extremely important point, which he has been making for many months, and it is time the Government listened and took action in that regard.
John Redwood (Wokingham) (Con)
Would the spokesman and his party now agree that we need to get a lot more gas and oil out of the North sea, which would generate tax revenue that the Treasury could use to ease the squeeze, instead of paying huge sums of money to Qatar and Russia for liquefied natural gas?
Stephen Flynn
The right hon. Gentleman makes an interesting point. Of course, he will be cognisant of the fact that when the oil and gas comes out of the ground it goes into the hands of multinational countries. Do we want to be in a situation in which that gas benefits us here, rather than those abroad? Absolutely. Should we be importing from Russia? Absolutely not, and the Government have been right to take action on that. Nevertheless, what I want to see from his Government, which he should want too, is a turbocharging of investment in renewables. When are they going to come forward with their energy security strategy? I have heard talk about it in the paper, but there has been no clarity whatsoever. I shall come back to that later in my speech.
John Redwood
Most of my constituents still have gas boilers. Renewables will work one day, but the immediate crisis is that we are short of gas. Do we have our own or do we have foreign gas? If we have our own, we get tax revenue.
Stephen Flynn
It is interesting to hear that we are short of gas when I regularly hear the opposite from the Minister for Energy, Clean Growth and Climate Change. That is the important point: Government Members can try to disagree with their own Government on these matters, but in real terms we are self-sufficient. Scotland is self-sufficient when it comes to oil and gas, but we can and must go so much further on renewables. If the right hon. Gentleman wants to hang around, he will hear me speak about that in due course.
Drew Hendry
I am grateful to my hon. Friend for generously giving way again. Is it not the case that Scotland, which is a net exporter of energy—I think we produce around 153% of our needs over the course of a year—would have been able to do much, much more had this Government not stood in the face of more cheap, reliable and green renewable energy by standing for many years against allowing solar and onshore wind power when it came to the contracts for difference? We could have been much further ahead. Is it not now this Government’s responsibility to help people with the cost of living crisis, which they and the energy price increase have caused?
Stephen Flynn
Yes, absolutely. The reason why we are in the current situation is that the Government have not planned ahead. They have chosen to sit on their seat when they should have been looking to where we could go in future. I hope the Minister will address that point when he sums up the debate.
Stewart Hosie (Dundee East) (SNP)
As my hon. Friend knows, when the price of oil goes up, the tax yield to the UK Exchequer is increased; when the price of a gallon of petrol goes up, there is extra duty for the UK Exchequer; and when the price of domestic bills goes up across the board, there is additional VAT for the UK Exchequer. Does he not find it passing strange that Tory Back Benchers are not calling for the additional tax yield that the UK Government already have to be used to reduce the cost of domestic bills?
Stephen Flynn
Absolutely. As I understand it, the Treasury currently believes it is going to take in excess of £3 billion in relation to oil and gas in particular. Every single pound and penny of that £3 billion should be directed towards the provision of support for families up and down the country.
It is on that support that I wish to briefly reflect. We know the Government have gone nowhere near far enough in terms of their support for households up and down the country. What can they do? What should they be doing? We know that they should be scrapping VAT on energy bills. We know that they should be reversing the national insurance price hike—a tax that will impact not just households, but businesses, too. We know that they need to turn those loans that they have forced on people into grants, and we know that they need to overturn that £20 cut to those on universal credit. People need help, and they need help now. The Chancellor cannot continue to stand still as if nothing at all is happening.
When we discuss these things, the Conservatives often say, “Well, what are you doing? What are the Scottish Government doing?” Without getting into the technicalities of who has powers over law and where resources lie, because, of course, we know that those are the responsibility of the UK Government, it is worthwhile reflecting on what we in Scotland are doing differently to what this UK Government are doing.
We are, of course, in the middle of a fuel crisis, but an older or younger person living in Scotland can hop on the bus for free. A person in Scotland who is struggling with their health can rest assured that they will continue to get free prescriptions. A family worried about how they will feed their wee bairn will know that there are funded hours in nurseries where they will be fed, and that when they go to primary school, they will receive free school meals. With the limited welfare powers that the Scottish Parliament has, the Scottish Government not only introduced the game-changing £10 Scottish child payment, but are doubling it in a matter of weeks to £20 a week. Those are huge differences in policy objectives and intentions, and they are designed to assist people. Yet, at the very same time, we still have the dead hand of Westminster above us, forcing us to spend some £600 million each and every year just to mitigate its policies, such as the bedroom tax. We can and should be able to do so much more, but we are held back by this UK Government and their complete intransigence.
Another question that this Government rightly ask is: “You have quite a wish list there, how do you fund it?” That question is justifiable, which is why we have come forward today not just with problems—problems that we are all aware of irrespective of party—but with solutions, too. Is it right that Serco, Amazon, Netflix and Asos are able to benefit from the pandemic to the tune of billions of pounds because of the way that people’s habits have changed and because of the contracts that they have received from the Government while our constituents are struggling? Absolutely not; it is not right at all. That is why we are calling for a broad windfall tax—one that takes into account the changing landscape in the UK and globally so that we can respond to it to provide people with the support that they so badly need, and which is so badly overdue.
I accept—I think everyone in this Chamber accepts—that, ultimately, such a mechanism is for today; it is not necessarily for tomorrow. What do we do next year? What do we do the year after that? That takes me back to the point that the right hon. Member for Wokingham (John Redwood) stumbled into earlier in relation to renewables. We are very much in this mess not just because of Brexit, not just because of the pandemic, but because of the energy policies, over decades, of this UK Government. What they need to do is come forward with a clear and concise plan as to how they intend to turbocharge renewables: hydrogen; hydro pump energy storage; onshore wind; offshore wind; solar; and tidal. Scotland has the resources. Scotland has the ability to deliver that energy security not just for people living in Scotland, not just for people living in the rest of the UK, but for our friends and allies in Europe who need that energy security now more than ever. We need the Government to come forward with that plan and to do so now.
Finally, as I said earlier, food prices and fuel prices are soaring. When will the UK Chancellor finally set down his silver spoon, pick up his cheque book, and deliver the support and security that people so badly need?
The Exchequer Secretary to the Treasury (Helen Whately)
It is an honour to take part in this debate on behalf of the Government. Let me begin by reassuring the House that we in Government recognise the challenges that many households, including of course in Scotland, face with the cost of living. That is one reason why we have provided support worth over £20 billion across this financial year and next; why we are cutting the universal credit taper rate and increasing work allowances to make sure that work pays; why we are freezing fuel and alcohol duties to keep costs down; and why, last month, we announced a £9.1 billion package to help households with rising energy bills.
Given the many steps that we have taken to protect jobs and livelihoods over the last two years, no one can reasonably accuse this Government of failing to act. There was £400 billion of direct support to the economy during the pandemic, including for the furlough scheme, which protected literally millions of jobs. As our focus turns to the economic recovery, we are allocating £600 billion to gross public sector investment over this Parliament, growing the economy, and improving the lives of people up and down the country. That, as much as anything, is the story here. We have supported people, we are supporting people, and we will continue to support people. We are also determined to create the conditions, Union-wide, for them to thrive.
As the global economy has reopened following the disruption of the pandemic, inflation has risen around the world. Global energy prices have increased as factories have scaled production back up, and there is increasing demand, while supply has been disrupted. There has been a further sharp rise in global energy prices following Russia’s invasion of Ukraine. Goods prices have also risen, with global supply chains struggling to meet demand as the world economy recovers. These global factors are the main drivers of higher inflation in the UK.
In that context, we understand that some households, particularly those that are vulnerable, need support with the cost of energy. We have introduced measures to provide exactly that. For instance, the winter fuel payment provides older people with £200 towards their energy bills; it is £300 for those over 80. There are also cold weather payments. Together, those measures provided almost £2.5 billion in support to households last winter. This year, we are increasing the generosity of the warm home discount, and expanding its reach to 3 million households.
The motion mentions VAT on energy bills. Domestic fuels such as gas and electricity are already subject to a reduced VAT rate of 5%, but as the Chancellor told the House in February, a further cut to VAT on energy would disproportionately benefit wealthier households. There would also be no guarantee that suppliers would pass on any reduction to all customers, and the cut would become a permanent subsidy, worth £2.5 billion every year, at a time when we are trying to rebuild the public finances.
Ronnie Cowan (Inverclyde) (SNP)
The Minister talks about helping people. How would she categorise the increase to national insurance contributions?
Helen Whately
I just mentioned the importance of rebuilding the public finances. We know that the NHS is the No. 1 priority for the general public; it is vital that we reduce the backlogs that sadly built up during the pandemic, and that needs to be paid for.
To come back to the motion, last month we announced an additional package of support to help households with rising energy bills, worth £9.1 billion—a package that, according to the motion, the Scottish National party wants to scrap. Our package to help people includes a £200 reduction in household energy bills this autumn that will be paid back automatically over the next five years, and a £150 non-repayable council tax rebate payment for all households in council tax bands A to D in England, plus £144 million of discretionary funding for local authorities in England to support households who need support but are not eligible for that council tax rebate. As we cannot apply these council tax measures across the whole of the UK, the devolved Administrations are receiving almost £600 million through the Barnett formula. This overall approach is fiscally responsible while helping customers to manage the unprecedented increase in energy bills and helping to spread the increased cost of global prices over time.
Stewart Hosie
The Minister mentioned global prices and I was rather struck that she sounded like Gordon Brown saying that it was always someone else’s fault. It is absolutely true to say that there are global pressures causing inflation, but while some countries are capping their electricity price increases at 5%, we are allowing 50%-plus increases in domestic energy prices. For all the big numbers that she has read out, does she not understand that people cannot afford to heat their homes?
Helen Whately
We have the price cap in this country, which means that customers have been protected from the volatility in global energy prices over recent months. At the moment there is further volatility following the impact on those prices of Russia invading Ukraine, but that is not going to hit the vast majority of households’ energy bills over the coming months. We will have to get to October to see the implications of that. What we have done—as I have just mentioned; I am sorry if the right hon. Gentleman was not listening—is put in place a support package worth £9.1 billion particularly to help those who will find it more challenging to pay their bills.
John Redwood
Over the last year, the economy has grown a lot faster because the Treasury did not hike tax rates but instead went for growth. That was a great policy, so why reverse it? Is there not a danger that these tax rises and massive increases in energy prices will slow the economy down too much? If that happens, the Government will have a revenue problem.
Helen Whately
If my right hon. Friend will give me a little time, I will come on to the importance of growth to our economy, which is the right answer for the longer term in ensuring that we improve people’s standard of living.
Pressures on household finances are not generally the consequence of one single price rise; they are typically affected by an amalgam of different factors. Remedying the pressure on households therefore requires taking action on a range of fronts, not just on energy bills. Again and again, that is what this Government have done and are doing. We are acting in dozens of ways to support working families. For instance, over the winter, the £500 million household support fund has helped vulnerable households with the cost of essentials such as food, clothing and utilities. Local authorities in England have allocated the lion’s share of that funding to ensuring that it reached those who needed it most, with 50% ring-fenced for households with children. Additional funding was allocated to the devolved Administrations, including the Scottish Government, in the usual way.
We have also reduced the universal credit taper rate and increased universal credit work allowances by £500 to ensure that work pays. This is essentially a £2 billion tax cut for the lowest paid in society. It is helping around 2 million households to keep an average of an extra £1,000 per annum in their pocket. Next month, the national living wage is increasing by 6.6% to £9.50 an hour, again benefiting more than 2 million workers and meaning an increase of over £1,000 in the annual earnings of a full-time worker on the national living wage. And we are committed to going further, so the national living wage will reach two thirds of median earnings for those over 21 by 2024, provided that economic conditions allow. We have supported working families in other ways too: doubling free childcare for eligible parents, which is worth around £5,000 per child every year, and introducing tax-free childcare, which will provide working parents with 20% support on childcare costs up to £10,000.
Jim Shannon (Strangford) (DUP)
I thank the Minister for what she is saying, and I welcome the £400 million that is going to Northern Ireland under the Barnett consequentials. The Republic of Ireland has suspended VAT on fuel in the short term to try to address the issue now. Can I ask the Minister whether any discussions have taken place with the Chancellor to see whether that could be done for us here in this great United Kingdom?
Helen Whately
I am not sure I heard exactly the specifics of the hon. Gentleman’s question, but in general there is already a lower VAT rate on fuel. Overall, however, if the question is whether we should have no VAT on fuel, the Chancellor has spoken about how that would in fact disproportionately benefit wealthier households, so it simply cannot be the right thing to do when it is the less wealthy households who face the greatest challenges in paying their energy bills.
The list of what we are doing in many different ways to help households goes on and on. Increasing fuel prices are indeed a global issue, not unique to the UK. The price of crude oil has increased sharply over the past year, increasing the price consumers pay at the pump. That is why we have taken action by freezing fuel duty; drivers are being protected by the 12th consecutive year of fuel duty freezes, with the average car driver paying around £15 less fuel duty per tank, saving them a cumulative £1,900 since 2011 compared with the pre-2010 fuel escalator.
On housing, the Government are maintaining the increase to local housing allowance rates for private renters on universal credit and housing benefit in cash terms. That increase was worth an extra £600 on average in 2020-21 for more than 1.5 million households. An additional £140 million has been provided this year for discretionary housing payments for those eligible for housing support who need extra help. All that is on top of existing support for families through the welfare system, which this year will add up to £240 billion of support, including £41 billion on universal credit and £105 billion through the state pension.
Turning specifically to Scotland, on top of our energy bill support scheme, which applies there, the council tax measure in England means the Scottish Government are receiving almost £300 million more than would otherwise be the case, which they can use towards cost of living interventions.
This Government will always do what we can to help those in need, and our actions speak for themselves, but we are also determined to help people to help themselves. The Government’s plan for jobs is helping people into work and giving them the skills they need to progress and earn more, which is the best approach to raising living standards. The Government are building on the success of the plan for jobs with a total of £6 billion on labour market support for the three years to 2024-25, providing targeted additional support to help at-risk groups find work, including younger and older age groups, the long-term unemployed and people with disabilities.
Why are we doing that? Because we know that work is the best way for people to get on, to improve their lives and support their families, and because households on universal credit are at least £6,000 a year better off in full-time work than out of work.
Stephen Flynn
I mentioned earlier, and indeed the Minister will be aware, that energy prices for households are rising 14 times faster than any pay rise they may receive if they happen to be in work. What does she say to that? How is that a good thing for consumers?
Helen Whately
As I was outlining—I do hope the hon. Gentleman was listening—we have put multiple interventions in place to support people with the rising cost of living. Specifically on energy prices, on the one hand we have the price cap and on the other, the package of £9 billion in support announced literally last month, which his motion says he would like to scrap.
On top of everything we are doing to help people with the cost of living, we are helping people to help themselves through our plan for jobs, and that plan is working. The UK was the fastest-growing economy in the G7 last year, and the International Monetary Fund forecast, produced before Russia’s invasion of Ukraine, was for us to be the fastest-growing major advanced economy again this year. Unemployment has now fallen to 3.9%, below its pre-pandemic rate, and payrolled employees are at a record high.
Helen Whately
I will give way, because I am about to move on to talk about energy.
Matt Rodda
The Minister is obviously covering a range of issues, both employment and the cost of living for households. As the right hon. Member for Wokingham (John Redwood) mentioned, is now perhaps the right time to look again at the national insurance rise, given the pressure on families and the stalling rate of growth?
Helen Whately
The Chancellor has already been asked about this, and the fact is that we have taken the difficult, fiscally responsible decision to ensure that there is a long-term funding stream, both to support the NHS to tackle backlogs and to fund the cost of social care reform. That has to be the right thing to do, going hand in hand with our determination to invest in growth in this country, which I will come to in a moment.
I will just talk for a moment more about energy. We have talked about the support for people’s energy bills, but the best way to support people with the cost of energy is to tackle the problem at source and reduce the overall cost of energy in the UK, as well as reducing demand for energy, and we have already taken steps to do that. Our investment in renewables in recent years has already reduced our dependency on gas, meaning overall that bills are now materially lower than they would have been.
Looking ahead, now is the time for us to go full steam ahead with our transition to renewables. We are investing in nuclear. We are accelerating our progress on renewables, in which Scotland plays an important part, and we are boosting energy efficiency, investing more than £6 billion in energy efficiency measures over this Parliament, including £3 billion to install energy efficiency measures in low-income homes. That will save low-income households hundreds of pounds a year off their energy bill, as well as being a fabulous growth opportunity for our economy.
The motion we are debating today specifically mentions implementing a windfall tax
“on companies which are benefitting from significantly increased profits as a result of impacts associated with the covid-19 pandemic or the current international situation”.
I am sure that SNP Members are talking about a windfall tax on North sea oil and gas. I say to them, and in particular the hon. Member for Aberdeen South (Stephen Flynn), that North sea oil and gas are important to our energy transition.
The UK Government place additional taxes on the extraction of oil and gas, with companies engaged in the production of oil and gas on the UK continental shelf subject to headline tax rates on their profits that are currently more than double those paid by other businesses. To date, the sector has paid more than £375 billion in production taxes. Those of us on the Government side of the House support the North sea oil and gas sector and its role in our energy security and our energy transition.
This Government have consistently acted whenever and however necessary to support families and businesses. It is our responsibility on their behalf to protect the public finances. Our level of debt means we are and have been vulnerable to shocks, including changes in interest rates and inflation. A sustained one percentage point increase in interest rates and inflation would cost more than £22 billion by 2026-27. Events in Ukraine are a clear reminder that there will always be the risk of further economic bumps in the road, and we must be ready. To that end, as we come out of the pandemic, we must focus even more on boosting productivity, growth and investment across the whole UK.
We are focused specifically on the three priorities that the Chancellor outlined in his recent Mais lecture: capital, people and ideas. That will help us foster a new culture of enterprise and drive growth. The Government continue to support business through the temporary super deduction to encourage firms to invest in productivity-enhancing plant and machinery assets. We are committing to unprecedented levels of investment in ideas: increasing investment in research and development to £22 billion a year, reforming and improving our tax credit system, improving access to finance, and helping small businesses through our flagship Help to Grow programme. The £4.8 billion levelling up fund will invest in infrastructure that improves everyday life across the UK, while the £2.6 billion shared prosperity fund will support our wider commitment to level up all parts of the UK. In these cases, we have public investment crowding in private sector investment, which is what will drive the growth of our economy. The spending review also confirmed a total of £100 billion of investment in economic infrastructure over the spending review period. Together, that adds up to an extraordinary, and extraordinarily ambitious, programme of investment in the UK.
The Government understand that this is a challenging time for British households, including in Scotland. That is exactly why we have acted in dozens of ways on multiple fronts for the entire United Kingdom, but it is also why we are looking to the future, focusing on our economic recovery, on growth and on skills—elements that together will raise the living standards of millions of people all across the Union.
Ian Murray (Edinburgh South) (Lab)
I am pleased that we are debating this important topic and I thank the SNP for bringing it to the Chamber again. Opposition parties have held a number of debates on the cost of living, which is critical for every part of the country.
The cost of living crisis really matters because millions of families across the UK face the hardship of not knowing whether they will be able to pay their bills. That worry plagued many when we spoke at the Dispatch Box on the topic in January, but in the interim, the Government have done close to zero to help. Listening to the Minister, everything in the country seems to be okay, but all her words will be no consolation to those who have to make the difficult decision about whether to heat or eat. That is the biggest single indictment of the Government to date.
In the intervening period, we have of course seen the most awful, barbaric and illegal invasion of Ukraine, which has not helped and has led to higher prices in many areas as a consequence. Yesterday, the Office for National Statistics revealed that average earnings fell 1% in the three months to January, which is the biggest fall in earnings in a decade. It is against that backdrop that working people face this crisis.
Although the Government may seek to convince people that the crisis is entirely the result of the war in Europe, the reality is that it long predates the Russian invasion. Let us be crystal clear with the public: the cost of living crisis for my constituents and every constituent across the country was with us in spades before Ukraine. One of my constituents described the crisis as “everything going up” but his wages; energy bills are due to skyrocket next month with the lifting of the energy price cap and there might be much more to come later this year.
Matt Rodda
My hon. Friend is making an excellent point that a lot of the pressure on families predates the current crisis by some months. There are an enormous number of food banks across the whole of the UK—in Scotland and England—and my experience of working with constituents and those hard-working charities is that there is an enormous need out there that predates the crisis in Ukraine. I hope that the Government will listen to that point.
Ian Murray
My hon. Friend raises a critical point and we have to keep dragging the Government back to their responsibilities as a result of being in power. Much of the crisis in our public services, including the NHS and social care, also predates covid but the Government keep telling us that perhaps that is not the case.
Inflation hit 5.5% in January and is expected to rise even further. Scots are facing the prospect of council tax, water bills and train fares rising while wages, as I have said, are falling in real terms. Perhaps unsurprisingly, the Conservative party failed to back the fully costed plans of the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), to tax the oil and gas companies’ excess profits to reduce people’s energy bills. Instead, the Chancellor’s response to the crisis has been to make matters worse, not better. We have already heard about the buy now, pay later scheme using taxpayers’ money to lend money back to taxpayers via the energy companies that they will have to pay back on future bills. That is not helping; that is deferring the problem.
The Government have refused to exempt VAT on skyrocketing energy bills, which was supposed to be one of the much-vaunted Brexit dividends.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
When the Minister winds up the debate, I wonder whether he will address the point that, as the hon. Gentleman rightly alludes to, part of the energy cost is pre-Ukraine. We left the European Union and its single energy market, which is detrimental to the rest of the UK.
Ian Murray
Those are some of the consequences that we start to see when the chickens come home to roost.
When the Minister responds, perhaps he can also clarify the Government’s policy on VAT on energy bills, because VAT is one of the most regressive taxes. By removing VAT on energy bills, the Government would remove a regressive tax that affects the poorest the most. I understand that if they remove the VAT, they help everyone, but perhaps it could be done temporarily and perhaps the £2.5 billion-plus, and increasing, that is taken from VAT on energy bills could be diverted to those who are required to pay higher energy costs.
There will be the largest tax burden since the 1950s, which is astonishing for a Conservative Government, and a more than 10% increase in national insurance, not just for working people but for businesses. We have a Conservative Chancellor who is high tax and the highest-taxing Chancellor in more than 70 years.
Mike Kane (Wythenshawe and Sale East) (Lab)
My hon. Friend is making an excellent speech. Do I understand rightly that Labour’s fully costed windfall tax on the energy companies is opposed by both governing parties in Scotland?
Ian Murray
It certainly is. To correct the Minister—I hope it is not the third time already; I am on only the second page of my speech—she assumed that the SNP motion backed a windfall tax on oil and gas, but it is actually the opposite. The motion is not to back a windfall tax on oil and gas, but to back a windfall tax on everything but oil and gas—maybe the SNP can clarify that later.
This Chancellor is also presiding over the largest hit to disposable income since the second world war. How are any of those policies helping, alongside, as we have already heard, the largest ever overnight reduction in support for the poorest households through the reduction in universal credit and the scrapping of the triple lock for pensioners? They are making people poorer and taking more money out of their pockets at a time when everything is going up—a cocktail of Government decisions that mean the discussions around the dinner table for many families are about the worry of paying the rent, the mortgage or the energy bill or for the weekly shop or to fill the car they need for work.
Families face a perfect storm of the Government’s own making: rising taxes, rising bills and rising inflation, and lower wages in real terms. This is all the result of over a decade of Conservative mismanagement of the economy. They like to think they have been in government only since 2019, but they have now been in place for 12 years. The policies of a succession of Tory Chancellors have created a low-wage, low-growth insecure economy.
I want to talk for a minute or two about the Scottish Government’s role in this. As the hon. Member for Aberdeen South (Stephen Flynn) rightly said when he moved the motion, the Scottish Government have a stake in this and I am grateful that the SNP has brought this debate to the House. The SNP is correct to point out the lack of action by the UK Government in trying to tackle this, as we have all discussed, but it is not an observer in this crisis as it is in government and can also help.
Scots are facing the prospect of higher council tax bills, because for over a decade the Scottish Government have decimated local government funding and spent 15 years promising to scrap the council tax—a promise that they continue to break at every election.
Owen Thompson (Midlothian) (SNP)
I find it particularly useful that the hon. Gentleman mentions council tax, given that the Labour administration in Midlothian proposed a 4.7% increase in council tax. Thankfully, the SNP amendment to that ridiculous proposal was accepted and that amount was reduced.
Ian Murray
We do not want to see council tax bills rising anywhere across the country, but my own council, the City of Edinburgh Council, has had £1 billion ripped out of its budget over the last 10 years by decisions to take Conversative austerity, times it by four and pass it on to local authorities. [Interruption.] I hear the cries of “What?” behind me, but these figures can all be checked. The 3% of Conversative austerity is multiplied by four and passed on to our local authorities who are delivering these services. Councils are forced to make decisions that they do not want to make. [Interruption.] All those figures can be checked, Madam Deputy Speaker, despite the SNP Members chuntering from the back.
The Chancellor’s measly council tax rebate scheme, while welcome at £150, will distribute more money to the Scottish Government, but the SNP response is just to reflect that entire policy. The Minister mentioned this. To put that into context, there will be £150 off council tax in bands A to D in Scotland, which means I will get £150 off my council tax. How is that fair? Of course, I will be donating it to local charities, but that policy is money wasted that should be directed to those who need it the most.
What of this one-off windfall tax on the unexpected cash bonanza for the oil and gas sector? The SNP group here in Westminster has been more interested in standing up for Shell than standing up for Scottish taxpayers. [Interruption.] Again, Hansard has all of this documented. When my colleagues and I put down a motion in this House for a vote on a windfall tax on the enormous excess profits of the oil and gas companies, the SNP sided with the Conservatives and failed to back it. In fact, the SNP BEIS spokesperson, the hon. Member for Aberdeen South, who is sitting not yards from me and who moved this motion, defended that position vociferously in this House. The deputy leader of the SNP did not back our motion on BBC “Politics Scotland”, live on television, and the hon. Member for Gordon (Richard Thomson) said:
“I am sorry to say that I have not heard anything to persuade me why a one-off smash and grab on the North sea industry is the best way to deal with this crisis.”—[Official Report, 1 February 2022; Vol. 708, c. 239.]
Let us see what this crisis is doing. Shell’s profits have quadrupled, in what its CEO has described as a “momentous” year, to an unexpected $19 billion. That is $600 a second in profit, driven primarily by the huge increases in energy prices. While Scottish families face the heartbreaking choice between eating and heating, the CEO of BP is describing the energy sector as a “cash machine” for his business. Under our proposals, he would be popping his corporate credit card in the cash machine, and giving a little bit of that money back to struggling families. Before both Governments—the Scottish Government and the UK Government—trot out the usual defence of harming investment, most of that unexpected profit is going to additional bonuses for shareholders in dividends and buybacks of shares, so such businesses will not be using that money for investment.
Now we see that the SNP, after weeks of defending not backing a one-off windfall tax to help Scottish people pay their bills, has its own proposal with one line in the motion about
“a windfall tax on companies which are benefitting from…impacts associated with the…pandemic or the…international situation”.
Surely that means oil and gas. Does it mean oil and gas? Does the BEIS spokesperson want to intervene and tell us if it means oil and gas? [Interruption.] Nobody on the SNP Benches is saying it means oil and gas, so what on earth does it include? Will it not affect investment, if that is the defence for oil and gas, in other industries? Do they have any detail on how much that would raise, how it would be implemented or who would be impacted?
Does this include every business that has turned a profit during covid? What about small businesses such as the micro-breweries that turned their hand to making hand sanitiser during the pandemic—should they pay? What about Pets at Home, because of the boom in people buying pets during the pandemic? The critical argument is that these businesses’ profits are not driven by the increases in energy costs that are hitting family finances directly. It is the oil and gas companies’ profits that are driven by the crisis, and it is they that should pay a little more. It is their additional, excess and unforeseen profits that are directly linked to the rise in bills paid by millions of families, and I have yet to receive an intervention to find out whether the SNP motion includes oil and gas—nothing. Quite obviously, we can come to our own conclusion that it wants to tax Irn-Bru, but not tax oil and gas.
Gareth Davies (Grantham and Stamford) (Con)
Not that I am going to make a habit of trying to defend SNP Members, but one of the reasons why they may not include oil and gas in their windfall tax plans is perhaps that they watched the Treasury Committee hearing with a panel of independent experts specifically on the windfall tax, who said that it would be ineffective and would damage investment. It would be ineffective because BP and other oil companies actually make their profits elsewhere, not in the North sea, and as a result, the costings the hon. Member describes are not up to scrutiny or robust. Could he explain to the House how he has got to the figures he is putting forward as fully costed?
Ian Murray
Yes, if we increase the additional rate on the oil and gas sector from 40% to 50%—10 percentage points extra—that will generate the money towards our fully costed plan for raising energy prices, but very well done for defending the Scottish National party, and both the Conservatives and the SNP knocked back the oil and gas sector’s windfall tax when it was brought to this House.
To go back to the central question of this debate on the cost of living crisis, many families are worried about the email dropping into their inbox telling them that a direct debit will treble, or the bill landing on the mat saying their energy bill will become unaffordable, yet both Governments refuse to ask the companies making the money, directly driven by the energy crisis and the energy prices that are generating those extra direct debits or those extra bills, to put a little bit more into the pot to help. With the SNP’s current policy in the motion, and SNP Members still will not tell us if it includes the oil and gas companies, AG Barr, a successful Scottish business that made more profit last year than pre-pandemic, would pay a windfall tax, but the oil and gas companies would not—taxing ginger, not taxing gas.
Matt Rodda
My hon. Friend is making an excellent point because surely the point is that, with the super-profits for these very wealthy companies, senior leaders of a number of them have been quoted as saying that they see their own business as a cash machine. If we contrast that with the day-to-day struggles of people of this country, surely he is putting forward the right policy.
Ian Murray
Those with the broadest shoulders should pay the most, but I just say to everyone in the country watching this who is worried about their bills that we have two Governments who could do something about this, but they are defending the profits of the oil and gas companies rather than trying to help them with their bills. We could achieve so much more if all put our shoulders to the wheel and helped with this energy crisis.
Christine Jardine (Edinburgh West) (LD)
The hon. Member makes an excellent point. Does he share my curiosity about whether the SNP’s problem is that it spent so much time saying that Cambo should not be developed and attacking the oil industry that it finds itself in a quandary and, as always, its main priority is what is the best argument for independence rather than what is best for the people of Scotland?
Ian Murray
If the SNP has an argument for not taxing the oil and gas companies, it can have the floor to tell us. I am happy to take an intervention. I am also happy to take an intervention that clarifies what their motion means. Does the line that says “a windfall tax” include the oil and gas companies? Not one SNP Member, including the BEIS spokesperson, will intervene and tell me that that is what it intends. That tells us all we need to know. The SNP is sitting on the fence, hoping that the Government get the wrong idea, and putting out the press release to say that the Government are attacking it.
Stewart Hosie
This is a serious debate affecting some tens of millions of families in the UK, so the sooner he stops wittering on about Irn-Bru and Pets at Home and makes a substantive point, the better for the viewing public.
Ian Murray
I make this substantive point. Your motion, which you brought to the House to debate today, says that you are happy to tax Irn-Bru and Pets at Home, but you are not willing to tell me whether you will tax the oil and gas companies. Am I correct? I am correct. Excellent.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please do not use the word “your”, because that is referring to me, and I am not doing anything.
Ian Murray
Apart from chairing the debate wonderfully, of course.
Let us make the serious point. We are debating the motion in front of us and we cannot get clarity from its mover about whether it includes a windfall tax on the oil and gas companies that would give every single household in Scotland £200 off their bills and the poorest 815,000 households £600 off their bills. That is what we are talking about. That is the substantive point that I am making.
Children will be going to bed cold or hungry—or both—and the best that the Chancellor can do is put up their parents’ taxes and lend them their own money to take a tiny amount off their energy bills. It is simply not good enough. The Trussell Trust says that two out of five people on universal credit are forced into a spiral of uncontrolled debt. Labour’s plan to tackle the cost of living crisis would put money in the pockets of Scottish families, helping them to make ends meet, and take worry out of receiving that unaffordable direct debit increase from their energy supplier. Across the UK—I repeat this again, because the right hon. Member for Dundee East (Stewart Hosie) wants a substantive point—we would introduce a fully costed, worked out plan for a windfall tax on oil and gas companies through which every single household in Scotland would get £200 off their bills and the 815,000 hardest hit households would get £600.
In Scotland, the Scottish National party has the power in its hands to do more than just bring Opposition day motions; it can change lives, too. That is what Labour would do. We would use the Barnett consequentials that the SNP has spent on replicating the Chancellor’s unfair policies to give a Scottish fuel payment of £400 to nearly 600,000 households facing the brunt of the crisis. We would top up the Scottish welfare fund so that local authorities could use their discretionary offer further to support households.
Ben Lake (Ceredigion) (PC)
I am interested to hear about the shadow Secretary of State’s proposals for Scotland. Has he had an opportunity to raise them with his colleagues in the Welsh Government, who have done exactly the same as the Scottish Government, whom he has criticised so heavily?
Ian Murray
The bottom line is that I should not be getting £150 off my council tax bill. That seems fair, and I think that we agree on that. We need much more imagination in how to get money into the pockets of the poorest who require it. The best way is to ask those with the broadest shoulders to put a little more into the pot. It is certainly not the whole host of Ponzi schemes reeled off by the Minister whereby people are lent their own money and will have to pay it back later. We need to implement long-term solutions to keep bills low such as improving the energy efficiency of Scottish homes and, as was mentioned, dealing with off-grid, which is a huge issue in Scotland.
That is a proper plan to tackle the cost of living crisis, unlike this back-of-a-cigarette-packet plan designed to help solve a political problem for the Scottish nationalists—who do not want to back a windfall tax on oil and gas but will not even tell us in public if that is what their motion is intended to do—or the Chancellor who is not only doing little to help but is costing people much, much more and making it worse. That is the difference Labour can and would make in power. We do not want just to oppose the Government in Opposition day debates; we want to replace them altogether, which the Scottish National party can never do.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I think Rosie Winterton, when she was last in the Chair, suggested between six and seven minutes, and then everybody can get in. We will try to do that without putting a time limit on.
Neil Parish (Tiverton and Honiton) (Con)
It is a pleasure to speak in this debate. I think all parties in this House are very concerned about the cost of living for all our constituents.
First, may I tackle the situation of very high energy prices? I commend our Government on the amount we have put into green energy, offshore wind energy and solar farms. We have many solar farms in my constituency. In fact, my constituents often say there are too many, but they contribute hugely to energy.
Christine Jardine
On that point, subsidies for renewable energy have been cut. Today, we are having to go to Saudi Arabia for oil and gas because the Government did not invest in renewable energy in this country sufficiently quickly. Does the hon. Gentleman agree that it is now time for the Government to step up to the plate and start doing a better job in that area?
Neil Parish
What happened with renewable energy, especially solar and wind, is that the price came down and we achieved a great deal of solar and wind energy without having to pump as much public money into it. That is very much a good thing and I commend the Government for what they are doing. The last Labour Government did nothing on nuclear power. The major nuclear power station at Hinkley Point, with two very big reactors, will produce 8% of our national need. That is the sort of thing that will solve our energy crisis and, in the long run, bring prices down. I also want tidal power at Swansea Bay and Bridgewater Bay to be reconsidered. I believe we are missing a trick there. We can produce very good energy from the second-highest rising tide in the world, so let us get going.
We have to recognise that at the moment energy prices are governed by oil and gas. What I would say to Her Majesty’s loyal Opposition, as they wax lyrical about having a windfall tax on oil companies, is that we need our oil companies, including those off Scotland, to produce more oil and gas. Who is making the murderous intervention in Ukraine? It is the Putin regime. What does the Putin regime rely on? It relies on the money from energy from both oil and gas. Therefore, it is time for us to produce as much oil and gas as we can. I very much support renewables and the environment, but we have to wake up to the fact that we need to pump oil and gas out of the ground. Putting a windfall tax on those companies would reduce their ability to invest. I urge the Chancellor to look at taxing those companies more if they do not invest, and less if they do. Let us get that going.
I want energy costs to come down. The increase in the cost of energy, both gas and oil, for my constituents has been huge. I have a meat wholesaler in Axminster whose energy bills have gone up from £90,000 to over £300,000, so it is not just individuals who are affected, but businesses. That means the cost of food goes up. It all has a knock-on effect on the cost of living for all our constituents. Many of my rural constituents have to buy heating oil. One constituent has been given a price of 186p per litre. However much the price of crude oil has gone up, there is no justification for such prices. We need to look not only at the tax on fuel, but at what individual companies are doing and whether they can justify such huge increases in the price of fuel. The Chancellor could also look at VAT on heating fuel: it is only 5%, but if the price doubles from £1 to £2 per litre, that will mean 10p in VAT, so getting some of that back would help at least.
I turn to fuel duty. Petrol hit a new high of 163p on Monday, with diesel at a record 173p. The RAC says that filling a family car’s 55-litre tank with petrol now costs more than £90 for the first time. Fuel duty is set at 58p per litre for petrol and diesel; VAT is 20%, which means 35p per litre of diesel and 33p per litre of petrol. The Chancellor will therefore have some leeway in his statement. There is no doubt that fuel and diesel costs hit everybody in this country, but they hit the rural population hardest, because the distances we travel to go to work or carry food around are all much greater. I very much support what the Chancellor and other Conservative Chancellors have done to keep duty down, but these are extraordinary times. None of us thought that we would see fuel rising to nearly £2 per litre.
Let me move on briefly to issues with the costs of farming and the costs to farmers. Some farmers have reported paying as much as 120p per litre for red diesel, compared with 73p a fortnight ago. I do not think that that 65% rise is justified, so please can we look at it very carefully? White diesel—derv—has risen by only 15% in the same timeframe. At 47p per litre, duty is lower for red than white diesel, while VAT is lower at 5%, so surely there is a case to be made that some suppliers are profiteering.
Nitrate fertiliser is now more than £1,000 a tonne, compared with £647 in January this year and £245 in January 2021, and the cost of urea, phosphate and potash is going up, so I hope that the Chancellor can see ways of helping food production. One of the issues in the terrible situation in Ukraine is that it is very much the breadbasket of the world, especially for the export of wheat. Wheat prices in this country are now at some £300 a tonne. To poultry and pig farmers, feed is an enormous cost, so those price rises will add to the cost of living and we will need to take them very seriously in the forthcoming Budget.
I commend the Government for their work to help those who are struggling to pay their bills. The cost of living crisis—and it is a cost of living crisis—is the one thing that hon. Members on both sides of the House know we need to face up to, and I believe that the Government are facing up to it. I look forward to the Minister’s winding-up speech.
Stewart Hosie (Dundee East) (SNP)
As the motion makes clear,
“households will soon be suffering the worst income squeeze since the 1970s”.
The Bank of England has said that inflation could reach more than 7% in April. Households’ average energy bills are forecast to rise by 54%—almost £700 on average—and there is a very real fear that energy costs could rocket again by a comparable amount in October.
Let me put that in context. One in seven people in Scotland are already finding household energy bills unaffordable. That is 640,000 people, and equates to 7 million people across the UK. Whether the cause of these difficulties is simply inflation, the massive hikes in energy costs themselves, low pay or underemployment, the fact that 68% of working-age adults in the UK who are in poverty live in households where at least one adult is in work—the highest figure on record —speaks volumes about the Government’s failure even to understand, let alone take seriously, poverty and what it means in this country. What else could explain their hiking national insurance contributions, removing the universal credit uplift, and allowing energy companies to impose brutal increases on people many of whom were already having to choose between heating and eating? According to the Resolution Foundation, those ill-conceived policies could lead to a fall in real household income of £1,000 per year for working-age households.
Of course, what successive UK Governments have not done simply makes the situation worse. We have all seen—and have just heard about—petrol and diesel approaching £2 per litre, and in some cases it already costs more than that. That is £9 or £10 a gallon, which essentially means that it costs over £100 to fill up an average saloon car tank. That is prohibitively expensive for someone on modest wages who simply wants to fill up the car in order to get to work. Yet every Tory Government I can recall has set their face against a “fuel duty regulator”, which would at least have moderated some of these obscene increases. May I just respond to something that was said by the shadow Secretary of State, the hon. Member for Edinburgh South (Ian Murray)? Let us remind ourselves that Shell alone made £4.7 billion of profit in the final quarter of 2021, and £14 billion in the entire year. So someone is doing very nicely out of these rising costs.
I now wish to turn to a slightly different energy-related matter. Yesterday I received an email from my constituent Elisabeth Walton. She wrote:
“I am writing to you as, being my representative in the House of Commons, I am hoping you will be able to seek an answer for people like me who have been unable to heat their homes as a result of rising prices. I live in an electric-only home, and chose so in an effort to reduce my reliance on fossil fuels.
While I have done everything in my power to reduce the amount I spend on heating (switching from a prepay meter, insulating windows, draught excluders, blankets and hot water bottles), as a single income household with a disabled partner I simply cannot turn on my storage heaters due to the sheer cost.
Could you please explain to me why, with such investment in renewable energy, that my electric standing charge could have more than doubled despite the only price rises affecting oil and gas...
Why is VAT not being cut? Presumably this is one of the actual benefits Brexit could offer us? What is the government doing besides forcing repayable loans onto us?
Why are energy business profits not being controlled to avoid the exploitation of powerless people?
Is there anything I can do to apply pressure to these companies and ease this hardship?
I have gone to my employer to plead for a raise or increased responsibility to meet this increase in living expenses, particularly as I continue to work from home, but this has been flatly denied.”
This is someone who has already done everything she can, and yet is being hammered with energy price rises.
Angela Crawley (Lanark and Hamilton East) (SNP)
Many of my constituents have written to me expressing the same concerns. Furthermore, the majority are members of single-parent families, particularly women, who have already borne the brunt of austerity and the worst effects of the changes in universal credit. They will not now benefit from the £20 uplift that the Government have removed from so many families who needed it. Does my right hon. Friend agree that more needs to be done to support those families?
Mr Deputy Speaker (Mr Nigel Evans)
Order. I remind hon. Members who intervene to face forward so that you are addressing the House and are properly picked up by the microphones.
Stewart Hosie
My hon. Friend the Member for Lanark and Hamilton East (Angela Crawley) is right that more must be done across the board. So far, women have particularly borne the brunt of the universal credit reduction, and people on modest incomes will bear the brunt of the national insurance increase. Of course, we must take more action across the board.
On the narrow point about the increase in standing charges, what possible reason can there be for energy standing charges doubling other than blatant price gouging and profiteering? The UK Government could act to stop this today if they had the will. This House was prepared to expedite sanctions on Russian oligarchs—in fact, we all said they should have happened already—and, given that we are facing the worst inflation since the 1970s, I am pretty confident this House would be prepared to expedite legislation to outlaw the daylight robbery of people through this obscene profiteering.
I am conscious of time, so I will not take much longer. I am struck by the stark public warnings about the rise in the cost of living. Martin Lewis has said that people were already at risk of “starving or freezing,” and the anti-poverty campaigner Jack Monroe has said that the cost of living crisis will have “fatal” consequences. The Government need to listen not to us or even to high-profile campaigners but to the millions out there who I fear will soon be cold and hungry, and take urgent and immediate steps before this crisis spirals out of control.
Scott Benton (Blackpool South) (Con)
I am grateful for the opportunity to speak in this debate on an incredibly important issue for many families in Blackpool. My constituency is among the most deprived in England, with the numbers of households in poverty, in receipt of benefits and looking for work being far higher than the national average. Indeed, eight of the 10 most deprived neighbourhoods in England are in Blackpool. Some commentators have said we are on the cusp of a cost of living crisis, but the sad reality is that many of my constituents have been struggling to manage their household budgets for a very long time.
Let us be clear that to frame this debate, as the socialists and Scottish nationalists have, as a “Tory cost of living crisis” is completely ridiculous and ignorant of the facts. The unavoidable truth is that the inflationary pressures created by economies emerging from the pandemic, the increases in wholesale gas prices and Russia’s illegal invasion of Ukraine have caused, and will continue to cause, a huge strain on household budgets for the immediate future, so we need to be honest with people about the causes of inflation and the fact that higher energy bills, food prices and prices at the pumps are not going away any time soon.
We also have to be honest with people that there is only so much that Governments can do to mitigate these higher costs. Governments cannot eliminate every single price rise in a free market, and we should not pretend otherwise. This Government are already providing a £20 billion package of support to help families with the huge increases in the cost of living. More families are in receipt of universal credit in Blackpool than anywhere else in this nation, and many of them will be benefiting from an effective £1,000 tax cut through our changes to the universal credit taper rate.
People in Blackpool will also disproportionally benefit from the significant rise in the national living wage to £9.50 per hour. Of course, those are not the only measures through which this Government are supporting families. The Chancellor has already announced the £350 package of household support for energy bills and council tax, which is worth some £9 billion, and we are providing more discretionary funding to local authorities to help those in need, as well as increasing the warm home discount to £150 and extending its eligibility. This Government have a good record in supporting families, but these are unprecedented times. We can do more and we must look to do more. Whether by looking to temporarily reduce fuel duty to protect motorists from the surge in prices or looking again at the national insurance increase, the upcoming Budget presents an opportunity to demonstrate that we understand the pressures that families are facing.
On energy, Governments of all colours, for decades, have failed to ensure a supply of affordable and domestically produced energy, and the successive failures are now coming home to roost. The drop of UK nuclear output to its lowest level since the 1980s is particularly concerning, and previous Governments, of both parties, have dithered on nuclear for far too long. I have some sympathy with the Opposition’s call to cut VAT on energy bills, and I have spoken about that on several occasions, but my understanding is that the cut would not apply to Northern Ireland, due to the Northern Ireland protocol, and of course the money to fund public services has to come from somewhere—I am afraid there are no easy options here. I also believe that there is a strong case to remove the cost of so-called “green levies” from energy bills, which could save households about £150 to £200 per year, on average. Many of my constituents would be shocked to find out that these levies cost them so much, and that some of the schemes they subsidise are not particularly green. However, once again, if they are taken away from bills, they will no doubt end up in the Exchequer’s lap and fall on general taxation, so we have to be careful what we wish for.
In the longer term, the Government must ensure that more nuclear power plants are brought online, and I welcome the new finance model for nuclear, which encourages a wider range of private investment into new nuclear projects. I also welcome the Government’s support for and investment in the small modular reactors currently being pioneered, which would reduce the cost of nuclear in the long term, letting it work alongside renewable sources.
Neil Parish
I congratulate my hon. Friend on his speech so far. Rolls-Royce can produce a lot of these smaller nuclear reactors, and we probably need to be able to boost Rolls-Royce to get those reactors out.
Scott Benton
I thank my hon. Friend and he makes a good point. I know that he shares my ambition for the Government to expand their capabilities on nuclear.
We also need to consider further investment in North sea oil and gas, in order to ensure a smooth transition to green and nuclear. Of course, these measures would not necessarily protect households against rising bills today, but they would provide security of supply in the longer term, reduce our dependency on foreign powers and help to reduce bills to consumers in the longer term.
In closing, it would be remiss of me not to point out that the state can only do so much. Work pays, and so getting people into employment so that they can provide for themselves and their family ultimately gives them the best opportunity. This Government have presided over a jobs miracle, and it is remarkable to think that there are more people in work now than before the pandemic, with the number of employees on payroll at a record high. However, again, there is more we can do. Blackpool has one of the highest unemployment rates in the country and there are more than 2,000 people out of work in my constituency alone. Yet there are hundreds of job vacancies locally, with employers telling me that they advertise for new posts and that time and time again people either do not apply for them or, on some occasions, turn up at an interview and seemingly go out of their way not to get the job. I know that the Department for Work and Pensions has taken steps to incentivise people into work, and that work needs to continue. If there are jobs out there, people need to take them.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
It is interesting to follow the hon. Member for Blackpool South (Scott Benton). It was nice to hear that he believes his Government are not doing well enough. We on the SNP Benches certainly agree with that, if not with everything in his speech.
Modelling carried out by the fuel poverty campaigners Energy Action Scotland on the impact of energy price rises in April suggests that 41% of households in West Dunbartonshire will be living in fuel poverty following the increases. Indeed, the front page of the Lennox Herald in my constituency has had the headline, “Families are turning down food because they can’t afford to cook”. This was a quote from the local food bank in Dumbarton, Food For Thought, which revealed that people in need are actually turning away meals because they cannot afford the energy required to heat them. At the beginning of the century, food banks were a rarity in our communities, but after years of the austerity-driven agenda from the Conservative Government that caused great hardship to vulnerable households while letting big business cronies and foreign owners off scot-free, they have become life rafts in a sea of inequality.
My right hon. Friend the Member for Dundee East (Stewart Hosie) alluded to the 1970s, which some of us are old enough to remember, as well as growing up in the 1980s. It is woeful in this day and age that anyone should consider that people now turn off their washing machines and wash their clothes and bedlinen in cold water, or would use a brush and a pail rather than a Hoover. It seems absolutely ridiculous. I remember a single-parent family who had to do the exact same thing. They were lucky that they had family who could help them with that impact of the aggressive politics of the British Conservative party. How my father, as a single parent of four kids—one of them profoundly disabled; he never made to adult life—got through it, I have no idea. But all is not lost for the Government. They need to take urgent, real action before the irreparable damage that was done in the ’80s is foisted yet again on households such as those in West Dunbartonshire—indeed, across the whole of the UK. Introducing immediate emergency cash payments would make a difference for many households and save many from falling into hardship. It is the right thing to do from a moral point of view but also from an economical point of view.
While much attention is quite rightly focused on rising energy costs, there are other factors impacting on the cost of living that need to be addressed. Colleagues have alluded to them and will continue to do so, so I will raise just two factors and how they are affecting my own constituency caseload. My office has been inundated by families who, despite working, rely on universal credit to help make ends meet but who are now desperately calling for further help. The Government’s callous £1,040 cut for millions claiming UC in the middle of a cost of living crisis has had a devasting impact on these families, and the further price increases are leaving them vulnerable, scared and, indeed, impoverished. The Chancellor’s autumn Budget announcements barely tinkered around the edges and will not come close to compensating for the cuts to universal credit.
The UK has one of the lowest sick pay rates in the OECD. The current rate of £96.35 per week is wholly inadequate, and one in five workers is not eligible for it. The specific groups most likely at risk are women and those in insecure work. The UK Government must surely believe that increasing statutory sick pay in line with the real living wage, and removing the threshold and extending it to 52 weeks instead of 28, is long overdue given the traumas of so many during the pandemic.
If the Chancellor needs any pointers on how to tackle this issue, we need only cast our eyes to the Scottish Parliament and its Government, and the priorities that they are setting with the limited powers of devolution. In many areas where the Scottish Parliament has devolved powers, Scotland enjoys lower than average costs compared with those in England and Wales, be that average household water charges, council tax bills or rail fares. The Scottish Government are delivering their game-changing child payment, one of five family social security benefits, and unique in the UK. I say “social security” because it is not a hand-out: we pay for it; it is what socially progressive Governments do. That will double in value in April, impacting immediately on 110,000 children in Scotland. The Scottish Government are also committing more than £3.9 billion for social security expenditure in 2022-23, providing support to more than 1 million people; that is £360 million above the level of funding to be received from the UK Government. It will help low-income families with their living costs, including heating, and enable disabled people to live full and independent lives; it will pay for the new adult disability payment.
Those are just some of the actions taken by the Scottish Government, who care for the people they govern: a Government who are serious about tackling the inequalities that exist in our country—systemic inequalities founded in the traumas of the ’70s and ’80s —and who want to create a fair and better country for all.
The Scottish Government can only do so much at the moment with the limitations of devolution, but with the full powers of national self-determination delivering independence they can deviate from both the previous courses of British Governments and the present Government, who have never worked for the people of Scotland, as well as the people of England, Wales and indeed Northern Ireland.
As I have said, serious times call for serious measures and I, like my constituents, have no faith that the UK Government are able to, or capable of, delivering them.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. The wind-ups will start at 6.40 pm.
Suzanne Webb (Stourbridge) (Con)
As my hon. Friend the Member for Blackpool South (Scott Benton) said, these are unprecedented times and families are facing unprecedented cost of living pressures, but it is important that we set the scene. The covid-19 pandemic has created an immeasurable strain on global supply chains, leading to increasing inflation and rising prices of food and everyday household items. We have seen wholesale fuel and energy prices rise due to increased global demand for gas as economies around the world recover from the pandemic, and that has been compounded by Russia’s invasion of Ukraine, which has pushed oil and gas prices up even further. We may only import 4% of our gas from Russia but, as the world’s largest exporter of natural gas, Russia’s actions have driven wholesale gas prices up worldwide. So a global pandemic on a scale not seen since the Spanish flu and an act of naked Russian aggression that is reminiscent of a bygone age equal unprecedented factors that have come together to create a perfect storm of pressure on families and households who are struggling with the cost of living.
We must be honest: the Government cannot control these global factors that have caused a strain on families and households, but they can shield people from the impact of some of these pressures, and they have done.
Getting more people into work is the single most important way the Government can support people with the rising cost of living. I recently hosted a business breakfast club in Stourbridge and was encouraged by how many firms are hiring and expanding, including by way of apprenticeships. However, filling these job vacancies and addressing skills shortages were raised as two major challenges for local businesses. That is why I am pleased that the Government’s plan for jobs is geared to tackle those problems.
The £2.9 billion restart scheme and a new £200 million scheme to improve job search advice are helping unemployed people find work. There is also £2.3 billion in funding to double the number of work coaches to provide bespoke support for jobseekers. From speaking to work coaches at Stourbridge jobcentre in my constituency I know of the positive impact they can have, and in Stourbridge it is showing results, with a fall of nearly 30% in unemployment since this time last year, equating to nearly 50% for young people. That is a significant drop.
The lifetime skills guarantee is another important Government programme that will equip people with the skills they need to fill the record number of job vacancies. I know that this programme will be appreciated by local business leaders in Stourbridge. Ensuring that work pays and making sure that people earn decent wages are vital in supporting families and households with the rising cost of living, and we should not forget that the historic vaccine programme and the plan for jobs have together helped deliver the fastest economic growth in the G7.
That is, however, not the only avenue of support this Government are providing. They are implementing a wide-ranging package of targeted and immediate support for households facing rising energy bills and fuel costs, from a £200 rebate on energy bills for all households to a £150 council tax rebate for over 86% of homes in the west midlands and a fuel duty freeze for the twelfth year in a row. The Government are stepping up to support working people.
That Government support will help to alleviate the shock of energy prices in the short term, but it is important that we ensure an affordable and secure energy supply for families and households in the long term. On the continent we see only too well the problems that dependence on fossil fuels and Russian oil and gas are causing for our European neighbours. It is imperative that we reduce our reliance on fossil fuels and transition to renewable energy sources. The Government have already made significant progress over the past decade and have increased the UK’s renewable energy capacity by 500% since 2010. However, we must do more, which is why I am pleased that the Government have announced a plan to phase out British imports of Russian gas by the end of this year, along with £380 million to support the UK’s world-leading offshore wind sector.
To transition away from fossil fuels and towards renewable energy is the goal that we are and should be aiming for. Again, we should be honest: gas will remain a critical part of the UK’s energy supply for the years to come. The transition away from fossil fuels and towards renewable energy will not happen overnight. That is why it is important that we continue to support the North sea oil and gas industry and import from reliable countries such as Norway, to boost the supply of domestic gas and lower energy bills for hard-working families.
To conclude, I know that people face rising living costs—they face them in Stourbridge—but I also know that the Government are doing and will continue to do all they can to help alleviate the pressures for working families and households in my constituency.
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
It is a pleasure to follow the hon. Member for Stourbridge (Suzanne Webb).
My constituents in Airdrie and Shotts are feeling the cost of living acutely and my inbox is full of their concerns. The reality is that the burden of poverty so often falls on children, with 24.8% of children in North Lanarkshire living in poverty, compared with the national average of 23%. Twenty-one per cent. of children live in households that experience both a low income and material deprivation. Those families are bearing the brunt of this Government’s inaction.
This crisis will have other consequences. It is estimated that around 20,000 people across North Lanarkshire already use short-term, high-cost credit annually. Loan sharks and money lenders have already stepped up their operations throughout the four nations, with Trading Standards Scotland reporting an increase in illegal money lending as people try to deal with increasing energy costs, rising food prices and cuts to universal credit.
The Tories should be listening and taking action to support my Airdrie and Shotts constituents, because they are experiencing the squeeze imposed by the Government when, for example, they cut universal credit last year. We have already seen action from the SNP Scottish Government, who are choosing to expand fuel poverty schemes, but they continue to tackle the crisis with one hand tied behind their back by Westminster.
The matter of fuel costs has been raised throughout this debate. The cost of living crisis is taking place while energy markets are already stretched. It is now predicted that the Russia-Ukraine crisis threatens to exacerbate already-high energy prices and impact industry supply chains as well. Even before Russia’s invasion of Ukraine, economists had predicted more hardship to come in April, when household energy prices and bills were set to soar.
It is really important to note that Money Saving Expert’s Martin Lewis has warned against a deliberate attempt by UK Government Ministers to pin the UK’s financial issues on the Ukraine war. He told BBC Radio 4:
“I’m slightly worried we are seeing what may be potentially a deliberate narrative shift that effectively says the entire cost of living crisis is due to Ukraine, and therefore we all need to make sacrifices, and that is not correct.”
There is simply no excuse for inaction from the Chancellor. This crisis has been a decade in the making, with rising costs compounded by damaging decisions at Westminster—including Tory austerity cuts and Brexit—that have resulted in squeezed household incomes and rising poverty across the UK.
This UK Government must take urgent action and introduce an emergency financial package to support the most vulnerable. I have raised this matter previously in the Chamber because it affects so many of my Airdrie and Shotts constituents. Let us take, for example, the UK Government’s buy now, pay later £200 loan. It is woefully inadequate and does nothing to help families. Even the Scottish Trades Union Congress has stated that this buy now, pay later loan
“comes nowhere near tackling the problem”
and that
“it is nothing short of shameful that people are being forced to choose between food and heat.”
The SNP is calling for the loan to be turned into a grant, and for a more meaningful financial package to be introduced to protect household incomes in the face of Tory cuts and tax hikes. The cost of living squeeze is happening now and it will only get worse once the bills rise in April and when the Tory regressive national insurance tax hike takes effect.
The UK Government have consistently ignored our calls for an emergency budget to tackle the cost of living crisis. I will repeat something that I have already said in this Chamber in the hope that the Minister will listen, rather than play on his phone. To provide certainty and reassurance, the UK Government must immediately announce a comprehensive financial package to help struggling families. As a minimum, the SNP proposes the following measures: a £200 buy now, pay later loan that must be turned into a more generous grant; the regressive national insurance tax hike must be scrapped; cuts to universal credit must be reversed; the child payment must be matched UK-wide; and, really importantly, wages must be increased, and there must be a real living wage. There can be no more delays from this Tory Government. The energy crisis is hitting the UK’s most vulnerable right now, including my constituents in Airdrie and Shotts. It is the UK Government’s duty to provide and deliver a substantial financial package.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to follow my hon. Friend the Member for Airdrie and Shotts (Ms Qaisar), who is a good friend and comrade. When she talked about loan sharks, it reminded me of the misleading adverts that we see on social media from debt companies, which I do regard as loan sharks, as they force people into trust deeds and other such things. I know the Minister used to be in the Treasury, so he will be familiar with some of these arguments. Certainly this is a matter that I will be taking up with the Government in future, because it must be tackled. If we are in a cost of living crisis and people see these misleading adverts on Facebook and other social media outlets, their lives could be made even worse.
I am told that repetition is not a vice. I was in a Westminster Hall debate this afternoon on in-work poverty, which was led by the hon. Member for Easington (Grahame Morris). It is worth reminding people that in-work poverty is at its highest ever level, disproportionately affecting lone parents, disabled people and carers. As the Joseph Rowntree Foundation has told us, 68% of working age adults in poverty are in a household where at least one adult is in work. Those are the highest figures ever recorded since 1996, when figures were first gathered on these issues.
I ask the Government to look specifically at in-work poverty. Far too many people in low-paid jobs do not have any opportunities to progress to better work and to better wages. Moreover, far too many of our fellow citizens are working in insecure jobs with unpredictable hours and unpredictable incomes.
I have a real concern about minimum wage rates, which some of my colleagues have also mentioned. A recent article on The Ferret website—the story was also covered by The Herald newspaper—outlined that an alarming number of the 10,000 jobs advertised on the Department for Work and Pensions website offered less than the national minimum wage. Burger King was advertising a post with a wage of £6 an hour; PizzaExpress, a wage of £6.56 an hour; and Farmfoods, a wage of £6.66 an hour. These companies made profits in the past couple of years—good profits, at that. I will be asking for an inquiry on why the DWP website is advertising jobs that pay less than the national minimum wage. It really is a scandal. Perhaps the DWP will refer itself to the national minimum wage compliance unit; it should, given that it is advertising jobs with these rates of pay. I hope that the Minister will respond to that point.
A number of Members on both sides of the Chamber have raised concerns about universal credit. Unfortunately, the hon. Member for Blackpool South (Scott Benton) is no longer in his place, but while he was speaking about universal credit, I looked at a parliamentary answer that I received from the Department for Work and Pensions, and it shows that 55% of Blackpool South constituents on universal credit have an average of £63 a month deducted from their benefit. In Stourbridge, 39% of people receiving tax credits get an average of £61 deducted as a result of tax credit overpayment.
Deductions from benefits really have to stop. Universal credit is supposed to be a subsistence-level benefit; it is supposed to be the amount of money that people require to eat, heat their home, and live a good life. If we deduct from universal credit, it leads to the spiral of debt that many hon. Members have spoken about.
The Government need to do a couple of things. This scandal of advances has to stop; there really should be an up-front grant. The all-party Select Committee on Work and Pensions unanimously agreed that there should be a starter payment two weeks after a claim. That is perfectly reasonable. It would stop the cycle of advances and debts.
Also, why are the Government pursuing tax credit debts that are over six years old? If the hon. Member for Edinburgh South (Ian Murray) wanted to sue me in the Scottish courts for a debt that was over six years old, the sheriff would immediately knock the case out, because it would be absurd; likewise if I were to sue the hon. Gentleman. So why are the Government pursuing tax credit overpayments that are decades old? It seems complete nonsense. I hope that the Government will sort that out.
The Minister is from the Department for Business, Energy and Industrial Strategy; one thing that he and his Department can do to sort out in-work poverty is introduce an employment Bill that ends insecure work, for example by seeking to eliminate zero-hours contracts, and that stops nonsensical practices. For example, employers are texting four individuals and telling them, “The first person who arrives gets the shift.” Employees then have to pay for transport to get to work, but they might not get the shift because someone else arrived two minutes before them. I hope that there will be an employment Bill, because we have been promised one since 2017. Five years on, it is still not here. Where is this mystical employment Bill? If the Government do not introduce it, perhaps they should support many of us who have brought forward employment legislation to address the plight of workers.
Peter Grant (Glenrothes) (SNP)
I was a bit reluctant to interrupt my hon. Friend, because he is making a fantastic speech, but may I give him an example that shows where the Government’s priorities lie? One group of employees who are traditionally low paid and in very insecure work are catering and cleaning staff. Does he recall that in the last Budget, the Chancellor claimed to have no choice but to impose a tax hike on people who are paid low wages to clean floors and dishes in casinos, but was at the same time able to announce a tax pay-back for the lucky people who own casinos? Is that not an example of where this Government’s true loyalties lie?
Chris Stephens
That is exactly where the Government’s priorities lie. Let us not forget that in-work poverty disproportionately affects carers as well, and that has to change.
I am conscious of time, but I hope the Government will respond positively to the points I have made. This is their crisis—the things I am pointing out are not to do with Ukraine or anything else. These things have been going on for 12 years, and the Government can immediately solve them.
Mr Deputy Speaker (Mr Nigel Evans)
There are 15 minutes left and three of you want to speak. Doing the maths, it is five minutes each and then you can all have equal time.
Deidre Brock (Edinburgh North and Leith) (SNP)
Many of the issues around the cost of living that we have heard about in the debate are underpinned by food security, which is what I will focus on. Before I expand on that, however, I reiterate that the people of Ukraine are at the forefront of our thoughts and discussions at this time. Their lives have been devastated by the horrors of war and they must remain uppermost in our minds as we reflect on any potential impact of the conflict on daily life here.
Hon. Members have previously touched on the anticipated consequences of the war on the global economy, including on food prices. Russia and Ukraine are the world’s largest and fifth largest wheat exporters respectively, and the two countries are major suppliers of critical fertiliser components. We must realise that the consequences of that hit to the supply chain are likely to be felt severely in sub-Saharan Africa and places already struggling with hunger such as Afghanistan, Syria and Yemen. We must be ready to help those regions of the world most affected by a potential global food emergency.
Those global shortages will lead to rising food prices in the UK too. The EU is moving quickly on measures to support farming and businesses, and there is concern in agriculture that the UK will not replicate or work in parallel with that. Of course, millions of households across the UK were already seeing their food bills escalate long before the crisis in Ukraine. Shop price inflation leapt between January and February this year to the highest inflation rate recorded since November 2011.
The Resolution Foundation has warned that rising food and energy prices could cause a “second peak” in inflation of above 8% in the autumn. It is our most vulnerable constituents who will be hardest hit, experiencing an inflation rate of as much as 10% due to their spending a higher proportion of their household budget on food and fuel.
The agricultural industry forecasts difficult conditions in the global fertiliser market, where the UK is a much smaller player with less leverage after Brexit. If, as looks almost certain, the resultant higher costs mean that yields are reduced, that too will have an impact on food security and take a further toll on the cost of living. Farmers are facing a perfect storm, with prices for fertiliser, fuel, energy and feed rocketing. The sector in Scotland has raised the alarm about the far-reaching implications for markets, processors and abattoirs, and ultimately rising prices in supermarkets for consumers. A post-Brexit shortage of both permanent and seasonal workers, combined with a lack of haulage drivers and processing staff, has put serious strain on agriculture and food and drink businesses across Scotland. Meanwhile, the UK Government have reneged on promises to replace fully our former EU funding.
On top of all that, the Scottish and UK farming sector is being exposed to real, lasting harm by the UK Government’s hurried and poorly conceived trade deals. The Department for International Trade’s own analysis of the deal with New Zealand euphemistically described an expected loss of £150 million to fishing, agriculture and food-related sectors as just a “process of economic adjustment”. Organisations such as the National Farmers Union of Scotland have consistently warned about food security issues in relation to that—indeed, it issued a press release on that very subject today—but have been repeatedly ignored or dismissed by the UK Government.
At Department for Environment, Food and Rural Affairs questions last week, the Secretary of State and the Minister for Farming, Fisheries and Food claimed that the UK is largely self-sufficient in its food production. However, the Government’s own analysis of food security shows that, by economic value, the UK produces only about 60% of food consumed domestically, and actual consumption of UK-produced food is closer to 54%, as a part of it is exported. In terms of historical, long-term trends, there is a concerning drop in the domestic supply ratio of fresh vegetables, from 76% in 1990 to 54% in 2020.
We need to ramp up domestic food production, but the planting window to do that is narrowing. The UK can do more to service the domestic market in cereals and spring barley, for example, but there is a risk of missing out if the EU acts faster and much of that services Europe instead. If offers come in from France or Germany to service spring cropping, businesses will take them.
We must keep things in perspective and do everything possible to assist with the humanitarian crisis in Ukraine, where there are reports of farmers being unable to go out into their fields for fear of bombardment, but the UK Government clearly need to take food security here much more seriously and take action now to address the immediate risks to domestic food production. We remain vulnerable if we are too reliant on imports, and it is people on the lowest incomes who will suffer the most.
Some of the people I am angriest with are the Brexiteers. The snake oil salespeople blithely assured all of us who warned them about the problems of over-dependence on imported foods—we said this Government were making it impossible for many farmers and others in our food industries—that all would be well in the golden land of Brexitania. They are now truly reaping what they have sown, are they not? The trouble is that all the other countries around the world who have also been relying on Ukraine—that golden breadbasket of the world—and Russia to supply their needs are out there alongside us, hunting on the trade markets for deals on the rice, wheat, maize, nuts, fruits and oils that we have all been receiving up to now. When goods are in short supply, prices go up. We must recognise and face with clear eyes the food security problems that there will be for the most vulnerable among us on these isles.
Owen Thompson (Midlothian) (SNP)
It is a great pleasure to follow my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock). While we cannot completely swerve the growing crisis around the globe, a sensible emergency package of financial measures could soften the blow, and it is incumbent on the Government to take decisive action now.
I speak on behalf of the people of Midlothian who, like the rest of the UK, are about to face the worst income squeeze for a generation. As a former coalmining community, my constituency unfortunately has first-hand experience of Tory Government policies leaving people high and dry and struggling with hardship. We are a resilient bunch though. It should not be too much to expect a little support from the Government rather than their hindering our efforts to tackle poverty and build back opportunities after the pandemic, but there is little evidence of that from this Administration.
It does not help the economy to take more money out of people’s pockets and risk more people entering a spiral of debt and despair. Let us not soft soap this. As anti-poverty campaigner Jack Monroe warned the Work and Pensions Committee, this crisis will have fatal consequences for some families. It is not an exaggeration to say that more people will be forced to skip meals and face ill health, hunger and cold. This is 21st-century Britain; inequality is on the rise. Yes, there are global issues—I have not heard anyone try to deny that today—but they have simply compounded the crisis that we were already facing after years of Tory austerity. The ideology imposed by the Government, which we have had to endure, has left public services running on empty. We have seen drastic cuts to benefits, which hurt the most vulnerable, along with the refusal to protect pay and conditions to make sure workers earn enough to get by, the betrayal of pensioners, the absolute wrecking ball of Brexit and the half-hearted commitment to green energy investment.
As things stand, poor decisions and self-inflicted damage over a decade have left the UK without the resilience to cope when external factors such as covid or the war in Ukraine take their toll. We have had a poverty problem in the UK for years, yet more and more families on modest earnings are finding that they are being pushed into poverty. The New Economics Foundation warned that by April, half of children will be in families who cannot afford the cost of living. It should be a matter of shame for this Government that food banks have become an accepted thing in our towns. I pay huge tribute to the Trussell Trust and Midlothian Foodbank, Food Facts Friends in Penicuik and all the volunteers involved with them, but they should not be necessary. We need Government action, and we need to reduce the size of the storm that households are about to face.
The £200 loan announcement from the Chancellor is put into perspective by what is actually needed. We do not need loans that people have to pay back. The SNP has suggested a range of measures, but the Government simply will not listen. My constituency of Midlothian is not only poorly served by this Tory Government but has a cloth-eared Labour administration in the council that simply does not listen to the communities that it is there to represent. It is sluggish and poor to listen and drags its heels on bringing forward proposals from the Scottish Government that are designed to help ease the financial burden on households. Only a few weeks ago, the Labour administration proposed a whopping 4.7% increase in council tax, backed by some of their Tory chums. Thankfully, the SNP’s alternative proposal to the budget was accepted, yet the council administration continues to implement what is now an SNP budget. Hon. Members can make of that what they will. It is time for action to be taken and we need it now.
Mr Deputy Speaker (Mr Nigel Evans)
To resume his seat no later than 6.40 pm, I call Ben Lake.
Ben Lake (Ceredigion) (PC)
Diolch yn fawr, Mr Deputy Speaker. I shall endeavour to ensure that I am seated again in just under five minutes.
It is a pleasure to follow the hon. Member for Midlothian (Owen Thompson). In the interests of time, I will say that I agree with every point that he made. Indeed, many points have been made this afternoon with which I would like to associate myself. We have heard a lot about the various pressures that are combining to fuel the cost of living crisis and those points have been well made.
We have heard about the rising cost of heating homes. I very much associate myself with the comments of the hon. Member for Tiverton and Honiton (Neil Parish), who drew attention to the fact that for many people in rural areas, the cost of heating their home has been further exacerbated by many premises being off-grid. With the price of heating oil and liquid gas rising, I have heard accounts from constituents whose heating costs have trebled in the few months since September last year. That is a pressing issue that is hitting rural areas.
Another driving force of the crisis in rural areas is the rising cost of fuel at the pump. Unfortunately, Wales has the highest car dependency in the UK with nearly 80% of commutes done by private car. Nearly half our businesses are located in rural areas where, sadly, people would be lucky to have multiple bus services a day. Of course I wholeheartedly support the rapid decarbonisation of our transport system to meet our net zero commitments, but many of my communities are devoid of the public transport infrastructure that would make that a reality. Sadly, they depend on private car use for essential journeys, whether going to work or going shopping.
With the RAC calculating that, on current rates, the Treasury will take an additional £2.9 billion from fuel prices, my party is calling on the Chancellor to urgently implement two measures. First, he should reform the rural fuel duty relief to extend it to more rural areas in Wales and improve its eligibility criteria to account for local transport provision. That would bring immediate relief at the pump for rural areas and would target areas with below UK average investment in public transport infrastructure, which would hopefully incentivise the longer-term solution that is represented by better public transport links.
Secondly, I urge the Chancellor to support the Road Haulage Association’s call for an essential user category to be developed to reduce petrol prices for key services, such as logistics, and essential professions with high mileage, such as carers. Indeed, I have been told by constituents who are carers and who typically travel upwards of 50 miles a day that they are recompensed by only 30p a mile. At current fuel prices, that is simply unsustainable.
I draw attention to the impact that the rise in national insurance contributions will have on families, a point that has been well made today, and on businesses. It is effectively a tax on employment, which is why Plaid Cymru supports the proposal to increase the employment allowance from £4,000 to £5,000 a year, as advocated by the Federation of Small Businesses.
An expanded relief to allow eligible employers to reduce their national insurance liabilities would achieve several key objectives. First, it would make widespread and welcome pay rises more financially sustainable for businesses. Secondly, it would reduce the risk of higher costs being passed on as higher prices to consumers. Thirdly, it would help to protect businesses’ ability to invest, which would boost our economy’s productivity and economic growth at such a crucial time.
In sum—with time to spare, Mr Deputy Speaker—I urge the Chancellor to make use of the slightly improved picture of public finances and take the opportunity next week to introduce measures to help families and businesses and to avoid the energy crisis turning into a shock that stalls the economy.
Kirsten Oswald (East Renfrewshire) (SNP)
The message from both Opposition day debates is clear: when times are tough for ordinary people, the Conservative party drags its heels, erects barriers and rolls out excuses for being unable to help. It feels like the UK Government are devoid of a plan about this issue and are resorting to piecemeal measures that do not address the actual problem but give the appearance of action. Unfortunately, many of their actions actually make the situation worse.
The cost of living crisis has not just happened. It is not only a result of war in Ukraine but a foreseen consequence of the UK Government’s policy failure, as my hon. Friend the Member for Midlothian (Owen Thompson) has just set out. That includes Brexit, as we have heard, which Scotland did not vote for—that is further compounding the cost of living crisis, leaving households and businesses all the more vulnerable.
Bodies such as the Joseph Rowntree Foundation have warned that the UK Government should not withdraw pandemic support in the face of rising and sustained inflation. The UK Government’s failure to heed this kind of warning has contributed to the crisis that households across the UK face today. Indeed, a recent YouGov poll shows that 84% of Scots said they were worried about the Tory cost of living crisis and 43% said they were very worried, and no wonder.
Family budgets are under pressure from all sides, with real terms cuts in wages, the £1,040 a year cut to universal credit and significant rises in the cost of basic foodstuffs and energy that will hit low-income households hardest. People are deeply concerned about how on earth they are going to manage; they are not managing right now, as my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) described. Next month the Chancellor plans to raise national insurance, which will hit low and middle-income households hardest.
The effect of the Tory Government’s policies is that many families are already unable to buy the essentials, as my right hon. Friend the Member for Dundee East (Stewart Hosie) eloquently explained. According to the National Institute of Economic and Social Research, when the increase in NI takes effect as many as 1 million UK households could be facing destitution and the spectre of spiralling debt, just as interest rates are on the rise.
As Victoria Benson, the chief executive of Gingerbread, has put it, budgets have already been cut back as much as possible, so the stark reality is that there is nowhere else to go other than into debt or poverty. The Chancellor needs to do something to put money into the pockets of low and middle-income households as quickly as possible, to help them address the inflation that has already taken place and, as my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) indicated, the worst that is yet to come.
Universal credit is a driver of poverty, including among working people, although the UK Government seem to forget that all too often. The withdrawal of the £20 a week uplift hits people very hard. Many households on universal credit are already worse off than they were in 2019 and many now fear for the future. The uplift must be reinstated. The UK Government should also reconsider their position on uprating given the forecast inflation rate in 2022 of 6%; the Scottish Government have just announced that they will increase six Scottish social security benefits by 6% from 1 April, helping low-income households and carers in light of the Tory cost of living crisis. That is the kind of swift and decisive action that matters so much now.
With energy bills for millions rising by £693 from April, Energy UK warning of further rises by October, which will make people significantly worse off, and concerns about the impact of the war in Ukraine on energy prices, this issue needs to be looked at very seriously. The way to do that is not, as the Chancellor has suggested, through a kiddy-on loan of £200; that is not an adequate response and, as my hon. Friend the Member for Aberdeen South (Stephen Flynn) pointed out, that is being forced on people.
As the Scottish Trades Union Congress says, this “buy now, pay later” loan comes nowhere near tackling the problem. As the SNP points out, it must be converted to a grant as part of a proper support package. The Chancellor must listen to the widespread calls to scrap VAT on energy bills and fuel, and consider a fuel duty regulator to feed back to consumers the additional income he receives through price increases.
We have heard that Jack Monroe has very sensibly highlighted the real effect of the cut in income for the poorest households and, focusing attention on the inflation premium facing low-income families with children, concludes that the impact of the cost of living crisis will be “fatal” in some cases. That must be a wake-up call for the Chancellor and the UK Government.
Maternity Action has highlighted concerns, pointing out the challenges facing new parents as the basic rate of statutory maternity, paternity and parental pay has fallen behind wages. From April, the basic rate of these vital payments will be just 47% of the already inadequate national living wage. So it is even more pressing that the UK Government should join the Scottish Government in backing a real living wage, including for younger workers. Someone’s age should not determine how much they are paid. The UK Government should also reverse the decline in support for expectant and new parents and, as we have heard, reform statutory sick pay.
Pensioners face a grim future after the Chancellor’s triple lock betrayal, reneging on clear commitments in his party’s manifesto. UK pensioners already get the lowest state pension in north-west Europe and now will be among the hardest hit by the cost of living crisis, losing £520 this year and £2,500-plus over the next five years, just as they face massive increases in energy and other costs. I spoke to a constituent in Neilston on Saturday, who wanted to know why she was being abandoned on the cost of living by the UK Government. She is a WASPI woman, and let me say yet again that it is high time the UK Government settled the claim by WASPI women.
As the SNP Scottish Government are demonstrating, with the limited levers at their disposal, it does not have to be this way. With the full powers of independence, we could do so much more with Scotland’s resources. Already, the Scottish Government are using their limited powers to support low-income households and to mitigate the Tory cost of living crisis. Nearly £70 million is going in direct financial support to households through the pandemic support payment, and discretionary housing payments of over £80 million are protecting more than 70,000 households, most of it going to mitigate the UK bedroom tax.
My hon. Friend the Member for Airdrie and Shotts (Ms Qaisar) mentioned the £20 million fuel insecurity fund, helping households at risk of self-disconnection. There is a £290 million cost of living support package, which supports council tax reduction. Spending on devolved benefits will already be about £4 billion in 2022-23, which is 10% above the funding from the UK block grant. The Scottish child payment will double in April, immediately helping 110,000 children. The Child Poverty Action Group estimates that, once that is doubled and the planned expansion of free school meals is in place, the net cost of bringing up a child in Scotland will be nearly £24,000 lower for low-income families than elsewhere in the UK.
Rolling out similar child-friendly policies across the UK would make a real difference, because a decade of Tory mismanagement has led the UK into this cost of living crisis. I am very keen to hear from the Minister about the missing employment Bill, which, as my hon. Friend the Member for Glasgow South West (Chris Stephens) highlighted, could also deliver real change.
The Chancellor has an opportunity in his Budget to begin to fix this. He could start by applying a broad-based windfall tax on excess profits of major companies, so that major organisations such as Amazon and other large retailers, as well as energy companies, can help to relieve the burden that millions of households face. He could also scrap the £4 billion tax giveaway to the banks. Above all, he needs to stop making excuses, stop ignoring the realities of people’s day-to-day lives and what the Tory cost of living crisis is doing, and start delivering to make a difference where it is needed. As my right hon. Friend the Member for Dundee East said, the UK Government must take urgent and immediate steps before this crisis spirals out of control.
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I thank right hon. and hon. Members for taking part in this important debate. This Government recognise and understand the pressures people are facing with the cost of living. This is of course a deeply worrying time for many of our constituents, and we will continue to listen to people’s concerns, as we have done throughout the pandemic.
Wholesale energy prices have been rising due to global pressures. Let me add here the Government’s condemnation of Vladimir Putin’s invasion of Ukraine, with its inevitable impact on global energy prices, and the UK is not alone in feeling the pinch. However, I reiterate that energy security remains an absolute priority for the Government. We are confident that our security will be maintained as we transition to net zero. Indeed, many of the measures in going to net zero will help our energy security by reducing dependency on imported fossil fuels.
We continue to work closely with key industry organisations including Ofgem and National Grid Gas to monitor both supply and demand. As well as ensuring security of supply, we are also working to ensure that consumers get a fair deal.
Let me turn to points raised in the debate, first by Back-Bench Members. My hon. Friend the Member for Tiverton and Honiton (Neil Parish), in a sound speech, called for more nuclear power and reminded us of Labour’s failures in the past. In 1997, the Labour party manifesto said
“We see no economic case for…nuclear power stations.”
Secondly, he rightly spoke against hydrocarbon imports from Russia. Thirdly, he spoke about heating oil—as we heard, heating oil prices are a concern on both sides of the House at the moment—and raised a few points about whether the prices charged can be justified. A recent Competition and Markets Authority investigation did not show any sign of profiteering, but, if he has evidence of unfair or sharp practices, he should please let me or others in the Department or the Treasury know.
The right hon. Member for Dundee East (Stewart Hosie) had done his homework. He spoke of the impacts of bills and other changes. However, he also needs to consider other aspects of Government action, such as the 12-year freeze in retail fuel prices and the increase in the national living wage from £8.91 to £9.50, which will put an extra £1,000 a year into the pockets of someone on that.
Greg Hands
I will respond first to the debate. If I have time, I will take interventions.
My hon. Friend the Member for Blackpool South (Scott Benton) said that there were more universal credit recipients in his constituency than in any other in the UK—a startling fact for his constituency—and said how much his constituents are benefiting from the changes in the UC taper rate as well as the increases in the national living wage, which he supported. On green levies, we announced in the heat and building strategy an affordability call for evidence on where to put those levies. We will take decisions on that later this year. His support for nuclear was well made, particularly coming from his part of the world near Springfields.
The hon. Members for Airdrie and Shotts (Ms Qaisar) and for West Dunbartonshire (Martin Docherty-Hughes) gave a selective account of Scottish Government actions. But Scotland is benefiting hugely from the broad shoulders of the United Kingdom and the UK taxpayer in particular. What would really hammer his constituents is separation and the immediate huge budget deficit, which would be easily the largest in the western world. Either taxes would have to rise or Scottish public services would be cut.
My hon. Friend the Member for Stourbridge (Suzanne Webb) praised the £9.1 billion package to help those with increased energy bills and spoke about how to reduce our dependence as well as the importance of the transition to renewables. That is the answer. She also praised the Government for the 500% increase in the proportion of our electricity that comes from renewables since 2010.
The hon. Member for Glasgow South West (Chris Stephens) made some important points about in-work poverty, but the best route out of poverty is work itself. I heard no mention from him of yesterday’s amazing figures, with the number of unemployed falling below pre-pandemic levels for the first time and another strong increase in employees on the payroll in February.
Greg Hands
I will answer the hon. Member’s point about minimum wage job adverts. The Department for Work and Pensions does have checks and, if it discovers any positions below the minimum wage, it will take them down.
Chris Stephens
I thank the Minister for that helpful answer. Is it in order for us to report the Department for Work and Pensions to the national minimum wage compliance unit?
Greg Hands
We take enforcement of the national minimum wage incredibly seriously across Government—all Departments do. However, I point out that the increase in the national living wage from £8.91 to £9.50, which is coming in just a few weeks, will help out someone working full-time by £1,000 a year. That will make a huge difference to their pay packets.
The hon. Member for Edinburgh North and Leith (Deidre Brock) rightly condemned the Russian invasion of Ukraine—I praise her for that—and made some important points on food security that I am sure will be drawn to the attention of the Department for Environment, Food and Rural Affairs. The hon. Member for Midlothian (Owen Thompson) called for a package of measures to tackle the crisis. Well, I had to go back to the SNP motion, because we will remember a package of measures being announced by our Chancellor of the Exchequer on 3 February at this Dispatch Box precisely to take action on energy bills. The hon. Gentleman is calling for a package of measures. Unfortunately, his motion calls
“to scrap the energy bill rebate scheme”.
His own motion calls for that very package of measures to be scrapped.
Moving on to the Front-Bench contributions, I have been in this House 17 years but I do not think I have ever heard a Member of Parliament for Aberdeen—for Aberdeen itself—without a single word of support for the North sea oil and gas sector. The hon. Member for Aberdeen South (Stephen Flynn) was ducking the issue, rightly raised by the hon. Member for Edinburgh South (Ian Murray), about what exactly is meant by the windfall tax. There are 100,000 Scottish jobs at stake, many in his constituency—in fact, his constituency may have more of those jobs than any other constituency in Britain—yet there was not a single word of support for those hard-working people in the North sea oil and gas sector.
The First Minister of Scotland said—these are her own words—
“production from the North Sea in the short term is not a practicably deliverable solution.”
That is totally defeatist. We will do further licensing rounds and we will do one this year. We are now seeing the benefits of previous licensing rounds. Only today IOG announced the Elgood field coming online, the second new field this week. This is great news for the UK as a whole and for the overall North sea sector so crucial for Scotland’s success, as well as the success of the whole of the United Kingdom.
They are not the Scottish national party. They are against the interests of Scotland. They are the Scottish dependency party, dependent on imported hydrocarbons from abroad, including from Russia. I read carefully the hon. Gentleman’s motion—one should always read the motion, as we all well know—which calls to
“scrap the energy bill rebate scheme”.
That would mean no reduction of £200 in energy bills in October, no council tax reduction in two weeks’ time, and, presumably, a repayment of the £290 million Barnett consequentials. What public services would the hon. Member for Aberdeen South cut in Scotland to fund that £290 million repayment?
Finally, I turn to Labour’s windfall tax. I must say that I had a slightly different interpretation of the position of SNP Front-Benchers. I think the hon. Member for Aberdeen South was supporting the windfall tax. I agree that it was not really clear, but I took it as supporting given that the motion talks about the windfall tax and this is a debate on energy. But I have to say to Labour that 82% of oil and gas produced in the UK is produced in Scotland, which means that Labour’s windfall tax would very largely hit the Scottish economy. A windfall tax could accelerate rising prices.
Labour has given up on Aberdeen and north-east Scotland. I remember when Labour had both seats for Aberdeen. Now, they are nowhere near—nowhere near. The Scottish Conservatives have overtaken them and anyone opposing the SNP in Aberdeen should vote for Ryan Houghton and his team in May. With moves like the windfall tax, is it any wonder that Labour support in Aberdeen is in decline and going nowhere? Maybe the hon. Member for Edinburgh South should go back to the shadow Cabinet and stick up for Scotland, and not throw in Labour’s lot with the Scottish National party—or the Scottish dependency party—when it comes to oil and gas.
As the Exchequer Secretary and I have set out, the Government have listened to, recognised and acted on the concerns of families who are struggling with the cost of living. We do not take their concerns lightly. The energy bills support scheme will provide £5.6 billion of support to households later this year, ahead of the winter period, while the additional support for English homes in council tax bands A to D will further help households with the cost of living—totalling, with Barnett consequentials, a package worth £9.1 billion. The Government will continue to engage with industry, consumer groups and other stakeholders as we progress these measures.
It is this Government who have the clear plan. The Opposition parties have squabbled among themselves today, arguing over the definitions of windfall tax, but it is we who are delivering energy security and energy transition, and securing this nation’s prosperity.
Question put and agreed to.
Resolved,
That this House warns that households will soon be suffering the worst income squeeze since the 1970s; notes The Institute for Fiscal Studies analysis that households are on course to be £800 worse off; calls on the Government to scrap VAT on energy bills, implement a windfall tax on companies which are benefitting from significantly increased profits as a result of impacts associated with the covid-19 pandemic or the current international situation, and to scrap the energy bill rebate scheme and introduce immediate emergency cash payments for households.
House of Commons Members’ Fund
Ordered,
That Stuart Andrew be removed as a Trustee of the House of Commons Members’ Fund and Christopher Pincher be appointed as a Trustee in pursuance of section 2 of the House of Commons Members’ Fund Act 2016.—(Gareth Johnson.)