Cost of Living: Fiscal Approach
(2 years, 6 months ago)
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Dan Jarvis (Barnsley Central) (Lab)
I beg to move,
That this House has considered the fiscal approach to tackling rises in the cost of living.
It is a pleasure to serve under your chairship, Mr Twigg. I am grateful to see so many Members present, although they appear—almost without exception—to be on the Opposition Benches. It is good to see the Minister and the shadow Minister in their places. I want to put on the record my thanks to Unison, which is working tirelessly to help its members through these toughest of times, and to Anna Birley, for her efforts with the research I will be quoting shortly.
It is not my intention to speak at great length. I am aware that colleagues wish to contribute and I want to ensure they get the opportunity to speak up for their constituents. However, before I begin, I would like to say a few words about the tone of the Government’s response to this crisis—not just for the next 90 minutes, but beyond. This is the most serious issue facing our country. Some of my constituents in Barnsley Central are facing an emergency, and the Government are providing nowhere near enough relief.
I want to share the words of a working single mum who contacted my office as an example of the indignity, pain and sacrifice happening up and down the country right now:
“I have not eaten for 2 days due to saving as much as possible for my son to get by until payday. I honestly can understand why so many people feel there is no other way than to end their life. It is humiliating to beg for food.”
She does not want Ministers telling her to work more hours when British workers already put in the longest shifts in Europe. She does not want Ministers telling her to buy non-branded food on the weekly shop when people are so desperate that baby milk is now being security-tagged in supermarkets. Most of all, she does not want Ministers telling her that the Government cannot ease her pain when that is simply not the case.
We are all aware that the effects of this crisis are almost boundless, but I will focus my remarks on the impact on public sector workers. Barnsley was left devastated by the pandemic. The suffering endured will live long in our memory, but so too should the resolve of those who pulled us through—not least our NHS staff, our carers and our educators. They are too often taken for granted, but their true value was there for all to see during our darkest hour. How quick we are to forget.
Unison research found that two in five health workers have had to ask family or friends for financial support in the past year. Roughly the same number are taking on extra work just to make ends meet. Nearly every member of school support staff that Unison surveyed—96%—was worried that they did not have enough cash to cope with the rising cost of living, meaning that a quarter have had to take on a second or, in some cases, third job.
The treatment of those on whom we relied so heavily and so recently is unacceptable and untenable. It is unacceptable because they deserve better. They paid their dues 100 times over, and the Government need to do right by them. It is untenable because it is exacerbating a staffing crisis. Public sector pay is lagging behind the private sector, and the long-term effect could be severely detrimental to services.
Take our NHS as an example. Already, 500 nurses and midwives quit every single week. We are at risk of losing thousands of low-paid staff because of that gulf in pay with the private sector. While Morrisons guarantees workers £10 an hour, there is an ad for a porter on the NHS website for £9.65 an hour. While UPS pays drivers more than £16 an hour, the NHS pays just £10 an hour. Public service workers have already endured more than a decade of pay restraint, and it cannot continue. Public sector workers need a pay rise that reflects not only the cost of living crisis, but their true value to wider society.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The hon. Gentleman is making an excellent speech. The public sector workers in my vast, remote constituency underpin life—I am thinking of health workers, people who keep the roads clear and everyone else. Given the sheer distance involved, however, everything we buy up in my part of the world, from a bar of soap to a washing machine, is that much more expensive due to the cost of getting the stuff there. However, these people are on similar rates of pay to those mentioned by the hon. Gentleman. Does he agree that, in addressing this hugely important issue, the remote location of parts of the UK, such as the west country or Wales, should be taken into account?
Dan Jarvis
The hon. Gentleman is fortunate to represent a beautiful part of our country. There are some particular pressures on the rural economy, and he is absolutely right to highlight them.
An NHS worker in Barnsley with two decades of service recently contacted me to say that 63% of the meagre pay rise she received went back into the Treasury coffers because she was on universal credit. She said:
“Having worked throughout the pandemic, pushing my children from pillar to post as after school clubs and usual childcare arrangements were cancelled, so that I could work on the front line—often with COVID positive patients—please can you tell me how the government can morally justify this?”
Perhaps the Minister can try to justify it. If not, will she outline what progress the Treasury has made in making the funds available for a long overdue and much deserved pay rise for those who quite literally risked their lives for us?
Soundings from No. 10 suggest that several Ministers, including the Prime Minister, are pushing for further public service pay restraint, but wage inequality is going through the roof. Research by the High Pay Centre reveals that the ratio of chief executive officer pay to that of medium earners is 63:1—almost doubling in a year—so it is telling whose pay Ministers are willing to restrain. By giving porters in our NHS enough money to put enough food on the table, the Government would protect public finances by avoiding a staffing crisis. Awarding a fair pay rise is morally and, critically, economically the right thing to do. Problems are being caused not just by what our key workers are seeing in their payslips each month, but by what is being taken out by stealth—the cost of working.
I have two suggestions for the Minister, both of which would lessen the burden on key workers and have an immediate impact. The first is about mileage rates. According to a survey by Unison, three out of four health workers who use their cars for work say that the current mileage rates do not cover prices at the pump. Care workers, environmental health inspectors, social workers and community healthcare staff are all out of pocket for doing vital work. Some 9% report that high petrol prices and out-of-date mileage payments mean that they have had to cut down on patient visits. More than half the workers at one South Yorkshire hospital say that mileage payments not covering costs is having a severe financial impact on them.
Her Majesty’s Revenue and Customs is responsible for setting approved mileage rates, but they have not been updated since the 2011-12 tax year. National Joint Council rates for local government workers have not changed since 2010, and NHS rates have not been updated since 2014. Ending the mileage rates freeze would put an average of £150 back in the pockets of workers over the course of a year.
The Minister will no doubt point to the Chancellor’s 5p fuel duty cut, which—let’s be honest—is modest, but some retailers stand accused of failing to pass on half that amount. Petrol and diesel prices are at record highs, so more needs to be done. Will the Minister provide an assurance today that the Treasury will conduct an immediate review of mileage rates—a review that would encourage and include provisions for the NJC and the NHS to do the same?
My second suggestion is on car parking fees. Not everyone can use public transport to get to work. Between a quarter and a third of the healthcare workers Unison spoke to in South Yorkshire use a car because of the lack of public transport. That is what makes reintroducing hospital car parking charges so wrong. Three out of five staff at one South Yorkshire hospital said that the reintroduction of car parking charges will have a high or extremely high impact on them financially.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Does my hon. Friend agree that it would be wise for the Government to look to the Welsh Labour Government, who have scrapped all car parking charges at NHS hospitals in Wales? It is a small measure, taken with a number of others, but supports the hard-working staff he is talking about.
Dan Jarvis
My hon. Friend raises an important point. Yes, I would point to the story that is being told in Wales, and to the benefit and value of Labour in power, leading by example.
I am aware that night shift workers remain exempt from car parking charges. However, it will still cost NHS staff £90 million a year to park. The Government cannot allow the price of parking their car to become the straw that broke the camel’s back for our health workers. Will the Minister provide an assurance that she will meet with ministerial colleagues in the Department of Health and Social Care as soon as possible to find a way to scrap all car parking charges for NHS staff? It is plain for everyone to see that the Government’s plan is not working. When plan A fails, the Government’s reaction should not be to keep repeating the plan, it should be to formulate plan B. Let us see what tomorrow brings.
Finally, the incredible Barnsley Foodbank Partnership supplied 8,000 food parcels in the 12 months to March—that is up 60% on pre-covid levels. Now demand is up and donations are down, as more people struggle with the cost of living crisis. I honestly do not know how some people have got through the last few months, and I dread to think about the sacrifices they will have to make to get through the next few. It does not have to be this way. If the Government grasp the seriousness of what people are facing, and act now, we can avoid a social catastrophe. I hope the Minister will consider the suggestions that I have made, and that others will no doubt make today, in the spirit that they are offered. Our public sector workers—indeed, our entire country—deserve better than this.
Several hon. Members rose—
Derek Twigg (in the Chair)
I am not going to impose a hard and fast rule, but I hope that Members will be considerate and keep their speeches to no more than five minutes. That will ensure that all colleagues get in on the debate. I am going to implement a hard and fast rule on the start time for the wind-up speeches. The SNP spokesperson will start no later than half past three.
David Linden (Glasgow East) (SNP)
It is a pleasure to serve under your chairmanship, Mr Twigg. As I am sure other Members will do, I pay tribute to the hon. Member for Barnsley Central (Dan Jarvis) for securing this debate and setting the scene so eloquently. I also pay tribute to Unison for its work on the issue. Most of us will have seen the briefing note that came out; I commend everything in it. As the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) made reference to hospital car parking charges, he will be aware that it was the SNP Government in Scotland who lead the way on that—not helped by private finance initiative contracts organised by the previous Scottish Labour Executive. I will not seek to be party political any further in the course of this debate.
Something that I have found difficult over the last few months, particularly since the beginning of the Ukraine crisis, has been people talking about the cost of living crisis as if somehow it is a new thing; it is not a new thing. It has been exacerbated by 12 years of Conservative austerity. In many respects, we are right to call it a crisis, but it is something we have been dealing with for quite some time. I would argue that it is not just a cost of living crisis. Ultimately, at its most fundamental level, it is a low pay crisis.
The UK Government like to talk about the living wage, and I am sure we will hear the Minister do so, but we know that to refer to it as a living wage is to inadvertently mislead the House. It is not a real living wage. It does not reflect the true cost of living for many of our constituents, and it is nowhere near the benchmark set by the Living Wage Foundation.
The UK Government must look at whether that real living wage is fit for purpose. As most of us know from our constituency postbags and surgeries, it is definitely not. The Government should also look at the pay discrimination baked into wage rates in the UK. The reality is that 16-year-old apprentices are still being paid roughly only £4 an hour. A young person on £4 an hour certainly does not get cheaper products at the supermarket as a result of their age. They should not be getting a lower rate of pay.
There are other things we can do. We should absolutely look at a windfall tax. That has become incredibly topical in this place, with people talking about putting a windfall tax on the likes of Shell and BP. I would like them to pay a windfall tax. There is no doubt that they are doing immensely well out of the current crisis. Why not also consider an additional windfall tax on supermarkets and Amazon? We know that the future of work is changing and that our high streets are struggling very much. That is a natural consequence of consumers using big, out-of-town supermarkets and getting goods delivered from Amazon. Given that they are doing very well out of this, perhaps we should consider putting a windfall tax on them as well.
The UK Government should also increase benefits in line with inflation. I was really disappointed when they legislated for a real-terms cut to benefits earlier this year. The people whose benefits are being cut are among the poorest and most vulnerable in society. This is no time to leave them behind. They do not have the disposable income to make a slightly more difficult choice at the supermarket. Let us increase benefits in line with inflation.
If the Scottish Government, who have a fixed budget, can uprate benefits by 6%—I accept that that is still below inflation—the UK Government, with all of their borrowing powers, should be able to do so, too. In reality, the biggest difference between the UK and the Scottish Government is that the UK just puts it on borrowing.
We should also reinstate the pensions triple lock. Pensioner poverty is on the rise and we do not talk anywhere near enough about it in this House. The fact that we have one of the lowest state pensions in western Europe should be a stain of embarrassment for this Government. They like to go around talking about being a global Britain, while pensioners are literally having to choose between eating and heating. I ask the Minister to reflect on that.
We should also reinstate the £20-a-week uplift to universal credit in the social security system. The Government were right to concede at the beginning of the pandemic that social security was inadequate in its current form. It was inadequate in March 2020, and, by the way, it is still inadequate now. Taking that £20 a week away from families means that they are losing £1,000 a year when they can least afford it.
Jamie Stone
Carers for the elderly, the infirm and the sick are crucial in remote parts of Scotland such as my constituency. I have carers pulling out, giving up and calling it a day right now. I am sure the hon. Gentleman agrees with the hon. Member for Barnsley Central (Dan Jarvis) that we must look again, as a matter of extreme urgency, at—how shall we put it?—payments for carers and the regime for taxation on mileage for them and other health workers who have to travel. It is a crisis right now.
Derek Twigg (in the Chair)
Order. I remind Members who take interventions to bear in mind that I am trying to keep speeches to around five minutes.
David Linden
Thank you, Mr Twigg. I am coming to the end of my remarks. I pay tribute to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who is himself a carer. More can be done on mileage, and I certainly echo the calls for HMRC to reform it. The Government need to look again at the carer’s allowance, because it is inadequate, particularly south of the border.
There is one last thing that I would like the Government to reflect on. I appreciate that there are massive ideological differences between me, as someone who believes that the state has a big role to play in people’s lives, and the Government, who undoubtedly do not believe that. However, given that Select Committees are receiving evidence from senior figures that the economy is in an apocalyptic situation, the Government should be considering placing price controls on food. I appreciate that they would not be naturally comfortable doing that, but we cannot end up in a situation where our constituents are not even able to choose between heating and eating and are instead left with nothing at all. I know that that view will be borne out.
In closing, many of my constituents have less than £10 in their bank account. They cannot afford to nip down to the local shop for the most basic provisions. Yet we have a Chancellor, who is responsible for the fiscal approach, who managed to spend £10,000 to nip down to Wales for a Tory gala dinner. That strikes me as the action of someone who is quite out of touch, which might be why we are having this debate today.
Derek Twigg (in the Chair)
I remind Members that you can see on the clock what time it is.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
It is a pleasure to serve under your chairmanship, Mr Twigg.
On Sunday, Michael Lewis, the chief executive of E.ON, announced that 1 million of its customers were already in arrears with their fuel bills. He expects that to rise to half of all its customers—4 million people—by October. The National Institute of Economic and Social Research predicts that more than 1.5 million households will see a rise in food and energy bills that will outstrip their disposable income. That means a quarter of a million more families sliding into destitution. Of course, the Bank of England already expects inflation to reach double figures and fears that a recession is on its way. This situation is unprecedented and it demands urgent action from the Government, but none appears to be forthcoming. I am very grateful to my hon. Friend the Member for Barnsley Central (Dan Jarvis) for securing this debate and I hope that the Minister can take away some suggestions for the Chancellor.
I want to focus in particular on the poverty premium. The rising cost of living hits those on the lowest incomes the most, through what is known as the poverty premium, which is a term for the hidden costs of poverty. Why does it exist? There are a number of reasons. Ideas about the fairness of essential products and services are based on an idealised version of the average person as a super-consumer. A super-consumer never becomes ill, always has a steady income that is sufficient to meet their outgoings, is able to understand all terms and conditions, and always has the time, energy and resources to shop around for and find the best deal. Clearly, that is a long way from reality for most people. There is a disconnect between policy makers and regulators, and the everyday experience of poverty and exclusion. This idealised consumer plays a role in that disconnect, as does the growing lack of social mobility, which means that an increasing number of policy and decision makers have no first-hand knowledge of what choices are actually like for someone experiencing hardship.
The ideological belief is that competition can meet all consumer needs and that freedom of choice exists for everybody. Even though we have seen markets fail time and again, with disastrous consequences, this nonsense is still held as an article of faith by the current Government. The question, then, is this: if the market is king, what happens to those people the market does not want? What that means is that policies and regulations are failing to acknowledge reality or to meet the needs of this large section of our population for whom the market does not wish to provide.
The poverty premium means, for example, that if someone cannot afford a direct debit bill for fuel payments and their income is uncertain, they pay more. If they are put on a prepayment meter because of problems paying the bill, they pay more. If they cannot afford to buy items in bulk or take advantage of multi-buy offers, they pay more. If they have an insecure income or a non-salaried job and they need a loan or credit card, they pay more. If they live in a deprived area and need car insurance to get to work, they pay more. That all adds up to extra costs that have a huge impact on those living in low-income households.
A study by Fair By Design shows that some households in places such as Hull face a poverty premium of £490. That is equivalent to 14 weeks of shopping—at least it was at the time of the study, but we expect that that sum will only have gone up. We can guarantee that, with inflation rising, the poverty premium is increasing all the time, such that the amount of food that people can buy is decreasing.
Whenever solutions to the poverty premium are proposed, or whenever questions are raised, the buck is passed between different Government Departments and regulators, and we go back to the earlier point—namely, that the market will provide. However, markets are not designed to be inclusive, and they do not have the necessary policies and guidance to achieve that. Therefore, the products that they provide are not designed to be inclusive either.
The good news, however, is that there is an opportunity to change this situation. The proposed financial services and markets Bill provides an opportunity to ensure that the Financial Conduct Authority “must have regard” to financial inclusion. A “must have regard” requirement would not pull the regulator into carrying out social policy, but ensure that the FCA has a statutory requirement to consider financial inclusion issues across all its work, wherever appropriate. It would also require the FCA to obtain the evidence it needs on market failures around financial inclusion, so that it can determine the areas of most detriment, how those issues can be resolved and which bodies are best placed to resolve them.
It is important to stress that neither the new consumer duty on which the FCA is currently consulting nor its consumer vulnerability guidance will address the situation, because both primarily deal with the treatment and the experience of consumers who already have access to those retail products, not the people I am talking about who are priced out of essential services because of the poverty premium. The only way to ensure that low-income or vulnerable customers can access essential services and products is to give the FCA a clear remit on financial inclusion.
This is a cost-free measure—it would not cost anyone anything. I will table amendments based on financial inclusion and I urge the Government, the Minister and all Members here to work with me in supporting them.
Grahame Morris (Easington) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Twigg. I congratulate my good and hon. Friend the Member for Barnsley Central (Dan Jarvis) on securing this important debate and on the powerful way in which he articulated the arguments in his speech.
I want to focus on one issue: the need to replace council tax with a proportional property tax. I want to demonstrate the inherent unfairness of council tax. I have some figures that I hope the Minister will find interesting, as they compare my constituency with hers. A proportional property tax would help families to address the cost of living crisis. It would also support the Government’s levelling up agenda and protect those on low incomes who may be disadvantaged by the reforms. I will explain how that will work.
I start by highlighting that 77% of households—more than 18 million—would benefit through a proportional property tax, with the average household saving £556 every year. A proportional property tax would replace council tax, bedroom tax and stamp duty. Outside London, regional economies would benefit from an overall reduction in property taxes of £6.5 billion, which would be a substantial stimulus for communities in need of levelling up and support those communities most in need. For example, under a proportional property tax my constituents would gain, on average, £900 a year compared with council tax. In the Minister’s South East Cambridgeshire constituency, two thirds of households would save money under a proportional property tax, averaging £350 a year. I hope this is something on which there could be cross-party consensus.
If we look at the effect on the constituency of the Minister’s colleague, the Chief Secretary to the Treasury, the right hon. Member for Middlesbrough South and East Cleveland (Mr Clarke), we will see that his constituents would receive almost £900 a year, similar to the amount that would be received by my constituents. Most people would benefit from this policy.
Grahame Morris
As I was saying before the Division, most people would benefit from the policy of moving from council tax to a proportional property tax. It is certainly true that there will be a small minority of cases where people on a low income but living in a high-value property could struggle, but that is perfectly possible to mitigate at the point of transition. Those struggling to pay the increase could have any rise capped at £100 a month. For those still unable to pay, options could be made available to defer payment until they can afford to pay or until the property is sold.
Council tax is unfair and the inequalities are stark. A £3 million property in Wandsworth pays less than 0.1% of its property value in council tax. We can contrast that with my constituency, where the average household pays more than 2% of the property value in council tax.
A simple system would also reduce admin costs by up to £400 million a year. The tax levied would reflect current property values, instead of the values as they were in 1991. Councils would no longer be forced to chase down council tax debts from people who were unable to pay, as payment can be deferred under a proportional property tax until the sale of the property.
Council tax is one of the most unfair and regressive taxes, taking a disproportionate amount from communities and individuals that can ill afford to pay but that often have a much higher demand for council services. Will the Minister explain why the current system of council tax is fairer than a proportional property tax? If she cannot, will she make the case for change to the Chancellor? I ask my Front Bench, in all humility, to reach out to the Fairer Share campaign. I would be delighted to facilitate a meeting. I think there will be substantial electoral dividends for the political party or parties willing to pick up the baton of a proportional property tax to replace council tax and include it in their manifesto at the next election.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate the hon. Member for Barnsley Central (Dan Jarvis) on his excellent opening remarks and on securing this debate.
There is a tide of poverty, terrifyingly large, growing in every single community in our country. I wonder what the point of this place is if we do not seek to meet the needs of people who literally cannot see how they can put food on the table for their children, pay their bills or pay their rent or mortgage. It is a crisis like no other facing this country.
I will focus my remarks on how that tide of poverty is affecting rural communities such as mine in Cumbria and elsewhere in the country. In my constituency, we have incredibly low unemployment—very low. Pretty much everybody I know, particularly those on low wages, are working multiple jobs. The idea that they can do extra hours or get a better-paid job is a colossal insult to them, as they work tirelessly to provide for their families. The massive majority of people in receipt of universal credit in our communities in Westmoreland, South Lakeland and Eden are in work. They work incredibly hard, but their wages do not keep pace with the rapidly rising cost of living.
The cost of living in an area such as our is exacerbated by the cost of housing. The average house price in my constituency is about £270,000 and the average household income is about £26,000. Do the maths: nobody on an average income can afford anything like an average home in our community. There is extra pressure, because the pandemic has massively increased the housing need in our area. We have seen the absolute evaporation of the long-term private rented market into the holiday let market. In my community, there has been a 32% rise in one year in the number of homes going into the holiday let sector. What were those holiday lets beforehand? They were people’s homes—family homes. People were evicted via section 21s—something the Government said they would abolish in their manifesto—and the availability of properties for those families to live in was diminished.
In parts of Devon, there has been a 70% reduction in the availability of long-term lets that are affordable to local families. It feels like the lakeland clearances are going on in our community. In Ambleside, a couple, both of whom worked, with children in the local school, were given their marching orders—they were evicted via section 21 from the rented property they had lived in for several years. There was nowhere else available in their community to rent, as everything else had gone to Airbnb or become a second home, so they had to give up their jobs, their children had to be removed from their school, and the family had to move to the next county in order to start all over again. It is miserable, and the consequence for our economy is huge.
What does it mean for our workforce? In the dales town of Sedbergh, which is a relatively small place, with fewer than 2,000 houses, there were 103 job vacancies as of last week because there is nowhere affordable for anybody on a modest, moderate, average or low income to rent, never mind buy—that is for the birds in the current era. That impacts on business. Some of the poorest people I know in communities such as mine run their own businesses. They pay and keep their staff—they cannot recruit enough staff—and they pay themselves less than the minimum wage. They live on next to nothing; they live in poverty.
Another huge problem that affects rural communities such as mine is fuel costs. Many of my constituents are not on the mains, so there are no energy price caps, no matter how high and ridiculous the prices are for people who run their property off liquid gas or oil. If someone wants to get the bus just one way from Kendal to Ambleside to get to their job, they have to spend more than an hour’s pay. Likewise, fuel costs are much more impactful when people have to travel miles and miles. My hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) also mentioned the huge impact on the care sector. We cannot recruit people to care for people in their homes.
We cannot miss the impact that the Government’s fiscal policies are having on farming. This year the Government are taking 20% of farm incomes without replacing them for 98% of the farmers in my community. That has an impact on rural poverty in communities such as mine throughout Cumbria. It also impacts on our ability as a country to produce food, and that means rising food prices for everybody else. It is morally wrong and incredibly stupid.
Of course the Government should be taxing the energy companies and redistributing that money to ensure that people are not in penury. Of course they should be cutting VAT to help people. The bottom line is that press releases will not pay bills. The Government need to act now.
Derek Twigg (in the Chair)
I will now impose a four-minute limit on Back Benchers, and I will call the SNP spokesman no later than 3.41 pm.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Twigg. I thank my hon. Friend the Member for Barnsley Central (Dan Jarvis) for bringing forward today’s debate.
I will always recall Mo Mowlam telling the story of a pensioner who came to her surgery, put their pension book in front of her and laid out the bills they had to pay—the sums did not add up. When Labour came to power, we restored respect and dignity to people and made a difference to them. We never thought we would return to the days in that story, but we have—and worse. When my constituents make hard choices because their bills and income do not add up, they too struggle to understand how they will get through the next three months, let alone the autumn and winter. They are having to make those hard choices every day, making pristine accounts and budgets just in order to survive. One constituent debated whether she would end going to the day centre, her only social contact. Another said that, when she went to the food bank, she had to select foods that did not require cooking. Those are real choices that my constituents are making right now.
If the bill drops through the door, and you dare to open it before reaching for help, your mind is in the echo room, with your mental resilience evaporated. That was the case for one of my constituents when they fell short by £3.45 on their utilities bill. That spiralled out of control and did not end well. That is the reality that people are living in. As many hon. Members have said, the Government have solutions in their hands, if only they would see this as a priority.
Wages are so low that people cannot survive on them. These are the people who never received those promised pay increases, particularly in the public sector, which did not even get 1%. Meanwhile, people paid themselves profits in the many multibillion-pound companies that benefited from Government handouts during the pandemic. The Government need to put the money where it will make the greatest difference. People will spend that money in the local economy, which is how we can get the economy moving. The pay remits should focus on those at the bottom of the pay scales, ensuring that they get not just percentage increases, which benefit the best paid in the workplace.
I, too, want to concentrate on housing. In York, we have a low-wage economy but an extortionately high cost of living because of the housing crisis. The house price to earnings ratio in York is 8.21 and rising. The rental cost figures published just this week show a rise of 10.2% over the past year, averaging £945 a month—35% of people’s income. We need rent controls to hold down those rents. People are not only using their hard-earned money to pay for a roof over their head, but that money is being extracted from the local economy.
We have seen family homes, which people would have bought and lived in in the past, being bought by investors who turn them into Airbnb lets. We have lost 1,785 homes into the Airbnb market, extracting more money out of our local area. We need those reforms now, to stop the crisis getting worse.
Yasmin Qureshi (Bolton South East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Twigg. I thank my hon. Friend the Member for Barnsley Central (Dan Jarvis) for securing the debate.
My constituency, a place I am proud to represent, is the 38th most deprived in the UK. We have a wage crisis, a job crisis and a housing crisis. Now we have a Tory-made cost of living crisis, which my constituents literally cannot afford. It is a major issue, and it is filling my constituency mailbag and, I am sure, those of other Members. A recent survey by 38 Degrees found that it is the No. 1 issue facing constituents: 80% faced higher bills, 76% faced higher petrol prices, and 24% have lost income due to the universal credit cut. I wish I could stop there, but the testimony is even more telling. A constituent who wished to remain anonymous said:
“I am a pensioner with a lung health problem. I cannot afford to heat my home, which makes the health problem require greater medical attention, putting more strain on the NHS.”
Petrol is becoming almost unaffordable. In just eight months, a tank of petrol has gone up by roughly £17.50, so 5p off fuel duty will not begin to cut it. In areas such as mine, people are dependent on cars, because we have poor public transport links. As a result, the only affordable option has now become incredibly expensive. As my hon. Friend the Member for Barnsley Central said, we must ask the Treasury to rethink the mileage cost allowance, at least for public sector workers, and to abolish hospital car parking charges.
The Bank of England is predicting a recession, interest rates will go up, as will the energy cap in October and again in 2023, and the inflation rate could pass 10%—the list goes on. There is so much that the Government could do but have refused to. Labour has called for a windfall tax to provide support to households. We could increase universal credit back to what it was throughout the pandemic, and cancel the national insurance rise. Those are measures that the Government could take, but they are refusing to do so.
Short-term policy responses will not put money into the pockets of working people; only a long-term plan to address the crisis will do so. The war in Ukraine has shown how important energy security is. We need to invest in renewables and nuclear energy, as the Labour party has pushed for, to end our dependency on foreign nations. That would create proper jobs on a living wage. We also need to invest heavily in our infrastructure—trams, trains and metros—to create further economic effects and to green up our nation. Again, that will create jobs.
As I find myself saying time and time again, this is an issue not of how but of political will. Sadly, I think it is an issue that the Government will continue to avoid, while the Opposition parties rightfully make the case for proper support. Our constituents are suffering; it is about time that the Government did something to help them. It is not surprising that no Conservative Back Benchers are present—they know that what is happening is indefensible.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate my hon. Friend the Member for Barnsley Central (Dan Jarvis) on securing what is an extremely timely debate, given that this is the biggest issue facing our country and our constituents.
The cost of living crisis is causing great hardship in Merthyr Tydfil and Rhymney, and right across the country. We desperately need measures to tackle it and, at the very least, an emergency Budget that introduces a windfall tax to bring people’s bills down now. Yesterday’s news that the energy cap could increase to £2,800 in the autumn is truly frightening.
The Government do not seem to have a plan. During the Queen’s Speech debate, the Prime Minister hinted that help would be announced “in the coming days”, only for the Treasury to announce in the following hours that that was not the case. That is an example of the lack of a joined-up approach across Government.
Recently, I met my local citizens advice bureau, which highlighted growing hardship across the constituency. I was alarmed to hear that overall client numbers have doubled in recent months. Queries about energy have increased by 250%, which is evidence of the fuel poverty crisis, and are now mainly about support to pay fuel bills. Debt numbers have increased by 200%, and council tax debt is now the biggest issue. That is worrying, as those are household debts. Probably most worrying, however, is the massive increase—more than 500%—in requests for food bank vouchers and other charitable support. My local food banks operate in challenging times and, on a number of occasions recently, have come close to running out of food, given the huge demand.
The fact that nothing in the Queen’s Speech tackled this growing crisis demonstrates that the Government are not listening or, if they are, that they are failing to act, which shows a shameful lack of compassion. A windfall tax would be a start. As we have heard, it is grossly offensive that energy giants are announcing their highest ever profits—recently, Shell announced profits of more than £7 billion in the first quarter of the year—and yet the Government have so far refused to implement a windfall tax. At the same time, people are struggling to choose between heating and eating. The Government must rethink their approach. We need a proper plan, and we need it now.
We also know that many public service workers are out of pocket from just doing their jobs. Many use their cars to do their job, such as care workers and social workers, who visit vulnerable adults and children. They are now repaid less than what they spend on petrol, thanks to the out-of-date HMRC mileage rates. I support the call of my hon. Friend the Member for Barnsley Central to review those rates.
It is clear that public sector pay is also key to levelling up, as public sector workers make up one in seven employees in every region of the UK. In the north-east, Wales, Scotland and Northern Ireland, increasing public sector pay would provide a boost to the economic regeneration of the country, given that we are seeing the steepest drop in living standards since the 1950s. The Government have levers at their disposal, and they must use all of them to help ease the huge pressure on thousands of families across the country. Talk on this issue simply is not enough; we need action, and we need it now. I look forward to the Minister’s response and hope that she can demonstrate that the Government will act, and act quickly.
Derek Twigg (in the Chair)
I am afraid I will have to reduce the limit again, to three minutes. I call Jim Shannon.
Jim Shannon (Strangford) (DUP)
Thank you for calling me, Mr Twigg. I am very pleased to speak in the debate, and I congratulate the hon. Member for Barnsley Central (Dan Jarvis) on leading it and setting the scene.
I will give some examples of how the cost of living crisis is affecting my constituents. There are people in my constituency who have to choose between putting on their heating and feeding their children. Increasingly, they have to decide whether they can help their widowed, elderly parent to heat their home as well. These decisions are happening in my constituency each and every day, and I have no doubt whatever that they are the same everywhere else.
Inflation has reached its highest rate since 1982, and gas prices have increased by 95%. Consumer prices are up by 9%, electricity prices are up by 54%, and 11% of the working-age population of Northern Ireland live in absolute poverty, so I look to the Minister for help. A constituent has informed me that she pays her gas bill by direct debit, which means that if she does not put the money in, she does not get gas. She has gone from paying £54 a month to £178 a month, and her electricity bill has risen three times in the past year. She and her husband both work full time, and even with her husband’s second job it is impossible to make ends meet. I would probably refer to them as the middle-class poor. She has a seven-year-old, who is a talented young musician. Even if the violin is rented, there is still money to be spent on the girl. My constituent is on the threshold for aid, but the Government have refused to lift the threshold in line with inflation, and she simply does not have the money.
At a time when costs are skyrocketing, people in employment are paying more national insurance than ever before and it cannot be sustained. After the luxury of a music lesson, there is a school visit, the school play or other essential extracurricular activities. The middle-class working poor have been under incredible pressure for the last few months, but they are even more so now. Those currently earning above £25,000 will pay more national insurance contributions and income tax after 2022-23. The Government keep on telling us that they are helping, but would they consider delaying the increased payments for now, given that it would have a significant impact on workers who are already struggling? The Ofgem chief has referred to the energy price cap, which is expected to rise by £830 and reach £2,800 in October. Again, we need reassurances about the long-term strategy to enable us to get beyond the next six months.
No longer are working families saving to go on a foreign holiday or putting in new kitchen cupboards. They are living from hand to mouth. As that is the case, I believe that the Government can and must intercede in a constructive and practical way. I have asked about delaying the increase in national insurance contributions, and I have asked for a six-month strategy to enable people to have some idea of what the costs will be. In the next six months, prices will rise by £600.
Matt Rodda (Reading East) (Lab)
It is a pleasure to serve under your chairship, Mr Twigg. I thank my hon. Friend the Member for Barnsley Central (Dan Jarvis) for his excellent work in securing the debate, and for his powerful speech.
In the time allowed, I would like to raise three key points about the cost of living crisis that is facing families and pensioners throughout the country—first, to raise some matters relating to my constituency; secondly, to point out some of the additional pressures on public service workers and key workers; and thirdly, to call for a robust response from the Government.
I will start with the points about my constituency. For Members who do not know Reading and the neighbouring town of Woodley, we are lucky to have a buoyant local economy. However, wealth is not spread evenly throughout our community, and many people live in older properties, which are very hard to heat. We have a large number of Victorian terraces, which are attractive to look at but very costly to the residents.
I want to highlight a couple of powerful cases that have come into my office. More than 60 people have contacted me and my team in the past few weeks about the cost of living crisis, which illustrates that this crisis is being felt everywhere, including in the south-east of England.
The first instance is of a woman who is a teaching assistant, who contacted my team in February in deep financial distress. Before the hike in energy bills, she was already struggling to make ends meet. Her take-home pay at that point was around £1,600 a month, but the cost of renting in our area was £1,150. She is extremely worried about the dramatic rise in her energy bills and, as a single parent, is very concerned about looking after her son.
I heard from another constituent—a young man living in a shared house—who is also single. He describes himself as working full time “on an OK wage,” meaning that he is not entitled to any kind of benefits. With rising costs, especially after the update in energy prices, his monthly bills are already above his earnings. He has spoken to his employer, who has very kindly listened and tried to respond, and he is due to get a pay rise. However, that will still not be enough to make ends meet. At the moment he is having to dip into his savings to cope, which is obviously not sustainable.
These cases show the scale of what we are facing around the country, including in areas with quite a buoyant economy. They highlight the need for urgent Government action.
My second point is about the particular pressures facing public service workers and key workers. I am sure that everyone across the House would agree on the vital role that those workers have played during the past couple of years. Whether that is our wonderful NHS, teachers, police officers or people working in supermarkets, it is absolutely incredible what they have taken us through, and I ask the Minister to consider the position they face.
Richard Burgon (Leeds East) (Lab)
Today, I want to make a proposal. We have heard a lot recently about a windfall tax. We have even heard that the Prime Minister might be about to U-turn and deliver one. To make a real difference to people’s lives, it must raise serious funds, so today I call for £10 billion to be raised via a windfall tax on North sea oil and gas giants to help deal with the cost of living emergency.
Let us be clear: people’s bills are so high because North sea oil and gas companies are making vast excess profits. Those excess profits are not the result of innovation or extra investments; they are an undeserved and unexpected windfall that has come about simply because oil and gas prices have spiked as a result of the horrific war in Ukraine.
We have a choice. Either oil and gas companies continue to make eye-watering levels of excess profits or we use a windfall tax to help people through this crisis. Using figures from the Office for Budget Responsibility, we can estimate that North sea oil and gas companies will make post-tax profits of £15 billion in the financial years 2021-22 and 2022-23, which is almost £13 billion more than they would have made based on their average annual post-tax profits in the three years before 2020-21, when oil and gas prices started to increase. I therefore think it perfectly reasonable for £10 billion of that £13 billion to go to the taxpayer.
Before we hear the claim that such a tax would undermine investments, let us remember that BP has even admitted that a windfall tax would not affect its planned investments. Of course, some in the Conservative party who put profit before people may scream and shout about such a plan. However, the truth is that this is an emergency that people are living through, and in that context we need emergency measures.
Of course, the level of windfall tax that I propose will not be enough by itself. We will need windfall taxes on the wider energy sector and across other sectors that are making excess profits. We will need price caps on key essentials and we will need wealth taxes. However, a windfall tax to raise £10 billion will make a real difference to people’s lives, and we should get on with delivering it. The Government can and should do it. It is necessary and it is the right thing to do. They should get on with it now.
Peter Grant (Glenrothes) (SNP)
I am pleased to begin the summing up for this debate, Mr Twigg. I commend the hon. Member for Barnsley Central (Dan Jarvis) for securing the debate and for his introductory remarks. Given that he devoted a lot of his speech—a number of other Members have mentioned this—to the debt we owe public service workers, I hope I may crave Members’ indulgence for a few seconds to give a shout out to one public sector worker in particular. Dr Fiona De Soyza retires today after 37 years as an NHS doctor—31 and a half years at Leslie Medical Practice in my constituency. She is not planning to retire from the 38 years she has served so far as my wife. Obviously, I would rather be there, but my duty means that I have to be here.
The Bank of England Governor, Andrew Bailey, told the Treasury Committee that we should expect “apocalyptic” food price rises before the end of the year. Archie Norman, the chairman of Marks & Spencer, said that food prices could rise by 10% this year, on top of the increases that we had already started to see last year. There are warnings that schools will have to cut the size of school meals to keep their budgets under control. The Institute for Fiscal Studies has reminded us that there is not a single rate of inflation; everyone has their own rate of inflation, and the poorer someone is, the bigger that inflation rate is. That is because, the poorer someone is, the more of their household money, by necessity, is spent on the things that are now spiralling out of control. Someone on an MP’s salary does not have to spend three quarters of their money just to keep themselves and their family fed and warm. Someone on minimum wage—or below—does.
At the same time, the number of billionaires in the United Kingdom is the highest it has ever been. The wealthiest people in the United Kingdom saw their personal fortunes increase by 10% last year. We are very definitely not all in this together. While I have no question about the sincerity of all those who have spoken against Government policy today, I do need to gently point out to Labour colleagues that right now their party in Scotland is doing deals with the Tories, all over Scottish local government, to help the Tories have an influence that the voters of Scotland wanted to deny them at the ballot box in the first week of May. When we are talking about the iniquities of this Government at a UK level, why are some parties in Scotland putting the Tories into power to run, and all often probably ruin, local government services?
The Government’s response so far has been nothing short of shocking. First, they pretend it is nothing to do with Brexit. They say that it is partly caused by the war in Ukraine, and that there is no doubt that covid has had a significant impact. Then somebody called “global” seems to get the blame for everything the Government get wrong these days. We have got a Chancellor who increases the burden of taxation and thinks it is a tax cut; a Chancellor who thought it was silly to give money to people who are poor to help them pay their bills; a Chancellor who tweets figures showing that the economy is shrinking and says, “Isn’t it good that the economy is growing?”; a Chancellor who increases national insurance, knowing perfectly well that it will hit people who work for a living and benefit people who are able to make a fortune from investment and property ownership. I wonder who the Chancellor knows who might benefit from that.
Valid points were made about the inadequacy of mileage rates paid to a lot of public sector workers, but people who work in the private care sector very often do not even get those—they often have to pay their own mileage and drive on their own time between appointments. It is now widely leaked by the Government that there is an emergency package of support coming. We might even see a U-turn on the windfall tax, not because it is morally the right thing to do, but because they need something—anything—to keep the Prime Minister with his glass of beer off the front pages for the next couple of days. What an example! What a perfect metaphor for the utter iniquity of this Government that they will not spend money to help people because they need it, but they will spend public money on trying to keep the Prime Minister’s misconduct off the pages of the newspapers.
What could they be doing? The windfall tax has been mentioned, and I am quite happy to support that in principle—not just for oil and gas companies, as has been mentioned, but for anybody who has made huge profits through good luck during the last two desperate years. The Government could follow the example of Germany, which has cut fuel duty five times as much as the United Kingdom. It is giving a €300 payment to everybody, plus €100 for every child. Ireland is giving a €200 energy rebate for everybody—not a loan that they have to pay back, but a grant. Belgium cut VAT on energy to 6%. That was something the Government told us we were not allowed to do when we were part of the European Union. How come Belgium was able to do that?
Scotland, without even the full powers of a normal nation, will be increasing the Scottish child payment by the end of the year to £25 per child. That has been described by the Child Poverty Action Group as a “game changer”. The Scottish Government are currently spending more than £360 million above Barnett funding on benefits, including through seven new benefits that do not exist anywhere else in the UK. The Scottish Government were not set up to spend Scotland’s money fixing the failures of the United Kingdom Government, but all too often, that is what they are having to do.
Poverty is not an essential part of today’s life. Poverty is not inevitable in the United Kingdom today. The United Kingdom boasts about being one of the wealthiest nations—or collections of nations—anywhere in the world. Scotland certainly, and probably the United Kingdom in its entirety, is self-sufficient in energy. We could be self-sufficient in food if the food production and distribution system had not been so destroyed over the years. Energy companies are now warning that half of their customers will not be able to pay their bills by the end of the year. That is not essential; it is a deliberate political choice by a Government whose days are up.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Mr Twigg. I begin by thanking my hon. Friend the Member for Barnsley Central (Dan Jarvis) for securing and leading this extremely important and timely debate. He is a great champion for working people across this country. I thought his opening speech set out clearly the challenges that are facing his constituents, as well as all hon. Members’ constituents, at this moment.
I would like to thank UNISON, a trade union I am proud to be a member of, for the briefings it provided in advance of this debate. I will come on shortly to how the cost of living crisis is affecting public sector workers. This has been a good debate, with hon. Members from across the House speaking with passion and sincerity about the impact of the cost of living crisis on their constituents. We have also heard repeated pleas to the Government to end their inaction and provide more support to the families who are really struggling. I will come on to some of these suggestion shortly.
The hon. Member for Glasgow East (David Linden) made some very important points about low pay, which I will address shortly. My hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) made an excellent speech on the poverty premium. I thought the point she made about the difference in cost between direct debit and prepayment meters for energy was particularly relevant to the current situation. I hope the Minister will address that point directly.
My hon. Friend the Member for Easington (Grahame Morris) made some interesting points about the taxation of property and possible reforms to how it is done. The hon. Member for Westmorland and Lonsdale (Tim Farron) spoke about the particular challenges of rural poverty and the issue of second homes and Airbnb making the housing crisis worse. My hon. Friend the Member for York Central (Rachael Maskell) spoke about the housing crisis, particularly the challenges for renters and the knock-on effect on the rest of the economy. My hon. Friends the Members for Bolton South East (Yasmin Qureshi), for Leeds East (Richard Burgon) and for Merthyr Tydfil and Rhymney (Gerald Jones) set out some short and long-term solutions to the current crisis, including a windfall tax.
I totally agree that this is a matter of political will. The hon. Member for Strangford (Jim Shannon) spoke about the impact of the increase in national insurance as well as energy prices on his constituents,. My hon. Friend the Member for Reading East (Matt Rodda) gave some heart-wrenching examples of the struggles facing his constituents and public sector workers.
I want to start by setting out how this cost of living crisis is affecting workers, families and businesses. In recent weeks, we heard the news that inflation had hit a record 40-year high, rising to 9%. It is the highest one-year increase in consumer prices since records began. The average household energy bill has gone up by more than £1,000 this year. The food shop has gone up by 5% and the Bank of England has warned of further, “apocalyptic” food price rises. The cost of filling the car with petrol has jumped by £20 a time. Since January, 2 million people have gone a whole day without eating, because they cannot afford to eat.
We have heard awful accounts from my hon. Friend the Member for Barnsley Central, who shared stories on behalf of his constituents. I know some of my constituents cannot even afford a bus fare to get to the food bank to receive help. I am sure that each and every hon. Member will have similar stories in their inbox.
As well as rising prices, there is a wage crisis in this country. Weekly pay for a full-time worker is expected to reach £652 by 2023, but if weekly pay had grown in line with inflation since 2010, it would have reached £695 by 2023. The last 12 years of Tory Government have seen pay squeezed, costing workers hundreds of pounds a year, even before the Tory tax rises. As several hon. Members have mentioned, the pay squeeze has also hit public sector workers. Stories of NHS workers having to use food banks are shameful. They and other key workers kept our country going through the darkest days of the pandemic.
My hon. Friend the Member for Barnsley Central set out some of the specific challenges facing public sector workers, including HMRC-approved milage rates falling behind the cost of driving and charging staff to park in NHS car parks. I hope that the Minister can address these important issues when she responds. Public sector workers deserve better from this Government on pay and other workforce issues, including workload, progression and staff wellbeing.
Of course, the cost of living crisis has also hit businesses. Consumer confidence is at an all-time low and businesses’ costs have rocketed. The cost of living crisis is adding to 12 years of low economic growth. In fact, over 12 years growth has averaged just 1.4%—the worst record of any Government since the second world war.
That is a cost of living crisis, a wage crisis and an economic growth crisis all at the same time, and what is the Government’s response? So far I have heard nothing except more dither and delay. Reports suggesting that the Chancellor is considering some form of windfall tax are all well and good, but we have been calling for that for months. Where is the urgency from the Government? Where is the recognition that people need help now? It is simply not good enough. We have said that the Government should bring forward an emergency Budget to deal with the immediate crisis, and that it should contain five priorities to make material difference to millions of workers and their families.
First, we have called for a windfall tax on oil and gas producers in order to cut home energy bills. The arguments for a windfall tax have been well stated by hon. Members today, so I will simply say that when leading business figures, charities and politicians from across the political spectrum are urging the Government to get on with this and do it, there is simply no excuse. We believe that the windfall tax should be used to remove VAT on domestic energy bills and expand and increase the warm home discount. That will save most households around £200, but those who most need it could save £600.
Secondly, we have called for support for struggling businesses through a discount on business rates for small and medium-sized enterprises, to be funded by a tax on online giants. Thirdly, the Government must scrap the national insurance increases, which are hitting workers at the worst possible time. This is not the time to implement a national insurance increase.
Fourthly, we need a clear plan to ramp up home insulation and upgrades, making homes more energy efficient and saving households, on average, £400 every year. Fifthly, we have said that the Government must go after the fraudsters who stole from the public during the pandemic. Why are the Government not allowing the National Crime Agency to investigate the £11.8 billion lost to tax from fraud? That money could have been used to help people out of hardship right now. These five policies would make a real difference to workers and families across the country.
To conclude, unlike the party opposite, Labour has a plan to put money back into people’s pockets, grow the economy, boost jobs and wages and tackle this terrible cost of living crisis. We are still waiting for the Government’s plan but we cannot wait very much longer. Now is the time for action and for a windfall tax, and to finally give the people the help they need.
The Financial Secretary to the Treasury (Lucy Frazer)
It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Barnsley Central (Dan Jarvis) for organising this important debate, and all Members for their valuable contributions.
Hon. Members have set out the concerns and struggles of their constituents. I assure hon. Members and their constituents that the Government absolutely recognise that families up and down the country are facing an unprecedented cost of living challenge at the moment. We understand that the cost of food is rising and that the cost of goods going up is hitting people’s pockets. It would be wrong of me to pretend that these issues are going to subside. We all know that the next few months are going to be difficult. I know that people are really worried. It would also be wrong of me to suggest that the Government can wave a magic wand and that there is some quick fix that no one has thought of to reverse all the price rises that are happening at the moment. These are global trends and they are driven by global challenges.
We recognise that these are serious issues facing our society, as the hon. Members for Barnsley Central and for Merthyr Tydfil and Rhymney (Gerald Jones) said. We are doing a significant amount. We have already done a significant amount to help the many families that hon. Members have spoken about. We have provided £22 billion of direct support to families grappling with the cost of living pressures, including the £1,000 that people on universal credit will get or the £1,000 that people on the national living wage will get, through the changes that we have made to those measures. Our support includes £9 billion of energy support to ensure that fuel duty is cut, and the council tax rebates of £150 for band A to D payers in England, as well as the warm home discount, which we have expanded to £150, and the £1 billion of household support that people are getting through their local authorities.
I recognise that it is important not just to talk about statistics or investment in global terms; we recognise that the cost of living pressures are affecting individual families. I listened very carefully to the hon. Member for Barnsley Central when he spoke about a public sector worker on universal credit who was struggling. I emphasise that a low-earning family with one adult working and two children under five will be £1,610 better off a year as a result of the recent changes we have made to national insurance contributions and the universal credit taper rate.
Peter Grant
Has the Minister bothered to work out how much of that £1,600 has disappeared in increased food and fuel bills since the announcement was made?
Lucy Frazer
Obviously, different people will experience different rises in the cost of living, depending on their circumstances. We absolutely recognise the rising cost of living, which is why we have already made a number of changes.
I will move on to the point that the hon. Member for Barnsley Central made about public sector pay, as did the hon. Members for Reading East (Matt Rodda) and for Glenrothes (Peter Grant) by analogy. I recognise the important work that public sector workers have been doing during the pandemic and in the ordinary course of business, helping to support our world-class public services. Hon. Members will know that last year’s spending review confirmed that public sector workers will see pay rises across the whole spending review period from 2022-23 to 2024-25. Pay for most frontline workforces, including nurses, teachers, the armed forces and police officers, is set through an independent pay review body. We will consider all recommendations from pay review bodies this summer, once those final reports are submitted. I also point out that many public sector workers will benefit from the increase in the national living wage that I mentioned. Two million people, many of them public sector workers, will benefit from that.
The approved mileage allowance payments, which the hon. Members for Barnsley Central and for Bolton South East (Yasmin Qureshi) raised, reflect all the running costs of a vehicle, including fuel and other vehicle expenses, such as servicing, insurance and depreciation; fuel is only about a third of the cost included in the rate. It is up to an employer what expenses they pay their employees. They do not have to use the allowance payment amounts, and can instead agree to reimburse the actual cost incurred. Individuals are not liable to pay tax on the difference as long as they can provide evidence of the expenditure. As with all taxes and allowances, we keep the rate under review.
The hon. Member for Barnsley Central talked about NHS car parking charges. I am pleased that he recognised that NHS staff working night shifts benefit from no car parking charges, as do disabled people, frequent out-patient attenders and parents of sick children staying overnight, but I am happy to look into the matter further with officials.
I listened carefully to the ideas raised by the hon. Members for Glasgow East (David Linden), for Kingston upon Hull West and Hessle (Emma Hardy), and for Easington (Grahame Morris). I have previously spoken to the hon. Member for Westmorland and Lonsdale (Tim Farron) about the housing issue he raised. I valued that conversation, and I thank him for raising those points again.
The hon. Member for York Central (Rachael Maskell) said that Labour restored people’s dignity, but the latest data shows that, compared with 2009-10, there are now 2 million fewer people in absolute poverty. The Chancellor, the Government and I are very proud of that statistic. I am very proud that, when Conservative Governments are in office—particularly this one—we have record unemployment, which allows people to earn a wage and support their families, whereas every single Labour Government has left office with unemployment higher than when they entered it.
I have set out a number of the measures that we have already taken to support people with the cost of living, which we absolutely recognise. We are also taking steps to boost the UK’s economy. I have not got time to go into all the measures today, but hon. Members know that the Chancellor has set out a long-term plan to boost the economy through capital, people and ideas, building on the progress that we have already made in in this area.
Emma Hardy
Before the Minister sits down, I want to push her a little further on financial inclusion. Will she meet me and the campaign group Fair By Design to look at the FCA’s remit with regard to financial inclusion and how we can reduce the poverty premium for people with the least money?
Lucy Frazer
I or another Minister would be very happy to meet the hon. Lady to discuss that.
We are helping to deal with the cost of living, but the only way out of the rising inflation that we face is to grow the economy more broadly, and that is what we are doing. I reiterate that the Government stand ready to do more to support people across the UK who are struggling with cost of living pressures. We will take action to ease these burdens, where we can, in the short term, while exercising responsible economic leadership to deliver the conditions we need to prepare the UK economy for the future.
Dan Jarvis
This has been a very useful and timely debate. Again, I thank Unison for the support that it has provided and for the work that it does. I also thank hon. Members for their contributions. Although minds have rightly been focused on the terrible time that many of our constituents are having with the cost of living crisis, the reality, as some hon. Members have commented upon, is that what we are actually talking about is the grinding effects of poverty, which many of us have known about for a very long time indeed.
In this debate we have heard concerns expressed about really important issues such as low pay, pensions, the poverty premium, reform of council tax, windfall tax, the cost of parking, the cost of mileage, housing costs, fuel costs, transport costs and a number of other things as well. I think that hon. Members have made a significant number of sensible and reasonable suggestions, and I very much hope that the Minister will think on them and that the Government will act at pace.
The Minister mentioned that she had worked with her officials to look specifically at the issue of NHS parking charges. I would be very grateful if she wrote to me with her conclusions following the piece of work on that issue that she said she would do.
Finally, although the Government of course have a crucial role to play, I will take this brief opportunity to recognise the very important contribution being made by the charitable and voluntary sector, which, as it always does, has stepped up to support those who are in crisis. In particular, I will just put on the record my thanks to the wonderful British Heart Foundation shop in Barnsley, which I had the pleasure of visiting last Friday. The staff there and the staff in charity shops right across the country are doing amazing work during these very difficult times, providing brilliant service and good-quality products at an affordable price. We owe them a huge debt of gratitude.
Question put and agreed to.
Resolved,
That this House has considered the fiscal approach to tackling rises in the cost of living.