Energy Suppliers: Customer Credit

Debate between Drew Hendry and Alan Brown

Wednesday 22nd February 2023 Westminster Hall

[Drew Hendry]

The hon. Lady makes a good point. There has been a great deal of debate in the industry about the practice of ringfencing, and whether that should be carried forward. I might touch on that shortly. The fact is that this money is being used in an incorrect way, whether it is propping up a company or aiding a company that needs it to survive, in a way that is not normal in business.

Notwithstanding the good point made by the hon. Lady, it is almost beside the point. The fact is that this money should not be used by companies, without the explicit permission of the people who have that money with them. Do not forget, they are not offering a shareholding to those customers. They are not saying, “Because you have a credit, as other people might have a credit with our company and have bought shares, we will give you back a dividend.” They are not applying any dividend. They are just keeping the money, and it is not their money.

I have some personal experience with OVO because, having started this campaign and looked into what was happening, I studied my own account, and lo and behold, I had a credit sitting on my account that I was not aware of, so I did some digging around. I have a smart meter that was installed and, despite several complaints and even a change of meter, OVO has still not been able to rectify the issue, so I have some sympathy for people who are not getting correct readings and are getting incorrect bills.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

My hon. Friend is making an excellent speech. The absolute crux of this is, as he says, protecting customers’ credit. I have an example of the opposite thing. I went to switch supplier, then I got a bill for £1,000 because I had been inaccurately billed for so long. That could have tied me to that supplier for a long time, because I might not have been able to afford to switch. It shows another failure in the market and failure in the billing process. Does my hon. Friend agree?

--- Later in debate ---

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Betts. I reassure you that I will not take 20 minutes, which I am sure will please everybody.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for bringing forward this important debate. As he said, the debate is about people’s money and their legitimate access to it. As you alluded to, Mr Betts, it is surprising that we are hearing from the Front-Bench spokespeople at 10 o’clock in the morning in this important debate. Given how many of us have been contacted by constituents who feel that they have been fleeced, and who are worried about turning on their heating and being able to eat, that is surprising. I suppose we can deal only with who is here.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey on how he set the tone for the debate. He said he would not list Government failures or attack the Government, and that he wanted to work with the Minister. That is commendable. I am not sure that I will be able to avoid criticising the Government, but we will come to that later. As my hon. Friend said, this debate is about people’s money; it is about people’s credit and what the companies do with it. I will turn to some of the examples he gave, particularly those in which people are in credit—effectively, companies owe them money—who should be secure, yet they are so frightened that they do not turn on their heating because they hear about the cost of living crisis. That struck me.

I pay tribute to the Wise Group, which works with vulnerable people. I was at an event last night, and heard an example of somebody the organisation engaged with. This individual was on a prepayment meter. They were so concerned about the cost of energy that they were scrimping on what they were eating so that they could put a £700 credit balance on their meter. They wanted to build up some form of insurance, as they saw it, by building up a £700 credit on their prepayment meter—a massive up-front payment. I cannot understand why that individual was not contacted by the energy company and asked why they had put so much money on their meter and whether everything was okay. It took engagement from the Wise Group to resolve the issue.

[Drew Hendry]

My hon. Friend’s point about fear is something that I perhaps did not cover enough in my remarks. The issue is not only that people fear not having enough to pay a bill. It has been in common parlance that we should be worried about energy costs, and people are really worrying. There is also the fear that, when people are struggling to get by—I do not know how many people in this room this will resonate with—and a bill comes in, they sometimes do not want to look at it or acknowledge that it is there; they put it away. People might panic about their bills without realising that they actually have money. My hon. Friend’s point about people’s fear is central to the fact that people should be getting their money back.

[Alan Brown]

I absolutely agree. That fear and the stress that comes with it were observed by the Wise Group in its report. Some 66% of people the group engaged with believe that their mental health has suffered because of the fear and concerns they have about dealing with the cost of energy. That has further detrimental impacts on individuals, but also consequential effects for the NHS and society.

In his fine contribution, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey mentioned the struggle to get proper information about the companies’ credit balances and how that is not transparent. Why is that? Back in 2018, Ofgem estimated that companies would hold surplus credit balances of somewhere between £600 million and £1.4 billion. How can the regulator itself look into the matter and not get an accurate figure? It beggars belief. We are now nearly five years down the line, and we still have no idea how much money these companies are holding. It is outrageous. I call on Ofgem to fully get a grip of this matter.

As my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey said, there should be transparent reporting, because we need a clear understanding of what these companies are holding. Had we had that understanding previously, we would not have had so many retail companies going bust because they did not have sufficient money and capital. Just reporting customers’ credit balances would give an indication of that, as well. It is concerning to hear about these companies’ performances, particularly OVO. I also pay credit to Mrs Raw for allowing that example to be given. Imagine a customer who is £1,000 in credit being asked to increase their direct debits.

[Drew Hendry]

I just want to underline the point that it is £1,796—nearly £2,000. That is nearly a year’s worth of bills. It is an absolute scandal.

[Alan Brown]

I thank my hon. Friend for clarifying that. It brings me to the two points: first, the credit balances; and secondly, the direct debits being increased. As The Times reported in December 2022, there is a real fear that companies were basically gaming the system by massively increasing the direct debits. I know this from anecdotal evidence from constituents, and I have tried to raise this with Ministers. I was afraid that when companies saw the Government energy support coming down the line, they were increasing direct debits and putting people on higher tariffs, because that would give them a bigger subsidy back from the Government. I really hope that the Government will look at that. It is commendable to give energy support to each household, but we need to ensure that householders, taxpayers and bill payers get 100% of the benefit of that, instead of companies gaming the system. That is another aspect to consider.

I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey for doing the work up front, and speaking with individual companies to try to get details about individual policies. It is certainly concerning that ScottishPower has said, “Yes, we’ll adjust the direct debit, but in doing so we are actually still keeping that credit balance,” which is the company keeping money for itself. I disagree slightly on Centrica and E.ON, because it is commendable, at least, that they want a system that ringfences and protects customers’ credit balances, although that should be the bare minimum. Why should customer credit not be protected? That should not even be up for debate. Some companies do automatic returns at year end, such as EDF, which is probably an acceptable way to work.

Returning to the key issue, this is the basic principle: credit is customers’ money that they have paid in advance to the energy company. It is logical that their money should be protected, and that they should be able to access it if needed. However, we also have to acknowledge that a system that allows customers to build up credit does allow smoother, equal payments over the calendar year, equalising payments over summer and winter. There are benefits in such a system: it allows steady, monthly payments, so that people can understand what they are paying and—in theory, if the smart meter and billing system work properly, which is unfortunately not always the case—will not get sudden increases in bills landing on their doorstep, causing further concern. We have to admit that allowing customers to build up credit is also to the customer’s advantage, because it smooths out their payments. We should not lose sight of that.

To be fair, if every single customer decided to access their credit at the end of the summer, the system would not work properly either. If customers withdraw all that credit, and then build up debit in the winter, companies will need to capitalise more, which means borrowing more, which means actual bills will go up. There needs to be some sort of balance overall, whereby we ensure customer balances are protected and accessed, otherwise bills will unfortunately end up going up in the long run anyway.

[Drew Hendry]

I am grateful to my hon. Friend for giving way again. I am taking advantage of the time that we have, Mr Betts—I apologise for the number of interventions, but this is an important point to clarify. The point he makes about having a fair mechanism in place to ensure that people are not being treated punitively over their credit balance is important. I hope the Minister will look at that to ensure that people are protected.

[Alan Brown]

I fully agree with my hon. Friend, and it will be good to hear the ministerial response. I said that I did not think I would be able to get through my speech without criticising the Government, so here it comes: companies using customer credit as working cash flow is what caused the market failure. That market failure was on the Government’s watch, and Ofgem was asleep at the wheel. Since the retail energy market has failed, we still have an inadequate response on how the Government and Ofgem will deal with this. It is outrageous that these companies went bust having used customers’ credit and then walked away, but then there is the double whammy of all the other bill payers paying the next company to restore the customers’ credit. We are paying twice, with other bill payers footing the bill.

I am also a member of the Business, Energy and Industrial Strategy Committee. Initially, we had a one-off hearing when companies started to go bust. The then Secretary of State and now former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), appeared in front of the Committee. His attitude was that, “Companies come, companies go. It is a free market; that is what happens. We know that some companies tend to go bust when it is time to pay their renewables obligations.” That laissez-faire attitude that the free market knows best is just ridiculous, and it shows that he was unsuited to be the Chancellor. It is funny how he did not like how the free market operated when he saw the effects of his policies. That meant he was putting his hands up and saying, “It is okay. We don’t mind companies going bust, owing customers money or owing money for renewables obligations”. The renewables obligation is supposed to fund energy-efficiency upgrades, help us towards net zero and help lower people’s bills. It was a dereliction of duty, and what he said in front of the Committee genuinely shocked me.

It was crystal clear at that time that companies must have sufficient capital and a robust assessment must be in place for any new entrants to the market. There needs to be an ongoing assessment, especially as we have seen the cost of buying energy increase, and Ofgem needs to clearly and periodically check that companies still have access to enough capital. I am trying to be balanced, though. There is another benefit to companies having some customer credit on the books, and that helps in the advanced purchase or hedging of energy—for looking ahead—which smooths out risk. Again, as long as companies are not overly reliant on customer credit balances and there is a robust system in place that assesses how much customer credit is being used for that hedging and that look-ahead, that is okay but, again, this is unfortunately another failure of Government. When Bulb, the seventh biggest energy company, went bust, it was too big to go through the normal process of another company picking it up, so it was the first company to begin the supplier of last resort administration process. The Government did not allow them to hedge ahead, costing taxpayers up to £1 billion more. Companies must be able to operate and hedge ahead, but that comes back to having the right capital in place.

It is unfortunate that Ofgem has flip-flopped on customer credit and how to deal with this since 2018. Of course, in that period from 2018 to 2022 30 companies went bust, while Ofgem was still dithering and wondering what to do. It is time that Ofgem came up with a solution. I commend my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey for what he has proposed. As he says, this is customers’ money. I refer the Minister to the Business, Energy and Industrial Strategy Committee report published in July 2022 called “Energy pricing and the future of the energy market”. Key recommendations 117 and 118 address customer credit, particularly 118, which is about Ofgem coming up with a system that manages these complexities and reporting back to the Committee and Government to agree a way forward. I will be interested to hear the Minister’s response because there has not been a suitable Government response to the report as yet—I look forward to hearing more. The point is that customers’ money should be protected. To throw in one last request, it is high time we got a social tariff to protect those that need it most and a much fairer system of paying for our energy.

Britain’s Industrial Future

Debate between Drew Hendry and Alan Brown

Tuesday 15th November 2022 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Interestingly, the Minister kept using the phrase “industrial strategy” without acknowledging that the previous BEIS Secretary actually ripped up and abandoned the UK Government’s industrial strategy. So there is not an industrial strategy; there is just a series of ad hoc announcements of money and targets that are arbitrary. We do not have a coherent strategy that links it all together.

I should start by welcoming today’s news of the confirmation of the £4.2 billion order for the five Type 26 frigates awarded to BAE Systems at Govan and Scotstoun. Those ships will now be built in the dry because BAE has been able to commit to the £200 million factory that was previously promised by the UK Government some way back. It is not the number of frigates that was originally promised, but there is no doubt that the announcement today is good news for the workers in Glasgow.

That good news is in contrast to a couple of stories and events from yesterday. In the Chamber, the former Secretary of State for Environment, Food and Rural Affairs, the right hon. Member for Camborne and Redruth (George Eustice), let slip what many of us had been saying for long enough, which is that the Australia and New Zealand trade deals that the Government signed are utter rubbish. Also yesterday, Bloomberg ran a story confirming that Paris’s stock market has now exceeded London’s stock market in value. These matters are interlinked. It is a combination of Tory free market ideology and Brexit, of course, and we continually see proof of the harm of Brexit in the UK’s performance compared with G7 and G20 countries.

There was a big lack of talk of Brexit in the contribution of the shadow Minister, the hon. Member for Sefton Central (Bill Esterson). Despite what we know of the harms of Brexit, Labour now says it wants to make Brexit work. Free movement of people has gone, the Labour leader tells us. We have recruited too many people from overseas into the NHS, he tells us. But the reality is that, when Labour has such a lead in the polls, it should be offering bolder plans, such as rejoining the single market, and certainly allowing free movement of people so we can grow the economy again. Right now the Labour position seems to be, “We won’t be quite as bad as the Tories”. That is hardly ambitious.

We have to be realistic: if we want to increase skilled jobs and the workforce, while continuing to recruit for the service sector, the hospitality industry, the NHS and so on, we need inward migration. There may be a legitimate debate about the fact that too many people have exited the workforce for various reasons, but the reality is that we currently have record low numbers of people seeking work compared with vacancies, so clearly immigration is required, and free movement of people with the EU is the logical step to achieve that.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend is making a powerful point. Of course, we need people to staff industries—in my constituency, hospitality is crying out for people and the health industry is crying out for people—and we used to be able to count on EU citizens, but there are not the people there to replace them. It is vital for a country such as Scotland to have a different approach from the one taken by this Government and this place over immigration. Our historical problem has been that we have suffered from emigration, rather than immigration, and we need people in Scotland.

[Alan Brown]

Absolutely. It is all about keeping that balance of population, growing the workforce, growing the skills base, helping our businesses grow and growing the tax base as well, which creates a fairer economy for all.

For too long in the UK, deindustrialisation was deemed acceptable as long as the financial City was booming in London, but that has been the wrong strategy for decades now. It has left coalfield areas such as my constituency struggling, not to mention the loss of industry and manufacturing in the main town of Kilmarnock and the Irvine valley. That has been replicated in industrial areas up and down the UK. The Tories have arguably now recognised this with the so-called levelling-up agenda, but that is a slogan that admits all those years of failure in terms of deindustrialisation. In reality, it was just a political strategy aimed at the red wall seats. The levelling-up agenda is so ad hoc that nobody can define what it means in terms of outputs and measures, and it opens the way for more political chicanery.

It is clear that Brexit has produced challenges for the automotive industry: additional paperwork; and rules of origin which will become more challenging for the industry as times goes on. According to the Society of Motor Manufacturers and Traders, despite recent increases in sales, 2022 is on course to be the weakest for car sales since 1982—a 40-year low in sales as we move into recession in the UK and have inflation at a 40-year high. On car manufacturing, while we know there have been global supply chain issues and long lead-in times for parts, the reality is that there has been a drop in output in the UK compared with the rest of Europe. Only Germany has suffered a bigger percentage decrease in manufacturing output.

On wider industrial strategies in car manufacturing and EVs, we must address the electric vehicle charging roll-out. The Government have a target of 300,000 charge points installed by 2030. That means that, each year from next year onwards, 31,000 charge points need to be installed; that is because only 34,000 have been installed to date. When we consider that the cumulative total installed at present needs to be installed nearly every year for seven years to hit the target, we realise the Government do not have a coherent strategy to achieve that.

I welcome that the battery car sales market share has increased and plug-in vehicles now account for over 21% of new sales, but we need to make sure the lack of infrastructure does not stall sales and output of such vehicles. In small, independent Norway, last year, EVs accounted for 65% of market share.

State Pension Triple Lock

Debate between Drew Hendry and Alan Brown

Tuesday 8th November 2022 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I will pick up some of the Secretary of State’s comments. He started off by trying to claim that there was not much illumination from the shadow Secretary of State’s speech, but we got absolutely no illumination from his speech, either. There is still no clarity on what the Government are going to do. As I said, it is just not adequate to say, “It’s irresponsible to come forward and provide clarity on what is going to happen on the triple lock.” The Secretary of State kept talking about being honest with the public, so he should be honest and tell us what will happen with the triple lock.

The Secretary of State attacked Labour with the old trope about Labour doing borrowing. I am sure that, not that long ago, he was backing the mini-Budget that was all about borrowing to give tax cuts to the rich. That was economic madness. Does he want to come back to the Dispatch Box and apologise for that?

I am happy to support the motion. It is simple and, as it references the Tory manifesto, it should win the entire House’s support—hopefully without the chaos that we witnessed in the Opposition day debate about fracking. I note that that was also the day when the former Prime Minister was questioned at the Dispatch Box by my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford); she did her 55th U-turn and said that she would protect the triple lock, so it should be easy for the Government to further confirm that, rather than holding on to the line about waiting until next week.

Last year’s breaking of the triple lock cost each pensioner £520 on average during the cost of living crisis, and the Red Book shows that it will take £30 billion in total from pensioners by 2026-27. At least uprating the state pension this year in line with September’s 10% inflation rate would give certainty of income to its recipients.

However, we should also look at the reality. If the triple lock is reinstated and pensions are uplifted, we are actually almost celebrating not cutting pensions in real terms in the Budget. That is how desperate things are. If that is the measure of compassionate conservativism—not making further cuts to pensions—then it shows the reality of where we are with this Government.

In terms of inflation in the here and now, we know from the Office for National Statistics that tea is up 46%, pasta is up 60% and bread is up 38%. The price of budget food in supermarkets is up an astonishing 17% in the year to September. On energy costs, the average bill, based on the previous cap, was £1,100 a year just a year and a half ago. Now, with the so-called energy guarantee, we are supposed to be pleased that bills are now, on average, £2,500 per year during the winter period.

For the Energy Prices Act 2022, the Government’s own figures estimated that energy bills would go up on average to £4,400 without the support package. That is almost 50% of an average state pension. Given that it is perfectly obvious that pensioners are more likely to use more energy than an average household, it is not just the triple lock that needs to be reinstated; we need this Government to come forward with confirmation of what the future energy support package will be for those who need it. The Secretary of State talked about protecting the most vulnerable. Well, they need to know what is happening with energy going forward as well.

In Scotland, average usage already means that bills are in the order of £3,300 per annum even with the current energy support package, so for people on fixed incomes it really is unaffordable.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I am grateful to my hon. Friend, who is telling it like it is for people in their homes just now. He is talking about energy costs. That does not include those people, including pensioners, who live off the gas grid and are therefore paying far, far more than those he is quoting.

[Alan Brown]

I agree wholeheartedly with my hon. Friend. The £100 payment to those off gas grid is almost an insult, because it does nothing to help them fill their oil tanks.

In a similar vein on inflation, petrol prices are still massively up compared with recent years. I drive an Insignia, which is not a huge car, but last week it still cost me over £100 to fill the petrol tank. That is clearly unaffordable for those on a fixed income, and it would account for 55% of one week’s full pension.

When we look at the UK in the round, we see that it is one of the most unequal countries in the world. Unfortunately, that inequality continues during retirement. The Gini coefficient shows that the UK is 14th out of 14 north-west European countries. It is the same for the S80:S20 quintile share ratio; when we compare the ratio of the poorest to the richest, the UK has by far the worst ratio and is again 14th out of 14. Scandinavian countries—all small, independent countries—lead the way on these measures.

Poorer pay and lower incomes for those struggling also means that later on in life they are less likely to have private pensions and so are reliant on the UK state pension. Again, the UK state pension fails in comparison with those of other countries. When we look at the proportion of earnings derived from state pensions, the UK sits 30th out of 37 OECD countries. I understand that there is an argument that it can be good to move away from dependence on state pensions, but the UK is clearly among outlier countries near the bottom of the pile, and way below the OECD average. Many people are using occupational pensions and capital as sources of income, but that increases inequality in pension age for those without access to such means.

If we look at the UK’s flat pension rate and compare it with other countries that pay a flat rate—Ireland, Denmark and the Netherlands—we see that the UK rate is again lower and fails in comparison. If we look at state pension expenditure compared to a country’s GDP, we see that the UK is again way below the OECD average and is ranked 28th out of 38 countries. Ministers might say that those measures can be somewhat subjective, but the UK trails in each one, so there is a common theme. One other measure is the replacement rate that compares all sources of pension income versus previous earnings. On this measure, the UK, with an average over 10% less than those of the EU27 and the OECD, is ranked 19th out of 37, so still in the bottom half of the table.

As I have stated, this means that inequality in the UK continues into retirement and the UK has the 12th highest pensioner poverty rate out of 35 countries measured by the OECD. What that means, if we turn that around, is that in terms of disposable income to support a standard of living for those aged 66-plus, the UK is ranked 24th out of 35 countries, while Iceland, Denmark and Norway occupy the top spots. Ireland is in eighth place. And those statistics are based on comparisons before the UK broke the triple lock and the link to earnings last year. It is absolutely critical that the triple lock is restored. Independent Age emphasises that:

“With more than 2 million pensioners already living in poverty and the cost-of-living crisis hitting hard, we know people are being forced to make impossible choices on how to cut back to be able to afford heating, electricity and food”.

One additional income support measure is pension credit, but we know that take-up levels are still too low—the Secretary of State acknowledged that. Previous research commissioned by Independent Age estimated that full take-up of pension credit could lift 440,000 older people out of poverty. So when will that be tackled by the Government? The unclaimed £4 billion in pension credit could make the lives of hundreds of thousands of pensioners more bearable. It is also money that would then be recirculated within local economies as it is spent on vital household needs.

Scottish Independence and the Scottish Economy

Debate between Drew Hendry and Alan Brown

Wednesday 2nd November 2022 Commons Chamber

[Alan Brown]

rose—

[Drew Hendry]

rose—

Economic Responsibility and a Plan for Growth

Debate between Drew Hendry and Alan Brown

Wednesday 19th October 2022 Commons Chamber

[Drew Hendry]

Again, the hon. Gentleman makes a fantastic point. The growth we are seeing from this Government is the growth in poverty and in inequality. That continues to rise and the Government are very good at driving it forward.

As I was saying, those off gas grid consumers are being given £100. Scotland is energy rich and a net exporter of energy. Renewable energy is six to nine times cheaper than the gas-fired power our prices are linked to. In Scotland we have the energy, but until we have the power our people will continue to be ignored over their basic needs and their potential.

After the Chancellor’s statement, the Scottish National party, through my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), tried to introduce some certainty for households terrified by the rising energy prices by tabling an amendment to the Energy Prices Bill that would have required Ministers to outline within 28 days how support after April would be provided to households. Labour failed to support that amendment. The Chancellor says that more difficult decisions will have to be made, which means cutting the funding for things that ordinary families and the most vulnerable rely on. We should note that the threat for those struggling by, many of them working people relying on universal credit, has not been lifted; there may be further reductions, on top of the fact that inflation has been three times higher than their last increase. Common decency demands that benefits must be fully uprated. Are the Government capable of that?

We should also remember that this Government still have not reversed the pernicious £20 a week cut to UC, yet the Chancellor had the cheek to say—this has been repeated today—that the Government’s priority will always be the most vulnerable. Does that include pensioners? This week, he was briefing journalists, including Robert Peston, who said this today, that the Government were abandoning the triple lock. With inflation rampant—today’s figure is 10.1%—this means further hardship for Scotland’s older people. Yet today, the Prime Minister says no. Is this another U-turn? Or is it like when she says that the energy cap will mean no family would pay more than £2,500 per year? Is it just—let me find some parliamentary language—questionable?

If the Government really mean that they care, they would reinstate the £20 a week to UC, scrap the bedroom tax, get rid of the odious rape clause and uprate benefits in line with inflation. They could choose to follow the progressive lead of the Scottish Government, who have brought in, among a wide package—[Interruption.] The Minister is laughing. The Scottish Government have brought in the Scottish child payment, which has risen now to £25 a week. That is helping to mitigate the callous cut made by his Government. They could choose to follow that progressive lead and to follow what the Scottish Government have done in doubling the December bridging payment from £130 to £260, at a time when families will need it most, in the depth of winter and at Christmas. The Government could pay for much of this by taxing the excess profits of companies that are clearly making them.

[Alan Brown]

My hon. Friend was talking about the Tories not keeping their pledge to protect the most vulnerable, and he has highlighted some awful policies that are making people more vulnerable. In addition, under this Government fuel poverty has increased by more than 50% and now affects 6.7 million households. So to say that the Government are protecting the vulnerable is, unfortunately, a sick joke.

[Drew Hendry]

My hon. Friend has said it all there—it is clear. To hear laughter this afternoon from Government Front Benchers about measures to mitigate poverty is shameful.

The Government could have taxed some of the excess profits, and companies are daring them to do so. Sometimes, as with the boss of Shell, they are asking the Government to do this. The Government could do this but they will not, because protecting the vulnerable is not what Tories do. It gets worse, because now the Bank of England will react with further interest rate rises, pushing mortgages to unaffordable heights for some homeowners and prospective buyers. As we have heard again today, the Government want to lay all the blame on the illegal war in Ukraine and on global conditions, but everybody knows that much of this is Tory-inflicted. A big part of that is Brexit. It has hamstrung businesses by starving them of vital staff; it has pushed inflation higher through import prices; the UK’s shocking balance of trade has been exposed; and it has ushered in a raft of new tax costs for businesses across the nations of the UK. As the former Bank of England Governor Mark Carney pointed out:

“In 2016 the British economy was 90% the size of Germany’s. Now it is…70%.”

That was before the clusterbùrach of the mini-Budget. Labour, with all the backbone of a squid, joined at the tentacles with this Tory ideology, is trying to pretend that somehow it will make Brexit work. Most Labour Members do not believe that, and it flies in the face of all the logic and informed opinion.

All this chaos is a timely reminder for the people of Scotland about why they should choose a different path. I say to people back home: look at what the Government are doing to you, to your communities, to your businesses, to your families and to your children’s futures. Let us make comparisons with the UK. Other countries similar to Scotland are wealthier and more equal, and have higher productivity, lower poverty, lower child poverty and lower pensioner poverty. Democracy can and will triumph. Scotland has the right to choose a very different path from this one, to build a better future as an independent nation and as an equal partner in the European Union—one that seeks to lift people up, not keep them down, and to live by the values of a welcoming, diverse and compassionate nation.

Cost of Living Increases: Pensioners

Debate between Drew Hendry and Alan Brown

Monday 21st March 2022 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is kind of a pleasure to follow the Secretary of State, but I have to say, not for the first time, that I am a wee bit puzzled, because she seemed to be responding to a different debate from the one we are having. The shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), set out some clear and harrowing examples of people who are really struggling, yet the Secretary of State gave a pre-prepared speech about a secure and dignified retirement tomorrow, ignoring the here and now.

Talking about how this Government have paid the most in pensions ever does not cut it. Those statistics are fine, but they do not help pensioners who are really struggling. That point needs to be taken on board. I asked about the £9 billion package that the Secretary of State cited, but she was not sure how much of it was Treasury-funded and how much was a loan to bill payers. I can tell her that out of that £9 billion, roughly £5.6 billion is just a loan to bill payers that will have to be paid back—bill payers who include struggling pensioners.

On pension credit, the Secretary of State picked up on what the pensions Minister—the Under-Secretary of State, the hon. Member for Hexham (Guy Opperman)—said earlier, bragging about how the Government are writing to local papers. When the shadow Secretary of State called them out on it, however, the Minister shouted, “Oh, we’ve done that for years!” If it has been done for years and there is still £4 billion of unclaimed pension credit, it is clearly not working. It is quite clear that another strategy is needed to make sure that there is a far greater uptake of pension credit, which can then be a passport to other benefits.

I welcome this debate. The motion combines the key issues for pensioners in the ongoing cost of living crisis: rising energy costs, real-terms cuts to pensions and, for older people in work, the health and social care levy. Where I disagree slightly with the shadow Secretary of State, which is why I intervened on him, is that I think that the motion could have been stronger in explicitly demanding the reinstatement of the pensions triple lock.

Earlier today, the pensions Minister stated that pensioner poverty has fallen, but as I tried to point out, the Government’s own statistics on households below average income show that UK pension poverty has risen to a 15-year high under Tory rule. Some 2.1 million UK pensioners—18%—are now living in poverty after housing costs, an increase of 200,000 people on 2018-19. Sadly, that was the figure before the latest energy cap rise was announced, so it will massively increase unless there is proper Government intervention. It is worrying that the Minister is trying to argue something different; either he is ignorant of the facts or he does not care. The Government really need to pay attention and start intervening.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

My hon. Friend is making a terrific point about the poverty that is affecting pensioners just now. Does he agree that the effect is disproportionately felt by pensioners living in off-gas grid households? Last year, heating fuel was 42p a litre; it is now £1.25 a litre and rising. There is going to be a really dramatic effect on pensioners in those areas.

[Alan Brown]

I completely agree. I thank my hon. Friend for highlighting that point; he has been at the forefront of the campaign to highlight the effects of increased energy costs on those who are off the gas grid. That threefold increase in fuel costs is completely unsustainable and really does lead people to the choice between heating and eating.

Let us look at conventional households covered by the energy cap. Next month, the cost of energy for the average household will have increased by 75% compared with April 2021, a rise of more than £800 a year. Pensioners spend more time in their homes and are more likely to feel the effects of cold or damp, so increased energy costs disproportionally hit the elderly. Not being able to afford to heat their homes puts their health more at risk. There are already something like 10,000 premature deaths a year due to fuel poverty, and that was before the huge energy cost increases. It is truly shameful that in an energy-rich country, or group of nations, people are dying prematurely because they cannot afford to heat their homes.

National Energy Action has estimated that the cap increase will have caused a 33% increase in fuel poverty rates. If this rise continues without Government interventions, come October we will be looking at some 8 million fuel-poor households in the UK, with perhaps between 2.5 million and 3 million of those households containing pensioners. When we look beyond the phrase “heating or eating”, we see that the grim reality for people faced with that choice is starving or freezing or suffering in damp houses, and that brings us back to the possibility of more people dying prematurely. It is truly shameful.

The interventions that the Government have announced to date clearly do not go far enough. Even worse, the removal of the triple lock is taking more than £500 a year from the pockets of pensioners, as the Government’s own Red Book demonstrates. Earlier today and this evening, Tory Ministers were arguing that wage increases were a false measurement owing to the partial recovery from covid. They have used that to justify breaking the triple lock. Just four months on, however, we have evidence that a much larger pension increase than 3.1% is required. The facts are clear: the spring statement in two days’ time will provide the one opportunity to reinstate the triple lock, or at least, as a bare minimum, to introduce a mechanism for increasing pensions by 6.1% in line with the current rate of inflation and what the Scottish Government are doing with benefits.

It was good to hear the Secretary of State guarantee that if inflation is at 7% or 8% later in the year, at the point when calculations are being made for the purpose of future uprating, pensions will rise by that amount. I hope that the Government stick to that, and it is not just bluster at the Dispatch Box. We all know who pulls the strings; it tends to be the Chancellor, so I hope that the Secretary of State is lobbying the Chancellor, because we know that inflation is not going to go down any time soon.

While I am talking about inadequate measures, let me point out that the £150 rebate on council tax will not catch all pensioner households in terms of bandings; and, as the shadow Secretary of State said, many pensioners living alone or in receipt of pension credit already receive a full or partial council tax discount, and are therefore unlikely to benefit from the new council tax rebate measure unless the Government do something about it. Making others who have avoided debt all their lives take out a £200 loan to pay back later is also morally wrong. That loan should be converted to a grant for all, and certainly, as the bare minimum, for pensioners and those on benefits.

The Secretary of State spoke about the warm home discount, but, as she knows, the Government put no money into that scheme, although too many Ministers do not even understand that; it is actually paid for by other bill payers. While I welcome the extension of the discount to 3 million households, only 10% more pensioners will receive it. The Government should extend it further, but, in doing so, should provide some direct funding rather than imposing the funding on other bill payers. They should also consider extending the energy company obligation scheme so that more homes become energy-efficient, but that too should involve direct funding rather than other bill payers having to foot the bill.

Apart from the £150 funded rebate, the only direct Government intervention to date on energy has been the allocation of £1.7 billion for the development of Sizewell C. Not content with Hinkley Point C being the most expensive power station in the world, the Tories are determined to build another more expensive one. In their own impact assessment for the Nuclear Energy (Financing) Bill, the upper estimate of the capital and financing costs of the Sizewell C development is £63 billion. How will that help people who need energy costs to come down? And why did Labour vote to commit bill payers to that amount for a new nuclear power station? The money could be spent so much more wisely. There really needs to be a rethink on this nuclear policy.

There are other cost increases to be considered. For instance, the cost of food is rocketing.

--- Later in debate ---

[Alan Brown]

I repeat that the time to be bold and increase fuel duty would have been when fuel prices were at a record low. That would not have had the same impact on people’s pockets. The current rise is unsustainable—[Interruption.] The Minister did not listen to what I said. This here-and-now policy from the Government is unsuitable; it should involve bolder long-term planning. Had they raised fuel duty earlier when prices were lower, they could have reinvested the revenue in public transport and in creating money for a rainy day, like right now.

[Drew Hendry]

Is it not a fact that pensioners and other people could have been helped greatly in this fuel crisis, had the Government listened and introduced a fuel duty regulator, which would have regulated the price and ensured that fuel was affordable for people just now?

[Alan Brown]

Absolutely. My hon. Friend has made my point much better than I was making it myself, and I appreciate that. A fuel duty regulator is exactly what would have given better stability for the Treasury and for people’s pockets.

Looking at other windfalls the Treasury receives, we see a VAT windfall from the £800 increase in average household bills. That is well over another £1 billion coming into the Treasury coffers. The Treasury is also benefiting from increased oil and gas revenues. The last Budget predicted an extra £6 billion in oil and gas revenues in this Parliament compared with the March 2021 Budget, but given the sustained period of increased prices, that £6 billion will prove to be an underestimate. That is more money that should have been reinvested.

I know that Labour has targeted a windfall tax on the oil and gas companies, but that sounds a wee bit like raiding the one traditional cash cow. Why do we not, as the SNP motion suggested last week, look at this in the round? Why do we not target all sectors or companies that have benefited disproportionately from the pandemic, and in particular the new-start companies and the Tory crony companies that were awarded PPE contracts and that have realised record profits since? That is a real obscenity that should be targeted. Anyone who has read Private Eye and seen the eye-watering sums that those companies have made should be truly horrified.

I want to highlight some additional measures in Scotland where the SNP Government are providing mitigation for pensioners, but even the powers the Scottish Government have are nowhere near enough to make the transformational changes that we want. Older people in Scotland get their bus passes at the age of 60, instead of having to wait until the state pension age. They also have universal free prescriptions and are more likely to have had targeted energy efficiency measures for their homes. All charitable organisations in this sector, as well as the energy companies themselves, want the UK Government to follow the lead of the Scottish Government in making energy efficiency a national infrastructure programme. The low-income winter heating assistance will give around 400,000 low-income households a guaranteed £50 payment every winter instead of the complicated UK cold weather payment of just £25.

United Kingdom Internal Market Bill

Debate between Drew Hendry and Alan Brown

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Monday 14th September 2020 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

In a “specific and limited way” is how the Prime Minister uses the words integrity and good faith. When the Bill was launched, an establishment newspaper in Scotland called it a day of national shame and infamy. It was right. With malice aforethought, the UK Government are breaking international law and breaking devolution. We reject the Bill and will never support legislation that breaks international law.

The Bill clearly threatens food and environmental standards, and opens up a race to the bottom in all aspects of life in Scotland, from the water we drink to education and health. It leaves our businesses uncertain and wary. It is no wonder that in Scotland, poll after poll shows that it is now the majority view that independence is not only the way to ensure the needs of the people of Scotland are delivered, but the only way to protect the Scottish Parliament. The Bill is emblematic of a Government with no regard for, or will to work with, devolution. It is a bare-faced power grab. The Scottish Tory leader has boasted that he will vote for the Bill tonight. In his other job, he runs the line; in this job, he crosses the line.

Clause 46 completely undermines the devolution settlement by stripping spending powers away undemocratically from the Scottish Parliament, jeopardising the current Barnett funding levels. We know only too well, as was mentioned by my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), the consequences of allowing Tory Governments control of our spending, from when the highlands lost out to shore up votes in the south of England.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Is it not a fact that over a 10-year period the Scottish block grant has been cut by the Conservative Government, and these measures give free rein for the UK Government to make further cuts to the Scottish block grant and to impose their spending in Scotland, such as through this stupid Boris Brexit that nobody wants?

[Drew Hendry]

I could not agree more with my hon. Friend. The people of Scotland are wise to these tricks and can see the utter contempt that this Tory Government have for their needs. Their Parliament will once again be ignored, in spite of that Parliament voting 92 to 31 against the White Paper for this Bill. The response of this Tory Government is as self-defeating as it is petty and harmful. Do not take my word for it. As the House has heard, the National Farmers Union, the General Teaching Council for Scotland, the Scottish Council for Development and Industry, the STUC, the Welsh Government and even the Chair of the Public Administration and Constitutional Affairs Committee have all agreed that this is a power grab.

The threat to environmental standards is palpable. Clauses 2 to 9 contain sweeping powers to compel Scotland to accept lower standards set elsewhere in the UK on animal welfare, food safety protections and a host of other elements with a direct impact on people’s lives. When directly challenged only yesterday, a UK Government Minister refused to rule out that we will have to accept chlorinated chicken in our shops. Imported hormone-injected beef can and will undercut our farmers and their quality production. Building control standards will be affected. Private companies will be able to trade unhindered to weaken and undermine our NHS and publicly owned water company—lowering standards, raising prices and undermining health.

This Tory Government are determined to break international law. This is proof to all looking on that they will break any boundary, concerned only with their own dogma. They do not want to work with others; they are not interested. Any real co-operation and consultation is anathema to them. They are a Government petulantly demanding compliance. Any deal, understanding, commitment, promise or even legally binding treaty is disposable. The common good is of no concern, especially when it gets in the way. Trust, honour and obligation are now words to trade on and be sneered at. What other inconvenient laws are next? Where does this stop?

Finally, what is the Government’s answer to the concerns of the Scottish people, businesses and communities to the poll after poll after poll showing that independence is now the majority view—not more powers or any attempt at understanding, but a pre-meditated move to put devolution to the sword? Madam Deputy Speaker, you bet we will be voting against this affront to Scotland and democracy tonight.