Cost of Living: Public Well-being

Lord Sikka Excerpts

Thursday 20th October 2022 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I would like to congratulate my noble friend Lady Drake on securing this vital debate. Opinion formers and mainstream media have latched on to the phrase “cost of living crisis”. In reality, it is a crisis of poverty, inequality, failed economic policies, an irresponsive state and democracy that is preventing millions of people from living a fulfilling life. The crisis has been incubating for years, and the main reason for that are the failed ideologies that the party opposite seems to venerate.

There is a twofold attack on people’s well-being—first, by shrinking their disposable incomes and, secondly, through an escalating cost of living, with inflation as measured by RPI already at over 12%, taxes at a 70-year high and, just last month, food prices increasing by nearly 15%. The weak pound means that we also importing inflation. Yet the Government have no strategy for dealing with corporate profiteering at all. If anything, the Government’s mantra is to further shrink people’s disposable income by cuts in real wages, pensions and public services that enable people to get healthcare and related services.

Due to government policies, the richest 250 people in this country are now worth nearly £711 billion compared to only £658 billion the year before. Clearly there is no cost of living crisis for the rich—or the rich people who donate to the Conservative Party. However, there is a cost of living crisis for the rest of the people. While many have been getting rich, the living standards of the masses are now lower than the average for developed countries. The Financial Times reported that the poorest 20% in Ireland have a standard of living almost 63% higher than the equivalent poorest in the UK. In 1976, workers’ share of GDP in this country, in the form of wages and salary, was 65.1%. Following attacks on trade unions, zero-hour contracts, fire and re-hire and other policies, that share is now down to 50%. It is not really surprising that people cannot get access to good food, housing, education, pensions, healthcare and much more.

Even before the pandemic and the energy price crisis, some 14.5 million people were living in poverty. This included 8.1 million working-age adults and 4.3 million children. That number is expected to hit 16 million to 18 million before long. Thanks to the Government’s policies, 21 million adults in this country have an annual income of less than £12,570. Has any Minister tried to live on that and see how they manage? Even with the freezing of energy tariffs announced by the Truss Government—we do not know what the next one will be called—some 6.7 million households are in fuel poverty. If the Government do not continue their support beyond next April, that number is expected to rise to over 11 million.

Some 800,000 children do not even get free school meals because their parents have income of more than £7,400. The tax system favoured by the Government clobbers the poorest. The poorest 10% of households pay 47.6% of their gross income in direct and indirect taxes. The richest 10% pay only 33.5%

In the face of the Government abandoning their duties to their citizens, people have to rely on charity for survival. Teachers, nurses and the police are relying on food banks. There are 1,400 Trussell Trust food banks and, in addition, nearly 1,200 independent food banks. They dished out 2.1 million emergency food packages in the last year, and 832,000 of them went to children.

Our senior citizens are taking endless bus trips and huddling in libraries, shopping malls and warm hubs just to stay warm. In case the Minister wheels out the slogan, “We are providing energy help”, I remind him that even with that help, energy prices have more than doubled. The Government have somehow managed to find a magic money tree and conjured up £65 billion to bail out the gilts market, but the same magic tree is never really plucked to eradicate poverty, reduce inequalities or make investment in public services.

This Government have set unprecedented records: let me give the House some examples. A study published in the peer-reviewed Journal of Epidemiology and Community Health has reported that there were 334,000 excess deaths in the period from 2012 to 2019. The cause was austerity. In 2016, Exercise Cygnus concluded that the NHS would struggle to cope with a serious outbreak of flu—an epidemic. The Government’s response was not to fund the NHS properly; they reduced the number of beds per capita in the UK. Despite the heroic efforts of NHS staff, 208,000 people died from Covid. Within the NHS, 117,000 people died last year while waiting for hospital appointments. The charity Marie Curie has reported that 93,000 people died from poverty in 2019. No previous Government have killed so many of their own people. Why have this Government not reflected on this organised democide in the name of their defunct economic ideology? We need a public inquiry into the real human cost of what the Government have done, and we need it as soon as possible.

The Government are not reflecting on what they have done to the people. We have Chancellors who are promising even more austerity, saying, “Yes, every public department has to be cut; there will have to be more cuts to people’s wages and benefits”. At the same time we have patriotic millionaires urging the Government, “Please tax us more”, but the Government will not do it. The Government could easily raise billions, for example by taxing unearned income at the same rate as earned income. If they applied that to capital gains it would raise £25 billion, which could be used to reduce inequalities, but the Government are not going to do that. Finally, I say: for God’s sake, please go and let the Labour Government do the proper thing for the country.

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[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)]

My Lords, I thank the noble Baroness, Lady Drake, for securing this important debate, and all noble Lords across the Chamber who have contributed to the constructive and thoughtful discussion. To answer the noble Baroness, Lady Smith, I found the debate fascinating and respond with pleasure.

I thank the noble Baroness, Lady Drake, for framing the debate in terms of the ONS study on public welfare and for highlighting that to me ahead of time. I welcome the contributions from the noble Lord, Lord Layard—it is good to see my ex-lecturer at LSE— and the thoughtful contributions from the noble Lord, Lord O’Donnell, and the right reverend Prelate the Bishop of Oxford. I believe this is an excellent basket of measures which should act as a North Star for the Government. Many moons ago, I worked a lot in Nigeria setting up digital TV, and I learned that one of the poorest countries in the world can actually be one of the happiest.

I would like to look at the impact of the cost of living on those 10 measures. I have excluded two—the environment and governance—because I was not sure how much the cost of living impacted them. I am not so sure on the governance point now, but that may be above my pay grade anyway. As I reply, I will look at how the cost of living measures impact the other areas: personal well-being, our relationships, our health, what we do, where we live, our personal finance, the economy, education and skills. I will not pretend today to have all the answers, but what I will try to do, crucially, as requested by the noble Baroness, Lady Gohir, is set out what the Government are doing to ameliorate the impact of the cost of living in these areas.

I turn first to energy prices, which we probably all agree is having the biggest cost of living impact. Of course, it is driven by the Russian war in Ukraine, but brought home to us here on our doorsteps. Many speakers today have mentioned this, including the noble Baronesses, Lady Tyler, Lady Smith, Lady Primarolo and Lady Janke, and the noble Lord, Lord Sikka. It impacts our personal finance in terms of the well-being measures, the economy and, as many have said, our health. As the noble Baroness, Lady Merron, said, its impact is as much as £1.4 billion a year.

I think we all agree that the price freeze was bold and decisive and has united support from all sides of the political spectrum. It gave peace of mind to all households. To echo the point made by the noble Baroness, Lady Drake, 77% of households are anxious about the impact of fuel prices on the cost of living. A measure that seeks to address this for all households will go a long way towards removing that anxiety, bringing financial stability to many households and helping them with their health and well-being.

At the same time, I think we probably accept the comments about whether we should have more targeted support. We will review that after six months. It is probably a sensible thing to do to make sure that we are using such a large investment of public money in the best way possible. In the meantime, in addition to the price freeze, the Government have sought to act to make sure that the 8 million poorest households receive an extra £650 per year.

Thirdly, I turn to the price freeze for business and institutions. To answer the noble Baroness, Lady Janke, that also applies to schools for the next six months. The price freeze will help the whole economy because industry, schools and hospitals are all impacted by the increase in the cost of fuel. It will help the whole economy and jobs and, by helping to keep inflation down by as much as 5%, it will have knock-on benefits in terms of the level of interest rates needed to contain inflation.

Undoubtedly, as mentioned by many speakers, including the noble Baronesses, Lady Sherlock and Lady Tyler, and the noble Lord, Lord Monks, all this has had an impact on interest rates and inflation. While I am sure we all recognise the need to increase interest rates to reduce inflation and the impact that that has on mortgage costs, it would be blind not to recognise the turbulence in the markets caused by the mini-Budget, as mentioned by the noble Lords, Lord Howarth and Lord Monks, and the noble Baroness, Lady Smith.

The impact on the cost of government debt, mortgages and our ability to finance our spending plans is crucial and affects us all in terms of public well-being. So I think we would all agree that the inescapable truth from the past few weeks is that we must find a way to make sure that, as necessary as energy price caps are and as important as investment in health and other services is, we show financial discipline and show that we can live within our means. We have to give confidence to the markets to bring down the cost of government debt and mortgages, which we know have such an impact on every single household.

To that point, I welcome the comment on the stability of Ministers. Speaking as a Minister of only three weeks, I wish for some stability. However, again, I believe that that is above my pay grade.

I want to place what we are doing in the context of needing to work within this fiscal constraint. The markets have demonstrably proved that we must live within our means.

I turn next to food prices; again, this point was recognised by many speakers, including the right reverend Prelate the Bishop of Oxford and the noble Baroness, Lady Merron. Food insecurity clearly has an impact on health, but it also impacts productivity, the economy, education and skills—all key measures of quality of life and well-being. That is why it is so important that we make sure that our children have a nutritious upbringing, which is why the free school meals programme is so important. All infant school kids get a free school meal, as introduced by the Government. Today, that 37.5% level is the highest on record, I believe.

So we are trying to give children a good foundation by having a healthy start and healthy food at school. We are also expanding that with a £200 million holidays and activities food programme to make sure that children can enjoy that when school is out. We also have the Healthy Start scheme to help 300,000 lower-income households. At this time, I thank the right reverend Prelate the Bishop of Oxford, the Church and all those who have a role in helping with food banks, because I know that that area provides a lot of comfort to people.

I turn to the impact of all this on mental health. The point was ably made by the noble Lords, Lord Hendy and Lord Layard, and the noble Baroness, Lady Gohir, among others, that the cost of living crisis causes more stress and anxiety. That is why the £2.3 billion of additional funding per annum that has been put in place to fund mental health services for an extra 2 million people per annum is a key recognition on the part of this Government of the importance of mental health to our general well-being. I believe that all areas have now set up a 24/7 urgent helpline to assist people in this. On a wider scale, the Treasury has set up the Breathing Space programme to assist people and give them breathing space when they need to manage their debts. These are difficult times and I will take this opportunity to urge anyone struggling with their mental health to seek support. Help is out there.

I turn to the pressures on the NHS. Again, many noble Lords’ comments recognised this issue today and, in terms of the broader measures of public well-being, how crucial health is in that—and, therefore, how NHS delivery is crucial to the health and well-being of our country. As a new Minister, I am under no illusions about the cost of living pressures and how they might add to the NHS challenges.

I have spoken previously about our plan for patients. I am confident that our focus on ABCD is the right approach. I will not repeat those points now. At a time of unprecedented investment in the NHS and a larger workforce than ever, my focus is to make sure that, by working with the NHS management team, we really are driving performance as well.

We have all seen examples of NHS brilliance—I had the chance to see some recently at Chase Farm in Watford—but we have all seen examples of poor performance that we know is not good enough. With tight budgets and the cost of living, maximising our return on this investment is more important than ever. That is why a lot of my focus is on making sure that not only are we expanding bed capacity by 7,000, we are expanding capacity in the right places. We must make sure that the beds are being used to most effect to relieve the pressures. Again, this will benefit the whole flow through the system, right back to ambulance and A&E waiting times. At the same time, we must make sure that the 50 million extra GP appointments we are delivering are available to meet demand in the places that need it most.

The noble Lords, Lord Layard and Lord Pendry, also mentioned the key part that adult social care plays in this whole system. As we all know, how we look after our loved ones is key to our relationships, to how we feel about ourselves and to our decency as a nation. Freeing up 13,000 hospital beds—13%—is key to ensuring that our loved ones are cared for in the right place: in care homes and not hospitals. It is also key to creating capacity in our hospitals to improve the flow right the way through the system, so that we can make sure that ambulance and A&E wait times improve. The £500 million discharge fund is a welcome addition to help solve this problem. Again, my job is very much making sure that we spend it in the right places to ensure that it is making a real difference.

In response to the point made by the noble Lord, Lord Pendry, at the same time we are working to recruit staff. Key to that, in the age of full employment, is looking to overseas workers, in the fine tradition of the NHS. I am glad that they have been added to the essential worker list so that we can have access to these markets. As the noble Lord, Lord Pendry, said, we must help people to see acting in the care sector as a vocation, not just a job.

I echo the points made by the noble Lords, Lord Howarth, Lord O’Donnell and Lord Hendy, around the role of work and employment. Work is not only key to our personal finances, it is key to our skills, our health and our own sense of worth and personal well-being. It is also key to a public sense of well-being and of benefit to the economy. In short, work pays. While I am delighted that unemployment is at a record low, as has been mentioned, we need to attract millions of people back into the workplace. Many people in their 50s stopped working during Covid. As the noble Lord, Lord O’Donnell, said, we need to find ways of attracting them back. As a former lead NED at the Department for Work and Pensions, I know about the work that the new Secretary of State, Chloe Smith, is putting in to help people on disability benefit back into the workplace. That is not only good for them and their income; it is good for their self-worth and vital to the economy. That is why we have put £1.3 billion into supporting disabled people and people with health conditions to help them back into work. It is good for them, good for their income and good for the economy.

In closing, I am grateful for the thoughtful contributions from noble Lords and to the noble Baroness, Lady Drake, for securing this debate.

[Lord Sikka (Lab)]

My Lords, will the Minister respond to my request for a public inquiry into the deaths caused by the Government’s policies? I referred to austerity, Covid deaths, deaths while people have been waiting for NHS appointments and poverty. I am aware that there are people here in the Gallery whose families and friends died. They are suffering anguish and they want an inquiry.

[Lord Markham (Con)]

No, I am not going to respond to that point at the moment.

The Government recognise how important it is to protect and promote the well-being of the British people, particularly the most vulnerable. The measures I have outlined today will do just that. We are delivering unprecedented levels of support due to the rising costs of living, and this will already be helping millions of people across the country. The increased costs of living are impacting everyone in a variety of ways, particularly the most vulnerable in society. The situation is very fast moving and I hope noble Lords will share my enthusiasm for continuing an open dialogue as the Government closely monitor the impact felt to ensure that the right support is delivered.