Cost of Living

Debate between Mike Amesbury and Patricia Gibson

Tuesday 25th January 2022 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I beg to move,

That this House has considered the cost of living in the UK.

I am delighted to have secured this debate today. It is very timely, and I honestly do not think that anything occupies the minds of constituents in North Ayrshire and Arran or indeed any other constituency more than this issue. It affects everyone. Everyone has noticed that their monthly outgoings are rising. Energy costs are up. Food prices are up. Fuel prices are up. Clothes prices are up. In that context, it is no surprise that consumer borrowing is also up, which will throw many into unsustainable debt as they struggle to keep up with essential bills. There can be no doubt that we are caught up in a genuine, biting cost of living crisis. It is simply not good enough that while our families, our communities and our pensioners are suffering, the Government are eating themselves alive over whether the Prime Minister knew he was actually at a party when he attended a party at the address where he lives.

I want to begin by saying a few words about the cost of energy. Gas and electricity bills are expected to rise significantly in April, when the energy price cap is predicted to reach £2,000 a year or £165 a month. That represents a 45% increase, although there are reports of even steeper rises. It is no wonder that National Energy Action believes that 6 million households will be in fuel poverty by April. That is a 50% increase from last year and it will hit hardest the poorest families, who spend most on energy as a proportion of their income. The reality is that wages are simply not keeping pace with the rise in the cost of living, as the Office for National Statistics has highlighted, with the Office for Budget Responsibility indicating that average real wages will be lower in 2026 than they were in 2008. Instead of a rising price cap, an emergency financial package must be introduced to support the most vulnerable and help families to cope during this crisis. The cost of living crisis is real and will only worsen as energy bills rise, alongside regressive tax hikes and inflation, pushing more and more people into poverty.

In addition the ending of the uplift to universal credit and working tax credit is imposing the biggest overnight cut to welfare in 70 years. The situation for too many of our constituents is critical. The changes to the universal credit taper rate are welcome, but they are not enough to help those who are struggling with this perfect storm of financial pressures. Let us not forget that apart from the suffering that the cut in universal credit will cause for those on low incomes, it will take £460 million out of Scotland’s economy. That money would be spent in local shops, stimulating local economies in communities in each and every town and city.

[Mike Amesbury (Weaver Vale) (Lab)]

I thank the hon. Member for securing this vital debate. Behind those headline figures is a 30-year high in inflation. As she rightly stated, that disproportionately affects the poorest in our communities. Jack Monroe, known on Twitter as BootstrapCook, has written for The Guardian and referred to those real-life experiences. For example, a 500-gram bag of pasta that was 29p is 70p today. That is a 141% price increase. And it goes on and on and on. The hon. Member is right to point out that people on universal credit have had that massive cut of £1,000 a year or £20 a week. That money must be restored.

[Patricia Gibson]

I absolutely agree with the hon. Gentleman that the cut to universal credit is beyond words in its cruelty and its insensitivity to the struggles that real people face every day. It is a cruel irony that, just as the Scottish Government introduced the Scottish child payment, the UK Government chose to remove the £20 universal credit uplift across the UK—pulling the rug away from struggling households in Scotland. That example really crystallises a tale of two Governments.

Yesterday, I heard hon. Members in the main Chamber say, “If the SNP is so concerned about the cost of living crisis, it should do more in Scotland to support people who are suffering.” I say to the Minister that in Scotland the hated Tory bedroom tax—a tax, incidentally, that hits the disabled hardest—has been fully mitigated by the Scottish Government. I do not have time to mention all the support that the Scottish Government have brought in, using their own fixed budget, to support those who are suffering. It is deeply ironic that Members in this House talk about how the Scottish Government could do more when they are the very people who imposed the constraints that limit the Scottish Government’s powers to do just that. Give us the powers; if we have the powers, we will do more. The irony of calling for the Scottish Government to do more while tying their hands behind their back is well noted in Scotland.

However, the UK Government have a rich array of powers with which they could help to tackle this cost of living crisis—if the political will existed. They could introduce a real living wage. A real living wage would, as it says on the tin, relate to the cost of living—unlike the current, pretendy living wage. They could increase statutory sick pay, which is among the lowest in Europe. Unless the real living wage replaces the pretendy living wage, more and more people will find that they have less to live on as their pay is eroded by the rising cost of living.

The sad fact is that, shamefully, the UK has the highest poverty rate and the worst levels of inequality in all of north-west Europe, with 11.7% living in relative poverty. Around two thirds—68%—of working-age adults in poverty in the UK live in households with at least one adult working. That figure is at an all-time high. Poverty is driving unsustainable debt, with around 3.8 million households carrying an estimated £5.2 billion of arrears in household bills—a figure that has tripled since the start of the pandemic. People are borrowing more to pay for basics and essential bills.

Further, the Chancellor could cut VAT on energy bills and provide emergency loans to energy companies that are teetering on the brink. He could rule out a rise in the energy price cap and reintroduce the £20 per week uplift in universal credit. If the political will existed—and I fear that it does not—the UK Government could replicate the Scottish Government’s child payment across the UK.

As household energy bills soar, fuel costs are rising too. That does not just hit motorists hard; it also has a wider impact on industry because it pushes up the price of food, goods and services. Amid all the pain being suffered by our constituents and communities, we are approaching the highest tax burden since the early 1950s because of the national insurance hike. The consequences for our poorest could not be more stark; they could barely be more harsh. The national insurance hike means that workers earning as little as £10,000 will soon pay a national insurance rate of 14.25%, regardless of income. If student loan repayments are included, graduates earning just over £27,000 will pay a marginal tax rate of 42.25%—and the Tories call themselves the party of low taxation! All of that will act as a drag on recovery. UK consumer confidence is at its lowest level for 11 months, as people understandably worry about surging inflation, which is expected to rise to a staggering 7% by the spring.

It looks much bleaker when we factor in the Brexit effect, which I know the Government do not like to talk about, but let us do so for a minute. The Office for Budget Responsibility—the UK Government’s own forecaster—suggests that the worst is yet to come. Make UK is an organisation representing 20,000 manufacturers, and it has said that Brexit will undoubtedly add to soaring consumer costs this year. Squeezed supply chains are under pressure, with customs delays, border red tape and labour shortages, and additional costs ultimately borne by consumers.

Last month, as the hon. Member for Weaver Vale (Mike Amesbury) indicated in his intervention, we saw £15 added to the average price of groceries. The rate of food price increases is set to increase further this year, just as the national insurance hike is set to bite into pay packets in April.

Let us not forget the promises that were made—the pictures that were painted of the sunny uplands—as we approached Brexit. We were told that VAT on energy bills would be scrapped. Now we are told we cannot do that because it would be a “blunt instrument”. We were told that the price of food would go down. In the wake of Brexit, this message slightly changed to there will be “adequate food”, but we see the price of food rising fast.

It seems that there is one rule for one and one rule for another. As the Minister will stand up and tell us, there are lots of reasons why he cannot do more, there are lots of reasons why the Government cannot do more and hard choices have to be made. In that context, I cannot help but remember the words of Lord Agnew yesterday when he talked about the £4.3 billion of covid loans conveniently written off by the Treasury. He said “arrogance, indolence and ignorance” were at the heart of Government and were freezing “the Government machine”. He said:

“Schoolboy errors…allowing more than 1,000 companies”

that were

“not even trading when Covid struck”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20.]

to have loans could not be justified. I wonder how much pain people like the ordinary man in the street would have been saved by a cash injection from the Treasury of £4.3 billion.

We cannot forget the poor deal for pensioners in this crisis. The WASPI women—the Women Against State Pension Inequality Campaign—have already been left high and dry as their pension age was increased with little or no notice, throwing their retirement plans into chaos. I want to head off once again the allegation that if the SNP Government are so concerned, they can help the WASPI women. I simply quote that section 28 of the Scotland Act 2016 prevents the Scottish Government from providing support on reserved areas, including pensions assistance or assistance by reason of old age. Once again, we need to burst the myth that the Scottish Government can solve the WASPI problem. It is a problem of the Government’s own making and it is down to them to fix it. If the Scottish Government had the powers, we would be happy to do so with all the levers of an independent country.

Those who have finally reached state pension age now find they are being clobbered again as the triple lock has been abandoned—right in the middle of a cost of living crisis. State pensions have to keep pace with the cost of living, otherwise, we will see older people languishing in poverty as the threat of a rise in morbidity from the cold looms large this winter. I will say that again, because it is outrageous: there is an expectation this winter that the death from the cold among older people will rise. I do not even know what to say about that, it is so appalling.

Pensioner poverty has risen to a 15-year high under this Government’s watch as 985,065 pensioners have been directly impacted by the breaking of the triple lock, despite the fact that UK pensions are the least generous in north-west Europe. Not only are they the least generous but they have been clobbered by this Government in the middle of a cost of living crisis. It is simply not good enough for the Government to fiddle while households, pensioners and one in four children in the UK suffer poverty as a result of the choices the Government are making—and it is a result of the choices they are making. The cost of living crisis is not inevitable, although of course there are factors at play such as global energy challenges and the all-too-predictable consequences of Brexit driving up prices due to supply issues.