Cost of Living: Fiscal Approach

Abena Oppong-Asare Excerpts

Wednesday 25th May 2022 Westminster Hall

[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.