Economic Update

Alan Brown Excerpts

Thursday 3rd February 2022 Commons Chamber

[Rishi Sunak]

I thank my hon. Friend for his question. On VAT, I have nothing further to add. He is right; what we are doing is more targeted, faster and more generous to those who need our help. With regard to sanctions on Russia, I can assure him that absolutely nothing is off the table. We are working closely with our international partners, as the Foreign Secretary has outlined, to prepare a very robust package of sanctions.

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

The Chancellor brags about having the fastest recovery, but that is actually wrong because Italy, for a start, has a higher growth rate. If the economy is doing so well, why is he still introducing a £12 billion tax on workers this financial year? Why has it taken to the last minute to try to do something about the cost of living crisis? Why is so much of this measure actually a loan that bill payers will have to pay back? He talks about not doing a VAT cut because he wants a more targeted approach. How is giving everybody a rebate a targeted approach? It is illogical.

The reality is that the Treasury is currently raking it in compared to where it thought it would be in the March 2021 Budget: an extra £3 billion this financial year and next year from oil and gas revenues; and VAT receipt predictions in October last year were nearly £40 billion higher than what they were in March 2021. That is a lot of money that the Treasury could be freeing up. Meanwhile, average energy bills increased this year to nearly £1,200, up from £700 the year before, bringing in an extra £0.6 billion in VAT. The VAT increase due to the cap rise will bring the Treasury another £0.8 billion a year, so there is much more money it could free up.

The Scottish Government are bringing in a £20-a-week child payment and uprating the child winter assistance payment. Could the Chancellor not look at doing something similar? Will he confirm that the council tax rebate proposal he is bringing in will have Barnett consequentials, how much they will be and that they will go to the Scottish Government? Will he look at devolving further budgets and powers so that Scotland can take a more targeted approach?

National Energy Action estimated that increasing the cap would put 6 million people into fuel poverty. With the Chancellor’s measures, what impact assessment have the Government done of how many households will be in fuel poverty? How many more premature deaths will there be because people are in fuel poverty? Lastly, the highlands of Scotland generate electricity and send it to the rest of the UK, yet electricity users in the highlands on the restricted meters pay 4p a unit more for electricity, or £400 more on their bills. When will the Treasury and the Department for Business, Energy and Industrial Strategy work with Ofgem to remove that ridiculous surcharge for ageing people in the highlands?

[Rishi Sunak]

I am happy to confirm to the hon. Gentleman that the Barnett consequentials for Scotland will be around £290 million, which I hope he will welcome. My right hon. Friend the Chief Secretary to the Treasury will be speaking to Kate Forbes later today to go over the details, and I very much hope that the Scottish Government will choose to do something very similar to what we are doing, to the benefit of Scottish citizens. Of course, Scottish citizens will benefit from the rebate scheme on bills, because that is a Great Britain-wide policy, as I outlined.

With regard to the hon. Gentleman’s broader points on the North sea, there is a clear point of difference between us on the Government side of the House and the SNP. We believe in the future of the North sea, in the oil and gas industry, and in the 200,000 jobs it supports, and we want to ensure it plays an important part in our transition to net zero. I hope he can see that that is the right thing for Scotland and will join us in supporting that very important industry.