Cost of Living

Alison McGovern Excerpts

Tuesday 25th January 2022 Westminster Hall

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure to serve under your chairship in this important debate, Mrs Cummins, and I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on having secured it. It is a fairly obvious truth that there are things that really matter to our country, and the subject of today’s debate is one of them. There are also things that are embarrassing and we wish we did not have to talk about, and frankly the sorry state of Downing Street is one of those, so I am glad to be here in this debate, talking about something that really matters.

The cost of living crisis that we are facing is going to come to a crunch this year, but let us be honest: it has been a problem for the past decade. When a country has had slow or no growth for a decade, and when wages are held down while prices rise, that will cause a problem for the vast majority of families in that country. Those who are in the worst financial situations face the indignity of having a food bank parcel where their shopping should be, unlike every other normal family in this country. It is outrageous that 2.5 million of our fellow citizens, including half a million children, are in that position. That is not the product of events that have happened in the global markets in recent times; it is the product of 10 years of lost economic growth, and 10 years of lost progress on tackling poverty in this country. That is why we are here today.

[Jim Shannon]

As we look at the rise of referrals to food banks, it is important to note that a different category is increasing: those in the middle class are also squeezed now. We are finding that more and more people are under the cosh of prices. We all know how important the role of food banks is, but the Government have to recognise that this crisis is greater than it ever was before.

[Alison McGovern]

I thank the hon. Member for his intervention, and to a degree, I agree with him: any of us could end up needing to go to a food bank. This can happen to any of us, but important though food banks have become, I want a Government that seek to end the need for them. Is that too much to ask? Do we just have to accept food banks as a permanent feature of our country now, or might we one day have a Government that set out to end the need for them?

As much as I agree with some of the points made by colleagues from the SNP, I have to challenge them. How are they going to meet their own goal set in 2017 of child poverty reduction? It was made without qualification. We all want to see an end to child poverty and therefore it is important that that goal is met. I feel strongly that the Tories in Westminster made the wrong choice in getting rid of Labour’s national goal to end child poverty and wiping the Child Poverty Act 2010 from the statute book. It is equally important that those who have made commitments to the people of Scotland stick to them.

[Marion Fellows]

The way the Scottish Government will do this is through independence and the control of our own economic levers—it is as simple as that. We make commitments and we hope to be able to achieve them, because then we can do things the way they should be done and in the way that is best for people in Scotland.

[Alison McGovern]

I look forward to hearing how that is going to work. I think the way to tackle poverty everywhere in the United Kingdom is through co-operation and the use of the redistributive force of the United Kingdom Treasury. Members rightly mention the bad impact of the botched Brexit deal on our country’s economic fortunes. I would hate to see any part of our country go through the same thing with the loss of access to the United Kingdom single market, so I look forward to hearing more in future debates about how that will work.

I turn to the UK Government and the issue of inflation. Members have mentioned that the headline inflation rate in no way represents the specific forces of inflation that are faced by those with the least. I think people who suffer poverty must be some of the finest economists in the country, because they are able to monitor prices and make every penny they have stretch further when they need to. The Government should take some responsibility here. What has the Minister asked of the Office for National Statistics, in respect of its measuring and reporting, so that we can know exactly what situation is faced by the people who have the least in this country?

I point the Minister to the comments of the chief executive of Iceland, who says that he is losing customers not to his competitors but to food banks. That should tell the Minister that we really do have a problem with prices in this country that cannot simply be understood from the headline rate of inflation.

Secondly, on work, does the Minister accept that whatever the intention of a jobs plan that set aside £9 billion for a job retention grant that was then cancelled; whatever the intention of a jobs plan that had a kickstart programme that was supposed to get jobs for 250,000 of our young people but failed to do so; and whatever the intention of a jobs plan that was supposed to bring older people back to the workforce, given the level of vacancies in our country now, that jobs plan was a failure?

Does he further accept that when it comes to people’s wages—the other side of the cost of living crisis—a crucial part of the problem is that people have too little choice about the job they do? The OBR says that one in five people is working below their skill level. They could get a better job, but they have not. The Government have much more to do to improve people’s prospects at work. I would bet the Minister agrees that the best route out of poverty is work. Why do we have a Tory Government that are failing to get people jobs that can pay for their bills and shopping? It is an outrageous situation.

Finally, I turn to some of the other ways in which people need help. If we think about people’s ability to earn more, some of the things that are holding them back are those facts about our economy that we have known about for far too long. The childcare system in this country is expensive and complicated. What steps has the Minister taken to simplify it? People trying to make ends meet on a lone parent’s income, for example, are limited by the cost of childcare and whether it is available at all. I think again of the one in five people who work below their skill level. A lot of them have caring responsibilities for children or older relatives and cannot work longer hours in their jobs because they do not have care support. What conversations has the Minister had about solving that?

I also want to mention the simple fact that in too many parts of our country it is hard to get around on public transport. The price of buses has gone through the roof in recent years, and in some parts of the country people cannot travel to a job because there is no public transport. Yes, the price of motoring has gone up, but it is hard to get a better job if someone relies on public transport in areas that have too little.

It would be remiss of me not to mention the fact that too few people are members of trade unions in this country, and that limits their ability to bargain for better wages.

The Labour party has put forward some simple, compelling and obvious ways in which the Government could take steps today to tackle the cost of living crisis. Whether it is cutting VAT on fuel or extending the warm home grant through a windfall tax on oil and gas, we know there are steps that we can take now. However, I want to hear from the Minister about the bigger structural changes that we need to fundamentally shift our economy so that every family in this country can truly make ends meet.

[The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)]

It is a pleasure to serve under your chairmanship today, Mrs Cummins, and to see your wonderful smiling face. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing the debate. It has been a lively one on important issues, but it was brightened up by the wonderful tie of my hon. Friend the Member for St Ives (Derek Thomas).

The Government are taking the present challenges of those on low incomes very seriously. The pandemic has been challenging for many people. We acted quickly to put in place unprecedented levels of support during this period, as has been highlighted by some Members today. After yesterday’s debate, it feels a little like groundhog day discussing these issues today, but they are important. As was highlighted yesterday, given the current cost-of-living challenges, we in the Government are actively working on the best way to build on the existing support that is available. I hope that will reassure the hon. Members for Strangford (Jim Shannon) and for East Londonderry (Mr Campbell), who raised points on this, as well as my hon. Friend the Member for St Ives.

Since the pandemic started, we have spent more than £400 billion on protecting people’s jobs and livelihoods and supporting businesses and public services. There has been unprecedented welfare support. Universal credit has stood up to the challenge of covid-19, providing a vital safety net for 6 million people. We must thank the hard-working staff at the Department for Work and Pensions, including the thousands of work coaches across all our constituencies, who worked tirelessly to ensure that the benefits system did its job. Many of them are the pandemic’s unsung heroes. I hope that we make an extra effort to thank them when we perform our constituency duties over the weeks ahead, if we have not done so already.

[Alison McGovern]

I just want to add that whatever the policy disagreements between our parties, I agree wholeheartedly that those who work for the DWP, particularly on the frontline, deserve all our thanks.

[David Rutley]

I am grateful for that comment. The hon. Lady did not have to say that; I know her well enough to know that she feels that way. We have differences over policy, but we know we have very dedicated public servants in the UK and Scottish Governments who are committed to addressing the issues, and we are grateful for their work.

It is also important to highlight the fact that our successful vaccine programme is providing us with the protection to fight the virus in all its forms. Although we need to remain cautious, the latest labour market statistics show that time and again we have made positive decisions during the pandemic. As we have shown throughout the pandemic, the Government will do what it takes to support people who are struggling financially. Supporting vulnerable people in our society is of paramount importance to me, our Secretary of State and the Government.

The proportion of Government spending that goes on welfare reflects a strong commitment to the poorest in society. This year, we will invest more than £250 billion through the welfare system, including £110 billion on people of working age. That rightly provides an important safety net. We also take notice of the clear evidence that work, particularly where it is full time, plays an essential role in reducing the risk of poverty. With our economic recovery continuing, it is right to focus our attention on getting people back into work.

The latest job figures tell a positive story. A record number of people are now in payroll employment in the UK, with 23,000 people added to the payroll in Scotland in December alone. The UK has a buoyant labour market, with 1.25 million vacancies. That figure is has increased by 33,000, or 2.7%, on the month, and by 462,000, or 58.9%, since the start of the pandemic, offering people opportunities to secure a job, progress in work and increase their earnings. Current estimates show that the number of online job adverts in Scotland alone has risen by 13.3% since the start of the pandemic. To help people take advantage of those vacancies, our extended multibillion-pound plan for jobs will help people across the UK find work and boost their wages and prospects.

The hon. Member for Wirral South (Alison McGovern) will probably shake her head at this point, but we are making real progress. We have opened 150 temporary job centres; I had the honour of opening the most recent one in Macclesfield last Friday. We have recruited 13,500 work coaches. They make a difference because they care about individuals, often meeting them face-to-face—increasingly so as we come out of the pandemic. There are 1,200 extra work coaches in Scotland, helping with this vital task.

We are also investing in our young people through the kickstart scheme: 112,000 young people have started a life-changing six-month work placement, and 10,000 of those starts were in Scotland.

[Alison McGovern]

It was supposed to be 250,000 by now. Given what the Minister just said, what accounts for the gap?

[David Rutley]

There are more vacancies available, and we are encouraging people to take them up across the country, in Scotland as well. The scheme has seen real success in turning people’s lives around. There are further opportunities in the months ahead for people to get involved with that important programme.

It does not stop there, because we want to ensure that we help address some of the gaps in the workforce that were highlighted yesterday: in hospitality, health and social care, and technology. Sector-based work academies help people to get new skills and a guaranteed job interview at the end of their placement.

I also recognise, along with many others here, the immense value that older workers bring to the workforce. That is why the DWP is providing specific funding for that cohort. There is funding available for the over-50s to get tailored Jobcentre Plus support, to help them find work and build on skills to get into the workforce.

In addition, to support those jobseekers who are out of work for 12 months or more, our Restart scheme provides intensive support to help claimants in England and Wales find jobs in their local area, which I am sure will be welcomed across the Chamber today. Through regular contact with all participants, providers will develop a strong understanding of the individual’s employment history, skills, aspirations and support needs to help each one succeed. That will break down the employment barriers holding claimants back from finding work.

I remind hon. Members that the DWP is focused on helping people to increase their income by progressing in work. We often talk about the importance of getting people into work, but we are equally committed to helping people progress in work and move ahead with their career aspirations. We will shortly respond to Baroness McGregor-Smith’s report on in-work progression and set out our approach. I hope that will be welcomed by the hon. Member for Motherwell and Wishaw (Marion Fellows), who was concerned about that issue.

Universal credit incentivises work as part of its design. With that in mind, we have gone further to make work pay, as has been referred to, by cutting universal credit taper rates from 63% to 55%, and increasing universal credit work allowances by £500 a year. That is essentially a tax cut for the lowest paid in society, worth around £2.2 billion in 2022-23. That means that 1.9 million households will keep, on average, around an extra £1,000 a year. In addition, from April 2022, we will boost the national living wage by 6.6% to £9.50, which is ahead of inflation and worth another £1,000 each year to workers on the lowest pay.