Tackling Short-term and Long-term Cost of Living Increases

Angela Eagle Excerpts

Tuesday 17th May 2022 Commons Chamber

[Rishi Sunak]

This Government have always acted to protect this country at times of challenge; we have done so through the past two years and we continue to do so now. As has been said, £9 billion of support on energy bills was announced in February at the same time as the price cap was increased, and it covered 50% of the rise in bills—accepting and being honest with the House, as we discussed at the time, that no Government could cover every pound of an increase when we are in a situation with global inflationary forces, and that it would be both irresponsible and misleading to pretend to the British people that that was possible.

But we are going further: in October, a further discount on energy bills worth £200 and, in just a few weeks’ time, a massive tax cut for workers when the national insurance threshold is increased to £12,500. That is a £6 billion tax cut for working people, the biggest increase in a personal tax threshold ever, and it will mean that everyone in this country can earn £12,500 without paying a penny of income tax or national insurance. That means, in contrast with what we have heard, that 70% of working people will pay less tax this year than they did last year.

Taken together, all the measures I have just mentioned equate to a £22 billion plan to help cut costs for families and help people with the cost of living. Of course, as the situation evolves, our response will also evolve. I have always been clear that we stand ready to do more.

That brings me to the topic of a windfall tax. Unlike the Labour party, we Conservatives do not believe that windfall taxes are the simple and easy answer to every problem. However, we are pragmatic, and we want to see our energy companies, which have made extraordinary profits at a time of acutely elevated prices, investing those profits back into British jobs, growth and energy security. I have made it clear and said repeatedly that, if that does not happen soon and at significant scale, no option is off the table.

Global economic forces are indeed hitting the British people hard, and that is why the Government are stepping in to help. Ultimately, however, over the long term we on the Conservative side know that the best way to raise living standards is to grow the economy. That is why our economic plan and this Queen’s Speech will create more jobs, more investment and, crucially, higher wages.

During the pandemic, we provided billions in support not only to the economy, but specifically to businesses. Because of schemes such as furlough we were able to keep millions and millions of people in work, and the success of our plan for jobs is clear. As we heard from my right hon. Friend the Member for Forest of Dean (Mr Harper), unemployment right now is the lowest it has been in almost half a century, job vacancies are the highest they have ever been, and total pay is rising in real terms and is more than 4% higher than before the pandemic, even adjusted for the inflation we are seeing.

That does not happen by accident. It is the result of a responsible Conservative Government delivering a stronger economy—an economy that grew faster last year than any of our competitors. That strong recovery is making a difference to people’s finances. Taken together, the combination of policy measures the Government have announced and the growth in the economy offset around half the shock to incomes caused by higher global energy and goods prices. Half of that shock has been offset by the result of our actions to grow the economy and support people directly.

Of course we need to do more to create further economic growth. That is why this Queen’s Speech includes measures to do exactly that.

[Dame Angela Eagle (Wallasey) (Lab)]

Given that the right hon. Gentleman was just talking about growth in the economy, he will be aware that the Governor of the Bank of England and the Monetary Policy Committee told the Treasury Committee yesterday that growth would be negative in the fourth quarter of this year. Growth is slowing, unemployment is rising and inflation is soaring—is that not correct?

[Rishi Sunak]

I think the hon. Lady said unemployment is rising. No—it just fell this morning to the lowest level in almost half a century. I will come on to our growth figures in just a second, but we have had a strong recovery and are forecast to continue growing strongly relative to peers.

We do need to do more, and that is why the Queen’s Speech includes measures to boost our national infrastructure, to level up, to back financial services—one of our biggest and most successful sectors, employing millions of people across the country—to cut red tape, to use our new Brexit freedoms, to back British businesses, to reform higher education and to strengthen our energy security. We on the Conservative side know that over the longer term, the best way to create growth is to have an economy where businesses can invest more, train more and innovate more.

--- Later in debate ---

[Dame Angela Eagle (Wallasey) (Lab)]

Can we judge this Queen’s Speech to be successful in addressing the cost of living crisis? The Governor of the Bank of England warned at the Treasury Committee yesterday of an “apocalyptic” situation with food supplies and therefore with rising prices. The Bank of England’s Monetary Policy Committee’s May report warned that inflation would soon reach 10%. It also signalled lower growth than previously predicted, with a contraction in quarter 4 of this year. It also expects higher unemployment. It predicts that inflation will not return to its target of 2% for nearly three years. The squeeze in what the economists call real incomes, which take account of inflation, is the most ferocious we have seen in generations, not least because the rapid rise in inflation is being driven by soaring prices for necessities: food and energy.

These higher costs cannot be avoided or easily minimised and, as my right hon. Friend the Member for East Ham (Stephen Timms) pointed out in his effective speech, it is well known that they cause most hardship to the poorest, who are least able to cope and have no savings. Despite what some Government Ministers seem to think, the poorest have little practical opportunity to increase their hours or their pay, at least in the short term.

Thus, after 13 years of Conservative rule, we see soaring poverty levels, millions relying on food banks just to get by, and the lowest level of benefits since Lloyd George was Prime Minister. It means that the social safety net created to prevent destitution has been deliberately shredded by this Government, leaving many to cope with the intensifying cost of living squeeze without effective help. And we have a Tory Chancellor who has said that it would be “silly” to add any extra help until the autumn.

Against that background, the Government’s abject refusal to alleviate suffering and use the powers at their disposal to assist those in real need is a disgraceful dereliction of their duty. Their indifference to real suffering will not be forgotten; it will be remembered as the hard times get even tougher for millions of our fellow citizens.

Labour has suggested a one-off windfall tax on the huge unearned profits currently flooding the energy companies’ coffers, which would help alleviate some of the suffering, yet the Government refuse to enact it. Instead, we have a hotchpotch of a Queen’s Speech, with 38 Bills with no focus and no connection to the realities millions of people in this country are facing. It shows just how out of touch the Government are that they prefer to press ahead with new, repressive laws against “noisy” protests while ignoring the collapse in law enforcement and prosecution levels on their watch, hoping we will forget the shamefully low numbers of crimes that are currently prosecuted and the even lower numbers which result in convictions.

This Government have let fraud run riot even as they under-resource and fragment any serious police response to it, while millions of our fellow citizens fall victim to scams and con merchants. This is a Government who prefer to campaign than to govern, and a Government who think that policy delivery is issuing a press release. We have a weak Primer Minister who runs No. 10 like he ran the Spectator office—as one long, chaotic, bacchanalian, irresponsible party.

So we have today’s threat to legislate to tear up the Northern Ireland protocol, and damn the consequences for the Good Friday agreement, or for our international reputation as a country whose word can be relied upon and that respects the rule of law. This is the Northern Ireland protocol that the Prime Minister negotiated, which he hailed as an “oven-ready” triumph, and which he asserted in the 2019 general election “got Brexit done.” Only this Government could be so irresponsible as to contemplate starting a trade war with the EU in the middle of the most ferocious cost of living crisis in generations. No previous UK Government have ever regarded breaking international treaties and breaking their own solemn undertakings as a negotiating tactic, sullying our international reputation in the process, and our country will rue the day that this one did.

This is a Government who look after their own, allowing a bonanza in dodgy covid contracts for their mates, and passing laws to wreck independent judicial oversight and clamp down on protests. The sooner they are gone, the better.

--- Later in debate ---

[Dame Angela Eagle]

It was.

[John Cryer]

And she was there.

I discovered these stark figures only the other day: only 12 years ago, the number of people using food banks was fewer than 30,000. It is now in excess of 2.5 million. Those figures illustrate what is happening in the country, if no other figures do. They should be sprayed on people’s eyeballs. More than 2.5 million people have been forced into using food banks.

This is an economic situation without precedent, certainly in living memory. I had hoped we had learned that at times of national catastrophe, full-scale Government intervention is always the answer. We should have learned that from covid, when it was clear, but the lesson has not been learned, and clearly not by the Chancellor. Full-scale state intervention is the only way to respond in times of national catastrophe. Sadly, the Chancellor is not in his place. Perhaps he has gone for a long lie down to think about the advantages of a windfall tax. We have a desiccated Chancellor who is wedded to the idea that the free market will deliver all, but it will not. We should not really be surprised by that when we have a Minister, the honourable—I use the word in its broadest possible sense—Member for Redditch (Rachel Maclean), who said, very clearly, “If you’ve got problems, just work a few more hours.” We are sent here to represent people, not attack them. She attacked British workers.

In the same vein, a few years ago, leading members of this Government produced a book called “Britannia Unchained”, which some of us might remember. It said, in very clear terms,

“the British are among the worst idlers in the world. We work among the lowest hours”

and

“we retire early.”

That is just factually incorrect. We work among the longest hours in Europe, and we very often retire later than people in other European countries. That historical contempt for British workers is behind the laissez-faire attitude to the current situation, and if it does not change quickly, we are heading for catastrophe.