Gas and Electricity Costs

Anne Marie Morris Excerpts

Tuesday 18th January 2022 Westminster Hall

[Anne Marie Morris (Newton Abbot) (Ind)]

The cost of gas and electricity has been a real challenge for my constituents. Although the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) makes a good point about the rural communities in Scotland, it is not just in Scotland that this is a challenge.

Down in the south-west, we have one of the lowest-wage economies, a very high cost of living, and a disproportionate number of over-65s with complex comorbidities. Our economy depends heavily on hospitality and tourism, and that has been decimated. The hope for recovery over the Christmas period went with plan B.

[Angus Brendan MacNeil]

The hon. Lady is making a very good speech and she is absolutely right—it is not just the north of Scotland that is affected, although I, like the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), would argue that that is where things are most acute.

House of Commons Library figures for all the neighbouring countries in north-west Europe show that 11.7% of people in the UK are living in relative poverty by the OECD’s definition, and of the 13 countries that were looked at, the Gini coefficient of inequality is highest in the UK. That puts this problem firmly in the Government’s ballpark; they really have to get to grips with it.

[Anne Marie Morris]

The hon. Gentleman makes a very fair point—this is a real problem. The hon. Member for Caithness, Sutherland and Easter Ross made the clear point that the answer and solution has to be found now.

I look at my constituents—indeed, I was on a telephone call just this morning—and I see that the food banks are doing great business. Increasingly, I am hearing that the people who are using them are not the usual attendees. We are in a state of crisis, which needs to be addressed right now. I have constituents—mostly pensioners—who are ringing my constituency office, and are very concerned. They are worried because of the cost of living and because of everything they hear about the energy costs that they will be facing.

For me, it is that uncertainty that is most challenging, because although the Government, to their credit, recognise the problem, the real issue is that to deal with that fear, we need an answer, a commitment and a solution. Looking at what we might or might not do in April is not soon enough. I am sure that even you, Sir Edward, will have looked at the barometer as you got up this morning. It is now that we are seeing minus temperatures. It is now that people need their heating at night. It is now that they need hot food.

Clearly, it is not the Government’s fault that there has been a global challenge in terms of energy prices. Indeed, they have risen to the challenge and recognised that security of domestic supply has to move further up the agenda. I welcome their investment—or promised investment—in more nuclear. But the real challenge is that despite all those good words and despite the concept of a price cap, which was effectively intended to protect consumers from very challenging prices, consumers are not being protected.

No scheme is perfect, but what happened here is that when it became clear that the prices meant that some of the smaller suppliers would go out of business, those customers were picked up by the bigger players but were inevitably put on the highest tariffs available. Those individuals, having done the right thing by seeking out good policies and good schemes, suddenly found themselves in the worst possible position. Then we hear—understandably, on one level—that the cap will not hold and that we expect that there will be an announcement on 7 February that it will increase substantially, as the hon. Member for Caithness, Sutherland and Easter Ross has already indicated—it will be an extra £700 per household, taking the average bill to £2,000. Suddenly energy costs will be going up 50% overnight.

When the Government set their energy retail market strategy for the 2020s, they set two objectives. The first was that there should be a sustainable retail market, whereby it was easy and rewarding to go green. However, that is not what is actually being delivered. Although they were well intended, many of the tariffs to try to encourage—to nudge, if you like—greener use have effectively pushed people further and further into fuel poverty.

The second objective was that all consumers would pay a fair price for their energy and would be protected from excess charges. Although I appreciate that those are charges for production rather than the other elements—the tax and the levies—it has all come together in a horrible, nightmarish mix, whereby, because of the global cost increase, the Government are now scrabbling to try to honour what I think was their intended commitment to make energy prices affordable by considering some of the things that they can move, which clearly will be taxes and levies, as opposed to some of the things that they cannot move, which include the global price of gas.

Therefore, for me, Government intervention is not optional. As has been said, the number of households in fuel poverty is increasing from 4 million to 6 million. That will affect a very large number of my constituents. The Government have a number of options. They can mix targeted initiatives and universal ones. The comment in the media is that the Government are uncomfortable about solutions that are more universal in nature.

This energy crisis—this energy cost—comes on top of a huge increase in the cost of living. We know from figures out today that people’s wages are not going up to meet those costs, and therefore it is not just the usual smaller percentage of the population that is suffering; it is actually a much larger percentage of the population. People at all levels make commitments, and they are struggling to meet them. They have to meet their mortgages; that is not negotiable. They have to pay their rent; that is not negotiable. Businesses have to pay business rates; that is not negotiable. To be reluctant to reduce, and to resist reducing, VAT from 5% to 0%—the most obvious, quickest and easiest universal solution—is perhaps a little disingenuous. It seems to me that at least 60% of the people who would benefit from that actually deserve it.

The other universal approach is what we do about universal levies. That is something that we will have to review, and we will have to look at how the burden can be moved to general taxation. We need to recognise that those levies are subject to a number of contracts, which means that they cannot be the first thing that the Government fix. None the less, they need to be in the bag of solutions.

The obvious targeted solution—I think that it is an “as well as” rather than an “instead of”—is expanding the warm home discount, changing the eligibility, taking it beyond winter and looking at how we might make it generally taxpayer funded rather than funded by those that contribute to it.

How are we going to pay for this? Of course, it is right that the Government consider that. A number of things have been looked at, including a windfall tax on the oil and energy industry. Only this morning, there have been suggestions that fraudulent covid payments claims, which the Government have committed to claw back and at the moment are estimated at £4.3 billion, would go a long way to covering the most urgent and easiest solution, which is to reduce VAT from 5% to 0%. The VAT bill that the Treasury would have to cover would be somewhere between £1.7 billion and £2 billion. Affordable is the wrong word, but it is the right thing to do, and it is entirely affordable given the likely income that the Government can expect as the economic forecast improves across the country—although, sadly, not in my constituency—and what they might get back from the covid claims.

Of course, the people who are most impacted are the ones who are most vulnerable: the over 65s on fixed incomes and those in poorly insulated houses, which is definitely the case in my constituency. Those people are the most important, but they are not the only ones. I ask the Government not just to look at this as a matter of money, but to ask what is the right thing to do. What is the timeframe in which they must act? It is now—it is cold now. I ask the Government not only to acknowledge that there is a problem but to put forward steps now, before the new cap is introduced—and certainly long before April.

[Sir Edward Leigh (in the Chair)]

Will Members now keep to about five minutes, so that everybody can speak?

Income Tax (Charge)

Anne Marie Morris Excerpts

Thursday 28th October 2021 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

We are clearly in very difficult and unprecedented times. It is a therefore a huge challenge for any Government, of any political persuasion, to decide exactly how to deal with the economy. We do not have a crystal ball and we cannot foresee what will be. It has been difficult for the Treasury to take a decision to increase taxes, but that is what it has done. It is not something that I am in favour of—I believe that productivity and boosting business are not helped by increasing taxes—but, as I say, these are challenging and difficult times.

The key for me is that to the extent that we raise taxes, there must be a clear plan of action. I do not believe in money for money’s sake, which is why when the Government brought forward a plan to increase national insurance, I did not support it. It is not that I think that the health service and social care do not need the money; they absolutely do, but I want to see a specific plan, particularly for social care. I do not believe that social care can wait three years for an injection of cash, although I am pleased that this Budget includes a contribution in that direction. Overall, I think the measures are balanced in these difficult times. As a non-economist, I do not think I can advise how we might have done it better.

From my constituents’ perspective, much of what the Chancellor said yesterday is very positive. My constituency in the heart of Devon is very rural and heavily dependent on tourism, and wage levels are very low. Much of what the Chancellor announced will help tourism and help people on some of the lowest wages in the country. On balance, I think people in Newton Abbot, Teignmouth, Dawlish, Kingsteignton and the 30-plus villages and hamlets that I represent will see it as a win.

Business rates have always been the biggest issue that my local businesses bend my ear about. Other hon. Members have said that business rates need proper reform, and the case is well made; it needs to be a priority for the Chancellor and his team. Too many Governments have consulted and too few have actually acted, but I am pleased with the creativity that has been demonstrated, at least for the short term. The 50% business rate cut for leisure and tourism is extremely welcome, but I ask that it come sooner, not later, and that it be for more than a year. The multiplier being frozen is brilliant; it will make a huge difference overall, along with the revaluation changes.

It is no surprise that my wonderful area has lots of village pubs, and indeed some vineyards. Much of what we have, including the small producer relief, will therefore be very welcome. Ashcombe, as it crushes its apples, will be absolutely delighted, and as the tax on English sparkling wine falls, the vineyard in Bishopsteignton will be smiling. As for draught relief, goodness me! It is great for the pubs, but it is also great for the village community, where the pub is at the heart of it all.

It may not surprise the House to learn that my constituency area is also a great centre of culture. I am sure that the tax relief extensions for museums and galleries will be welcomed by Newton Abbot Museum, among others, and the Teignmouth theatre will definitely enjoy the double tax relief for orchestras, theatres and museums.

Of course, at the heart of any community are its families, and I pay tribute to my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) and her diligent work to persuade the Government to consider more support for the very young at the very start of life, which is an extremely challenging time for parents. The start for life programme is one of the best things to come out of the Budget. The new network of family hubs is welcome, as is increased funding to allow more childcare provision and more training for those who provide childcare. I have always felt passionate about the supported families programme; funding for it has ebbed and flowed over the years, so I am pleased that this year there will be more.

Support for young people does not stop there; it goes on at schools, where the rise in the pupil premium is welcome, and the tripling of special educational needs places is a particular benefit. May I suggest, however, that we not only provide money and create places, but consider how to use them better? I have a wonderful SEN institution in Dawlish, Orchard Manor School, which currently has places unfilled because of all the challenges, debates and arguments about who should take up those places within Devon County Council. That cannot be right.

The catch-up fund is fabulous news, but one of the comments I heard from my local schools was that while the money is very welcome, the fact that there are so many constraints on how it can be used is not so welcome. The support for lifelong learning, with a 26% increase in skills spending, is also fabulous, but could we focus not just on colleges but on sixth forms? A number of headteachers have told me that funding for sixth forms, as opposed to colleges, has been going down rather than up, so I hope that some of the funding will be going in their direction. Of course I welcome the news of more T-levels, more traineeships and more apprenticeships, but can we have more degree-level apprenticeships? At present, there are too many aspiring young people coming out the grammar schools just outside my constituency who leave, because there is no opportunity to do more.

The rise in the national living wage is particularly good news for working people in my constituency who are on very low wages, and the reduction in the universal credit taper rate is very welcome. Of course, in rural areas people have to travel to work, so reducing their burden by freezing fuel duty and providing more money for roads and dealing with potholes, as well as more money for buses, is absolutely what rural constituencies need. In addition, there is to be a proper public sector pay review.

It is good that there is £150 billion more, before 2024, for the public services that have served us so well during the pandemic, but local government has borne much of the brunt. The £1.6 billion is very welcome, but can we ensure that it is given flexibly, so that local authorities can use it in the way that best meets local need rather than simply being told, “This must be spent in this way by centrally produced providers”? As for housing, I was pleased to receive a letter yesterday saying that my constituents would be given a piece of the brownfield land release fund.

I look forward to working with the Government, Devon County Council, Teignbridge District Council and the community, and discussing how we can increase productivity and improve the quality of life across Teignbridge.