Cost of Living: Public Well-being

Baroness Tyler of Enfield Excerpts

Thursday 20th October 2022 Lords Chamber

[Baroness Tyler of Enfield (LD)]

I congratulate the noble Baroness, Lady Drake, on her excellent opening speech and refer to my relevant interests in the register.

As we speak, we are witnessing political turmoil of a kind I have not seen in my lifetime. Frankly, we are a laughing stock on the world stage. All of this makes me very angry because it is ordinary people who will pay the price, and that is what we are debating. On 23 September we were already in a cost of living crisis, with the highest inflation in 40 years and the nightmare of out-of-control energy prices. Events since then have caused massive further anxiety, fear and distress for millions of our fellow citizens. The cost of living crisis we are experiencing and the impact on public well-being is simply dire. All the research on well-being shows that not being able to meet basic needs has a negative impact on well-being individually, as families, communities and as a nation.

How did we reach this parlous state? It just does not wash to blame it all on Ukraine and other international factors. The market’s response to the so-called fiscal event of 23 September—the completely unfunded and by far the largest giveaway Budget in 50 years—was instant, brutal and devastating, both for the UK economy and us all as individuals. Sterling plunged; gilt yields rocketed; mortgage rates rose by well over two percentage points; and major players in the pensions market came close to insolvency. The outgoing Prime Minister’s much-lauded but quickly junked growth plan led to the UK losing overnight our much-cherished global reputation for fiscal probity and sound financial management.

Instead of it being a case of going too far too fast, the truth is that the growth plan did not survive its first contact with economic reality. The immediate result was to crash the economy. It is ordinary citizens—particularly the most vulnerable and the lowest paid—who are going to pay the highest price. Fast forward a few weeks: the IFS and others estimate that there is a remaining black hole of around £40 billion still to be bridged in the Chancellor’s Budget on 31 October. The Chancellor has said that he will be identifying a mixture of further extraordinarily painful cuts in public expenditure, together with increases in taxation. No matter what the Chancellor does, however, the UK will be paying a significant political risk premium to lenders not just for months but for years to come. One very visible effect of this is that millions will be paying higher mortgages and rents of several hundred pounds a month for years to come. It is no wonder that people are anxious, and public well-being has nosedived.

Jeremy Hunt has stated that he will be keeping the most vulnerable at the centre of his attention, which is clearly right. However, he is still refusing to confirm that universal credit will be raised next April in line with an inflation figure of well over 10%. The energy price guarantee—which, of course, was very welcome—has now been reduced from two years to six months. History will judge both the politics and the economics, and will allocate blame for the mistakes made on 23 September and subsequent events. Today, however, we are focusing on what we can do to support the millions whose already fragile sense of personal well-being has been further battered by all this turmoil and to protect them from the worst effects of that £40 billion of further cuts and tax increases still to come.

The context is not promising. Inflation is at 10%; food inflation is at 14% and real wages for many are at a 40-year low. According to a recent British Psychological Society survey, 55% of people feel more anxious about being able to pay their bills than they did this time last year; more than a quarter said that worrying about money was making them feel depressed; only 27% felt confident that they will get by financially this winter, and 52% said they were concerned about not being able to afford food. Other recent surveys have shown an estimated 11 million people feeling unable to cope. Anxiety about the rising cost of living is estimated to be affecting half the population; 50% of the population report that they have had to reduce expenditure on essentials—food, toiletries and petrol—over the past few months. Use of food banks, as we have heard, including by people in full-time employment, is skyrocketing. Millions are extremely anxious about how they will be able to feed their families and children. An estimated 1 million children are in food poverty and not receiving free school meals. Fuel poverty is estimated to have tripled, with many saying that they feel too scared to open their energy bills.

This cost of living and well-being crisis requires an urgent and meaningful response. This toxic cycle of mental health problems and money worries demands immediate action from the Government, regulators, employers and firms to stop the cost of living crisis becoming a mental health crisis. Many charities, think tanks and external commentators are generating policy responses and ideas. Foremost among these are: raising all benefits, including universal credit and disability benefits, in line with inflation on 1 December; reviewing and then revising in line with inflation all benefits, not only every 12 months but every six months, starting from next April; moving all children from families living in food poverty into free-school-meal programmes; providing further targeted cost of living payments to vulnerable groups still falling through these new safety nets; strongly encouraging mortgage providers and landlords to restructure payments for those struggling with payments, with a view to minimising home possessions and evictions; requiring the appropriate regulators to work with the energy companies to ensure that they make all possible efforts to secure payment restructuring for bill payers and provide a compassionate response to customers; ensuring energy companies make further financial contributions to the financing of the energy price cap; and ensuring—this is very important—provision of adequate and accessible debt advice services and debt relief schemes to prevent people from spiralling ever further into debt.

Finally, it is vital that the Government commit to funding mental health services, as set out in the NHS Long Term Plan, and publish the promised 10-year cross-government mental health and well-being plan and the health disparities White Paper. I hope that, when the Minister winds up, he can assure me that the measures I have highlighted, and others that we will no doubt hear about today, are being urgently considered.

Finally, there is a time when you have to say, “Enough is enough”. So could the Minister also say when this Government will finally do the decent thing and call a general election?