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

David Duguid Excerpts

Tuesday 17th May 2022 Commons Chamber

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

I would like to say it is a pleasure to follow the Chancellor, but we have just heard 16 minutes of platitudes and no new ideas. He said that Opposition Members are causing people more worry. What is causing people more worry is not having enough money in their pockets to pay their bills. It is nothing to do with what we say here; it is what they see in reality.

The Chancellor mentioned yet again his £9 billion support package for energy bills, but he did not say that only a third of that is money from the Treasury that will not be clawed back. Two thirds of that £9 billion will be added to our energy bills and recovered through our bills, so he is making bills higher for some while providing crumbs of support to the most vulnerable. He mentioned growing the economy while ducking the fact that, after the past five years, the economy had already started to contract in March. Then, for good measure, we heard some bluster about Labour’s past record, as if to hide the issues. What that tells us is that Westminster has not been working for a very long time.

It is a dereliction of his duty as Chancellor to have no new measures and no new finances associated with the Queen’s Speech to address the Tory cost of living crisis. The stark reality is that the longer nothing is done, the more people will plunge into fuel and food poverty. The April 2022 price cap is 75% higher than just a year ago. National Energy Action estimates that up to 6.5 million households could now go into fuel poverty. That underlines why more action is needed by the Chancellor. The October increase coming could see up to 40% of households becoming fuel-poor. National Energy Action previously estimated that about 10,000 premature deaths a year arise from fuel poverty. How many more premature deaths are likely to occur with these increasing fuel costs? They have such an impact that people die early through fuel poverty. How can any Minister who claims to have compassion stand by and do nothing? Even the British Chambers of Commerce has asked for an emergency Budget. Companies such as Scottish Power are calling for £1,000 of support for energy bills, and yet the Chancellor has insisted that taking measures now would be silly. Why is he so out of touch with reality when even businesses are telling us what is required?

Looking back to April 2020 and the onset of the covid crisis, the Government increased universal credit by £1,040 to help people to live, but back then home energy bills were 75% cheaper and petrol was 50% cheaper, and we are now dealing with food inflation and with general inflation rising to 10%. If that £20 a week uplift was required for people to live two years ago, surely the Chancellor must recognise that he needs to reinstate that uplift and do so quickly. Even Asda chairman and Tory peer Stuart Rose backs reinstating the £20 per week uplift to universal credit, so it really is time for the Chancellor to listen. People on universal credit are more likely to be on prepayment meters and are therefore further penalised with a higher energy tariff. Those people will be forced to self-disconnect this winter, as they simply will not have the funds to put in the meter. They do not have a dilemma about whether to turn the heating on; they do not have the choice.

Yesterday I was at a meeting with Ewan McCall of the Wise Group. He and others within the Wise Group deal with people who are on the frontline of fuel poverty. A survey of nearly 300 people in Glasgow found that 24% were self-disconnecting or rationing their heating. There are really heartrending individual stories behind this: people reliant on candles and using hot water bottles, reduced to living in misery. The Wise Group, like others, provides fantastic help with turnaround, but it can only do so much. Other groups such as the Trussell Trust, which does fantastic work with food banks, have confirmed that ever more people are reliant on their services.

Rather than action, we have had the bizarre admission from the BEIS Secretary that his Department’s nuclear power policy will increase our energy bills. It is economic madness—and, unfortunately, madness cheered on and encouraged by Labour. It should come as no surprise that new nuclear will add to our bills. With an upper estimate of £63 billion for the capital and finance costs for one new nuclear power station, it is crazy to proceed when the costs of renewable energy are ever falling. So-called small modular reactors are neither small nor cheap, at circa £2 billion per new station. Rolls-Royce does not want a contract for just one small modular reactor; it wants a contract for 12 to 15. The Government should be focusing on providing cheaper dispatchable energy and agreeing a minimum electricity price for the proposed pumped storage hydro scheme at Coire Glas and the proposed extension at Cruachan Dam. Those can be delivered much quicker and at a fraction of the costs of nuclear. Indeed, the £1.7 billion that the Chancellor has used to buy a stake in Sizewell C would pay for Coire Glas to be built outright.

One obvious way to reduce bills and emissions is to increase energy efficiency measures massively. The Scottish Government rightly treat that as a national infrastructure programme and spend four times more on it per capita than the UK Government. The Green Alliance estimates that retrofitting 11 million homes will reduce peak heat demand by 40%. Shamefully, instead of showing increased ambition, the UK Government have not even brought forward the regulations for ECO4, yet the programme was supposed to have started on 1 April and is part of the £9 billion package the Chancellor keeps bragging about.

This Government are trapping more children in poverty who are therefore destined to have fewer opportunities and to be less likely to have positive outcomes in life. The Child Poverty Action Group estimates that there are currently 4 million children in poverty and says that the legacy of this Queen’s Speech will be even more children going into poverty. Yet at a stroke, overnight, the Chancellor could lift 250,000 children out of poverty by scrapping the two-child limit for universal credit. When he knows that he has at his disposal the power to take 250,000 children out of poverty overnight, why does he not act and scrap the cap? Why are Tory Back Benchers not calling for the two-child limit to be scrapped altogether? Instead we hear demands for tax cuts which the Chancellor has promised are coming, but which will disproportionately help the richest and not the poor.

Another decision taken by this Government is not to uprate benefits even close to the rate of inflation. That is a conscious decision, and as others have said, blaming the IT system is a piece of nonsense. The Chancellor is hiding behind weak excuses. There is something far wrong if the Government’s IT system is so poor that they cannot press a button to provide a percentage uplift.

We have heard one new policy announcement, which is making 91,000 civil servants redundant during this crisis. It beggars belief that the Government use the slogan “Making work pay” while wanting to sack 91,000 people. Unfortunately, many who are working know that work does not pay. The number of people who are in work and in poverty is increasing, and no amount of bluster will change that statistic. The Government could help by making the minimum wage equivalent to the real living wage. At a stroke, that would take more people out of poverty, and it would not cost the Government any money, so why do they not do that?

There is talk about balancing the books, and another cohort on whom the Government have balanced the books is pensioners. Scrapping the triple lock is costing pensioners more than £500 a year during this crisis. If inflation is running at 10% when the next uprating assessment is undertaken for pensions, will the Chancellor stand by the pledge to reinstate the triple lock? Will he actually increase pensions by 10%, if that is what inflation is telling us? It would be good if he could confirm that. Okay, he is just staring into space.

The topic of pensions takes me to the Women Against State Pension Inequality Campaign and the millions of women still awaiting compensation. The recent Parliamentary and Health Service Ombudsman report has highlighted and confirmed that there was clear “maladministration” in how the Department for Work and Pensions delivered—or failed to deliver—the news of the increased pension age for millions of women. Some form of compensation would not only be at least a nod towards justice, but put money in people’s pockets at this time of need.

I met two representatives from Ayrshire WASPI on Friday, and they highlighted that fair compensation in Ayrshire will be about £150 million for 15,000 women. That money would then be spent locally on services and goods in a real form of levelling up. Even then, much of that money would return to the Government in various taxes. Sadly, by the end of this calendar year, more than 220,000 women across the UK will have died waiting for justice in the seven years since the WASPI Campaign began. Thousands more women will die waiting unless the DWP and the Treasury sit down with campaigners to agree fair, fast compensation. I put it to those on the Front Bench: how acceptable is it just to sit back and let people die, instead of providing them with justice and the compensation they deserve?

Returning to the issue of the Treasury and how to pay for support, we agree with Labour on the principle of a windfall tax. However, it should not just be a cash raid on the North sea; rather, it should be a wider pandemic profit levy. Tax Justice UK has identified that just six companies made an excess profit of £16 billion in the financial year 2020-21. A 10% additional levy on them would realise £1.6 billion for the Treasury. A much wider pandemic profit levy of 10% across the board would raise even more money.

The right hon. Member for Doncaster North (Edward Miliband) said that companies should not profit from circumstance and from just being there. On that principle, he should agree that a pandemic profit levy makes more sense, because that would affect companies that benefited from the covid situation just by virtue of being there. That levy would also target the companies that made excessive profits from personal protective equipment contracts awarded to them directly by the Government.

There is no doubt that things have moved with the oil and gas sector. As the right hon. Gentleman pointed out, the chief executive of BP has said that investment would not be at risk. If we look at the reality of it, Shell and BP combined are on course to reach £40 billion in profit this year, so there must be some loose change there for the taking. It is interesting that the Tesco chairman wants a windfall tax on oil and gas, so I am sure he would also welcome a windfall tax on Tesco and other companies that benefited during the pandemic.

[David Duguid (Banff and Buchan) (Con)]

I genuinely thank the hon. Member for giving way. It is two or three short months since I welcomed his stance against Labour’s calls for a windfall tax, but putting that aside, he quoted Bernard Looney, the chief executive of BP. Is he aware that, as well as saying that currently committed investments would not be at risk from a windfall tax, Bernard Looney has also said that future investments could be?

[Alan Brown]

At the end of the day, there is so much excess profit here that something needs to be done. We need to have a serious conversation about it. Interestingly, in front of the Business, Energy and Industrial Strategy Committee, the chief executive of Centrica spoke about the record profits it is making and about how it pays much more tax in Norway than here. He confirmed that a tax regime can be balanced and that he is quite happy paying more if it is a stable regime. We could have a serious debate about a tax regime that realises more money for the Treasury, especially in this time of need.

That takes us to the Treasury. The Chancellor has generated his own windfall. As our energy bills have nearly doubled, so has the VAT intake to the Treasury. As petrol prices have soared, so have the VAT returns to the Treasury. Indeed, the duty cut he was bragging about is actually a loan paid for by the extra VAT that was already getting raked in. As we have heard, there is now a real risk that that duty cut is being gouged out by greedy petrol companies and not being passed on to consumers. That is another thing on which the Chancellor needs to get a grip. Oil and gas revenues have increased by £3.5 billion in the past couple of years, and I have a funny feeling that in the autumn statement, the Chancellor will predict even greater income from oil and gas revenues. That income alone should be getting recirculated and used to support people.

The Scottish Government are doing what they can to mitigate the crisis, but we cannot make decisions a normal country can make. The Scottish Government introduced the game-changing child payment and doubled it to £20 a week, and it will increase to £25 a week later this year. That could lift 50,000 children out of relative poverty, but it cannot have the positive impact it otherwise would have had due to Tory cuts. That also demonstrates the lack of real options for Scotland within the current constitutional settlement. We cannot make decisions a normal country can make. It is not in our gift to change VAT on energy bills. Whatever the views are on a windfall tax, we cannot do that. We do not have control over fuel duty or VAT either. We have limited borrowing powers. We are locked into bad decisions by the UK Government on the race for nuclear—encouraged by Labour—on money on nuclear weapons, and on being taken out of the EU, and we are short-changed in funding from the UK Government in relation to that.

As a country, we are energy-rich, yet we have citizens living in fuel poverty. We have exported oil and gas for years, but we do not even have an oil and gas fund. It is time for a different direction. We have had 315 years of the so-called most successful Union ever, yet we have a Government whose slogan is “level up” and “we know best”. If the Union is so successful, we should not need a slogan about levelling up. It is time for independence and time we made decisions for ourselves.