Energy (oil and gas) profits levy

Debate between David Linden and Stephen Crabb

Tuesday 22nd November 2022 Commons Chamber

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

It is a pleasure to follow the hon. Member for Richmond Park (Sarah Olney). I want to take a few minutes to make a few brief points, which I hope go with the flow of some of the excellent speeches we have heard. Before I do, I want to say something about the nature of last week’s autumn statement. One Opposition Member said that it was full of smoke and mirrors, but it was nothing of the sort. It was a straightforward, honest, blunt assessment of our economic situation and fiscal circumstances. Before the autumn statement, I made the point that if anybody in this House could be trusted to come up with the most “untricky”, straightforward, honest fiscal event, it is the Chancellor of the Exchequer, my right hon. Friend the Member for South West Surrey (Jeremy Hunt), and that is exactly what he did.

Opposition Members have been suggesting, yet again, that we are not spending enough and we need to spend more. I say to them that all the way through the pandemic and the lockdowns, theirs were the voices calling for further lockdowns and more restrictions. Even though we were spending hundreds of billions of pounds supporting families and businesses, Opposition Members were calling for yet more spending. Who did they think was going to pay for that? These moments of reckoning we are facing were always going to come, and the statement presented by the Chancellor last week reflected the honesty of that.

As other Members have said, the backdrop to the statement is the global energy crisis, which is fuelling the cost of living pressures that so many families in our constituencies are facing. An extraordinary number of households in this country lack basic financial resilience; they do not have the savings and reserves to enable them to withstand the shocks we have seen in the past two to three years. So I welcome the cost of living measures that my right hon. Friend has brought forward in the autumn statement.

We have heard the idea that this package lacks either compassion or financial firepower behind it, but next year alone the cost of living measures will cost £26 billion, and that does not include the extra £11 billion cost of the full uprating of working-age benefits. As one voice who had consistently been calling for the full social security uprating at this event, I welcome the clarification that the Chancellor brought, but this is a very expensive policy. We are talking about implementing the triple lock on the state pension and the full uprating of social security for working-age people by 10.1%.

[David Linden]

I pay tribute to the right hon. Gentleman for being one of the few voices on the Government Benches who have spoken about the need to uprate benefits. However, does he not agree that part of the problem with the cost of living crisis, which is not necessarily a new thing, is that it highlights the inadequacy of the current social security system and why we must have a root-and-branch review of what had gone wrong long before the war in Ukraine and long before covid?

[Stephen Crabb]

I am grateful to the hon. Gentleman for that intervention, and I will go on to say something about that, but I agree with the point he is making.

Over the past 10 to 11 years, what the Government have done, in essence, is hold back increases in working-age benefits while boosting the state pension for older people. That is very much part of the picture. When wages did not increase in the way we wanted them to, following the last financial crisis, we saw an increase in in-work poverty as a direct result. I wish to flag up three areas that should be longer-term concerns for this Government.

I welcome the additional spending on health and education announced in the autumn statement, but let us not forget that our spending on education, as a percentage of GDP, has been squeezed over the past 10 or 20 years; this is a long-term trajectory. As a country, we are not spending anything like as much as we should be on our skills and vocational education if we are to see increases in productivity. We are also not spending as much as we should on our armed forces and on defence. We are not spending what we should be on these other areas because three large areas are not sustainable in the long run and they are constraining Chancellors of the Exchequer in their decisions.

The first area I wish to flag up is the triple lock. I called for it to honoured during this cost of living crisis, but there are long-term question marks as to its sustainability. I asked the House of Commons Library to do some calculations for me. It found that over the past 10 years if we had increased the state pension by CPI—the consumer prices index—inflation rather than by the triple lock measures, we would have saved almost £13 billion. If we had applied the same uprating measures to the state pension as we did to working-age benefits, that figure would have become about £23 billion. The triple lock is a very expensive long-term policy. It has played a hugely important role in lifting many pensioners out of poverty—no one will forget the derisory 75p increase in the state pension that the last Labour Government made—but I want those on the Treasury Bench to bear in mind that we need a more honest discussion about that area.

The second area to mention, which has already been flagged up this afternoon, is working-age benefits and economic inactivity. Some 9 million people in this country are economically inactive. Many of them have good reasons for this, such as older people and students, but there are millions of people in this country who could work—many of them want to work—but are finding themselves increasingly distant from the labour market.