Cost of Living in Wales

David T C Davies Excerpts

Tuesday 22nd February 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)]

It is a pleasure to serve under your chairmanship, Ms Fovargue. I apologise for the fact that I was at the vote for a few minutes, as one or two others were. I congratulate the hon. Member for Newport East (Jessica Morden) on securing this debate, and I thank those who have contributed. I am pleased that we are having this debate on a subject that is of great importance to colleagues. I want to make it absolutely clear that I fully accept that there is a cost of living crisis. It is a global crisis with many causes, one of which is the quadrupling of gas prices as a result of factors such as the sudden increase in demand for goods and energy as we come out of the covid crisis, and the inability of some suppliers to match that need. It is a global crisis, and I do not deny for one minute that people are suffering.

It is worth reflecting on the unprecedented support provided to businesses and individuals by the UK Government in Wales during the pandemic: 475,000 Welsh jobs have been protected through the furlough scheme, billions have been provided in Government loans to Welsh firms and an extra £3.8 billion of Barnett-based funding has been provided to the Welsh Government. The hon. Lady suggested that the extra money for the council tax rebate had not been supplied yet. That might be the case, but it will be supplied because it was a Barnettised sum, so I am certain that that money will arrive. That is why the Welsh Government were right to pass that reduction on.

The pandemic has had a significant effect on the global economy, and the Government have intervened to ensure that the UK persists and is strengthened throughout the economic challenges. As a result of actions taken by the Government, more people are on a payroll than before the pandemic began. The UK economy is the fastest growing among the G7 nations, so I hope we can agree that the best way to support people’s living standards is not through handouts but by offering access to good quality jobs, better skills and higher wages.

We are helping people across the UK, including in Wales, to find work and to boost wages and prospects through our plan for jobs. That includes the kickstart scheme, which has seen 122,000 young people begin work across the UK, including 6,000 in Wales. I am pleased to say that the Wales Office has a kickstart worker from Merthyr Tydfil working in our Cardiff office, and I was absolutely delighted to meet her today.

We are increasing the national living wage by 6.6% to £9.50 an hour, which will benefit more than 2 million workers. We want to ensure that people in Wales keep more of what they earn, so we are raising income tax personal allowances and freezing alcohol and fuel duties. Although the price of filling up a tank has gone up, it is still £15 cheaper than it would have been if we had kept the original fuel duty escalator.

We have also, as the hon. Lady knows, reduced the universal credit taper rate from 63% to 55%, and we are increasing universal credit work allowances by £500 a year. Together, that should mean more than a million households—I do not have the exact figure, but it is certainly a significant number of households—keeping an extra £1,000 a year, on average.

We absolutely recognise that this is a worrying time because of significant increases in global energy prices. We understand that people such as the hon. Lady’s constituents are concerned, and we have done what we can to help. We have provided £12 billion of support over this financial year and next to ease the cost of living pressures across the UK. We have targeted help for working families, low income households and the most vulnerable in society, in addition to providing a £9.1 billion package of support to help households with rising energy bills during 2022 and 2023.

The hon. Lady is right about the impact that these prices will have, but we cannot do very much about the fact that global gas prices have quadrupled in the last year alone. This will be an issue for every country across the world. The more dependent a nation is on gas, the more of an impact that will have.

[Jessica Morden]

The Minister is quite right, but he missed the comments that I read out from constituents about how hard life will be. He is also quite right that there is a global gas crisis, but we are more exposed to it because of a decade of Tory mismanagement. Gas storage has been cut, so we are reliant on Russia and other countries. We have been slow on insulating homes and we have not been investing in renewables. Does he not accept that?

[David T. C. Davies]

Funnily enough, I do not accept that. First, gas storage will make no difference whatsoever to the price. It does not matter if we are storing two, 20 or 200 days’ worth of gas, because if the unit price of gas has gone up at some point, we will have to pay that higher price.

[Carolyn Harris]

Will the Minister give way?

[David T. C. Davies]

I will in a moment. Let me finish my speech—as Opposition Members know, I like to take interventions and then I completely lose my place.

I do not accept that storage was an issue. We made a decision, as a nation, that we were not going to frack for cheap gas, but we are not dependent on Russian gas. Only about 2% of the gas we use comes from Russia, and we could easily do without it. We import mainly from Norway and take liquefied natural gas, as well as using our own. We are not dependent on Russian gas, but other countries in the EU are, and that will have an impact on supplies overall.

As far as renewables are concerned, we have an amazing story to tell. We have vastly increased the amount of renewables we use, mainly from wind. We are now developing offshore wind power, and even looking at floating offshore wind. The hon. Member for Newport East will realise that the transition towards carbon neutrality comes at a cost. We should not hide the fact that low-carbon energy sources, such as wind and solar, generally cost more than carbon-based energy sources, such as gas and coal. I wonder how many minutes I have left.

[Yvonne Fovargue (in the Chair)]

You have until 4.49 pm.

[David T. C. Davies]

I will take a quick intervention from the hon. Member for Swansea East (Carolyn Harris).

[Carolyn Harris]

In France, where the industry around energy is nationalised, there have been nowhere near the price hikes that there have in this country, where we have allowed the Government to allow the companies to get away with blue murder.

[David T. C. Davies]

I fear the hon. Lady may not be right about that. About 70% of the electricity in France comes from nuclear power plants, which are already built. That is one reason why they have managed to control their costs. I hope we will be building nuclear power stations across the UK, and I would very much like to see one built at Wylfa in Wales; there is pretty much cross-party support for that.

I welcome the fact that we are going further and looking into developing modular reactors. I know the hon. Member for Newport East is chair of the all-party parliamentary group for the western gateway, and I may see her later on when I talk to that group about the spherical tokamak for energy production, which could lead to nuclear fusion by 2040.

[Jessica Morden]

Will the Minister give way?

[David T. C. Davies]

I have only 30 seconds left and I have a conclusion here as well, but I give way to the hon. Lady.

[Jessica Morden]

Does the Minister accept that a failure to regulate our energy market has led to dozens of energy companies going bust and consumers footing the bill for that? Consumers have had to move their bills to new energy companies, and they do not know what those will be like in the future.

[David T. C. Davies]

A fairer analysis would be that a lot of energy companies had not expected prices to quadruple and had given people fixed prices. In conclusion, this has been an excellent debate and I wish we had more time for it.

Motion lapsed (Standing Order No.10(6)).