Cost of Living

Derek Thomas Excerpts

Tuesday 25th January 2022 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I am grateful for the opportunity to take part in this worthwhile and timely debate. I apologise for not being able to take part in yesterday’s debate, but it is really important that we talk about how we can help households and families in our constituencies that are facing the real pressure of increased house prices, and all the anxiety and difficulties that go with that. I agree that the Government must do what they can to mitigate increasing living costs, particularly for low and fixed-income families.

I regularly host drop-ins across west Cornwall, where people can come along and raise whatever issue they like. I try to do so in every part of my constituency: like many Members present, I represent a large rural area, and it is important that I get to where people are. Many people, pensioners in particular, have come to me in recent months. Those households have worked hard to plan for their retirement, but find that their pension has become less able to meet their basic living costs—a position that they never expected to be in. These are not just pensioners on the state pension who might be getting pension credit: there are those who have a small pension in addition, but are finding that costs are outrunning their income.

I have also come across several families whose rent costs have rocketed over the past couple of years—an issue that I raised in this Chamber last month. It is really important that the Government look at how we can manage and protect housing supply, particularly in places such as Cornwall, which is a very attractive place to visit and possibly an attractive place to buy a second home or bolthole. That forces up the price of homes for the people living there, and that is true for lots of other constituencies, particularly coastal ones. The Government must look more earnestly at increasing the availability of rental properties and homes to buy by protecting them for permanent residents. When we build new homes, it is important that they meet a local need, as is the case in St Ives, which is part of my constituency. This is about the cost of housing and rent.

[Mike Amesbury]

Would not part of the solution be to build homes for social rent, allocated to local residents? Fewer than 6,000 of those homes were built last year. Would the hon. Member agree that homes for social rent must certainly be a big part of the solution?

[Derek Thomas]

I completely would, and I welcome that intervention. However, in parts of the country, including my constituency, families with fairly decent incomes who would never qualify for that list are also seeing their rents rocketing. We are talking about the nurses, teachers and police officers we need to come to take jobs in Cornwall, or stay in the county, and who cannot afford the rents they are expected to pay.

I absolutely agree with the hon. Gentleman’s point. Cornwall County Council, now under a Conservative administration, is ramping up the provision of social rental properties. That meets the needs of a particular group of constituents, but does not reach or solve the whole problem.

In view of the rising costs of housing, Cornish MPs are arguing in favour of protecting new buildings for permanent residents only, which will help to protect those homes for local need. I agree that we need to look at every tool available to ensure that people have secure homes for life that they can feel safe in. Those homes should be built efficiently, so that rising energy costs, which I will address in a minute, can be managed, so that we are not just heating up the planet when we are trying to heat our homes.

I want to touch briefly on energy costs. My understanding at the moment is that the cost of production of energy has not risen. Companies that are producing it, not all of them based in the UK, are making colossal sums of money due to demand. I am interested to hear from the Minister what the Government are looking to do to bring the cost that suppliers pay for energy closer to the cost of production.

Another area to look at is the feed-in tariff. For example, customers are seeing energy prices increase and that is expected to carry on this year, but those who are feeding into the energy supply, through solar panels or wind turbines they have invested in, are not seeing any change in the money they receive for that energy. It seems sensible for the Minister to look at whether the feed-in tariff should be tracked against the energy costs people pay.

There is no doubt that the energy market needs reform, but right now urgent help is needed for households most hit by energy prices. I heard the calls for a cut in VAT, but householders concerned about energy costs have already worked extremely hard to reduce the amount of energy they use, sometimes choosing not to heat their homes in order to feed their families. The VAT element of the bill for those families will be tiny: they might save £20 or £30, perhaps a little more, a year in VAT. If I owned several electric cars, a couple of hot tubs, maybe a swimming pool, and a massive house with lights on all the time, the savings I would make from the VAT cut would be significant. We are not helping the households that most need it with the headline-grabbing promise to cut VAT on energy.

There must be targeted and effective help for the families I have referred to, the pensioners, people on fixed incomes and low-income households. There should be cash to help with energy bills and, at the same time, an effective way to improve people’s homes. We have had lots of schemes recently where large amounts of money have been made available for people to retrofit their homes. In Cornwall, builders—people involved in construction—were already run off their feet with building homes and looking after Cornwall’s homes and did not choose to take up those offers. People came in from different parts of the country to retrofit homes, not doing it properly or effectively, and often going bust before they got found out.

Lots of Government money was wasted while the homes were not actually improved. The Government need to look carefully at how we retrofit homes, probably through local authorities, where that can be targeted and effective. Ultimately, not now but in the near future, the Government with their sizeable majority could properly reform the energy market so that the poorest families paid hardly anything—if anything—for energy, and those more demanding homes paid more.

[Martin Docherty-Hughes]

rose—

[Derek Thomas]

I will give way to the hon. Gentleman and then I ought to finish, because I am getting the eye.

[Martin Docherty-Hughes]

Does the hon. Gentleman agree that energy market reform also requires a reform of transmission charges? While in most parts of England a subsidy will be given to provide energy, north of a certain line north of London people have to charge to produce energy to put it on to the national grid, and that reduces the ability of renewables to lower energy costs.

[Derek Thomas]

I agree that there is a need for a time out to properly look at the energy market and how it works. The price cap we introduced a few years back was helpful and certainly it is helping right now; my understanding is that the variable tariff is the best to be on. However, I met policy advisers some years ago to discuss some sort of block tier energy price, where the first units paid are extremely cheap or free and the more units someone uses, the more they have to pay. We have to retrofit the poorer homes to make sure that does not penalise them, but there is a need in the energy market to make those who can afford it contribute to the cost of energy for those who cannot. It is not a luxury; it is something that we need to care about. We do care about it, and we need to do something.

[Several hon. Members rose—]