Cost of Living

Jake Berry Excerpts

Wednesday 16th May 2012 Commons Chamber

[Malcolm Wicks]

I understand that point, which raises the difficult issue of what financial allowance we can make for parental leave. We need to get to grips with this.

I turn to an issue that the House has discussed before. I put it to the Government that their policy on child benefit is a case study in unintended consequences—and I am being kind here. I speak as a great advocate of child benefit, which, along with the family allowance before it, has had its supporters on both sides of the House, right back to the pioneering work of Eleanor Rathbone, who wrote such important works on the importance of what she called family endowment. This Government’s decision to end the universal nature of child benefit by withdrawing it from people who earn above a certain income is a catastrophic strategic decision. It is a move towards potential means-testing that we need to be aware of.

[Jake Berry (Rossendale and Darwen) (Con)]

rose—

[Malcolm Wicks]

The hon. Gentleman wants to defend the policy.

[Jake Berry]

Is the right hon. Gentleman seriously suggesting that people in my constituency, where the average salary is well below the national average—some of my constituents earn £14,000 or £15,000 a year—should pay tax to give child benefit to Members of this House, who are earning £65,000?

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[Malcolm Wicks]

That is the logic of the position and, to be fair, many on the free-market wing of the Conservative party—such as the Institute of Economic Affairs think-tank—have been arguing for decades against universal provision and for a move towards a residual welfare state just for the poor, guarded strictly by the means test. That is the logic of some of these arguments.

I want to make two more specific points that I think colleagues understand. As I said, this policy is a case study of unintended consequences. The Prime Minister, the Chancellor of the Exchequer, Treasury Ministers and officials did not set out to say—I am being generous now—“Let’s design a child benefit policy so that a family in which mum and dad earn just under £50,000 combined will maintain child benefit, but if there is only one earner bringing in over £60,000, that family will lose child benefit.” No sensible Treasury policy would have reached that conclusion, but because this one was rushed and ill-thought-out, that is the consequence. I do not know what the constituents of the hon. Member for Rossendale and Darwen (Jake Berry), some of whom will be affected by this policy, will make of that. Where both members of a couple are earning a lot of money—nearly £50,000 each, following the revision, so they will have almost £100,000—they will keep their child benefit. However, if their next-door neighbours consist of a mum at home looking after the young ones, and a father earning over £60,000, his child benefit will be lost. Not even the hon. Gentleman, in his loyalist rash of enthusiasm, would defend that, surely. Would he?

[Jake Berry]

Surely the logical conclusion of the right hon. Gentleman’s argument is that all benefit should be universal. Does he think that all benefit, such as council tax benefit, should be universal? If there is no means test and people get the benefit regardless of their earning capacity, even if they are among the richest people in the country, that is the logical conclusion of his argument.

[Malcolm Wicks]

As I said earlier, any sensible social policy balances universal and selective provision. Many of these higher-income groups are paying substantial amounts of tax and thereby contributing to the community chest.

The story becomes yet more bizarre if we consider the second unintended consequence. Following the reaction against the Treasury decision to introduce a cliff-edge, resulting in the sudden loss of child benefit, Treasury officials were told to think again, and they came up with the idea of a taper. Those whose income is above the magic number will still get some benefit, but slowly but surely, it will be tapered away. As a consequence, it is estimated that 500,000 more people will have to go through self-assessment or PAYE. This Government, who are good on the rhetoric of cutting red tape and the “back room”, as they call it, have come up with a policy so bizarre that 500,000 more self-assessments or PAYE assessments will have to be made. I put it to them that it is time to admit that they have got this one wrong, to think again and to restore the child benefit, which is such an important policy if we are to build stronger family life.

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[Phil Wilson]

That amount—£500 million—is not a drop in the ocean. It is a lot of money that could have done a lot of good for transport throughout our rural areas. I hope that Ministers will address this issue in winding up tonight.

Finally, let me make one or two other comments. Arriva runs bus services in County Durham, where a lot of those services have a bad name. With Arriva buses in London, if you see one, you see three at a bus stop, but in some of the villages we represent, people are lucky if they see one all day. Obviously bus companies need to make a profit to invest in better buses and so on, but the private sector also relies a lot on subsidy. Those companies have a right to make a profit but, given that they are providing a social service, they should have some kind of social conscience.

For me, this issue highlights elements of all the talk about the big society. People cannot get to work or see their friends.

[Jake Berry]

It is interesting to hear the hon. Gentleman talking about the cuts at Darlington council. All of us in politics accept that in tough financial times, we have to take decisions about how we serve our constituents, but why has Darlington council chosen to cut the bus subsidy when in March 2011, on its own admission, it had more than £10 million in cash reserves?

[Phil Wilson]

Those are figures we do not recognise, but—[Laughter.] Let me answer the question. Tough decisions have to be made, but they are even harder when the amount of money given to local authorities is being cut drastically.

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[Jake Berry (Rossendale and Darwen) (Con)]

May I say what a privilege it is to have the opportunity to speak on the cost of living? All hon. Members would accept that the cost of living is the issue raised most often with us in our advice surgeries. In an era of static if not falling incomes, ensuring that our constituents can live their lives, support their families, continue to get work, put fuel in their car and keep their houses warm, is one of the most important issues we can debate in the House.

Recent media coverage seems to revolve around whether MPs know the cost of a pint of milk, and that decides whether they are in or out of touch with their constituents. I know the cost of a pint of milk, because I am particularly fond of a milky coffee with two sugars on a Saturday morning before I go to my advice surgery.

[Gavin Shuker]

How much is it?

[Jake Berry]

It was 46p when I bought it last weekend, but since the general election, the cost of the pint of milk that I buy for my milky coffee has gone up by 10%. Although that is not the world’s greatest economic indicator, all hon. Members can accept that it is a symptom of the huge increase in the cost of fuel, which puts pressure on families in all our constituencies.

I am a great supporter of the great British pint—I am sure some of my colleagues think that litres are a European abomination—but one thing that we buy in litres is fuel. The cost of fuel in my constituency is 6p or 7p a litre more expensive than in the neighbouring towns of Bury and Bolton. I became absolutely fed up with that, so I wrote to the major supermarkets to ask why there is such a difference. Apparently, for people who live in rural isolated areas such as Rossendale and Darwen, the local supermarket sets the cost of the fuel at the pump. Therefore, in a small geographical area that encompasses my constituency alone, the biggest retailer in my patch—the supermarket—sets the price and is the major supplier.

People in my area say, “Welcome to rip-off Rossendale or dearest Darwen if you want fuel in your car.” That situation cannot be right. It is wrong that supermarkets behave in that way on fuel pricing. I can find out the price of a Tesco pint of milk or a can of beans by going on its website, but it is not prepared to set a tariff for fuel nationally and instead discriminates against rural and isolated areas.

I support the Government’s idea of getting energy suppliers, particularly the utility companies, to write to their customers to offer them the lowest tariff, but supermarkets should offer petrol at the cheapest price to the young, hard-working families in my constituency—they might have to put diesel in a van to go to work or petrol in a small car to take children to school—and not at a price that they know they can get away with just because of location. The major supermarkets have had a monopoly—the hon. Member for Westmorland and Lonsdale (Tim Farron), who is no longer in his place, spoke extremely well on farming and the price of milk in that respect. Anti-competitive practices on fuel are pushing small, independent fuel retailers out of business, which is bad for businesses and for my area.

That extra £5 a week where I live to put fuel in a vehicle to go to work is the difference between people being able to turn the heating on or not, being able to feed their children healthy food or not, or being able to go out and spend money in the economy or not. I hope fuel price setting is part of the Government’s programme to look at the relationship between supermarkets and their suppliers.

The cost of gas and electricity is another major issue raised by all our constituents. Those costs have ballooned beyond anyone’s increase in income over the past few years. They have risen by as much as 20%. We tell people to switch supplier. When people visit me in my patch, they say they will not switch supplier because they are nervous of bill shock. Uniquely, virtually, in a service industry supplying utilities to our houses, it is expected to be self-service. People are asked to read their own electricity meter. People in my advice surgeries have told me that they purposely underestimate how much electricity or gas they have used to help manage their cash flow. That builds up a huge legacy bill. Others simply have underestimations having had their meter readings underestimated over a long period.

Those people are worried about switching, because they know that when they switch they will have to give an up-to-date meter reading and will have a huge legacy bill that they cannot pay. These people, sometimes those on the most expensive tariff, are unable to switch because they cannot pay their historical bill. That is why it is absolutely right that the Queen’s Speech sets out a programme to introduce smart metering. Bglobal, a successful business in my constituency, which I am delighted to see has retained its profitability, does business-to-business smart metering. There is an opportunity for us all to have smart meters in our homes.

[Dr Whitehead]

Does the hon. Gentleman think that consumers should pay for smart meter installation or should other methods of payment be considered?

[Jake Berry]

However they are paid for, ultimately the consumer will pay, because if the electricity company pays, it will be added to the bill somewhere.

I am glad that the hon. Member for Southampton, Test (Dr Whitehead) is interested in smart metering. As I said, Bglobal, a business-to-business smart meter supplier in my constituency, is doing very well. The great thing about smart meters is that they enable us to pay only for the energy we use. There is not the bill shock; there is not the legacy bills which make people nervous. Paying only for the energy we use helps us to manage our electricity consumption and means that we can reduce it over time. People underestimate their readings so that they can manage their cash flows and pay their bills, but that is not real; they are simply putting off the pain. I want people to understand that by smart metering they can regulate their utility use and genuinely reduce their bills.

Bill shock is a real block to switching, as too is the fact that switching between the majority of energy suppliers involves an online medium. I refer to the uSwitch website, which I am sure many Members have used. That is a real block for the elderly and people on low incomes who do not have an internet connection. There are plenty of silver surfers in my constituency—they e-mail and tweet me—but that is not for everyone, so switching online is not right for all. People without phone lines or internet connections cannot switch.

Having said that, uSwitch does make the switching facility available in paper form. I am sure that many Members, like me, have collected the uSwitch envelopes and taken them out to elderly constituents, saying “Get your last utility bill, put it in here, and uSwitch will write back telling you the best tariff to go on.” As MPs, we should be publicising that and ensuring that vulnerable constituents are not excluded from saving what can be hundreds of pounds by switching their electricity supplier.

I support the Government’s proposal that energy suppliers should be compelled to write to their customers every year offering them the cheapest tariff. That does not enable people to switch between suppliers, but it at least ensures that they are on the best tariff. Of course, that is not always the one with the lowest electricity charge. Some people—those with very low usage, for example—might choose not to pay the standing charge and pay slightly more for their electricity. Tariffs have to be tailored to individuals.

Finally, I turn to the proposal to ensure that power generation in this country is environmentally sustainable. Often in this place we obsess far too much about short-term issues. As important as things are such as the eurozone, part of our job has to be horizon scanning. If I scan the horizon and think about what might affect our children or grandchildren, global warming is probably the biggest issue that I spot. I absolutely support the Government proposals to move to more sustainable electricity generation, but we have a problem with wind energy. In my constituency, 30 planning applications for wind turbines are currently under consideration by the local authority. That points to a market that is completely out of kilter with commercial reality. We saw it with solar energy: we had a sort of gold rush, because people suddenly realised that they could get 16% guaranteed by the Government tax-free. We are now seeing similar speculation by major energy suppliers, with the applications for large wind turbines in my constituency.

We all support wind generation, but I do not want to see my patch become the wind capital of the UK—although colleagues might look at me and think that it already has become that. I hope that the Government will have a look at the subsidy for wind generation and try to ensure that we cut the “get rich quick” merchants—the speculators—out of the market. I am happy to see the development in my area, but I want to ensure a local benefit, so that it really works for our children and grandchildren.