Cost of Living in Scotland

John Lamont Excerpts

Tuesday 9th January 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Scotland (John Lamont)]

It is a pleasure to serve with you in the Chair, Ms Vaz. I begin by congratulating the hon. Member for Glasgow East (David Linden) on securing this important debate on the cost of living in Scotland. The United Kingdom Government fully recognise the challenges and pressures facing households due to the higher cost of living. We are have taken decisive action to protect struggling families, with the largest support package in Europe.

In total, Government support across the UK to help households with higher bills has been worth £104 billion, an average of £3,700 per household, including households in Glasgow and across Scotland. The UK Government reacted quickly to protect energy consumers, maintain continuity of supply and stabilise the markets, when unprecedented increases in wholesale energy costs from mid-2021 caused significant volatility in energy retail markets. The energy price guarantee and the energy bill support scheme covered around half of a typical household energy bill over winter 2022, and by the end of June 2023, had saved a typical household around £1,500. Businesses across the UK have also received support through the energy bill relief scheme and the energy bills discount scheme.

Wholesale energy prices have now significantly fallen, with the average annualised household energy bill in quarter four of 2023 falling from EPG level of £2,500 in 2022, to £1,834 in 2023, under the Ofgem price cap. The price cap will increase by 5% to £1,928 in the first quarter of 2024, and is expected to fall back to around £1,800 for the rest of 2024.

Hon. Members will be aware that tackling high inflation remains a core priority for the Prime Minister and the UK Government. At its peak, inflation was 11.1%, and that hit families and businesses alike. We remain committed to the challenge, and the latest Office for National Statistics data shows that we have reduced inflation to 3.9%, which is good news for everyone in Scotland and across the UK. When inflation is low, it helps people and businesses to better plan their spending and investments. In turn, that helps the economy to grow by creating jobs and prosperity, which is a key priority for the Government.

[Christine Jardine (Edinburgh West) (LD)]

So many of my constituents are concerned about the cost of living and how they are going to afford it. Age Scotland says that 50% of people over 50 in Scotland have seen their standard of living decrease. Does the Minister agree that the answer is not constitutional change, but a change of Government?

[John Lamont]

The hon. Member will have heard about the measures that the UK Government have put in place to support all households with the rising cost of living, including the older groups that she identifies. As Members of Parliament, we all recognise the challenges that our constituents face with rising bills, but what they do not need is the reopening of the constitutional debate in Scotland. They do not need independence for Scotland; they want both of Scotland’s Governments to focus on the challenges that households face not just in her constituency in Edinburgh or in my constituency in the borders, but across Scotland.

This Government passionately believe that the best way to improve living standards in the long term is to get more people into higher-paid jobs, which is why it is so encouraging to see the employment rates in Scotland. The number of payrolled employees in Scotland hit a record high of 2.45 million in November 2023, and the unemployment rate remains below the UK average. This includes the area represented by the hon. Member for Glasgow East, Glasgow city, where the number of people in employment has increased by nearly 18,000 pay-rolled employees since the start of the pandemic to a new record high of over 275,000.

It is not just about getting people into work, but about ensuring that it pays to work. That is why the Government will increase the national living wage by 9.8% to £11.44 an hour and increase the national minimum wage by 14.8% to £8.60 an hour, benefiting around 200,000 people in Scotland. However, we recognise that short-term cost of living pressures remain and particularly impact on vulnerable groups. In addition to UK-wide support for all households, the Government have deployed specific, targeted financial support and tailored interventions to help those most in need. For example, around 680,000 low-income and vulnerable households in Scotland have received additional support through the cost of living payment scheme, with millions more households also benefiting in other parts of the country.

[Martin Docherty-Hughes]

Will the Minister give way?

[John Lamont]

As you have already pointed out, Ms Vaz, we are expecting votes shortly. I am keen to cover the key points in response to the points already made during the debate, so I am not going to give way.

In the constituency of the hon. Member for Glasgow East, around 21,200 means-tested cost of living payments have been made to date, with about 18,200 individuals already eligible for disability payments. Nearly 12 million pensioners across the UK have received additional financial support of up to £600 to heat their homes over the winter. We are also supporting pensioners by maintaining the triple lock. The basic state pension, new state pension and pension credit standard minimum guarantee will be uprated in April 2024 by 8.5%, in line with the average earnings growth between May and June 2023. We have also introduced new local housing allowance rates, which will come into force in April this year. That will help to boost those who are most in need, with more than 92,000 households in Scotland £800 better off per year as a result.

Overcoming the cost of living pressures facing our communities requires collective action from us all in Government, which is why we have provided the Scottish Government with the necessary levers to play their part. The UK Government have topped up the record block grant from the previous spending review with an additional £2.4 billion as a result of the decisions taken across three fiscal events. The Scottish Government receive about 25% more per person than equivalent UK Government spending in other parts of the United Kingdom, and that translates into about £8.5 billion more per year on average. The renewed Scottish fiscal framework, as agreed by both Governments, provides the Scottish Government with greater certainty and enhanced budget management flexibility to meet the expectations of devolved public services and local communities.

It is also important for us to remember the tools the Scottish Government have at their disposal under the devolution settlement. As well as control over local taxes and most rates and thresholds of income tax, the Scottish Government have responsibility for stamp duty land tax and landfill tax. About a third of their budget is self-funded, so they have significant control over their income generation and spending. Although this is a matter for the Scottish Government, I encourage them to use the tools and levers at their disposal to complement the existing cost of living support delivered by this United Kingdom Government.

I am confident that the measures that the UK Government have put in place have helped millions of people across the length and breadth of this country, including in Scotland, to deal with the cost of living pressures—[Interruption.] I have no idea why SNP Members find this so funny. My constituents are feeling the cost of living crisis, and yet SNP Members come here, barrack Government Members and laugh at a subject that is very difficult for many households in the Scottish Borders and, indeed, across Scotland.

We cannot be complacent, which is why this Government remain vigilant to any future challenges that risk diminishing household budgets. As the Prime Minister said, inflation is the real cause behind the increasing living costs, and our responsible plan for controlling inflation and reducing debt is working.

Question put and agreed to.