Social Security (Additional Payments) (No. 2) Bill

John McDonnell Excerpts

2nd reading
Tuesday 21st February 2023 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Although no one will oppose the Bill today, it is important to put it in the context of what many of our constituents are experiencing at the moment, because it does mean that they will bear a significantly greater burden.

Last year the household energy cap was £2,500, and people on means-tested benefits received £650 plus the £400 universal payment. This year the cap will be £3,000, and yes, people on means-tested benefits will receive £900, but the universal payment is not being renewed, which means that they will suffer a 45% increase in their cost burden. For households that are not entitled to means-tested support, the average household energy bill will rise again by at least 43%. So although we will not be voting against the Bill today and will support the benefits to be distributed by the Government, there will, as I have said, be a significant increase in the burden for many of our constituents.

According to National Energy Action, in October 2021 there were 4.5 million households in fuel poverty, in October 2022 the figure was 6.7 million, and by April 2023 it will have risen to 8.4 million, which means that about one in three households will be in fuel poverty. The Bill will not relieve that fuel poverty. Of those 8.4 million households, 1.8 million will be carers, 5.9 million will be low-income and financially vulnerable households, 3.6 million will be people with a disability, and 1.6 million will be households in off-gas homes—as some Conservative Members have mentioned in other debates. As we heard from my right hon. Friend the Member for Leicester South (Jonathan Ashworth), this poverty is due to the fact that, for a considerable time, social security support has not kept up with either the cost of living or the rise in earnings.

I am pleased that some benefits will rise by 10.1%, but in recent decades they have fallen in real terms. I supported the triple lock, which I considered to be an excellent policy, but that was in the context of the breaking of the earnings link by Mrs Thatcher, which I opposed in the 1980s. If the earnings link had been retained, pensions would be £50 a week higher. However, it did not apply only to the state pension; it also applied to carer’s allowance. A group of carers whom I have been meeting over the last year have explained their own financial plight. If the earnings link had been retained, carer’s allowance would be almost double what it is today. With those protections, there would be fewer households in poverty and fewer dependent on the benefits that the Bill will provide. The time has come, I think, when we need to consider the advantages of applying the triple lock to all benefits in future, thus protecting people from poverty and hopefully lifting some of them out of poverty as well.

However, the origins of the current fuel poverty are not just our immediate problems with the Ukrainian war and what has happened post covid. It stemmed from the policies of Mrs Thatcher in the 1980s and the asset-stripping of our country, particularly in respect of energy and the subsequent introduction of a weak market-protecting form of regulation. Today we have Ofgem, a regulator that I and many others believe serves the interests of the companies, not the consumers. The energy companies have made excess profits, and I fully support the call from the Labour Front Bench to extend the welfare tax, because it cannot be right that we have an energy system in which companies are raking in massive profits and another 1.7 million households will be condemned to fuel poverty from April.

In addition to supporting the £900 proposed today, the hon. Member for Glasgow East (David Linden) suggested that he would be tabling amendments in Committee. I would suggest that he table an amendment that doubles the scale of support that is being provided today. The cost of providing the £900 is £7.2 billion, but the Chancellor has today been given an extra £30 billion in headroom from the outturn with regard to debt, so doubling the support provided as an emergency measure to lift people out of poverty could easily be accommodated.

I would also like to back the proposal from the former Prime Minister Gordon Brown, who said last August in the negotiations with the energy companies for lower prices that those companies that could not meet the lower prices would be given equity loans up to and including taking them into full public ownership if necessary. In that way, we would protect consumers facing fuel poverty as well as protecting them by operating energy companies in the public interest, not in the interest of their shareholders.

We are spending billions of pounds on bailing out families who are being ripped off while protecting the profits of the companies that are ripping them off, and I think there is a better way. The better way is to support the extension of the windfall tax, to ensure that we cap prices at a rate that is affordable to people, to provide greater assistance to those most in need and to provide equity loans for those companies that cannot deliver. In that way, we might be able to lay the foundations for a fuller debate about how we reform our social security system.

I agree with the hon. Member for Broadland (Jerome Mayhew), in that I have consistently argued that we should tackle poverty by enabling people to go to work, but that work must be paid at a level that will lift people out of poverty. The tragedy for me is that I did not believe we would reach this era and have 4 million children in poverty, with two thirds of those children in families where someone is at work. I think that says something about the way in which we distribute the rewards of work in our society. Some of the people who work the hardest in some of the most difficult jobs have tragic levels of low pay. We will be voting to enable this Bill to go through, but so much more has to be done to tackle poverty in our society, and there is an opportunity to improve this legislation in the coming weeks to enable at least some people to heat their homes in this coming period.