UK Economy
Justin Madders Excerpts(2 months, 1 week ago)
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Bim Afolami
The Prime Minister and the whole Government are committed to reducing debt as we get to the end of this economic forecast period, which is what we are doing.
Justin Madders (Ellesmere Port and Neston) (Lab)
The Minister’s rosy picture of the economy shows a complete lack of awareness of what is actually going on in this country. He claims that the Labour party is somehow a risk to growth, but it is his party that has taken the country into recession. That shows a complete lack of self-awareness, too. That is the nub of the matter.
We are in a recession, yet the Chancellor is nowhere to be seen. I would have thought this was important enough for him to be here to answer questions. Given that growing the economy is yet another of the Prime Minister’s pledges that has not been met, who does the Minister think should carry the can for this failure: the Prime Minister or the Chancellor?
Bim Afolami
I will have to take the hon. Gentleman’s criticism of my self-awareness on the chin, but his broader point is serious. He is asking whether the Government and I are light-hearted or think that everything in the economy is absolutely fantastic, but it is not. That is why we have taken the measures that we have. It is why we cut tax for working people, beginning in January. It is why we are increasing business investment. It is why we had a more than £100-billion package of cost of living support, because we know how much many ordinary people in this country are suffering. And it is why we are trying to grow our economy overall, because that will result in greater prosperity for the country and more money for our public services. The Labour party puts all that at risk.
Oral Answers to Questions
Justin Madders Excerpts(4 months, 2 weeks ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
The Chief Secretary to the Treasury (Laura Trott)
The OBR revised up its growth figures after data revisions by the Office for National Statistics indicated the economy had recovered more fully from the pandemic than had been expected, which means that the current level of real GDP is nearly 3% higher than was predicted in March forecasts.
Laura Trott
I want to reassure the hon. Gentleman: no decision has been made about the household support fund. More broadly, however, we have pulled in an average of £3,700 per household this year to help people with exactly what we are talking about. This Government are on the side of people during what is a very difficult time.
Justin Madders
According to the Low Pay Commission, one in five people who should be receiving the national minimum wage do not even get that. This is a huge failure of enforcement. How can we have increased living standards if people do not even receive the legal minimum to which they are entitled?
Laura Trott
If the hon. Gentleman can give individual examples, I ask him please to let us know. It is, obviously, extremely important that we enforce this, but I should point out that we will increase the levels by 9.8% next year, which will make a significant difference to households up and down the country.
Mortgage Charter
Justin Madders Excerpts(10 months, 1 week ago)
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Jeremy Hunt
We will be making big efforts to sign up any remaining lenders who have not subscribed to the charter. To reach a level of 85% over a period of four days is a good start, but we would love to get the other 15% on board. I should add that if they are not on board, that will make their mortgage offer less competitive from the viewpoint of the many thousands of families who will want to arrange their new mortgage with a lender who makes an effort to reduce the anxiety they may feel.
Justin Madders (Ellesmere Port and Neston) (Lab)
My constituents who are facing eye-watering increases in their mortgage repayments are asking—as have other Members—how they can square those increases with the increased profits that the banks and building societies are making, and are also asking whether this pain is for any gain. Inflation has not fallen in the way that the Government hoped. Is the current mortgage market not fundamentally different from that of the early 1990s, when we last had spiralling interest rates, and is this tool not merely hammering a group of people rather than tackling the core problem? Does the Chancellor believe there is an element of truth in that, and does he believe that there are other tools at his disposal to get inflation down?
Jeremy Hunt
The hon. Gentleman is entirely right to say that the mortgage market has changed, given that 85% of deals now involve a fixed-rate element, but I still think that interest rates are the most effective tool. Other countries that have used them are seeing their inflation starting to fall, and I would expect it to do so here.
Cost of Living Increases
Justin Madders Excerpts(1 year ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
If wages had continued to increase at just their pre-2008 rate, workers would have been £233 a week better off last year than they are now, and that figure is expected to increase to £304 per week by 2027. There is a yawning chasm between what working people could have benefited from and what they are experiencing now. Imagine what the world would have been like if that wage rise had continued.
It is a staggering fact that average incomes will lag behind those in Poland by the end of the decade if we carry on as we are. Ours is not a poor country—we have one of the biggest economies in the world—but when so many of our citizens have to scrape from day to day just to make ends meet, we have to ask some fundamental questions about why it has gone so wrong. It seems pretty clear to me that the experiment with trickle-down economics has been conclusively proved to be a failure, that the Government can no longer be a bystander in our economic renewal, and that the economic shocks of the past 12 months could have been much more effectively mitigated.
Let us look at what is happening around the world. With his Inflation Reduction Act, President Biden is taking steps to prepare the United States for an extremely challenging future. We have nothing approaching that scale or that ambition, at least not from the Government Benches, but those of us on the Labour Benches do have ambition. We are ready to face the challenges of global competition and climate change; we are seeking to reduce our dependence on fragile international supply chains with our plans to buy, make and sell more in Britain; we will have a real go at funding the step change in home insulation that is needed for this year’s and every subsequent year’s energy bills; and we will end the chronic disease of low-paid, insecure employment.
It is pretty clear that we need to do more to improve people’s earnings in this country, and one way of doing that is to empower workers to negotiate their terms and conditions through sectoral collective bargaining. Wherever we look in the world, when trade unions are empowered to negotiate on behalf of their members, people’s earnings tend to be higher.
When I look at what my children and their generation are facing, I see their wages continuing to fall behind everyday costs, with endemic job insecurity and companies gaming the system so that they do have any rights, let alone the ability to get on and progress in their chosen fields. More and more of their wages go on meeting the basics of living, which puts into the realms of fantasy the idea that they might be able to save up for a home of their own one day, or even—heaven forbid—save for their retirement. That is not the future that I want for my children, or for anyone’s children. We have to do something to halt the country’s slide into mediocrity, where ambition is stymied before people even start because the way in which the economy is structured means that the bulk of the nation’s wealth never leaves the top rung.
We cannot go on like this, with people working harder but seeing their cash go less and less far so that it becomes a stretch even to pay for essentials, while their tax burden increases and public services continue to deteriorate. If we were still in Europe, we would be the sick man of it. We cannot keep asking people to pay more for less. Something has to change, and it should be the Government.
Non-domicile Tax Status
Justin Madders Excerpts(1 year, 3 months ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
This place is a contradiction. Look at the speed at which this place operates when the Government are determined to bring about a change in the law—from the minds of Ministers to the statute book in just a few weeks. Then I look around, and I see the archaic practices that this place still reveres. Yes, it can be argued that traditions have their place, but when we look under the surface and see some of these ancient laws that not only remain in place, but that some seek to defend, it becomes clear that the forces of conservatism are alive and well here.
Non-dom is a legislative hangover from the 18th century. Far from being an ancient and noble right, it is nothing more than a tax avoidance device. A week is a long time for some; it appears that 220 years is not long enough when it comes to helping your wealthy friends or even your spouse escape from paying their fair share of tax. In many ways, the intransigence we see in the face of mounting opposition to this outdated law shows the Government’s poor approach to the UK tax system. They have failed and continue to fail to act upon and prevent basic abuses of the tax system.
I have no doubt that some on the Government Benches believe that people who avail themselves of such loopholes as non-dom are being clever or aspirational, as we have heard several times today. I suppose they might say, “Why pay more tax if you can use these loopholes to your advantage?” That misses the point. Taxes ought not to be viewed as something to avoid; they should be viewed as part of everyone’s contract with society—a contract that says, “Pay your dues, and in return we will provide security, education, healthcare and transport.” In short, it is the bargain necessary in every civilised society, and it is crucial to securing a fair country that works for all, providing the services on which we rely and security and prosperity for all.
There should not be a two-tiered approach to taxation, where the super-wealthy can shield their riches with expensive accountants and the rest of us have to pay more as a result. Put simply, such loopholes should not exist, because they benefit a tiny proportion of some of the world’s wealthiest individuals at the expense of everyone else in this country, and frankly they are laughing at us. Look at how the bulk of these people live in the wealthiest parts of London, making a mockery of the levelling-up agenda.
It is also worth saying that some of the people who choose to live in this country then decide not to live by the same rules as everyone else, because they believe they will be wealthy if they do not pay their full taxes in the UK. Perhaps the most striking thing about this group is not just that they are incredibly wealthy, but how numerous they are as a proportion of the country’s highest earners. Research published last year from the University of Warwick and the London School of Economics found that 30% of those earning in excess of £5 million were registered as non-doms in 2018, and a further 10% have been non-doms at some point in the past. That means that just under half of those earning more than £5 million a year have chosen not to pay their fair share of tax to the UK coffers. What kind of country are we living in when those with the broadest shoulders get to opt out of paying their fair share? That shows that non-dom is a loophole for the rich.
We still have people defending this archaic status in the House. They argue that removing it would damage the economy, as those registered would leave, taking their riches and spending power elsewhere. I even remember the Chancellor arguing just a few months ago that if we scrapped non-dom status, those people would leave the country and spend less money in restaurants. As an economic strategy goes, it is little wonder we are the only country in the G7 with negative growth, when our great hope for prosperity is a few rich people spending more money in restaurants. We believe that everyone should pay their fair share in tax and that people stashing away money in offshore accounts is not acceptable, and we do not think that the wealthiest in society should be able to get away with this any longer.
Non-domestic Energy Support
Justin Madders Excerpts(1 year, 3 months ago)
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James Cartlidge
My hon. Friend speaks with great knowledge of manufacturing, which is very important in his constituency. I am glad that he welcomes the 12-month duration, which I agree is important: it is what businesses were calling for, and it gives them extra certainty. I am afraid that I do not have the exact “www” off the top of my head, but hopefully it is live on gov.uk; I look nervously at my officials. There will certainly be a list on gov.uk at some point today. Is it live? [Interruption.] Noises off and a nod from the officials tell me that it is now live on gov.uk. I will tweet the exact address in due course.
Justin Madders (Ellesmere Port and Neston) (Lab)
From talking to local businesses before Christmas, it was clear to me just how important it was for them to get clarity on the issue. It is a shame that we did not have a statement before Christmas—I am afraid that businesses have already had to make some decisions, because they could not afford to wait—but we have had a decision now.
I want to pick up on a point that other hon. Members have made in relation to blocks of flats. Communal areas are charged at a commercial rate, but obviously that will be changed as a result of the decision announced today. How can we ensure that costs are not passed on to leaseholders?
James Cartlidge
The hon. Gentleman makes a very good point. Just to be clear, we are aware that some domestic customers receive energy bill support via the EBRS—the current scheme, which is non-domestic. They include people in park homes and on heat networks, which are presumably the sort of case that he is talking about. While domestic consumers on a non-domestic meter will continue to benefit from the discount offered through the extension of the EBRS to the new discount scheme, we are developing options to ensure that they receive support in line with other domestic users after April.
Public Sector Pay: Proposed Strike Action
Justin Madders Excerpts(1 year, 6 months ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to see you in the Chair, Sir Edward. I refer to my entry in the Register of Members’ Financial Interests and to my membership of Unite and the GMB.
The right to join a trade union is a basic democratic right, as is someone’s right to withdraw their labour. Trade unions play an invaluable role in ensuring justice is served, defending workplace rights, pay, and terms and conditions for their members. Far too many people experience insecurity, uncertainty and exploitation at work. In-work poverty is on the rise, and years of wage restraint have created the circumstances that we now find ourselves in, where the ever growing gap between wages and the cost of living has become a chasm. The result is that millions of people are now actively considering taking part in the act of last resort: industrial action. What is the Government’s response? To spout anti-trade union rhetoric, to denounce those wishing to take up their rights to withdraw their labour and to introduce yet more anti-trade union laws, which will do nothing to address the underlying issues that those taking action face.
Already this year, we have seen agency worker regulations as the latest attempt to undermine those taking industrial action. So far, it looks like they have not worked, because we know that agency staff are unlikely to choose a role that requires them to cross a picket line against one that does not. We know that inserting third-party agency workers into a dispute is likely to inflame tensions and elongate strikes in the impacted sector. We know that it places agencies supplying those workers in an invidious position, risking their business reputation and financial situation. We also know that many roles that may be on strike require technical skills or training and training agency workers to do those jobs is expensive and time-consuming. Allowing agency workers in during a strike will shift a negative focus on to those workers and it will not address the underlying issues.
It is little wonder, given those factors, that on the face of it the regulations have done nothing to reduce industrial action. They create a nice headline for the Tory supporters in the media and provide useful soundbites for the next set of leadership candidates, but achieve nothing useful. Yet the Government want to go further. It has been suggested that tailored minimum thresholds, including staffing levels, will be determined in each industry in an attempt to delegitimise industrial action and effectively remove the right to strike. That is as impractical as it is immoral. For example, how can a railway be run safely on a skeleton staff? Twenty per cent of signal boxes cannot be operated, and it is far from clear what the consequences will be if unions do not comply with agreements on that. Will their action become unlawful? What is the minimum service? Is it different in different sectors? Who decides? Where is the liability if workers refuse to comply? Are we looking, with these proposals, at fundamentally changing the nature of the employment relationship so that a third party, the trade union, can compel an individual to attend work? So many questions, so little connection with reality.
Then there are the double standards we have seen in recent times, whereby the last Prime Minister but one was elected by an electronic ballot, but trade unions, despite there being a review five years ago, are still not allowed to use electronic voting for industrial action. Such embarrassing double standards cannot be defended.
There are, as we know, about 6.5 million trade union members in the UK. Every one of us present today will have constituents who are members of trade unions—ordinary men and women who want to organise themselves collectively to strive for better working conditions. We should be supporting them and not attempting to thwart them in their efforts to improve those working conditions. A happy workforce is a productive workforce. It is good for employers and it is good for the economy. We should therefore be saddened to hear that research by the TUC has found that one in three workers do not feel comfortable approaching their managers about a problem at work. More than a third of workers do not feel they or their colleagues are treated fairly, and half of all workers say their line manager did not explain their rights at work properly. Trying to attack trade unions and limit the right to strike will address none of those underlying issues.
It is time the Government ditched their ridiculous, outdated and prejudiced view that trade unions are the enemy within. It is time the Government respected the views and rights of those who choose to take strike action. It is time the Government addressed the chronic underfunding of public services, which has led us to the current situation.
Delivery of Public Services
Justin Madders Excerpts(1 year, 10 months ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
There is an old saying that you cannot solve a problem if you do not know that it exists. While I hope that the contributions to this debate have spelled out in no uncertain terms where the problems are, there has been a failure right across Government to measure performance, which is part of the reason we are here now. To illustrate the point, I will highlight some of the written questions I have asked on these issues.
I will start with the most recent. Yesterday I got an answer to a question asking what the average waiting time is for an assessment for personal independence payment from the point of application. The answer I got was:
“the information requested is not readily available and to provide it would incur disproportionate cost.”
I am sure that Members recognise that phrase very well. People claiming PIP usually need immediate help, but how can the Department judge whether it is doing enough on that score if it cannot even tell us how long it takes to get to an assessment? I know some of the practical consequences of that. I have a constituent with multiple long-term conditions who was disgracefully turned down for PIP back in October 2019 and still has not had her appeal heard. She had another go at it last week, but the appeal was cancelled for the umpteenth time because no one from the Department was available to register their objection to her appeal. How is that justice for that individual? How is it anything other than a damning indictment of the way that the Department works?
At least the response to that written question was rather more straightforward than the one I got from the same Department on the average online journal response time for universal credit claimants:
“Universal Credit is a 24/7 digital service.”
Well, that is really helpful for understanding how long it takes people to get a response.
Moving on to the Department of Health, I asked it what the average length of time was for a resolution to complaints to the Vaccination Data Resolution Service regarding incorrect vaccination records. I was told that the information was not held centrally—again, a phrase that I am sure that many Members are familiar with. The Government need to get a grip on this, because I know people who have been trying to correct their records since last year, which means that they are having trouble travelling abroad because their vaccination records are not up to date. That shows that it is not just GP appointments, specialist referrals, ambulance waiting times and A&E waits that the NHS is struggling with. However, at least there is some kind of measurement of those issues, although it has not gone unnoticed that for quite a lot of them, the goalposts have moved in recent times.
As many Members have said, the biggest issue in the inbox at the moment is passport delays. It has been for at least the past couple of months in my constituency. I asked a written question about processing times for passports way back in April. Despite having a couple of weeks’ notice of the question, the Department could not get an answer to me before Prorogation, rather conveniently. Last week I finally got an answer to the question; I was told that between March and May, more than 90% of applications were processed within six weeks, with approximately 98.5% completed within 10 weeks. Obviously the Prime Minister told us a few weeks ago that everyone was getting them in four to six weeks, which was clearly incorrect, but I think we have done enough on his exactitude recently, so I will not go any further into that.
The issue has been live for many months now, but it was only last week that the Department was able to provide me with information on its own performance, which takes me back to the original point: the Government have either wilfully or negligently decided not to mention their own performance. I think they are doing that because they just do not want anyone to know how badly they are doing.
On the issue of the Home Office backlog, my constituency office phone bill last month was far larger than normal. It was more than £260. When we dug a little deeper, we found that most of it was down to my excellent caseworkers being put on hold for hours at a time when ringing various Home Office hotlines. If we multiplied that by all the Members here, it would mean that more than £2 million had been spent in one year on calls to one Department’s hotlines. If that is what it is costing us here, imagine how much the British public are having to pay. It is not just backlog Britain; it is rip-off Britain.
I am reminded of a constituent who told me about his passport renewal. Having paid an extra £70 to get it checked by the Post Office, he had to make an emergency dash to Durham on Friday, which cost him £100 in fuel, and then had to pay another £90 to the Home Office to get the passport issued, despite the fact that the application had been sent in more than 10 weeks ago. Just for good measure, he could not work that day, so he lost another £200 in earnings. He could not do his job because the Ministers could not do theirs.
Let us make it clear that the blame lies at the feet of Ministers, not with the hard-pressed civil servants who are doing their best. As we have already heard, the Government think that we can cut civil servants by 20%. One can only imagine the backlog we would face if that went ahead. This backlog is across every facet of life. The child waiting for their education, health and care plan; the teenager waiting months for a driving test slot; the young family waiting for their passport renewals; and the pensioner waiting for the ambulance to arrive—everywhere we turn, there is another person unable to get on with their life because the Government have failed them. It is not just the failure of the Prime Minister; over the past 12 years, each of his predecessors has decided, time and again, that public services are not a priority, and that they can get away without investing in those services and the people who run them.
Matt Western
My hon. Friend is making a powerful speech. One of the learnings of the past two years, and one of the concerns, has been about the cuts to local government and our local administrations. They performed very well in the disbursement of support to businesses and so on, and were doing well with test and trace. The Government seem to be doing the reverse of what is obvious and logical, which is delivering services well.
Justin Madders
I thank my hon. Friend for his intervention. I declare for the record that my wife is a member of the local authority. When we first entered the covid crisis, there was already a system in place for contact tracing through local authorities. Unfortunately that was not deemed good enough by this Government, who decided to spend an awful lot of money on private providers. On the Homes for Ukraine scheme, I get a lot of compliments from residents on how the council is reacting, and a lot of complaints about how slow the Home Office is to respond. The power of local government cannot be overstated, and we should value more the great service that it provides.
In conclusion, we have seen over the past few months that a decade of austerity has consequences, and the folly of it has been well and truly exposed. This Government should hang their head in shame and step aside for a party that believes in public services, and has a record of delivery in government that this lot can only dream of.
UK Gross Domestic Product
Justin Madders Excerpts(1 year, 10 months ago)
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John Glen
In Gloucestershire, as across the country, we remain focused on the challenges facing both small and large businesses. As my hon. Friend mentions, during the pandemic we made a number of sector-specific interventions for retail, hospitality and leisure businesses, which will continue to benefit from the business rates holidays. We are keen to ensure, however, that we achieve better productivity, with more investment in capital, in ideas and in measures that will lift us to a new level of growth. That means interventions across the whole economy.
Justin Madders (Ellesmere Port and Neston) (Lab)
In the past week or so I have been contacted by a number of community nurses at their wits’ end because it is costing them more to travel to see patients than they can claim back in mileage allowance, and they are not alone—taxi drivers, couriers and others, such as domiciliary care workers, are struggling because of the surge in fuel costs. The Government have already taken 5p off fuel duty, but given that they have raked in far more in increased VAT receipts since then, how much more has the Treasury recovered in VAT receipts this year?
John Glen
Perhaps unsurprisingly, I cannot give the hon. Gentleman that figure at the Dispatch Box at this point, but we have introduced timely, temporary and targeted interventions. We recognise with a real sense of empathy the fact that people will be struggling. We have been very clear from the time we made this series of announcements and over the past six months that we will not be able to ameliorate the impact of every single additional cost. The key intervention we need to make is to encourage that growth and productivity in the economy in the context of fiscal responsibility and the commitments we have made to intervene so far.
Taxes on Motor Fuel
Justin Madders Excerpts(1 year, 11 months ago)
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Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to see you in the Chair, Ms Elliott. I thank my hon. Friend the Member for Gower (Tonia Antoniazzi) for her excellent introduction, which she delivered with panache, as always. I am sure she pleased the people who signed the petition by covering many of the issues they want to raise.
This is an important debate for my constituency. We have made vehicles in Ellesmere Port for more than 50 years, and we have one of the few remaining oil refineries in the country. Most importantly, people in my constituency overwhelmingly depend on private transport to get to work. Some 78% of people in Ellesmere Port and Neston use a private motor vehicle to get to work, which is about 15% above the national average. That is not just a reflection of our proud industrial heritage; it is probably more to do with the lack of a regular and affordable public transport service in the area.
Although fuel duty and VAT are the same at whatever pump in the country someone fills up at, their impact differs depending on where they live and what they do for a living. Shift workers are far less likely to be able to use public transport to get to work. To be honest, people with jobs that finish after about 6 pm in my constituency are lucky to find a bus to take them home. If a person has children they need to place in childcare or school on their way to work, or pick up them up from afterwards, they may well need a car. If they are in a job that requires a large amount of driving, that of course makes a huge difference to how much they have in their pocket at the end of the week. Taxi drivers are a particularly affected group, but as my hon. Friend the Member for Newport East (Jessica Morden) said, so are care workers. Of course, the Minister will have some reflections on that from her previous role.
Nor should we forget about the impact that fuel has on other costs that we as taxpayers have to meet, including police cars, ambulances and school transport. There are literally millions of miles travelled every day that end up paid for by the taxpayer. The cost is quite often met by local councils, which do not have a say in the amount of fuel duty raised in the first place. As the hon. Member for North Ayrshire and Arran (Patricia Gibson) rightly pointed out, fuel costs also play into wider inflationary pressures, particularly on food and other services that are delivered.
What someone does, and where they live, can make a huge difference to the impact of fuel duty, and I am afraid that that extends to some inexplicable variations in the price at the pump up and down the country. It might only be a couple of pence most of the time, but that can quickly add up, and I wonder why the average price is a couple of pence more around Ellesmere Port than it is in various other parts of the country, given that we are on the doorstep of a refinery.
On a related point—this is something my hon. Friend the Member for Gower mentioned earlier—the RAC Foundation has said that the 5p cut in fuel duty, which was introduced by the Chancellor in March, led to an average fuel price reduction of 3.3p per litre for unleaded and 2.6p per litre for diesel. In their defence, the representative bodies for the retailers claim that their members passed on the cut in full, but that prices were rising at the time. It might not be right to lay the blame entirely at the door of the retailers, but it is very difficult to get the level of transparency we need.
Peter Grant (Glenrothes) (SNP)
Does the hon. Gentleman recognise that the other issue is that retailers often have no choice as to which distributor or wholesaler they go to? If the wholesaler does not take any of the 5p duty cut off the wholesale price of fuel, the retailer is given a double whammy: they cannot cut the price, but they get flak from drivers who expect to see 5p coming off a litre of fuel.
Justin Madders
The hon. Member is right, and it goes to my point about needing greater transparency. It can often be difficult to know exactly where the 5p has disappeared to, but I think it beyond contention that our constituents are not seeing the full benefit of the fuel duty cuts. The key question that we need to ask is how these measures will help to put cash back into people’s pockets. The reason this debate is so important at the moment is because we have the biggest squeeze on living standards in a generation, and the steps that the Government have taken so far are woefully inadequate.
The rise in prices across the world is obviously largely out of our hands, so it is inevitable that people will look at what the Government can change to ensure that there is some respite for people, and that help reaches those who need it most. We have already discussed the windfall tax at length in this place, so I will not repeat the arguments on that, but it is the fairest and most effective way to get help to those who need it most in a fairly quick manner. As we have seen already, although reducing the cost of fuel can help, there is a risk that such a reduction might not be passed on in full, and that it will benefit only those who have a car in the first place. In the context of wildly fluctuating oil prices, those savings may not be felt by people at all.
On fluctuating oil prices—or, to be more accurate, increasing oil prices—we should remind ourselves that higher prices at the pump mean that the Government have an increased income from VAT. Research has indicated that because of the rising oil price this year, the Government’s VAT receipts on pump sales have gone up by an average of 7p per litre for petrol and 9p per litre for diesel, which is far more than the 5p per litre that has been taken off. Fuel duty cuts might be a sleight of hand that creates a good headline and the illusion that the Government are taking decisive action, but it could be that those cuts are being made up for by increased revenue elsewhere—revenue that comes out of the pockets of the same people who are meant to benefit from the cut in the first place.
This debate cannot really happen in isolation and away from the influence of the Treasury, and we must be realistic and acknowledge that it will always be the primary driver of these decisions, given the huge amount of revenue that fuel duty brings in. Sooner or later, however, the debate must move on from whether we take off 2p here or add 2p there, because if we are to meet our net zero targets and move away from reliance on fossil fuels, we must also move away from reliance on taxing those fuels that we currently tax. At the heart of this is a complicated dilemma about moving to a similar fuel duty system for electric vehicles, which may disincentivise people to change. If instead we decide to tax people by the mile—I know that has been suggested in some quarters—that may disproportionately impact some communities, as well as removing one of the major reasons for investing in an electric vehicle in the first place.
There is also the question of whether the infrastructure is in place to make reliance on electric vehicles realistic. I certainly see that in my area there is a long way to go in order to get a comprehensive charging structure in place. We know that many properties—some say at least one third, and possibly even higher—are not, and never will be, suitable for home charging. With the differential VAT rate for charging at home and at a filling station, that is a major inequality that needs addressing. I would suggest that it needs addressing now, before the tax taken from it becomes so high that it becomes impossible for us to wean ourselves off that too.
Those are debates for the future, however, and we now need more effective and rapid ways of putting more money into the pockets of those who need it the most. As I have said, the best proposal I have heard so far is the windfall tax, and with this being a debate on the cost of living crisis, it is very disappointing that not one Government Back Bencher has come to speak about this issue. It shows, I am afraid, just how out of touch the Conservative party is.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Ms Elliott. I thank the Petitions Committee for organising this important debate and all hon. Members who have contributed today, especially the hon. Member for Gower (Tonia Antoniazzi), who opened the debate.
I also thank the more than 100,000 people across the UK who signed the petition calling for a reduction in fuel duty and VAT. Those signatures are a reflection of how hard high fuel prices are hitting people. As well as being Exchequer Secretary, I represent a rural constituency, and I know that for most people in my constituency, there is no alternative to going by car for most journeys. As hon. Members have said, whether it is getting to work, doing the school run, going to the supermarket, the doctor or the dentist, or visiting family, there is usually no alternative. If we add to those journeys all the business journeys—the man in a van, delivery drivers, logistics and so on—we can see that so much of our economy is reliant on road transport.
The UK has about 30 million drivers, and the vast majority of us fill up our vehicles at the petrol station. As many hon. Members have said today, fuel prices have dramatically increased in recent months, and they reached their all-time highest levels this spring. I know that this comes at what is already a painful moment for many households, with so many pressures—ranging from heating bills to higher food costs in the shops—on people’s budgets. I welcome the Petitions Committee survey assessing the impact of increases in the cost of motor fuel on petitioners, which reflects what I have heard from my own constituents and from people I speak to up and down the country. Whether that is the parent struggling to put food on the table for their children or the care worker providing vital care across her community, we hear you, and the Government have stepped in to help, with support measures that add up to £22 billion.
However, we should not ignore the context. We are part of a global trend, driven by global issues—by the surge in demand post pandemic, exacerbated by Putin’s war in Ukraine. And just as these circumstances are not unique or specific to the UK, so they cannot be solved by the UK alone.
Prices at the pump are not set by the Government, and nor are crude oil prices more widely, but the Government have taken action to help people with recent unprecedented price increases. After the launch of this petition last October, my right hon. Friend the Chancellor of the Exchequer took the decision, at autumn Budget, to freeze fuel duty rates; this was the 12th consecutive year of the freeze. He then went further. In the spring statement, the Chancellor announced that fuel duty for petrol and diesel would be cut by 5p per litre. Unlike many international counterparts, who have introduced shorter-term relief for motorists, we have this measure in place for a full 12 months. This is only the second time in 20 years that fuel duty has been cut, and this time, it is the largest cash-terms cut ever across all rates of fuel duty at once. It represents a tax cut worth £2.4 billion in 2022-23. Coupled with the fuel duty freeze, it is worth £5 billion overall and equates to a reduction in fuel duty of about £100 over the year for the average car driver.
Justin Madders
The Minister will have heard the suggestion that the Chancellor has raked in more through increased VAT receipts than he has given away in this fuel duty cut. Will she say whether she agrees with that or not?
Helen Whately
The hon. Member comes to exactly the next point that I was going to make in my speech. The petition called for a VAT reduction, as did the hon. Member for North Ayrshire and Arran (Patricia Gibson) when she intervened. Given that VAT is applied on top of fuel duty, the 5p duty cut on petrol and diesel also results in a VAT reduction. It effectively translates to a reduction of 6p per litre overall. That said, a VAT reduction is not generally the best way to provide help with fuel costs, particularly because it would not help many businesses, many of which already claim back VAT paid on fuel for business use. About 40% of fuel is used by businesses. If we had just focused on reducing VAT instead of fuel duty, that would have left businesses more exposed to fuel price increases, in turn impacting the cost of goods for consumers. Making the focus fuel duty rather than VAT means that businesses, as well as consumers, will benefit from that tax cut. Also, by helping businesses with the fuel duty cut, we ensure that the duty cut benefit flows through to people who do not own cars, as well as those who do, because of the importance across the supply chain of the cost of fuel.
Helen Whately
That goes a long way into the broader economic questions about the right way to deal with the crisis we are in, and how we raise money if we are to make further tax cuts to provide further support to consumers. As I have mentioned, and as I am sure the hon. Lady well knows, we have already put in support worth £22 billion to help people across the country with the cost of living. That includes £9 billion to help people with energy bills—some of that will be through council tax rebates of £150—and that money is already going into many people’s pockets. [Interruption.] The hon. Lady shakes her head and says that that is not enough, but the Chancellor has been clear that he stands ready to do more. We do not yet know what the retail cost of fuel will be in the autumn, and we are absolutely concerned about the rising costs to people. We have already taken steps, and that is what we are talking about today.
I want to come back to VAT, because it has been suggested that the Treasury might be getting some kind of VAT windfall. Overall, the Office for Budget Responsibility is forecasting that VAT receipts will now be lower than it had expected in the autumn. There is not some great surge in VAT coming through to the Treasury.
Helen Whately
I will move on and keep to the topic of the petition, if that is okay with the hon. Gentleman. Another question that came up earlier, particularly from the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), was on the extent to which the fuel duty cut has been passed through. I am well aware of that concern and the suggestion that suppliers have been taking the benefit of the £2.4 billion tax cut.
To provide some context to this, the spring statement was made at a time of sharp rises in international oil markets, which would have taken some time to feed through to the pump. Diesel has faced specific pressures, because of the particular role of Russian exports in the European market. That has, unfortunately, contributed to diesel reaching all-time high prices this month. The background movement in prices makes the 5p cut harder to see. The Government have been clear that we expect all in the supply chain—from the moment fuel duty is owed to when fuel is bought at the forecourt—to pass the fuel duty cut through to consumers.
The Chancellor and the Business Secretary wrote to industry on the day of the announcement to set out that expectation. The Business Secretary wrote to industry on this matter again last week. The Competition and Markets Authority is closely monitoring the situation. To quote its chief executive, Andrea Coscelli, the CMA stands ready
“to take action should there be evidence that competition or consumer protection law has been broken in the fuel retail market”.
He went on to say that a formal investigation may be considered appropriate,
“which could ultimately lead to fines or legally binding commitments”.
The Government will continue to undertake longer-term analysis to establish the extent to which the Chancellor’s cut may have been buried beneath further wholesale price increases, and to ensure that the market does not fail to pass on the benefits of the duty cut to those refilling at the pump.
I have also heard public discussion of something called PumpWatch to regulate prices at the pump. Some comparisons have been made to Ofgem, the energy regulator, and the role of the price cap in the domestic energy retail market. However, that price cap was introduced in 2019 specifically to correct the market failure identified by the Competition and Markets Authority, which showed that the conditions for effective competition were not present in the market. While the energy price cap has shielded customers from volatile energy prices, it was specifically designed to better protect disengaged customers from being offered poor-value deals.
To date, we have not seen evidence that the same situation is happening in the fuel market, because pump prices are conspicuously displayed outside fuel stations to encourage competition and allow drivers to make comparisons and find the best deals, but I reiterate that if the CMA finds evidence of anti-competitive behaviour in the market, it is clear that it will not hesitate to act.