Cost of Living Increases

Kirsten Oswald Excerpts

Wednesday 16th March 2022 Commons Chamber

[Kirsten Oswald (East Renfrewshire) (SNP)]

The message from both Opposition day debates is clear: when times are tough for ordinary people, the Conservative party drags its heels, erects barriers and rolls out excuses for being unable to help. It feels like the UK Government are devoid of a plan about this issue and are resorting to piecemeal measures that do not address the actual problem but give the appearance of action. Unfortunately, many of their actions actually make the situation worse.

The cost of living crisis has not just happened. It is not only a result of war in Ukraine but a foreseen consequence of the UK Government’s policy failure, as my hon. Friend the Member for Midlothian (Owen Thompson) has just set out. That includes Brexit, as we have heard, which Scotland did not vote for—that is further compounding the cost of living crisis, leaving households and businesses all the more vulnerable.

Bodies such as the Joseph Rowntree Foundation have warned that the UK Government should not withdraw pandemic support in the face of rising and sustained inflation. The UK Government’s failure to heed this kind of warning has contributed to the crisis that households across the UK face today. Indeed, a recent YouGov poll shows that 84% of Scots said they were worried about the Tory cost of living crisis and 43% said they were very worried, and no wonder.

Family budgets are under pressure from all sides, with real terms cuts in wages, the £1,040 a year cut to universal credit and significant rises in the cost of basic foodstuffs and energy that will hit low-income households hardest. People are deeply concerned about how on earth they are going to manage; they are not managing right now, as my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) described. Next month the Chancellor plans to raise national insurance, which will hit low and middle-income households hardest.

The effect of the Tory Government’s policies is that many families are already unable to buy the essentials, as my right hon. Friend the Member for Dundee East (Stewart Hosie) eloquently explained. According to the National Institute of Economic and Social Research, when the increase in NI takes effect as many as 1 million UK households could be facing destitution and the spectre of spiralling debt, just as interest rates are on the rise.

As Victoria Benson, the chief executive of Gingerbread, has put it, budgets have already been cut back as much as possible, so the stark reality is that there is nowhere else to go other than into debt or poverty. The Chancellor needs to do something to put money into the pockets of low and middle-income households as quickly as possible, to help them address the inflation that has already taken place and, as my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) indicated, the worst that is yet to come.

Universal credit is a driver of poverty, including among working people, although the UK Government seem to forget that all too often. The withdrawal of the £20 a week uplift hits people very hard. Many households on universal credit are already worse off than they were in 2019 and many now fear for the future. The uplift must be reinstated. The UK Government should also reconsider their position on uprating given the forecast inflation rate in 2022 of 6%; the Scottish Government have just announced that they will increase six Scottish social security benefits by 6% from 1 April, helping low-income households and carers in light of the Tory cost of living crisis. That is the kind of swift and decisive action that matters so much now.

With energy bills for millions rising by £693 from April, Energy UK warning of further rises by October, which will make people significantly worse off, and concerns about the impact of the war in Ukraine on energy prices, this issue needs to be looked at very seriously. The way to do that is not, as the Chancellor has suggested, through a kiddy-on loan of £200; that is not an adequate response and, as my hon. Friend the Member for Aberdeen South (Stephen Flynn) pointed out, that is being forced on people.

As the Scottish Trades Union Congress says, this “buy now, pay later” loan comes nowhere near tackling the problem. As the SNP points out, it must be converted to a grant as part of a proper support package. The Chancellor must listen to the widespread calls to scrap VAT on energy bills and fuel, and consider a fuel duty regulator to feed back to consumers the additional income he receives through price increases.

We have heard that Jack Monroe has very sensibly highlighted the real effect of the cut in income for the poorest households and, focusing attention on the inflation premium facing low-income families with children, concludes that the impact of the cost of living crisis will be “fatal” in some cases. That must be a wake-up call for the Chancellor and the UK Government.

Maternity Action has highlighted concerns, pointing out the challenges facing new parents as the basic rate of statutory maternity, paternity and parental pay has fallen behind wages. From April, the basic rate of these vital payments will be just 47% of the already inadequate national living wage. So it is even more pressing that the UK Government should join the Scottish Government in backing a real living wage, including for younger workers. Someone’s age should not determine how much they are paid. The UK Government should also reverse the decline in support for expectant and new parents and, as we have heard, reform statutory sick pay.

Pensioners face a grim future after the Chancellor’s triple lock betrayal, reneging on clear commitments in his party’s manifesto. UK pensioners already get the lowest state pension in north-west Europe and now will be among the hardest hit by the cost of living crisis, losing £520 this year and £2,500-plus over the next five years, just as they face massive increases in energy and other costs. I spoke to a constituent in Neilston on Saturday, who wanted to know why she was being abandoned on the cost of living by the UK Government. She is a WASPI woman, and let me say yet again that it is high time the UK Government settled the claim by WASPI women.

As the SNP Scottish Government are demonstrating, with the limited levers at their disposal, it does not have to be this way. With the full powers of independence, we could do so much more with Scotland’s resources. Already, the Scottish Government are using their limited powers to support low-income households and to mitigate the Tory cost of living crisis. Nearly £70 million is going in direct financial support to households through the pandemic support payment, and discretionary housing payments of over £80 million are protecting more than 70,000 households, most of it going to mitigate the UK bedroom tax.

My hon. Friend the Member for Airdrie and Shotts (Ms Qaisar) mentioned the £20 million fuel insecurity fund, helping households at risk of self-disconnection. There is a £290 million cost of living support package, which supports council tax reduction. Spending on devolved benefits will already be about £4 billion in 2022-23, which is 10% above the funding from the UK block grant. The Scottish child payment will double in April, immediately helping 110,000 children. The Child Poverty Action Group estimates that, once that is doubled and the planned expansion of free school meals is in place, the net cost of bringing up a child in Scotland will be nearly £24,000 lower for low-income families than elsewhere in the UK.

Rolling out similar child-friendly policies across the UK would make a real difference, because a decade of Tory mismanagement has led the UK into this cost of living crisis. I am very keen to hear from the Minister about the missing employment Bill, which, as my hon. Friend the Member for Glasgow South West (Chris Stephens) highlighted, could also deliver real change.

The Chancellor has an opportunity in his Budget to begin to fix this. He could start by applying a broad-based windfall tax on excess profits of major companies, so that major organisations such as Amazon and other large retailers, as well as energy companies, can help to relieve the burden that millions of households face. He could also scrap the £4 billion tax giveaway to the banks. Above all, he needs to stop making excuses, stop ignoring the realities of people’s day-to-day lives and what the Tory cost of living crisis is doing, and start delivering to make a difference where it is needed. As my right hon. Friend the Member for Dundee East said, the UK Government must take urgent and immediate steps before this crisis spirals out of control.