Cost of Living

Lord Monks Excerpts

Thursday 3rd February 2022 Grand Committee

[Lord Monks (Lab)]

My Lords, I congratulate the noble Lord, Lord Whitty, on his prescience in the timing of this debate. Barring a Russian incursion into Ukraine or more wine o’clock Downing Street shenanigans, inflation is very much at the top of today’s news. It is not good news, as has already been spelled out: we are in very difficult waters at the moment and things show all the signs, in the coming period, of getting worse. With inflation now at a 30-year high and a record increase in energy bills expected from April, poorer households are under particular pressure, as essentials such as energy and food form a larger proportion of their shopping basket than discretionary items. We also have the increase in national insurance to come, adding to the pressure on jobs and living standards. I believe that to be a bad idea, certainly at this time in the cycle of our economy.

I recognise that the Minister is very much bound by the Statement on energy made by the Chancellor today. These new measures, and the inclusion of a government-backed £200 discount in bills by offering loans to suppliers, as well as the council tax rebate of £150 for those in lower-cost housing, are welcome and a recognition by the Government that we have a big problem. They are welcome, but they will not offset the other measures that we are going to experience with the Ofgem price cap announcement, which could catapult the average home bill to £2,000 from April. That is a lot of money for many households.

I had hopes—there is no surprise here, with my background—that rising real wages would help to ease the position of working people. Indeed, labour shortages and union action in a number of industries have secured impressive pay rises for some. For example, I read in the paper the other day that the GMB has secured a very decent rise for binmen in Eastbourne, while Unite has secured good settlements to disputes in South Yorkshire, Mercedes Benz and Nottingham. But this is not the general picture: the majority of workers face a fall in real pay and the heroes of the public and related services, who have done so much in the current pandemic, will be poorer at the end of it than they were at the beginning, despite being showered with thanks and claps by a grateful nation.

Worryingly, firms and employees do not expect the squeeze to end soon; we will have to live with this for a while. So what can we do about it? Some things are being done about it and I have mentioned my welcome for those. I hope that the Minister can undertake at some stage to revisit two other areas to help the low paid and hard pressed. These are raising the national living wage more than it has just been raised. Wages are too low in many sections of our society and raising them will be crucial to the success of any levelling-up agenda. If we do not raise people’s spending power in the weaker regions, we will not get very far with the levelling-up agenda. The other thing that I hope will be revisited is the premature withdrawal of the £20 uplift to universal credit, which helped many get through lockdown. That and the furlough scheme were two massive supports for the economy and for the hardest hit at a time when they were most needed and I unapologetically welcomed them at the time.

More generally, will the Government not make the George Osborne mistake? In the last period when we had recessionary pressures after the financial crash, the then Government tackled our indebtedness with growth-killing policies of austerity. It was a disaster from which we are still reeling. We should have given growth a better chance than was done at the time and I hope that the orthodoxy of that time has now passed. This time, the economy should be allowed to expand. The Government should be looking at other areas for their revenue. Lower capital gains tax payments are an obvious area for attention, as are windfall taxes. Can the Minister encourage us today by saying that those things are still on the table and are being considered?