Cost of Living

Margaret Ferrier Excerpts

Tuesday 25th January 2022 Westminster Hall

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

It is a pleasure to serve under your chairship, Mrs Cummins. I congratulate the hon. Member for North Ayrshire and Arran (Patricia Gibson) on securing today’s important debate, which keeps a spotlight on an issue that impacts every person across the UK—including in my constituency. The current rate of inflation is 5.4%, which is the highest it has been in three decades. The Bank of England expects the consumer prices index to peak at around 6% in April, but others have a grimmer forecast—Goldman Sachs expects it to hit around 6.9%.

The cost of living crisis must not be underestimated; every essential will cost more and every penny must stretch ever further. In-work poverty has become more common, which is ironic under the leadership of a Government who claim to incentivise work. In April, benefits will be uplifted in line with inflation, but as inflation stood in September; inflation was only at 3.1% then, so this will represent around a 3% real-terms cut in 2022. In October, the Government chose to remove the £20 universal credit uplift, which is needed now more than ever. That was before inflation hit its current high.

There are some obvious areas that we can immediately recognise as stressors, such as energy prices and the cost of food, but there are other problems that we might not see so suddenly. Social housing, one of the UK’s greatest supports for low-income families, is in short supply; demand simply cannot be met, so we see people forced towards an unaffordable rental market. In the year until September 2021, rent across the UK had already risen an average of 8.6%. If Greater London is excluded, that figure lessens, but only to 6.6%. Private properties, for the vast majority, require a hefty deposit, which is a huge upfront cost. We know that it is often cheaper in the long run to spend more in the short term, but that is not an option for those on lower incomes. Homeowners face anxieties too, as the interest rates on mortgages increase; they may struggle to keep up and there is a possibility that some may lose their homes—the roof over their families’ heads.

Another worry is car insurance. It is cheaper to pay it annually in a lump sum than monthly, the cost of which has just hit a 12-month high. A car might seem like a luxury, but for so many it is a necessity; it is how people commute in rural areas or in areas where there are poor transport links, and how people undertake caring responsibilities for family members. Those on low incomes are also more likely to have a poor credit rating and less likely to recover from debt—they may need to access short-term, high-interest payday loans. Previously, these loans may have been used to cover unexpected large expenses, such as a car breaking down or to replace white goods. However, there is a real risk that these loans are now going to be taken, out of necessity, to cover basic living expenses.

Credit cards pose the same risk; what happens when next month rolls around and people have the same expenses to cover but a couple of hundred pounds less in the bank to cover last month’s lending? It is a dangerous cycle and one that the Government must do everything in their power to prevent—these are not options that people should have to consider.

What if someone becomes sick? Statutory sick pay in the UK is the worst in Europe, at £96.35 per week. From April, a full-time job earning the national living wage is over £230 per week. I had a constituent contact me last week because she had missed the deadline for the warm home discount. She has no frequent internet access, a pay-as-you-go SIM card and she did not have the money to top up and call her supplier in time, so she lost out.

The Government cannot rest on their laurels any longer. Their own Back Benchers are calling for the national insurance hike to be scrapped; even the Chancellor is seeking to distance himself from it. It is clear that there is a need for action. I plead with the Minister and his colleagues: please, do not leave it until it is too late. Let us help our constituents through this difficult time.