Cost of Living Increases

Neil Parish Excerpts

Wednesday 16th March 2022 Commons Chamber

[Neil Parish (Tiverton and Honiton) (Con)]

It is a pleasure to speak in this debate. I think all parties in this House are very concerned about the cost of living for all our constituents.

First, may I tackle the situation of very high energy prices? I commend our Government on the amount we have put into green energy, offshore wind energy and solar farms. We have many solar farms in my constituency. In fact, my constituents often say there are too many, but they contribute hugely to energy.

[Christine Jardine]

On that point, subsidies for renewable energy have been cut. Today, we are having to go to Saudi Arabia for oil and gas because the Government did not invest in renewable energy in this country sufficiently quickly. Does the hon. Gentleman agree that it is now time for the Government to step up to the plate and start doing a better job in that area?

[Neil Parish]

What happened with renewable energy, especially solar and wind, is that the price came down and we achieved a great deal of solar and wind energy without having to pump as much public money into it. That is very much a good thing and I commend the Government for what they are doing. The last Labour Government did nothing on nuclear power. The major nuclear power station at Hinkley Point, with two very big reactors, will produce 8% of our national need. That is the sort of thing that will solve our energy crisis and, in the long run, bring prices down. I also want tidal power at Swansea Bay and Bridgewater Bay to be reconsidered. I believe we are missing a trick there. We can produce very good energy from the second-highest rising tide in the world, so let us get going.

We have to recognise that at the moment energy prices are governed by oil and gas. What I would say to Her Majesty’s loyal Opposition, as they wax lyrical about having a windfall tax on oil companies, is that we need our oil companies, including those off Scotland, to produce more oil and gas. Who is making the murderous intervention in Ukraine? It is the Putin regime. What does the Putin regime rely on? It relies on the money from energy from both oil and gas. Therefore, it is time for us to produce as much oil and gas as we can. I very much support renewables and the environment, but we have to wake up to the fact that we need to pump oil and gas out of the ground. Putting a windfall tax on those companies would reduce their ability to invest. I urge the Chancellor to look at taxing those companies more if they do not invest, and less if they do. Let us get that going.

I want energy costs to come down. The increase in the cost of energy, both gas and oil, for my constituents has been huge. I have a meat wholesaler in Axminster whose energy bills have gone up from £90,000 to over £300,000, so it is not just individuals who are affected, but businesses. That means the cost of food goes up. It all has a knock-on effect on the cost of living for all our constituents. Many of my rural constituents have to buy heating oil. One constituent has been given a price of 186p per litre. However much the price of crude oil has gone up, there is no justification for such prices. We need to look not only at the tax on fuel, but at what individual companies are doing and whether they can justify such huge increases in the price of fuel. The Chancellor could also look at VAT on heating fuel: it is only 5%, but if the price doubles from £1 to £2 per litre, that will mean 10p in VAT, so getting some of that back would help at least.

I turn to fuel duty. Petrol hit a new high of 163p on Monday, with diesel at a record 173p. The RAC says that filling a family car’s 55-litre tank with petrol now costs more than £90 for the first time. Fuel duty is set at 58p per litre for petrol and diesel; VAT is 20%, which means 35p per litre of diesel and 33p per litre of petrol. The Chancellor will therefore have some leeway in his statement. There is no doubt that fuel and diesel costs hit everybody in this country, but they hit the rural population hardest, because the distances we travel to go to work or carry food around are all much greater. I very much support what the Chancellor and other Conservative Chancellors have done to keep duty down, but these are extraordinary times. None of us thought that we would see fuel rising to nearly £2 per litre.

Let me move on briefly to issues with the costs of farming and the costs to farmers. Some farmers have reported paying as much as 120p per litre for red diesel, compared with 73p a fortnight ago. I do not think that that 65% rise is justified, so please can we look at it very carefully? White diesel—derv—has risen by only 15% in the same timeframe. At 47p per litre, duty is lower for red than white diesel, while VAT is lower at 5%, so surely there is a case to be made that some suppliers are profiteering.

Nitrate fertiliser is now more than £1,000 a tonne, compared with £647 in January this year and £245 in January 2021, and the cost of urea, phosphate and potash is going up, so I hope that the Chancellor can see ways of helping food production. One of the issues in the terrible situation in Ukraine is that it is very much the breadbasket of the world, especially for the export of wheat. Wheat prices in this country are now at some £300 a tonne. To poultry and pig farmers, feed is an enormous cost, so those price rises will add to the cost of living and we will need to take them very seriously in the forthcoming Budget.

I commend the Government for their work to help those who are struggling to pay their bills. The cost of living crisis—and it is a cost of living crisis—is the one thing that hon. Members on both sides of the House know we need to face up to, and I believe that the Government are facing up to it. I look forward to the Minister’s winding-up speech.

--- Later in debate ---

[Scott Benton (Blackpool South) (Con)]

I am grateful for the opportunity to speak in this debate on an incredibly important issue for many families in Blackpool. My constituency is among the most deprived in England, with the numbers of households in poverty, in receipt of benefits and looking for work being far higher than the national average. Indeed, eight of the 10 most deprived neighbourhoods in England are in Blackpool. Some commentators have said we are on the cusp of a cost of living crisis, but the sad reality is that many of my constituents have been struggling to manage their household budgets for a very long time.

Let us be clear that to frame this debate, as the socialists and Scottish nationalists have, as a “Tory cost of living crisis” is completely ridiculous and ignorant of the facts. The unavoidable truth is that the inflationary pressures created by economies emerging from the pandemic, the increases in wholesale gas prices and Russia’s illegal invasion of Ukraine have caused, and will continue to cause, a huge strain on household budgets for the immediate future, so we need to be honest with people about the causes of inflation and the fact that higher energy bills, food prices and prices at the pumps are not going away any time soon.

We also have to be honest with people that there is only so much that Governments can do to mitigate these higher costs. Governments cannot eliminate every single price rise in a free market, and we should not pretend otherwise. This Government are already providing a £20 billion package of support to help families with the huge increases in the cost of living. More families are in receipt of universal credit in Blackpool than anywhere else in this nation, and many of them will be benefiting from an effective £1,000 tax cut through our changes to the universal credit taper rate.

People in Blackpool will also disproportionally benefit from the significant rise in the national living wage to £9.50 per hour. Of course, those are not the only measures through which this Government are supporting families. The Chancellor has already announced the £350 package of household support for energy bills and council tax, which is worth some £9 billion, and we are providing more discretionary funding to local authorities to help those in need, as well as increasing the warm home discount to £150 and extending its eligibility. This Government have a good record in supporting families, but these are unprecedented times. We can do more and we must look to do more. Whether by looking to temporarily reduce fuel duty to protect motorists from the surge in prices or looking again at the national insurance increase, the upcoming Budget presents an opportunity to demonstrate that we understand the pressures that families are facing.

On energy, Governments of all colours, for decades, have failed to ensure a supply of affordable and domestically produced energy, and the successive failures are now coming home to roost. The drop of UK nuclear output to its lowest level since the 1980s is particularly concerning, and previous Governments, of both parties, have dithered on nuclear for far too long. I have some sympathy with the Opposition’s call to cut VAT on energy bills, and I have spoken about that on several occasions, but my understanding is that the cut would not apply to Northern Ireland, due to the Northern Ireland protocol, and of course the money to fund public services has to come from somewhere—I am afraid there are no easy options here. I also believe that there is a strong case to remove the cost of so-called “green levies” from energy bills, which could save households about £150 to £200 per year, on average. Many of my constituents would be shocked to find out that these levies cost them so much, and that some of the schemes they subsidise are not particularly green. However, once again, if they are taken away from bills, they will no doubt end up in the Exchequer’s lap and fall on general taxation, so we have to be careful what we wish for.

In the longer term, the Government must ensure that more nuclear power plants are brought online, and I welcome the new finance model for nuclear, which encourages a wider range of private investment into new nuclear projects. I also welcome the Government’s support for and investment in the small modular reactors currently being pioneered, which would reduce the cost of nuclear in the long term, letting it work alongside renewable sources.

[Neil Parish]

I congratulate my hon. Friend on his speech so far. Rolls-Royce can produce a lot of these smaller nuclear reactors, and we probably need to be able to boost Rolls-Royce to get those reactors out.

[Scott Benton]

I thank my hon. Friend and he makes a good point. I know that he shares my ambition for the Government to expand their capabilities on nuclear.

We also need to consider further investment in North sea oil and gas, in order to ensure a smooth transition to green and nuclear. Of course, these measures would not necessarily protect households against rising bills today, but they would provide security of supply in the longer term, reduce our dependency on foreign powers and help to reduce bills to consumers in the longer term.

In closing, it would be remiss of me not to point out that the state can only do so much. Work pays, and so getting people into employment so that they can provide for themselves and their family ultimately gives them the best opportunity. This Government have presided over a jobs miracle, and it is remarkable to think that there are more people in work now than before the pandemic, with the number of employees on payroll at a record high. However, again, there is more we can do. Blackpool has one of the highest unemployment rates in the country and there are more than 2,000 people out of work in my constituency alone. Yet there are hundreds of job vacancies locally, with employers telling me that they advertise for new posts and that time and time again people either do not apply for them or, on some occasions, turn up at an interview and seemingly go out of their way not to get the job. I know that the Department for Work and Pensions has taken steps to incentivise people into work, and that work needs to continue. If there are jobs out there, people need to take them.