Cost of Living Support: Carshalton and Wallington

Nigel Evans Excerpts

Thursday 11th January 2024 Commons Chamber

[The Economic Secretary to the Treasury (Bim Afolami)]

I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on securing this debate. He is an asset to his constituents, who I am sure are pleased to be represented by him in the admirable way he has done so this evening. He is decent and has a clever mind, but most importantly he has a good heart, and that heart is in Carshalton and Wallington.

I think all of us in this place recognise the difficult times through which the people of this country, and indeed people around the world, have lived over the past couple of years. We have had the covid pandemic, Putin’s illegal war in Ukraine, and long-gathering inflationary clouds that have created a perfect storm for us all, but particularly for vulnerable people. However, this Government and this country have consistently fought back—against the virus, alongside our Ukrainian friends and, critically, from the perspective of the Treasury Benches, against the economic headwinds. As my hon. Friend outlined, this Government have provided one of the largest support packages in Europe over the past two years, in contrast to the damaging actions taken in his area by the London Mayor and my hon. Friend’s local Liberal Democrat council.

Some 11,300 households in Carshalton and Wallington were eligible for means-tested cost of living payments this financial year, and 8,500 individuals were eligible for the disability cost of living payment. Those households —my hon. Friend mentioned 30,500 properties in his constituency—along with all their neighbours, would have been eligible for the energy price guarantee, the £400 energy bills support scheme and the £150 council tax rebate, along with fuel and alcohol duty cuts. Energy support alone has paid for almost half of the typical family’s energy bill from October 2022 to June 2023 through both the energy price guarantee and the energy bill support scheme.

It is in part thanks to those measures that growth and real incomes have been stronger than expected this year—not just stronger than expected by the Office for Budget Responsibility, but stronger than expected by international economic forecasters. Inflation has also come down significantly to less than half its 2022 peak, and in November it fell to 3.9%, which is the lowest rate in over two years. Again, that was not forecast by the OBR or international forecasters. I do not deny that the outlook for real incomes remains challenging—it remains very challenging for many people, particularly vulnerable people in my hon. Friend’s constituency and across the country—as does inflation, but that is why we announced further support in the autumn statement in November to support the most vulnerable.

The Government will raise local housing allowance rates to the 30th percentile of local market rents in April 2024. In plain English, what does that mean? It means that 1.6 million low-income households will be better off to the tune of about £800 on average in 2024-25. Some, particularly Opposition Members, often say that that is not a lot of money, but I can tell the House that, for those 1.6 million low-income households, it is considerable support that they will welcome, as they will in my hon. Friend’s constituency.

The Government will also uprate all working-age benefits in full by the September 2023 consumer prices index rate of 6.7%, which is considerably higher than inflation, to make sure that working-age people on benefits are supported properly. That is 3 percentage points higher than forecast earnings for 2024-25 and, again, it will help support the most vulnerable while inflation continues to fall, with 5.5 million households on universal credit gaining £470 on average in the 2024-25 financial year.

My hon. Friend mentioned in his speech that 15,000 of his constituents are over 65, and we are maintaining the triple lock in support of those people and pensioners across this country, who have helped to build this country and have worked hard over years gone by. The basic state pension, new state pension and pension credit standard minimum guarantee will be uprated in April 2024 in line with wage growth of 8.5% in the usual reference period. In 2024-25, the full yearly amount of the basic state pension will be £3,750 higher in cash terms than in 2010 or, to put it more simply, £995 more —almost £1,000 more—than if it had been uprated by prices alone.

That comes on top of cost of living payments this year that are helping more than 8 million households on eligible means-tested benefits, 8 million pensioner households and 6 million people across the UK on eligible disability benefits. For individuals needing further support, local authorities in England continue to provide support through the household support fund, which is backed by £1 billion of funding. This allows local authorities up and down England to provide crisis support for the vulnerable households that need it the most, such as through supermarket or food bank vouchers. This means that, from 2022 to 2025, total support to help households with the cost of living will be over £100 billion—£104 billion—at an average of £3,700 per UK household.

However, I and the Government know that relatively short-term help is not enough. The only sustainable way to help vulnerable people in this country, including in my hon. Friend’s constituency, and to improve the living standards is to build a more prosperous future while remaining fiscally responsible. The best way to do that is to grow the economy and get more people into better paid jobs.

On growing the economy, this is not the time for more statistics, but I will say this: taken together, the measures in the autumn statement and the 2023 Budget represented the biggest upgrade in the GDP forecast that the Office for Budget Responsibility has ever scored. That shows the Government’s commitment to and delivery of a growing economy, which gives us all a better future.

When it comes to getting people into better paid jobs, from 1 April 2024, the Government are increasing the national living wage by 9.8% to £11.44 an hour for eligible workers aged 21 or over. That represents an increase of more than £1,800 in the earnings of a full-time worker on the national living wage and will benefit over 2.7 million low-paid workers. Just this month, employees’ main national insurance contribution rate has been cut by about 17%—that is, cut from 12% to 10%—and from April the main rate of class 4 national insurance for self-employed people will be reduced similarly, from 9% to 8%. That tax cut is worth £9 billion a year and is the largest ever cut to employee and self-employed national insurance.

The OBR expects that the measures announced at the spring Budget and autumn statement, taken together, will support nearly 200,000 additional people into work by the end of the forecast period. We do not do this for academic reasons or for fun; we do this because we know that giving people more of their own money—allowing them to keep more of their own money—improves their living standards, and we can do this while increasing funding for public services. Despite the difficulties of the last couple of years, over the course of this Parliament public services will benefit from the public purse by an increase above inflation of over 3%. We are doing this while supporting public services, while bringing down the deficit and bringing down the debt, and we can do all of it because of our careful management of the economy. That will benefit the vulnerable people in my hon. Friend’s constituency of Carshalton and Wallington and people across the country.

These measures underscore the Government’s unwavering commitment to supporting households up and down the country. We firmly believe that the key to a prosperous future lies in creating opportunities for everyone. The boost to the national living wage and the historic reductions in national insurance contributions are powerful tools in driving employment. Getting more people into work is not just good for them; it is good for our economy and for improving living standards, and it is clear evidence of a Government who have been willing to act to the tune of over £100 billion over the last three years. By putting more money into the pockets of hardworking people, we are not only bolstering their financial wellbeing but fuelling economic growth.

As always, we need to balance support for households with fiscal sustainability. The economic position remains challenging. We continue to keep options under review as we take tough decisions to drive down debt, drive down inflation and increase prosperity in every part of the United Kingdom. These are complex issues that affect all our constituents, wherever we call home.

I thank all hon. Members, but particularly you, Mr Deputy Speaker, because you are very kind, and my hon. Friend the Member for Carshalton and Wallington. He cares deeply for his constituents for whom he is a brilliant advocate in this place, and it is an honour to respond to him today.

[Mr Deputy Speaker (Mr Nigel Evans)]

Thank you for your kind words.

Question put and agreed to.