Cost of Living: Fiscal Approach

Peter Grant Excerpts

Wednesday 25th May 2022 Westminster Hall

[Peter Grant (Glenrothes) (SNP)]

I am pleased to begin the summing up for this debate, Mr Twigg. I commend the hon. Member for Barnsley Central (Dan Jarvis) for securing the debate and for his introductory remarks. Given that he devoted a lot of his speech—a number of other Members have mentioned this—to the debt we owe public service workers, I hope I may crave Members’ indulgence for a few seconds to give a shout out to one public sector worker in particular. Dr Fiona De Soyza retires today after 37 years as an NHS doctor—31 and a half years at Leslie Medical Practice in my constituency. She is not planning to retire from the 38 years she has served so far as my wife. Obviously, I would rather be there, but my duty means that I have to be here.

The Bank of England Governor, Andrew Bailey, told the Treasury Committee that we should expect “apocalyptic” food price rises before the end of the year. Archie Norman, the chairman of Marks & Spencer, said that food prices could rise by 10% this year, on top of the increases that we had already started to see last year. There are warnings that schools will have to cut the size of school meals to keep their budgets under control. The Institute for Fiscal Studies has reminded us that there is not a single rate of inflation; everyone has their own rate of inflation, and the poorer someone is, the bigger that inflation rate is. That is because, the poorer someone is, the more of their household money, by necessity, is spent on the things that are now spiralling out of control. Someone on an MP’s salary does not have to spend three quarters of their money just to keep themselves and their family fed and warm. Someone on minimum wage—or below—does.

At the same time, the number of billionaires in the United Kingdom is the highest it has ever been. The wealthiest people in the United Kingdom saw their personal fortunes increase by 10% last year. We are very definitely not all in this together. While I have no question about the sincerity of all those who have spoken against Government policy today, I do need to gently point out to Labour colleagues that right now their party in Scotland is doing deals with the Tories, all over Scottish local government, to help the Tories have an influence that the voters of Scotland wanted to deny them at the ballot box in the first week of May. When we are talking about the iniquities of this Government at a UK level, why are some parties in Scotland putting the Tories into power to run, and all often probably ruin, local government services?

The Government’s response so far has been nothing short of shocking. First, they pretend it is nothing to do with Brexit. They say that it is partly caused by the war in Ukraine, and that there is no doubt that covid has had a significant impact. Then somebody called “global” seems to get the blame for everything the Government get wrong these days. We have got a Chancellor who increases the burden of taxation and thinks it is a tax cut; a Chancellor who thought it was silly to give money to people who are poor to help them pay their bills; a Chancellor who tweets figures showing that the economy is shrinking and says, “Isn’t it good that the economy is growing?”; a Chancellor who increases national insurance, knowing perfectly well that it will hit people who work for a living and benefit people who are able to make a fortune from investment and property ownership. I wonder who the Chancellor knows who might benefit from that.

Valid points were made about the inadequacy of mileage rates paid to a lot of public sector workers, but people who work in the private care sector very often do not even get those—they often have to pay their own mileage and drive on their own time between appointments. It is now widely leaked by the Government that there is an emergency package of support coming. We might even see a U-turn on the windfall tax, not because it is morally the right thing to do, but because they need something—anything—to keep the Prime Minister with his glass of beer off the front pages for the next couple of days. What an example! What a perfect metaphor for the utter iniquity of this Government that they will not spend money to help people because they need it, but they will spend public money on trying to keep the Prime Minister’s misconduct off the pages of the newspapers.

What could they be doing? The windfall tax has been mentioned, and I am quite happy to support that in principle—not just for oil and gas companies, as has been mentioned, but for anybody who has made huge profits through good luck during the last two desperate years. The Government could follow the example of Germany, which has cut fuel duty five times as much as the United Kingdom. It is giving a €300 payment to everybody, plus €100 for every child. Ireland is giving a €200 energy rebate for everybody—not a loan that they have to pay back, but a grant. Belgium cut VAT on energy to 6%. That was something the Government told us we were not allowed to do when we were part of the European Union. How come Belgium was able to do that?

Scotland, without even the full powers of a normal nation, will be increasing the Scottish child payment by the end of the year to £25 per child. That has been described by the Child Poverty Action Group as a “game changer”. The Scottish Government are currently spending more than £360 million above Barnett funding on benefits, including through seven new benefits that do not exist anywhere else in the UK. The Scottish Government were not set up to spend Scotland’s money fixing the failures of the United Kingdom Government, but all too often, that is what they are having to do.

Poverty is not an essential part of today’s life. Poverty is not inevitable in the United Kingdom today. The United Kingdom boasts about being one of the wealthiest nations—or collections of nations—anywhere in the world. Scotland certainly, and probably the United Kingdom in its entirety, is self-sufficient in energy. We could be self-sufficient in food if the food production and distribution system had not been so destroyed over the years. Energy companies are now warning that half of their customers will not be able to pay their bills by the end of the year. That is not essential; it is a deliberate political choice by a Government whose days are up.

--- Later in debate ---

[The Financial Secretary to the Treasury (Lucy Frazer)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Barnsley Central (Dan Jarvis) for organising this important debate, and all Members for their valuable contributions.

Hon. Members have set out the concerns and struggles of their constituents. I assure hon. Members and their constituents that the Government absolutely recognise that families up and down the country are facing an unprecedented cost of living challenge at the moment. We understand that the cost of food is rising and that the cost of goods going up is hitting people’s pockets. It would be wrong of me to pretend that these issues are going to subside. We all know that the next few months are going to be difficult. I know that people are really worried. It would also be wrong of me to suggest that the Government can wave a magic wand and that there is some quick fix that no one has thought of to reverse all the price rises that are happening at the moment. These are global trends and they are driven by global challenges.

We recognise that these are serious issues facing our society, as the hon. Members for Barnsley Central and for Merthyr Tydfil and Rhymney (Gerald Jones) said. We are doing a significant amount. We have already done a significant amount to help the many families that hon. Members have spoken about. We have provided £22 billion of direct support to families grappling with the cost of living pressures, including the £1,000 that people on universal credit will get or the £1,000 that people on the national living wage will get, through the changes that we have made to those measures. Our support includes £9 billion of energy support to ensure that fuel duty is cut, and the council tax rebates of £150 for band A to D payers in England, as well as the warm home discount, which we have expanded to £150, and the £1 billion of household support that people are getting through their local authorities.

I recognise that it is important not just to talk about statistics or investment in global terms; we recognise that the cost of living pressures are affecting individual families. I listened very carefully to the hon. Member for Barnsley Central when he spoke about a public sector worker on universal credit who was struggling. I emphasise that a low-earning family with one adult working and two children under five will be £1,610 better off a year as a result of the recent changes we have made to national insurance contributions and the universal credit taper rate.

[Peter Grant]

Has the Minister bothered to work out how much of that £1,600 has disappeared in increased food and fuel bills since the announcement was made?

[Lucy Frazer]

Obviously, different people will experience different rises in the cost of living, depending on their circumstances. We absolutely recognise the rising cost of living, which is why we have already made a number of changes.

I will move on to the point that the hon. Member for Barnsley Central made about public sector pay, as did the hon. Members for Reading East (Matt Rodda) and for Glenrothes (Peter Grant) by analogy. I recognise the important work that public sector workers have been doing during the pandemic and in the ordinary course of business, helping to support our world-class public services. Hon. Members will know that last year’s spending review confirmed that public sector workers will see pay rises across the whole spending review period from 2022-23 to 2024-25. Pay for most frontline workforces, including nurses, teachers, the armed forces and police officers, is set through an independent pay review body. We will consider all recommendations from pay review bodies this summer, once those final reports are submitted. I also point out that many public sector workers will benefit from the increase in the national living wage that I mentioned. Two million people, many of them public sector workers, will benefit from that.

The approved mileage allowance payments, which the hon. Members for Barnsley Central and for Bolton South East (Yasmin Qureshi) raised, reflect all the running costs of a vehicle, including fuel and other vehicle expenses, such as servicing, insurance and depreciation; fuel is only about a third of the cost included in the rate. It is up to an employer what expenses they pay their employees. They do not have to use the allowance payment amounts, and can instead agree to reimburse the actual cost incurred. Individuals are not liable to pay tax on the difference as long as they can provide evidence of the expenditure. As with all taxes and allowances, we keep the rate under review.

The hon. Member for Barnsley Central talked about NHS car parking charges. I am pleased that he recognised that NHS staff working night shifts benefit from no car parking charges, as do disabled people, frequent out-patient attenders and parents of sick children staying overnight, but I am happy to look into the matter further with officials.

I listened carefully to the ideas raised by the hon. Members for Glasgow East (David Linden), for Kingston upon Hull West and Hessle (Emma Hardy), and for Easington (Grahame Morris). I have previously spoken to the hon. Member for Westmorland and Lonsdale (Tim Farron) about the housing issue he raised. I valued that conversation, and I thank him for raising those points again.

The hon. Member for York Central (Rachael Maskell) said that Labour restored people’s dignity, but the latest data shows that, compared with 2009-10, there are now 2 million fewer people in absolute poverty. The Chancellor, the Government and I are very proud of that statistic. I am very proud that, when Conservative Governments are in office—particularly this one—we have record unemployment, which allows people to earn a wage and support their families, whereas every single Labour Government has left office with unemployment higher than when they entered it.

I have set out a number of the measures that we have already taken to support people with the cost of living, which we absolutely recognise. We are also taking steps to boost the UK’s economy. I have not got time to go into all the measures today, but hon. Members know that the Chancellor has set out a long-term plan to boost the economy through capital, people and ideas, building on the progress that we have already made in in this area.