Tackling Short-term and Long-term Cost of Living Increases

Richard Fuller Excerpts

Tuesday 17th May 2022 Commons Chamber

[Rishi Sunak]

I am now going to make some progress. Our plan is to build the economy of the future. That is why, this autumn, we will cut taxes on capital, on people and on ideas to drive up growth and support businesses to do so.

While we are talking about growth, we have heard a lot during these debates—I think the right hon. Member for Doncaster North also mentioned it—about the Labour growth that we experienced between 1997 and 2010. It was obviously a very long time ago that we last had a Labour Government, so let me remind the House of the facts.

Under the Labour Government, the UK’s cumulative economic growth was third in the G7. Under this Government, despite having lived through the worst recession in more than 300 years, our cumulative growth is also third in the G7. Let us also remember that when the Opposition last arrived in office, unemployment was 7%. When they left, 13 years later, it was of course higher at 8%. New figures out this morning, as we have heard, show that today, the UK’s unemployment rate is less than half that, at 3.7%, the lowest in almost half a century.

The story is the same on public finances. The deficit in 1997 was 2% of GDP. By 2010, it was nearly 10%, and £1 in every £4 the Government spent was borrowed. There was, as we heard, no money left.

[Richard Fuller (North East Bedfordshire) (Con)]

May I add to what the Chancellor says that under this Conservative Government we introduced the living wage, which has increased wages for the poorest in our country at a higher rate than the last Labour Government ever had the courage to do, and we now have the lowest unemployment rate for 50 years?

[Rishi Sunak]

My hon. Friend is absolutely right. This year’s increase in the national living wage is worth £1,000 to someone working full-time who is on the national living wage. That will benefit millions of people, particularly those on a low income. That is our priority and those are our values.

The approach to borrowing that I have described is not the approach of this responsible Conservative Government. Today, despite having spent hundreds of billions throughout the pandemic, we are providing the highest sustained level of public sector investment in decades and investing record amounts in public services such as the NHS. This Government are on track to have borrowing low and debt falling again. That is our record: robust growth, more jobs and being responsible with the country’s finances.

History reminds us that, at times when we face severe supply problems, an unconstrained fiscal stimulus risks making the problem worse, pushing up prices still further and ingraining expectations of higher inflation—a vicious cycle leading inexorably to even higher interest rates and more pain for tens of millions of mortgage holders and small businesses. Let us be in no doubt, simply trying to borrow and spend our way out of this situation is the wrong approach; those paying the highest price would be the poorest in our society. Instead, the Government are taking a careful, deliberate approach. We will act to cut costs for those people without making the situation worse. We will continue to back people who work hard, as we always have, and we will do more to support the most vulnerable—and, unlike others, we will not simply borrow our way out.

So yes, we are helping families by cutting their costs, and it is irresponsible to suggest otherwise. That support will always be part of a broader plan to grow the economy, encourage investment and create more high-skilled, high-wage jobs, all built on the foundation of strong public finances. That is our economic plan. We are providing £22 billion-worth of support to help families with the cost of living. We are creating more jobs, more investment and higher wages. That is what this Queen’s Speech is all about, and I commend it to the House.

--- Later in debate ---

[Richard Fuller (North East Bedfordshire) (Con)]

It is a pleasure to listen to the right hon. Member for Walsall South (Valerie Vaz) and to follow her. It is also a pleasure to be able to welcome Her Majesty’s Gracious Speech, introduced by this Prime Minister and this Chancellor. They are leading a Government who continue to look at finding long-term solutions to large, persistent problems and having the courage to pursue them fully. The debate today is entitled “Tackling short and long-term cost of living increases”, and many of the contributions have rightly focused on the immediate pressures on the cost of living. If I may, I want to mention a couple of points that look at longer-term solutions.

The first relates to an issue that came up in our Business, Energy and Industrial Strategy Committee: the problem of decarbonising home heat. If we wish to achieve our net zero goals in the timeframe that we as a Parliament have set out, one of the most significant challenges will be how our households are to afford changing the way they heat their homes to be consistent with net zero. The up-front cost appears to be about £12,000, and it is well beyond the ability of any household to afford that, essentially to replace something that is working perfectly satisfactorily with something that will hopefully work perfectly satisfactorily but have much less impact on the climate. It was clear in our hearing that no obvious solutions are around today that would solve the issue. That led to a significant debate in the Committee.

I want to draw the attention of those on the Front Bench to solutions around the idea of net zero community green schemes. In a previous contribution I talked about the possibility of attracting the enterprise investment scheme towards a net zero scheme, but there are also ways to get patient capital and pension fund capital in. Bankers without Boundaries has been working with the UK Cities Climate Investment Commission on green neighbourhood funding models that combine the opportunity to retrofit housing—putting in the insulation that many very poorly insulated houses require—with the installation of heat pumps and other work on a community basis, while also considering ways to make the step change in recycling that the Government are trying to accomplish, so that we can make a big step forward on the circular economy.

Interestingly, by doing it on a community basis, we have two significant public gains: a financial model is created that can attract pension fund money because it has a long-term return and is at scale; and we get over the inequities of saying that individual households ought to be providing the finance for achieving net zero, which means many poor families and households will never be able to make that leap. Attracting such private capital can substantially reduce the cost to the Treasury of achieving that long-term gain. It will not affect energy bills in the short term but, my goodness, it is the sort of idea we need if we are to find a pragmatic rather than ideological solution to achieving green energy change.

I echo the comments of my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), as we need substantial regulatory change in this country. Even since our exit, we have stuck with the EU’s sclerotic regulatory powers for too long. We have made insufficient progress towards getting the agility she described, and we rely too much on regulatory agencies that, I am afraid, too frequently show themselves to be asleep at the wheel.

The BEIS Committee has previously looked at the Financial Reporting Council and the Pensions Regulator and their issues with BHS and Carillion. It is nice to see an audit reform Bill in the Gracious Speech, but it is only a draft Bill. We need to look at the issues with Ofgem. Where on earth was Ofgem last year and the year before? Absolutely nowhere. Ofgem’s job is to improve competition. We had someone before the Committee who was then at university. When asked whether he had a finance director, he said, “I don’t need one.” When we pressed him, he said, “Well, I’ve got my dad.” He was responsible for £300 million of consumer expenditure on energy. Ofgem is asleep at the wheel, just as the FRC and the Pension Regulator were historically asleep at the wheel and the Bank of England is potentially asleep at the wheel, so let us have real, substantive reform of our regulatory agencies to ensure that we have performance indicators and oversight by this House and by the public.

[Several hon. Members rose—]