Cost of Living

Robin Walker Excerpts

Wednesday 16th May 2012 Commons Chamber

[Mr Robin Walker (Worcester) (Con)]

It is a pleasure to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), who made a thoughtful speech on the important issue of social care, about which people from all parts of the House feel strongly. I echo her good wishes to the hon. Member for Truro and Falmouth (Sarah Newton).

It is a pleasure to be called to speak in the debate on the Gracious Speech and to be able to mark, as MP for the faithful city of Worcester, the celebrations that will rightly take place around the country for the diamond jubilee of our sovereign. After the splendour and pageantry of last week’s Gracious Speech, this debate focuses on its grittiest elements—those that relate to the cost of living. I am constantly reminded on the doorsteps of Worcester and in my surgeries that the cost of living is a matter of prime concern for many constituents. I will first address the parts of the speech that relate specifically to the cost of living, before making a few broader points on the economy, which is referenced in the Opposition amendment.

There was much to be welcomed in the Gracious Speech on the cost of living. Contrary to the rhetoric that we have heard from Opposition Members, the speech is imbued with concern over the cost of living. It promises vital reforms that will make a difference to the price of the water and electricity in our homes and the food in our shops.

There are some things that I would have liked to have been included in the Queen’s Speech that were not present. In some quarters, the speech has been criticised for not doing more to tackle the issue of fuel duties or to spearhead vitally needed growth. I will return to the latter point at the end of my speech. On the former point, I have enormous sympathy for people across the country and from all parties who want to see a permanent shift in the balance of fuel duties. Although I am doubtful that a programme of legislation is the right place for such a move, I will continue to push for it in future Budgets and Bills. The price of petrol has become too high. It is a major cost to our economy and a driver of inflation. I hope that the Government will listen carefully to the many voices that have been raised—from Upper Bann and Belfast to Harlow—to call for more action on this front.

I want to see a Government who are resolutely focused on supporting the economic growth that will deliver better living standards. I am confident that we will see that, without the need for further legislation. The best weapon that we can wield against the cost of living is material prosperity for the many, not the few. In that regard, we should look at what has been done to help the lowest-paid workers stay out of tax and at the commitment in the Budget to extend the tax-free threshold to up to 2 million more lower-paid workers, which have been mentioned by my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) and the hon. Member for Cambridge (Dr Huppert).

I do not accept the suggestion from some quarters that economic growth is the enemy of sustainability and that we should juxtapose the need to grow our economy with the desire to be green and efficient. Nor do I accept the argument so often heard from the Opposition that fiscal stimulus is the only path to growth. I believe that we can deliver greener, more diverse and more sustainable economic growth that will increase the wealth of our nation and provide individuals and families with the tools to overcome a higher cost of living. That does not mean that the Government can neglect the need to deal with the cost of living.

I am delighted that the Government are committed to major reforms in the provision of electricity and water to make those industries more efficient, to ensure that there are clean, secure and affordable supplies, and to ensure that prices are fairer over the long term. It is a shocking indictment of the last Labour Government that we inherited a situation in which a fifth of the UK’s energy generation capacity was due to be taken offline within 10 years, while electricity demand is to double in the next 40 years. We need to act fast to secure the £100 billion of investment that is necessary to keep the lights on.

I am glad that the Government are setting out detailed plans for an energy Bill to bring market reform. Winston Churchill said that energy security is energy diversity. The Bill must reflect that by supporting all technologies, whether nuclear, renewable or gas-based, that can make our electricity more affordable, more efficient and more sustainable. The introduction of a capacity mechanism will be vital to improve our security and to maximise the enormous potential for diversity that our island nation has.

The introduction of an emissions performance standard, alongside the Government’s earlier decision to look at carbon pricing, should ensure that we have cleaner, greener generation in the future. However, that must be carefully balanced, so as not to push costs too high.

I understand that the Government’s analysis shows that although some years might see higher prices as a result of the electricity market reforms, the overall impact will be to bring prices down. That is to be welcomed, but I urge the Government to recognise the need to do everything in their power to accelerate that trend. By 2020, it is expected that bills could be 7% lower than they would have been without the reforms. As the Secretary of State said earlier, over two decades, bills are expected to be 4% lower. I would like to see more progress and a greater impact as the Bill makes its way towards becoming an Act.

After months of drought followed by torrential rain, it might be suggested that water reforms would be best focused on regulating the weather. However, I am pleased to see a serious focus on that industry as well. It cannot be right that we have one of the lowest proportions of metered households in Europe, and that prices are rising so sharply for everyone, including the poorest in the country. The measures to encourage the water companies to introduce cheaper tariffs to support the most vulnerable customers are welcome. It is vital that the Government work to drive down water bills by increasing competition in the water industry.

Across water and energy, there is increasing pressure from a growing population for finite resources. As the right hon. Member for Croydon North (Malcolm Wicks) pointed out in a thoughtful speech, it is important that we do not just concentrate on the day-to-day minutiae of market structures and prices or on what is happening just within the boundaries of the UK, but that we raise our eyes and recognise that there are big strategic challenges for our management of energy and water supplies. In a world in which the population is growing fast and where the wealth of those who previously consumed the least is rising more swiftly than that of the formerly gluttonous west, we will face increased competition for all resources. Realistically, politicians of all colours have to admit that we cannot wave a magic wand and bring prices down every year for the resources we need. We have to face up to a far more competitive and far more volatile world and take on the long-term challenge of keeping costs under control and reducing consumption. Acknowledging that entails an ever greater focus on efficiency and on ensuring that resources are not wasted—itself a potential driver of growth for businesses such as Worcester Bosch, which makes energy efficient boilers in my constituency, or Vickers Electronics, which I visited recently and which has opened an office in Worcester to market its energy saving devices for factory heating.

There is an old saying, “Where there’s muck, there’s brass,” and we should ensure that where there is a waste of resources, there are opportunities for British businesses to get involved in reducing it. Previous actions by the Government, such as the green deal and the renewable heat incentive, are important elements of that, and I encourage Ministers to take those measures forward further and faster. The creation of the Green investment bank will provide vital investment for the sector and encourage its growth. That does not mean that the Government are wrong to be acting on prices and reforms, but action must be part of a bigger strategic approach to ensure that Britain is best placed to compete in the 21st-century world. In that respect, I recognise the enormous value of many of the initiatives discussed in yesterday’s debate on foreign affairs: the emerging powers initiative, the commitment to work with the Commonwealth, and the broad focus that this country is putting on maintaining our place on the world stage. Our energy and water resources will not be secured in isolation, nor can we feed our nation purely from the produce of our own shores.

Moving closer to home, I strongly welcome the introduction of a groceries code adjudicator to regulate the big supermarkets, ensure a better deal for our farmers, and put fairer food at the heart of our food system. The adjudicator must have strong powers to act on behalf of shoppers and suppliers and it must be prepared to take on some of the powerful vested interests that have dominated the sector hitherto. Diversity of production is as important in food as it is in energy and we must support diversity of supply so that there are more farmers markets, more co-operatives and more direct selling of food by growers or producers. Worcestershire has some fantastic food producers, whether it is our fruit growers and asparagus champions of the vale of Evesham, our dairies and sheep farmers across the county, or global brands, such as Lea & Perrins Worcestershire sauce, which is produced in the very heart of my constituency. I want all those producers to be able to get a fair price for their product and to market those products at a reasonable price to consumers. I believe that the groceries code adjudicator can play a key role in achieving that.

Keeping down the price of food would also be helped enormously by a reduction in the price of diesel, which is important both in the growing and harvesting of our crops and in their delivery to market. That is another reason why the Government should consider further action on that important issue.

[Dr Poulter]

My hon. Friend is making a very good speech. On the subject of the groceries code adjudicator, I am sure he agrees with me that it is important to have fair prices not only for consumers, but for producers, and that if we do not look after our food producers prices will go up for our consumers, because we will be far too reliant on food imported from overseas. Does he also agree that one of the key purposes of establishing the groceries code adjudicator must be to support producers better and ensure that we have a more sustainable food and agriculture sector in this country?

[Mr Walker]

I could not agree more with my hon. Friend.

[Albert Owen]

The hon. Gentleman mentioned the importance of diesel prices. This is not a party political point, but one of the stark problems confronting this country is our lack of diesel refining capacity. Much of the oil extracted from the North sea is exported to India and the sub-continent, refined there and brought back to this country, which puts up the price. As a result, we have a shortage of diesel and pay more for it. Surely we should all work together on ways to increase distillery capacity, so that we can refine diesel in this country? Diesel used to be a damned sight cheaper than petrol, but the reverse is now true because of this problem.

--- Later in debate ---

[Mr Walker]

I absolutely agree that we need to work together on long-term planning to get back some of the refining capacity that we have lost. I also think we should consider the potential for differential taxation of diesel and unleaded petrol, which most other countries in Europe already have, and I have mentioned that idea in previous debates. This is an issue that should be debated and explored in more depth.

Pensioners are people living on fixed incomes and are directly affected by changes in the cost of necessities. I am proud that our coalition Government have not only restored the link between the basic state pension and earnings, which the Labour Government failed for such a long time to do, but strengthened it with the triple-lock guarantee. It is crucial that the Government legislate to make public sector pensions sustainable—to reduce the cost not just for the sake of it, but so that we can continue to provide high-quality pensions for public servants.

Council tax is a major issue for pensioners, and we have a good record on keeping it frozen. Earlier, we heard a little Labour triumphalism from the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) about the local election results, but I am pleased to say that, in Worcester, the Conservatives remain the largest group, although Labour gained seats and the Liberal Democrats lost one to us. The Liberal Democrats are now working with the Conservative administration in Worcester to try to make the council more efficient and to keep council tax down.

As I said, the hon. Member for Worsley and Eccles South (Barbara Keeley) spoke passionately about social care. I am pleased to see in the Queen’s Speech a draft Bill on modernising social care, but I agree with the hon. Lady that there is more to be done and that the Government have to take yet more action to tackle the enormous challenges set out clearly in the Dilnot review. I urge the Government to make swift progress on that issue, which is hugely important for the long term. As has been pointed out, Labour does not have a strong record of addressing it.

Part of the cost of living is the need to ensure that there is the best possible support for those in the later stages of life, which means better provision of social care as well as more investment in palliative care, an issue that is dear to my heart.

I am glad that the Government are doing more to support families by expanding child credits for those most in need, protecting child benefit for people earning up to £50,000 and expanding the provision of nursery education. The right hon. Member for Croydon North (Malcolm Wicks) described the changes to child benefit as a “case study in unintended consequences”, and that accusation certainly could be levelled, but I would say they are a case study of the Government listening to concerns and doing something about them. That is to be commended.

My hon. Friend the Member for Witham (Priti Patel), in an earlier part of the Queen’s Speech debate, and the right hon. Member for Croydon North today, pointed out that child care is a huge cost to many families. Like them, I hope that the Government can do more to help on that front in the future. I hope the contentious and argumentative line in the Gracious Speech that states:

“My Government will strive to improve the lives of children and families”

will enable the Government to act on both that issue and the essential one of delivering fairer funding for our schools.

The greatest thing that the Government can do to improve the standards of living of people in this country, and to help them overcome the challenge of the rising cost of living, is to succeed on the economy. As I mentioned earlier, there has been some commentary that there was not enough about the economy in the Queen’s Speech. As I discussed with businesses at my business breakfast in Worcester last week, that misunderstands what the Queen’s Speech is about. It is not a description of everything that the Government must do but a programme of legislation. As the hon. Member for Cambridge eloquently pointed out, the Government do not need to legislate to make a difference. Most of the major issues affecting our country and economy do not require legislation. As shown by today’s welcome job numbers, which have improved in Worcester, across the country, we can create jobs and grow the economy without new laws.

[Mrs Madeleine Moon (Bridgend) (Lab)]

One thing that the House desperately needs to do is give a feeling of hope to young people, who are being particularly badly hit at the moment. The hon. Gentleman mentions the unemployment figures. In Bridgend, I had five youngsters between the ages of 18 and 24 claiming jobseeker’s allowance in April 2011, and in April 2012 I had 70. That is an increase of 1,300%. That is not a message of hope, and the House has to do something about it. There was nothing in the Queen’s Speech about—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We must have shorter interventions. I know that it was important to the hon. Lady to get that point on the record, and she has done so now.

[Mr Robin Walker]

The hon. Lady is of course right to be concerned about youth unemployment. In my constituency it is lower than when we took over from the Labour Government, but there is clearly more to be done. The Government are already investing in apprenticeships and many other schemes to help people into work, and we must continue to do more, but I do not believe that that required legislation to be announced in the Queen’s Speech.

Fixing the deficit and getting our country to live within its means is firmly at the centre of the coalition’s programme for government, and there it must remain. The cost of living for millions of families and for businesses that employ young people would increase appallingly if the Government were to lose control of those central aims and allow interest rates to spiral out of control. It is our responsibility to all our constituents to ensure that that does not happen, and good government and efficient management, not legislation, will deliver what we need.

As my hon. Friend the Member for Gainsborough (Mr Leigh) suggested, we need not more laws and regulation but less. However, there are some important measures that require legislation, including supporting enterprise and encouraging small businesses. As a former entrepreneur, I am glad that the Queen’s Speech included an enterprise and regulatory reform Bill, which will repeal many unnecessary requirements on business and promote early resolution of employment disputes.

Earlier this week, I was pleased to attend the launch of the all-party small business group’s recent report on breaking down the barriers to entrepreneurship, and to hear from local entrepreneurs such as Neil Westwood of Magic Whiteboard. The more the Government can do to implement the all-party group’s proposals the better.

Safeguarding our banks and ensuring that they continue to lend is another vital matter for economic growth, and I am pleased that the Government will bring forward measures to ring-fence commercial banking and encourage lending. I also welcome the fact that they are already beginning to support alternative lending sources, including community development financial institutions such as Impetus, which is doing good work in Worcestershire, and innovative new private sector solutions such as ThinCats.

Of course issues beyond our control affect the economy, and at a time of crisis in Europe, when the eurozone appears to be teetering on the brink, it would be wrong to omit a mention of the broader economic crisis that persists and is driving up the cost of living for everyone. I am as disappointed as anyone that the UK’s growth figures have not been stronger, and as determined as anyone that the cost of the European project should not become an unfair burden on our country. I am glad we have a Prime Minister who is prepared to stand up in Europe and say no when he needs to, and I am confident that he and our Foreign Secretary will continue to hold the line that the UK cannot be asked to pay for the failings of a currency we rightly stayed out of. Britain must continue to forge its own path through this crisis, working with our friends and allies all over the world, not just in Europe, to ensure that we have the best possible opportunities for growth and to protect our economic stability. We should continue to refuse to allow the costs of the EU to increase and guard our own interests in foreign policy and international trade. I believe the time will come when we have to renegotiate our relationship with the EU. Although that is not referred to in the Gracious Speech, it is essential the Government stand ready on that vital matter.

Overall, I welcome the Queen’s Speech. I welcome the fact that, in the year when we celebrate a glorious 60-year reign, we have a Government who are firmly focused on the future. I want to see a thousand flowers flourish in small business and I am excited by the opportunities that will be created in this programme of legislation, whether for companies engaged in helping us to manage energy and resources better, for small enterprises, or for food producers, who will benefit from the new groceries code adjudicator. The economy is at the heart of the Government’s programme, and growing it will be key to allowing Government and people to deal with the cost of living in the years to come.

[Several hon. Members]

rose—