Stephen Flynn
Main Page: Stephen Flynn (Scottish National Party - Aberdeen South)Department Debates - View all Stephen Flynn's debates with the HM Treasury
(2 years, 8 months ago)
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Stephen Flynn (Aberdeen South) (SNP)
I beg to move,
That this House warns that households will soon be suffering the worst income squeeze since the 1970s; notes The Institute for Fiscal Studies analysis that households are on course to be £800 worse off; calls on the Government to scrap VAT on energy bills, implement a windfall tax on companies which are benefitting from significantly increased profits as a result of impacts associated with the covid-19 pandemic or the current international situation, and to scrap the energy bill rebate scheme and introduce immediate emergency cash payments for households.
A phrase said to me many years ago has stuck with me, and I believe it is true for this debate on the cost of living crisis: “Poverty is a punishment for a crime you didn’t commit.” For so many people now—in Aberdeen, Scotland and across the United Kingdom—there is a real feeling of helplessness, hopelessness and powerlessness at the situation before them. Their food, fuel and energy prices are soaring, as is the price of their children’s clothes; no matter which way they turn they cannot escape the grim reality of the situation before them.
This issue cuts across all sectors of society. Just yesterday at the Dispatch Box the Chancellor was extolling the virtues of the employment figures going up. That is of course good—everyone irrespective of political party would welcome it—but he did not address the fact that for those in work, energy prices will be some 14 times what their pay rise might be; he did not even acknowledge that that was a fact. Furthermore, he did not address, let alone reflect on or apologise for, the fact that, just a matter of months ago, he took some £20 of universal credit out of the pockets of those who are not in work and are reliant on the state for social security to get by day to day.
Chris Stephens (Glasgow South West) (SNP)
On deductions by the state, it is not just the £20 uplift but the fact that hundreds of thousands of people across these islands have £60 taken off them every month in Department for Work and Pensions deductions, some of them advances and some of them so-called tax credit overpayments.
Stephen Flynn
Absolutely; my hon. Friend is a doughty champion on these causes and makes his point extremely well, and it would be remiss of the Government not to listen to him. He is right to touch on that, as we all are right to touch on the cost of living crisis, because it is a crisis: it is a crisis for households up and down the country.
What we need from the Government in a time of crisis is a response. We need them to take action to improve people’s lives—to protect them, and to insulate them from what is coming down the road—but, sadly, they have been completely lacking in that regard. I am sure that in their hearts of hearts many Conservative Back Benchers—although just a few are present today—recognise that the Government can and must go further, because all we have seen at this stage, despite the exponential increase in the price cap, which could well reach about £3,000 a year by the autumn, is £150 towards a council tax rebate.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
The hon. Gentleman is right to draw attention to the price cap, but even before that consumers across the country are facing massive increases in the standing charges, something for which there should be no link to the cost of energy. It is reported that this is because we are having to fund the supplier of last resort as a consequence of the failure of the small energy companies; does the hon. Gentleman share my sense that it is wrong to expect consumers to pick up the tab for what is essentially a regulatory failure?
Stephen Flynn
I welcome the right hon. Gentleman’s intervention and he is absolutely right. The Minister for Energy, Clean Growth and Climate Change is present and I am sure he will address those remarks if he comes to the Dispatch Box later, as I see that he will.
It is not just the money towards the council tax rebate that the Government have put forward, of course, because they have gone so much further: they have given people a buy-back loan for their energy bills—buy now, pay later. That is the best they can do in this time of crisis, and of course that was predicated on the basis that energy prices would reduce over time but the situation has changed and many experts and analysts now suggest that is not going to happen. So the Government need to get real on this matter.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend is making a point about energy price increases, which will be devastating for many families, but people who live in off-gas-grid areas will be crucified by the price increases, because they rely on bottled gas, oil or wood, all of which are going up in price, and they are of course currently using more of that expensive energy. Does my hon. Friend agree that this Government need to take action now to adopt regulation for people who live off the gas grid, so that they are treated more fairly and before there is a crisis for rural communities?
Stephen Flynn
Absolutely—I could not agree more wholeheartedly with my hon. Friend on that. He makes an extremely important point, which he has been making for many months, and it is time the Government listened and took action in that regard.
John Redwood (Wokingham) (Con)
Would the spokesman and his party now agree that we need to get a lot more gas and oil out of the North sea, which would generate tax revenue that the Treasury could use to ease the squeeze, instead of paying huge sums of money to Qatar and Russia for liquefied natural gas?
Stephen Flynn
The right hon. Gentleman makes an interesting point. Of course, he will be cognisant of the fact that when the oil and gas comes out of the ground it goes into the hands of multinational countries. Do we want to be in a situation in which that gas benefits us here, rather than those abroad? Absolutely. Should we be importing from Russia? Absolutely not, and the Government have been right to take action on that. Nevertheless, what I want to see from his Government, which he should want too, is a turbocharging of investment in renewables. When are they going to come forward with their energy security strategy? I have heard talk about it in the paper, but there has been no clarity whatsoever. I shall come back to that later in my speech.
John Redwood
Most of my constituents still have gas boilers. Renewables will work one day, but the immediate crisis is that we are short of gas. Do we have our own or do we have foreign gas? If we have our own, we get tax revenue.
Stephen Flynn
It is interesting to hear that we are short of gas when I regularly hear the opposite from the Minister for Energy, Clean Growth and Climate Change. That is the important point: Government Members can try to disagree with their own Government on these matters, but in real terms we are self-sufficient. Scotland is self-sufficient when it comes to oil and gas, but we can and must go so much further on renewables. If the right hon. Gentleman wants to hang around, he will hear me speak about that in due course.
Drew Hendry
I am grateful to my hon. Friend for generously giving way again. Is it not the case that Scotland, which is a net exporter of energy—I think we produce around 153% of our needs over the course of a year—would have been able to do much, much more had this Government not stood in the face of more cheap, reliable and green renewable energy by standing for many years against allowing solar and onshore wind power when it came to the contracts for difference? We could have been much further ahead. Is it not now this Government’s responsibility to help people with the cost of living crisis, which they and the energy price increase have caused?
Stephen Flynn
Yes, absolutely. The reason why we are in the current situation is that the Government have not planned ahead. They have chosen to sit on their seat when they should have been looking to where we could go in future. I hope the Minister will address that point when he sums up the debate.
Stewart Hosie (Dundee East) (SNP)
As my hon. Friend knows, when the price of oil goes up, the tax yield to the UK Exchequer is increased; when the price of a gallon of petrol goes up, there is extra duty for the UK Exchequer; and when the price of domestic bills goes up across the board, there is additional VAT for the UK Exchequer. Does he not find it passing strange that Tory Back Benchers are not calling for the additional tax yield that the UK Government already have to be used to reduce the cost of domestic bills?
Stephen Flynn
Absolutely. As I understand it, the Treasury currently believes it is going to take in excess of £3 billion in relation to oil and gas in particular. Every single pound and penny of that £3 billion should be directed towards the provision of support for families up and down the country.
It is on that support that I wish to briefly reflect. We know the Government have gone nowhere near far enough in terms of their support for households up and down the country. What can they do? What should they be doing? We know that they should be scrapping VAT on energy bills. We know that they should be reversing the national insurance price hike—a tax that will impact not just households, but businesses, too. We know that they need to turn those loans that they have forced on people into grants, and we know that they need to overturn that £20 cut to those on universal credit. People need help, and they need help now. The Chancellor cannot continue to stand still as if nothing at all is happening.
When we discuss these things, the Conservatives often say, “Well, what are you doing? What are the Scottish Government doing?” Without getting into the technicalities of who has powers over law and where resources lie, because, of course, we know that those are the responsibility of the UK Government, it is worthwhile reflecting on what we in Scotland are doing differently to what this UK Government are doing.
We are, of course, in the middle of a fuel crisis, but an older or younger person living in Scotland can hop on the bus for free. A person in Scotland who is struggling with their health can rest assured that they will continue to get free prescriptions. A family worried about how they will feed their wee bairn will know that there are funded hours in nurseries where they will be fed, and that when they go to primary school, they will receive free school meals. With the limited welfare powers that the Scottish Parliament has, the Scottish Government not only introduced the game-changing £10 Scottish child payment, but are doubling it in a matter of weeks to £20 a week. Those are huge differences in policy objectives and intentions, and they are designed to assist people. Yet, at the very same time, we still have the dead hand of Westminster above us, forcing us to spend some £600 million each and every year just to mitigate its policies, such as the bedroom tax. We can and should be able to do so much more, but we are held back by this UK Government and their complete intransigence.
Another question that this Government rightly ask is: “You have quite a wish list there, how do you fund it?” That question is justifiable, which is why we have come forward today not just with problems—problems that we are all aware of irrespective of party—but with solutions, too. Is it right that Serco, Amazon, Netflix and Asos are able to benefit from the pandemic to the tune of billions of pounds because of the way that people’s habits have changed and because of the contracts that they have received from the Government while our constituents are struggling? Absolutely not; it is not right at all. That is why we are calling for a broad windfall tax—one that takes into account the changing landscape in the UK and globally so that we can respond to it to provide people with the support that they so badly need, and which is so badly overdue.
I accept—I think everyone in this Chamber accepts—that, ultimately, such a mechanism is for today; it is not necessarily for tomorrow. What do we do next year? What do we do the year after that? That takes me back to the point that the right hon. Member for Wokingham (John Redwood) stumbled into earlier in relation to renewables. We are very much in this mess not just because of Brexit, not just because of the pandemic, but because of the energy policies, over decades, of this UK Government. What they need to do is come forward with a clear and concise plan as to how they intend to turbocharge renewables: hydrogen; hydro pump energy storage; onshore wind; offshore wind; solar; and tidal. Scotland has the resources. Scotland has the ability to deliver that energy security not just for people living in Scotland, not just for people living in the rest of the UK, but for our friends and allies in Europe who need that energy security now more than ever. We need the Government to come forward with that plan and to do so now.
Finally, as I said earlier, food prices and fuel prices are soaring. When will the UK Chancellor finally set down his silver spoon, pick up his cheque book, and deliver the support and security that people so badly need?
Helen Whately
I am not sure I heard exactly the specifics of the hon. Gentleman’s question, but in general there is already a lower VAT rate on fuel. Overall, however, if the question is whether we should have no VAT on fuel, the Chancellor has spoken about how that would in fact disproportionately benefit wealthier households, so it simply cannot be the right thing to do when it is the less wealthy households who face the greatest challenges in paying their energy bills.
The list of what we are doing in many different ways to help households goes on and on. Increasing fuel prices are indeed a global issue, not unique to the UK. The price of crude oil has increased sharply over the past year, increasing the price consumers pay at the pump. That is why we have taken action by freezing fuel duty; drivers are being protected by the 12th consecutive year of fuel duty freezes, with the average car driver paying around £15 less fuel duty per tank, saving them a cumulative £1,900 since 2011 compared with the pre-2010 fuel escalator.
On housing, the Government are maintaining the increase to local housing allowance rates for private renters on universal credit and housing benefit in cash terms. That increase was worth an extra £600 on average in 2020-21 for more than 1.5 million households. An additional £140 million has been provided this year for discretionary housing payments for those eligible for housing support who need extra help. All that is on top of existing support for families through the welfare system, which this year will add up to £240 billion of support, including £41 billion on universal credit and £105 billion through the state pension.
Turning specifically to Scotland, on top of our energy bill support scheme, which applies there, the council tax measure in England means the Scottish Government are receiving almost £300 million more than would otherwise be the case, which they can use towards cost of living interventions.
This Government will always do what we can to help those in need, and our actions speak for themselves, but we are also determined to help people to help themselves. The Government’s plan for jobs is helping people into work and giving them the skills they need to progress and earn more, which is the best approach to raising living standards. The Government are building on the success of the plan for jobs with a total of £6 billion on labour market support for the three years to 2024-25, providing targeted additional support to help at-risk groups find work, including younger and older age groups, the long-term unemployed and people with disabilities.
Why are we doing that? Because we know that work is the best way for people to get on, to improve their lives and support their families, and because households on universal credit are at least £6,000 a year better off in full-time work than out of work.
Stephen Flynn
I mentioned earlier, and indeed the Minister will be aware, that energy prices for households are rising 14 times faster than any pay rise they may receive if they happen to be in work. What does she say to that? How is that a good thing for consumers?
Helen Whately
As I was outlining—I do hope the hon. Gentleman was listening—we have put multiple interventions in place to support people with the rising cost of living. Specifically on energy prices, on the one hand we have the price cap and on the other, the package of £9 billion in support announced literally last month, which his motion says he would like to scrap.
On top of everything we are doing to help people with the cost of living, we are helping people to help themselves through our plan for jobs, and that plan is working. The UK was the fastest-growing economy in the G7 last year, and the International Monetary Fund forecast, produced before Russia’s invasion of Ukraine, was for us to be the fastest-growing major advanced economy again this year. Unemployment has now fallen to 3.9%, below its pre-pandemic rate, and payrolled employees are at a record high.