Before we begin, I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with current Government guidance and that of the House of Commons Commission. Please also give one another and members of staff space when seated and when entering and leaving the room.
That this House has considered the cost of living in the UK.
I am delighted to have secured this debate today. It is very timely, and I honestly do not think that anything occupies the minds of constituents in North Ayrshire and Arran or indeed any other constituency more than this issue. It affects everyone. Everyone has noticed that their monthly outgoings are rising. Energy costs are up. Food prices are up. Fuel prices are up. Clothes prices are up. In that context, it is no surprise that consumer borrowing is also up, which will throw many into unsustainable debt as they struggle to keep up with essential bills. There can be no doubt that we are caught up in a genuine, biting cost of living crisis. It is simply not good enough that while our families, our communities and our pensioners are suffering, the Government are eating themselves alive over whether the Prime Minister knew he was actually at a party when he attended a party at the address where he lives.
I want to begin by saying a few words about the cost of energy. Gas and electricity bills are expected to rise significantly in April, when the energy price cap is predicted to reach £2,000 a year or £165 a month. That represents a 45% increase, although there are reports of even steeper rises. It is no wonder that National Energy Action believes that 6 million households will be in fuel poverty by April. That is a 50% increase from last year and it will hit hardest the poorest families, who spend most on energy as a proportion of their income. The reality is that wages are simply not keeping pace with the rise in the cost of living, as the Office for National Statistics has highlighted, with the Office for Budget Responsibility indicating that average real wages will be lower in 2026 than they were in 2008. Instead of a rising price cap, an emergency financial package must be introduced to support the most vulnerable and help families to cope during this crisis. The cost of living crisis is real and will only worsen as energy bills rise, alongside regressive tax hikes and inflation, pushing more and more people into poverty.
I thank the hon. Member for securing this vital debate. Behind those headline figures is a 30-year high in inflation. As she rightly stated, that disproportionately affects the poorest in our communities. Jack Monroe, known on Twitter as BootstrapCook, has written for The Guardian and referred to those real-life experiences. For example, a 500-gram bag of pasta that was 29p is 70p today. That is a 141% price increase. And it goes on and on and on. The hon. Member is right to point out that people on universal credit have had that massive cut of £1,000 a year or £20 a week. That money must be restored.
I absolutely agree with the hon. Gentleman that the cut to universal credit is beyond words in its cruelty and its insensitivity to the struggles that real people face every day. It is a cruel irony that, just as the Scottish Government introduced the Scottish child payment, the UK Government chose to remove the £20 universal credit uplift across the UK—pulling the rug away from struggling households in Scotland. That example really crystallises a tale of two Governments.
Yesterday, I heard hon. Members in the main Chamber say, “If the SNP is so concerned about the cost of living crisis, it should do more in Scotland to support people who are suffering.” I say to the Minister that in Scotland the hated Tory bedroom tax—a tax, incidentally, that hits the disabled hardest—has been fully mitigated by the Scottish Government. I do not have time to mention all the support that the Scottish Government have brought in, using their own fixed budget, to support those who are suffering. It is deeply ironic that Members in this House talk about how the Scottish Government could do more when they are the very people who imposed the constraints that limit the Scottish Government’s powers to do just that. Give us the powers; if we have the powers, we will do more. The irony of calling for the Scottish Government to do more while tying their hands behind their back is well noted in Scotland.
However, the UK Government have a rich array of powers with which they could help to tackle this cost of living crisis—if the political will existed. They could introduce a real living wage. A real living wage would, as it says on the tin, relate to the cost of living—unlike the current, pretendy living wage. They could increase statutory sick pay, which is among the lowest in Europe. Unless the real living wage replaces the pretendy living wage, more and more people will find that they have less to live on as their pay is eroded by the rising cost of living.
I am grateful that my hon. Friend mentioned energy prices. Does she agree that the UK Government’s penchant for reducing investment in onshore wind farms, as well as removing subsidies for offshore specifically in Scotland, undermines not only renewable energy but the production of the cheapest energy that this United Kingdom of Great Britain and Northern Ireland can provide, which would otherwise lower energy costs for our constituents?
Absolutely. That is yet another example of this Government’s skewed priorities—no joined-up thinking, no strategic thinking. Of course, at the moment, they are a Government who are not focused on governing, but are tearing themselves apart with their own internal struggles.
However, there is action that the Government can, and should, take to see people through this perfect storm of rising costs. To stand by and do nothing to alleviate this very real crisis while so many of our constituents across the UK suffer—including the Minister’s constituents—is not acceptable and, as I said, shows skewed priorities. It punishes those on low pay. It punishes those seeking work and pushes them further away from the job market, because poverty creates barriers to work that need not be there. Perhaps worst of all, it punishes those whose health prevents them from working. Among all that, it punishes the children in all the households that are struggling during these difficult times, because it blights their childhood with poverty. I can tell the Minister that the scars of childhood poverty do not easily heal and are never forgotten. If this Government wanted to, they could do more. They could use their powers for good, to protect and support those they are supposed to serve. I urge the Minister to make the case to his Government to do so.
I am grateful for the opportunity to take part in this worthwhile and timely debate. I apologise for not being able to take part in yesterday’s debate, but it is really important that we talk about how we can help households and families in our constituencies that are facing the real pressure of increased house prices, and all the anxiety and difficulties that go with that. I agree that the Government must do what they can to mitigate increasing living costs, particularly for low and fixed-income families.
I regularly host drop-ins across west Cornwall, where people can come along and raise whatever issue they like. I try to do so in every part of my constituency: like many Members present, I represent a large rural area, and it is important that I get to where people are. Many people, pensioners in particular, have come to me in recent months. Those households have worked hard to plan for their retirement, but find that their pension has become less able to meet their basic living costs—a position that they never expected to be in. These are not just pensioners on the state pension who might be getting pension credit: there are those who have a small pension in addition, but are finding that costs are outrunning their income.
I have also come across several families whose rent costs have rocketed over the past couple of years—an issue that I raised in this Chamber last month. It is really important that the Government look at how we can manage and protect housing supply, particularly in places such as Cornwall, which is a very attractive place to visit and possibly an attractive place to buy a second home or bolthole. That forces up the price of homes for the people living there, and that is true for lots of other constituencies, particularly coastal ones. The Government must look more earnestly at increasing the availability of rental properties and homes to buy by protecting them for permanent residents. When we build new homes, it is important that they meet a local need, as is the case in St Ives, which is part of my constituency. This is about the cost of housing and rent.
Would not part of the solution be to build homes for social rent, allocated to local residents? Fewer than 6,000 of those homes were built last year. Would the hon. Member agree that homes for social rent must certainly be a big part of the solution?
I completely would, and I welcome that intervention. However, in parts of the country, including my constituency, families with fairly decent incomes who would never qualify for that list are also seeing their rents rocketing. We are talking about the nurses, teachers and police officers we need to come to take jobs in Cornwall, or stay in the county, and who cannot afford the rents they are expected to pay.
I absolutely agree with the hon. Gentleman’s point. Cornwall County Council, now under a Conservative administration, is ramping up the provision of social rental properties. That meets the needs of a particular group of constituents, but does not reach or solve the whole problem.
In view of the rising costs of housing, Cornish MPs are arguing in favour of protecting new buildings for permanent residents only, which will help to protect those homes for local need. I agree that we need to look at every tool available to ensure that people have secure homes for life that they can feel safe in. Those homes should be built efficiently, so that rising energy costs, which I will address in a minute, can be managed, so that we are not just heating up the planet when we are trying to heat our homes.
I want to touch briefly on energy costs. My understanding at the moment is that the cost of production of energy has not risen. Companies that are producing it, not all of them based in the UK, are making colossal sums of money due to demand. I am interested to hear from the Minister what the Government are looking to do to bring the cost that suppliers pay for energy closer to the cost of production.
Another area to look at is the feed-in tariff. For example, customers are seeing energy prices increase and that is expected to carry on this year, but those who are feeding into the energy supply, through solar panels or wind turbines they have invested in, are not seeing any change in the money they receive for that energy. It seems sensible for the Minister to look at whether the feed-in tariff should be tracked against the energy costs people pay.
Does the hon. Gentleman agree that energy market reform also requires a reform of transmission charges? While in most parts of England a subsidy will be given to provide energy, north of a certain line north of London people have to charge to produce energy to put it on to the national grid, and that reduces the ability of renewables to lower energy costs.
I agree that there is a need for a time out to properly look at the energy market and how it works. The price cap we introduced a few years back was helpful and certainly it is helping right now; my understanding is that the variable tariff is the best to be on. However, I met policy advisers some years ago to discuss some sort of block tier energy price, where the first units paid are extremely cheap or free and the more units someone uses, the more they have to pay. We have to retrofit the poorer homes to make sure that does not penalise them, but there is a need in the energy market to make those who can afford it contribute to the cost of energy for those who cannot. It is not a luxury; it is something that we need to care about. We do care about it, and we need to do something.
Order. I remind hon. Members that I will be starting speeches from Front-Bench spokespersons at 10.28 am and no later than that. Can hon. Members adjust their times accordingly?
9:56 am
Deidre Brock (Edinburgh North and Leith) (SNP)
Thank you, Mrs Cummins. It is a pleasure to serve under your chairship. I congratulate my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) on facilitating the debate. It is such an important one at this time and I am pleased to contribute.
The cost of living crisis being experienced around the UK has been created and compounded by a series of UK Government failures, all reaching an awful crescendo, it seems, at the same time—a decade of austerity, savage cuts to welfare, chaos and shortages brought by Brexit, inept handling of the pandemic and Ministers’ shameful failure to mitigate and anticipate against rising energy prices. As is so often the case under the Government, it is those with the least who will suffer the most from the price cap increase.
The Joseph Rowntree Foundation finds that households on low incomes will spend a staggering average 18% of their income, after housing costs, on their energy bills from April. For single adult households on low incomes that rises to an extraordinary 54%: an increase of 21 percentage points since 2019-20. The climate deniers among the Tories—one in 15 of them according to a recent survey by The Independent, although I will point out that the hon. Member for St Ives (Derek Thomas) is not among their number—like to peddle a narrative that environmental levies are to blame for high energy costs. However, analysis by Carbon Brief has found that energy bills in the UK are nearly £2.5 billion higher than they would have been if climate policies had not been scrapped over the past decade.
Those cuts included gutting energy-efficiency subsidies, effectively banning onshore wind in England, as my hon. Friend the Member for West Dunbartonshire (Martin Docherty-Hughes) mentioned, and scrapping the zero carbon homes standard. The latter move, as Lord Deben, the Chair of the Committee on Climate Change has pointed out, has resulted in hundreds of thousands of insufficiently insulated homes continuing to be built in the years since, effectively pushing the costs for bringing their insulation and energy systems up to scratch on to homeowners and off housing developers’ balance sheets. Those cuts were made after a front page by The Sun in November 2013 reported that the then Prime Minister David Cameron’s answer to rising energy bills was to get rid of “all the green crap”.
The hikes in energy prices, along with the cuts to universal credit and increasing national insurance contributions, are forcing local and national Governments to take even more action to protect our citizens. In the past eight years, the Scottish Government have spent £1 billion tackling fuel poverty and improving energy efficiency in homes and created a £10 million fuel and security fund, which gives direct help to those who might otherwise have been forced to ration or disconnect altogether from their energy supply. The Scottish Parliament also passed the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019, which commits to drastically reducing the number of households living in fuel poverty in Scotland by 2040. Even before the expected energy price cap rise in April, one in three Scots is struggling to cover their energy bills—a Citizens Advice Scotland survey found that 36% of people in Scotland say their energy bills are unaffordable.
10:05 am
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In addition the ending of the uplift to universal credit and working tax credit is imposing the biggest overnight cut to welfare in 70 years. The situation for too many of our constituents is critical. The changes to the universal credit taper rate are welcome, but they are not enough to help those who are struggling with this perfect storm of financial pressures. Let us not forget that apart from the suffering that the cut in universal credit will cause for those on low incomes, it will take £460 million out of Scotland’s economy. That money would be spent in local shops, stimulating local economies in communities in each and every town and city.
The sad fact is that, shamefully, the UK has the highest poverty rate and the worst levels of inequality in all of north-west Europe, with 11.7% living in relative poverty. Around two thirds—68%—of working-age adults in poverty in the UK live in households with at least one adult working. That figure is at an all-time high. Poverty is driving unsustainable debt, with around 3.8 million households carrying an estimated £5.2 billion of arrears in household bills—a figure that has tripled since the start of the pandemic. People are borrowing more to pay for basics and essential bills.
Further, the Chancellor could cut VAT on energy bills and provide emergency loans to energy companies that are teetering on the brink. He could rule out a rise in the energy price cap and reintroduce the £20 per week uplift in universal credit. If the political will existed—and I fear that it does not—the UK Government could replicate the Scottish Government’s child payment across the UK.
As household energy bills soar, fuel costs are rising too. That does not just hit motorists hard; it also has a wider impact on industry because it pushes up the price of food, goods and services. Amid all the pain being suffered by our constituents and communities, we are approaching the highest tax burden since the early 1950s because of the national insurance hike. The consequences for our poorest could not be more stark; they could barely be more harsh. The national insurance hike means that workers earning as little as £10,000 will soon pay a national insurance rate of 14.25%, regardless of income. If student loan repayments are included, graduates earning just over £27,000 will pay a marginal tax rate of 42.25%—and the Tories call themselves the party of low taxation! All of that will act as a drag on recovery. UK consumer confidence is at its lowest level for 11 months, as people understandably worry about surging inflation, which is expected to rise to a staggering 7% by the spring.
It looks much bleaker when we factor in the Brexit effect, which I know the Government do not like to talk about, but let us do so for a minute. The Office for Budget Responsibility—the UK Government’s own forecaster—suggests that the worst is yet to come. Make UK is an organisation representing 20,000 manufacturers, and it has said that Brexit will undoubtedly add to soaring consumer costs this year. Squeezed supply chains are under pressure, with customs delays, border red tape and labour shortages, and additional costs ultimately borne by consumers.
Last month, as the hon. Member for Weaver Vale (Mike Amesbury) indicated in his intervention, we saw £15 added to the average price of groceries. The rate of food price increases is set to increase further this year, just as the national insurance hike is set to bite into pay packets in April.
Let us not forget the promises that were made—the pictures that were painted of the sunny uplands—as we approached Brexit. We were told that VAT on energy bills would be scrapped. Now we are told we cannot do that because it would be a “blunt instrument”. We were told that the price of food would go down. In the wake of Brexit, this message slightly changed to there will be “adequate food”, but we see the price of food rising fast.
It seems that there is one rule for one and one rule for another. As the Minister will stand up and tell us, there are lots of reasons why he cannot do more, there are lots of reasons why the Government cannot do more and hard choices have to be made. In that context, I cannot help but remember the words of Lord Agnew yesterday when he talked about the £4.3 billion of covid loans conveniently written off by the Treasury. He said “arrogance, indolence and ignorance” were at the heart of Government and were freezing “the Government machine”. He said:
“Schoolboy errors…allowing more than 1,000 companies”
that were
“not even trading when Covid struck”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20.]
to have loans could not be justified. I wonder how much pain people like the ordinary man in the street would have been saved by a cash injection from the Treasury of £4.3 billion.
We cannot forget the poor deal for pensioners in this crisis. The WASPI women—the Women Against State Pension Inequality Campaign—have already been left high and dry as their pension age was increased with little or no notice, throwing their retirement plans into chaos. I want to head off once again the allegation that if the SNP Government are so concerned, they can help the WASPI women. I simply quote that section 28 of the Scotland Act 2016 prevents the Scottish Government from providing support on reserved areas, including pensions assistance or assistance by reason of old age. Once again, we need to burst the myth that the Scottish Government can solve the WASPI problem. It is a problem of the Government’s own making and it is down to them to fix it. If the Scottish Government had the powers, we would be happy to do so with all the levers of an independent country.
Those who have finally reached state pension age now find they are being clobbered again as the triple lock has been abandoned—right in the middle of a cost of living crisis. State pensions have to keep pace with the cost of living, otherwise, we will see older people languishing in poverty as the threat of a rise in morbidity from the cold looms large this winter. I will say that again, because it is outrageous: there is an expectation this winter that the death from the cold among older people will rise. I do not even know what to say about that, it is so appalling.
Pensioner poverty has risen to a 15-year high under this Government’s watch as 985,065 pensioners have been directly impacted by the breaking of the triple lock, despite the fact that UK pensions are the least generous in north-west Europe. Not only are they the least generous but they have been clobbered by this Government in the middle of a cost of living crisis. It is simply not good enough for the Government to fiddle while households, pensioners and one in four children in the UK suffer poverty as a result of the choices the Government are making—and it is a result of the choices they are making. The cost of living crisis is not inevitable, although of course there are factors at play such as global energy challenges and the all-too-predictable consequences of Brexit driving up prices due to supply issues.
There is no doubt that the energy market needs reform, but right now urgent help is needed for households most hit by energy prices. I heard the calls for a cut in VAT, but householders concerned about energy costs have already worked extremely hard to reduce the amount of energy they use, sometimes choosing not to heat their homes in order to feed their families. The VAT element of the bill for those families will be tiny: they might save £20 or £30, perhaps a little more, a year in VAT. If I owned several electric cars, a couple of hot tubs, maybe a swimming pool, and a massive house with lights on all the time, the savings I would make from the VAT cut would be significant. We are not helping the households that most need it with the headline-grabbing promise to cut VAT on energy.
There must be targeted and effective help for the families I have referred to, the pensioners, people on fixed incomes and low-income households. There should be cash to help with energy bills and, at the same time, an effective way to improve people’s homes. We have had lots of schemes recently where large amounts of money have been made available for people to retrofit their homes. In Cornwall, builders—people involved in construction—were already run off their feet with building homes and looking after Cornwall’s homes and did not choose to take up those offers. People came in from different parts of the country to retrofit homes, not doing it properly or effectively, and often going bust before they got found out.
Lots of Government money was wasted while the homes were not actually improved. The Government need to look carefully at how we retrofit homes, probably through local authorities, where that can be targeted and effective. Ultimately, not now but in the near future, the Government with their sizeable majority could properly reform the energy market so that the poorest families paid hardly anything—if anything—for energy, and those more demanding homes paid more.
I know how hard this is hitting many people in my constituency of Edinburgh North and Leith. For example, my constituent Imogen lives with her husband, two teenage children and very elderly parents, who live above her in a self-contained flat. Over the past two years, their heating bills have increased because Imogen’s husband is now working at home full time due to covid, she works part time at home, and her parents need the heating on a lot as they are in their late 80s to 90s and are now not very mobile.
After the family’s energy supplier went bust, they were shunted on to another one. The first direct debit was not taken, leaving the family in a state of uncertainty about how much they were paying. Eventually, Imogen was able to set up another direct debit, but only after numerous stressful attempts to contact the new energy provider, as the company did not attempt to contact them. The family’s current energy bills are approximately £3,000 a year, and that looks likely to increase to £4,500 after the rise in the energy price cap. As you can imagine, Mrs Cummins, she and her husband are extremely concerned about how they will cover such a hike. Many more of my constituents will be facing anxieties similar to those that Imogen and her family are dealing with, with many further facing that dreadful choice to heat or eat in coming months.
Citizens Advice Scotland says that of those struggling to cover their energy bills, 40% cite low incomes as a reason, while 12% say that inconsistent incomes make it difficult to afford to pay for their utilities. That is why the Scottish Government’s promotion of the real living wage across all sectors is so important, helping to ensure that Scotland has the lowest percentage of earners earning below that living wage in the UK.
Our Scottish Government public sector pay policy underlines our commitment to tackle poverty by introducing a public sector wage floor of £10.50 per hour from April 2022, with additional funding for local government to ensure that that applies to adult social care workers in commissioned services. The UK Government must act to make work pay by increasing minimum wage rates and the totally inadequate statutory sick pay, in line with the real living wage.
The Conservative Government’s contemptuous treatment of those on low pay is also reflected, of course, in their latest attack on lifeline welfare payments, with the enormous cuts in the incomes of families on universal credit and working tax credit. In Edinburgh North and Leith, 13% of working-age households were impacted, with 34% of that number being working-age families with children.
It all comes on top of more than a decade of Tory Government austerity, which the SNP Scottish Government are having to work very hard to mitigate. The fixed Scottish budget funds the Scottish Government’s priorities of tackling child poverty and inequality by targeting over £4 billion in social security payments. That includes the doubling of the game-changing Scottish child payment to £20 a week from April 2022. The Child Poverty Action Group welcomed that, calling it a
“lifeline for…families across Scotland”.
Consumer prices were 5.4% higher in December 2021 than a year before. That is the highest inflation rate recorded in 30 years. However, as we have heard already, food campaigner Jack Monroe’s excellent Twitter thread, which highlights huge price hikes for basics such as pasta, baked beans and rice, shows how that figure grossly underestimates the real cost of inflation for families on minimum wages, zero-hours contracts, and those forced to food banks. She also highlighted the manufacturers’ sneaky practice of making products smaller while keeping the same price—known as “shrinkflation”.
This Tory Government might be able to ignore Brexit chaos and the rampant cronyism, dark money and corruption in British politics, but they cannot keep ignoring poverty and people on low incomes any longer. As we have heard from my hon. Friend the Member for North Ayrshire and Arran, the UK has the highest poverty rate of any country in north-west Europe, and the worst inequality for every year of this century.
We call on the UK Government to urgently tackle the cost of living crisis by cutting VAT on energy bills and categorically ruling out a rise in the energy price cap. We must also see an emergency financial package to help families by reversing cuts to universal credit, delivering a low-income energy payment, matching the Scottish child payment UK-wide, introducing a real living wage, and increasing statutory sick pay in line with that real living wage. The UK Government could also choose to act now by providing everyone eligible for cold weather payment with a one-off payment to help those on lowest incomes with fuel bills. That would mirror what the Scottish Government will do when they take on responsibility for cold weather payments from next winter.
We must never forget that Governments, particularly those with all the economic levers of a normal country at their command, have choices. They can choose either to support, and treat with respect and dignity, those among us who need a helping hand, or to scorn their vulnerability and do everything possible to put obstacles in their way while sneering that they do not deserve our help. I know which Government I prefer.
The question must be asked: why is Scotland having to protect its citizens from the right-wing policies and vicious ideologies of successive Tory Governments when Scotland did not vote for those Governments? It is time for our independence and a fairer Scotland that does everything in its power to protect and support its citizens.