Before we start the debate, I would like to say something about the exceptional heat. I am content for Members not to wear jackets or even ties in Westminster Hall. Mr Speaker has announced similar arrangements for the Chamber. When the House returns in the autumn, Mr Speaker and the Deputies will expect Members to revert to wearing jackets and will strongly encourage male Members to wear ties when speaking in the Chamber and Westminster Hall. I call Ruth Jones to move the motion.
That this House has considered the impact of the cost of living crisis in Wales.
It is a pleasure to serve under your chairship this afternoon, Ms Nokes. Thank you for the warning about the heat. I am grateful for the opportunity to lead the debate on behalf of the many families in Newport West who have written to me, called me and messaged me with their stories, experiences and fear for the months and years ahead.
I was elected to the House three years ago. In that relatively short time, despite the devastating pandemic and all the pain associated with it, until now I have never seen such worry and fear in the eyes of my constituents. I am so angry that they have been forced into that position by the actions of this 12-year-old Tory Government. Let me be clear: this is a cost of living crisis made in Downing Street. The biggest challenge facing us all is that we have a caretaker Prime Minister who is more focused on hosting parties than attending Cobra meetings, and more focused on holding power than using power. He is so evidently uninterested in ensuring that the people of Newport West, of Wales, and across the United Kingdom have the support they need and the good government they deserve.
I have shared this story before, but it speaks volumes to the challenge that the cost of living crisis has placed on people in Newport West. My constituent says this:
“Thank you for responding to my e-mail Ruth Jones, these are my concerns. We are in a position right now where we’re not coping. Our energy bills have risen 54% and I am afraid that myself and many others will not be able to provide for our families. My husband’s parents are on a state pension of £82.45 a week, we are concerned for their welfare as they cannot afford to heat their home nor pay for food if these energy prices continue. Many of my friends are concerned for their own families too, we are all struggling, and instead of living, we’re surviving day to day. If these prices don’t change, we must have an increase in the minimum wage.”
That is just one example of the constituents’ emails that I get every day.
I thank my hon. Friend for giving way. She is making an excellent speech. I am going to hold cost of living crisis workshops throughout Cardiff North, such is the scale of worry and concern from constituents writing to me time and again. Does she agree that this is because of the inaction and complacency of this Government, who have failed to deal with the crisis?
I thank my hon. Friend for her intervention. The workshops sound an excellent idea. People are desperate and need such ideas. She is quite right that the obvious inactivity of the Government is the problem. This debate today is not about party politics or short-term political gain; it is about people’s lives. It is about housing, food, and the ability to have the fan on and be able to pay the bill. It is about survival.
Another Newport West resident wrote to me:
“I have one daughter, 12 years old. I am in full time employment and on benefits. I have cancer. Even before the surge in energy prices many people like me have been struggling to afford the essentials. The cost of weekly food shopping has risen, so has the cost of energy. My rent also increased recently. I have had to make cut backs on most things.”
Like colleagues across Wales, and indeed the House, I came into politics to make Newport West, Wales and our United Kingdom a better, fairer and more equal place to live, learn and work, and that remains my single focus. I hope today to give Ministers the chance to tell us how they can help us make life better for the people of Wales, but I am afraid that the response from Conservatives in Westminster and in Cardiff Bay to their cost of living crisis has been nothing short of insulting. They are out of touch, out of ideas and now out of time.
We cannot wait another day to act, because local people are worried about paying their bills and looking after their families, and have no basic survival abilities. At the same time, Ministers seem to be seriously suggesting that the answers to the challenges facing local people are dodgy loans and Tesco value products. The only conclusion I can draw from those suggestions is that the Conservatives are living on another planet. Although we are pleased to see the back of the caretaker Prime Minister, the current contest for the leadership of the Tory party means that we have no real Government in power. No decisions are being taken and there is no ambition for the people of Wales. There is no commitment to addressing their needs and no plan to get our country out of this mess.
I am grateful to my hon. Friend for raising prescriptions. Does she agree that, had the UK Government delivered on their pledge last year to introduce hormone replacement therapy for one annual payment, women in England would not face the pressure of choosing between feeding their children and paying for their HRT prescription?
My hon. Friend makes a powerful point. Prescriptions, medicines and HRT are so important to people—[Interruption.] Absolutely, they are free in Wales.
The average band D council tax bill in England is £167 more than in Wales. Even with the UK Government’s recently announced council tax rebate, households in Wales still pay £17 less than in England, which shows that people are better off with Labour.
People being better off with Labour is further exemplified by the Welsh Government’s £244 million council tax reduction scheme, which helps more than 270,000 households with their council tax bills. Although the crisis is real, the Welsh Labour Government are stepping in and stepping up. That helps people in Marshfield, Rogerstone, Pill, Caerleon and right across Wales.
The crisis of food poverty is continuing to grow across the United Kingdom, which is why the Welsh Labour Government committed to provide free school meals to all primary school pupils. An extra 196,000 primary school children benefit from that offer, which shows how the impact of the Tory cost of living crisis can be mitigated by Labour in power. The Welsh Labour Government announced in December 2020 that free school meals would be provided through the holidays to children in Wales through to Autumn 2022, and the First Minister committed to further widen access to free school meals overall. This Tory Government have had to be forced, shamefully and repeatedly, into U-turns by Marcus Rashford’s campaigning and the votes of Her Majesty’s Opposition in Parliament.
As I have said in the House before, the people of Newport West are looking for help. The caretaker Government have no plan to help people with heating their homes, filling their cars with petrol or feeding their families. Last year, I spoke in this House about the 9,000 families in Newport West who had their universal credit cut, and since then I have seen for myself the devastating impact that decision had on families in Newport West and across Wales.
I will focus today on the structural issues that face Wales, and ask what the UK Government do for Wales in policy terms. I very much believe in being part of the United Kingdom—I believe that together we are stronger—but we can use that power in ways that can be influential and really benefit every single person.
In the last 12 years, we have seen a massive growth in inequality in this country. We have seen the rich get richer and the poor get poorer; we see that in the millionaire lists and in the people turning up at food banks. So what do we need? We need a tax policy that is redistributive, whereby those with the broadest shoulders bear the greatest burden. What have the Government done? Well, they have put in some immediate support for the time being, but it is a stop-gap; it is not changing the system or the way we redistribute our money. They did that because Labour said, “Look, come on, you need to have a windfall tax. You need to get that money and redistribute it from the oil and gas companies, and make sure it goes into the pockets of people who are facing those enormous bills.”
Let us look at some of the taxation policies that we have had from this Government. There has been the raising of the threshold at which people pay income tax. In principle, that sounds a very good thing, but it is not the most effective way of using that money, because everybody benefits, up the whole scale; it wastes quite a lot of money on people at the top of the scale. By contrast, if we put in targeted support at the bottom, as tax credits were designed to do, we can get a lot more value for our money through redistribution and achieving equality.
What about VAT? One of the things we suggested could have been done this year was taking VAT off energy bills. Back in 2008, Labour reduced VAT from 17.5% to 15%, but now it is obviously up at 20%. VAT is also a very regressive tax, because everyone pays it; it is not a way to redistribute wealth.
Let me turn to the national income insurance hike, which hit people who are working, but did not tax unearned income . Again, that is not a helpful way of taxing people. That is not to say that we do not need money; of course we need money for the health service and the care service, but the way we raise it matters. Our cost of living crisis goes back to some of those fundamentals.
It is a pleasure to serve under your chairmanship, Ms Nokes. I congratulate the hon. Member for Newport West (Ruth Jones) on securing this important debate. It is also a pleasure to follow the hon. Member for Llanelli (Dame Nia Griffith), who made several important points regarding the situation we find ourselves in, most notably that it is the product of several failings over many years. I thank her for referencing some of the issues that rural communities face with the fuel and energy crises. That is something that I will focus on in my speech.
We have had a few opportunities in recent months to debate the impact of the rising cost of living on households and our communities. I am very grateful to the hon. Member for Newport West for securing this debate, because it allows us to focus on the impact it is having in Wales. As has already been mentioned, the April increase of 54% to the price cap has already caused a lot of concern and misery for households across Wales. I note that, as we debate today, there is speculation that the cap might rise again, in a few months’ time, to more than £3,000, with further increases expected when it is reviewed in January next year. That coincides, of course, with inflation soaring to a 30-year high and the UK facing the biggest fall in living standards since records began.
It is sobering to reflect on the fact that, following the April price cap review, the Welsh Government found that some 45% of households in Wales would fall into real fuel poverty. I shudder to think what the situation will be this autumn, when there will be increases in both the price cap and the demand for fuel to heat the winter months.
It is worth repeating a few of the statistics, just to give the background to the severity of the crisis. Domestic gas prices increased by 95% between May 2021 and May 2022, while domestic electricity prices, as we have already heard, rose by some 54%. In nominal terms, last April’s price cap increased the maximum for average bills from £1,277 a year to £1,971. Just last May, the chief executive of Ofgem said that he expected the price cap to rise by a further 40% in the autumn, to around £2,800. Perhaps demonstrating just how volatile and unpredictable the situation is, analysts now suggest that, rather than £2,800, the autumn price cap increase will actually surpass £3,000. If that happens, the price cap will have more than doubled in the last two years. That is why I think it is important that we discuss the sufficiency of the Government’s measures to date.
It is an honour to serve under your chairship, Ms Nokes. I congratulate my hon. Friend the Member for Newport West (Ruth Jones) on securing the debate, and it is an honour to follow the hon. Member for Ceredigion (Ben Lake).
It is also wonderful to see so many Welsh Labour colleagues present for this important debate. That is a testament to the proud and long history that Labour has and will continue to have in the Senedd and among the Welsh electorate more widely. I note that a considerable number of Welsh Conservatives are absent this afternoon—I cannot possibly think what is distracting them at the moment.
The shambolic Tory leadership might be a priority for some, but I remain focused on the issues that keep coming up when I speak to constituents across Pontypridd and Taff Ely. The single issue impacting people the most is without doubt the cost of living crisis, which is putting working families on the brink. The crisis is hitting every single corner of the UK, but it is right to have a debate about Wales specifically.
In this place, we often talk about the north-south divide in England, but the complex situation across Wales is all too often forgotten in that narrative. Recent research by the Centre for Cities think-tank shows that regions in Wales are among the hardest hit by the cost of living crisis across all the devolved nations. Research by the University of Bristol suggests that 22% of Welsh households are in severe financial difficulty, meaning that they are forced to do things like buy lower-quality food, shower less and even sell their belongings just to make ends meet.
In my constituency of Pontypridd and Taff Ely, the local Trussell Trust food bank in Treforest has had to extend its opening hours simply to deal with the swelling demand for its services. Only last week, Wales Online reported that some food banks in Wales are on the brink of running out of food. Demand is sky-rocketing, but the generous donations that food banks depend on to function are drying up, because people can no longer afford to donate and are themselves feeling the pinch. The teams running the food banks do incredible work in extremely difficult circumstances, but it does not have to be this way, and it should not be this way.
The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)
Will the hon. Lady say where the Welsh Government got the money from for those schemes?
It is not for Wales to come cap in hand to a Government in Westminster for what is rightly ours. We pay tax in Wales too and we are meant to be part of this United Kingdom. This is our money—we are not begging or asking for it. People in my constituency and across Wales are entitled to this money to help themselves. If the Minister will allow me, I will come on to the fact that in the recent uplift by the previous Chancellor, the right hon. Member for Richmond (Yorks) (Rishi Sunak), people in Wales got the equivalent of £9 a head, which is shocking and is nowhere near the amount of money that they need to survive the cost of living crisis.
We have done everything we can to empower local authorities such as mine to mobilise resources at a local level. The Welsh Government have held two cost of living summits attended by Welsh Government Ministers and key stakeholders from across Wales. Those events allowed grassroots organisations to directly inform the Welsh Government about the impact that the crisis is having on communities. In turn, they allowed the Welsh Government to target support at those most in need. I pay tribute to all involved in those summits for their incredible efforts to help the people of Wales.
Let us be clear that those measures pale in comparison with what the UK Tory Government have the economic firepower to achieve if only there was the political will. In Westminster, the Tories are completely asleep at the wheel. While the leadership contest continues to take centre stage, everyday working people and families will continue to struggle. Good governance starts at the top, which is why I am genuinely proud of the work that Mark Drakeford and the team in Wales are doing, despite the situation in Westminster.
Ultimately, people in Wales, including me, are tired of false promises. As we all know, the UK Government are the absolute kingmakers of gaslighting and U-turns. I cast hon. Members’ minds back to the spring statement, which I mentioned. The then Chancellor briefed the press that he was set to announce bold measures to support people through the cost of living crisis. He promised an increase in Welsh Government funding of just £27 million over the next year, which, as I stated, amounts to £9 a person in Wales.
Beth Winter (Cynon Valley) (Lab)
I congratulate my hon. Friend the Member for Newport West (Ruth Jones) on securing the debate. The people of Cynon Valley, Wales and the United Kingdom are suffering a cost of living emergency—it is not a crisis; it is an emergency. In April, in response to the crisis, I conducted a survey among local people in my constituency, and its results were truly harrowing—that is not too strong a word.
I will take a moment to focus on those results, because this is about millions of real people’s lives. I have sent a photocopy of the report that was produced to the Secretary of State; I am still waiting for a response, which I hope will be forthcoming. In excess of 650 local people responded within four or five days—an unprecedented number—which shows the severity of the crisis in Cynon Valley. Unfortunately, I am sure that is reflected across the UK.
Some 76% of people reported having to cut down on using heating in the last year and some 90% reported feeling worse off than this time last year. In Cynon, 81% of people reported that the cost of living crisis is impacting on their mental health, 78% are worried about paying the bills in the next 12 months, 61% of those on benefits have had to skip meals in the last 12 months and over half have had to borrow money in the last year. We also asked questions about the next 12 months, which were even bleaker in terms of the impact that the cost of living crisis is likely to have.
As I said at the outset, this is about real people and I want to quote what a couple of my constituents said:
“Both my wife and I work full time and don’t feel any better off. Most schemes are aimed at people who are on benefits, which I understand, but people need help who work.”
There is a massive problem with in-work poverty in this country. Another person said:
“It was already bad before the energy prices increased. Life genuinely does not feel worth living any more. I feel guilty for bringing my children into this awful mess of a world.”
That is the reality for millions of people.
This is a political choice, and it is a political choice caused by successive Conservative Governments. It is bringing misery, anxiety and despair to millions of people. We are the fifth richest nation in the world; this is not inevitable. It is a political choice.
It is not simply because of the pandemic or inflation, although that has made matters worse. For 12 years, we have seen and experienced austerity measures in this country and the Tories have overseen a reduction in wages, including holding down public sector pay for key workers. I have just come off a call with a number of trade unions and other organisations, and the National Education Union was saying that since 2010 there have been 20% to 25% real-terms cuts in their members’ pay because of the continuous pay freeze. It is not just about the cuts at the moment, but about the cuts over the longer term.
It is a great pleasure to follow my hon. Friend the Member for Cynon Valley (Beth Winter), who emphasised the depth of inequality, despair and impoverishment in her constituency and across Wales due to the cost of living crisis and a long history of cuts that we have seen disproportionately in Wales.
We are talking about Wales, and it is worth remembering that Wales is poorer, sicker and older. That was already the case before the austerity cuts began to bite from 2010 onwards. Let us put this in context. Austerity cut public services and welfare, and Wales is disproportionately reliant on public service jobs, has more older people on welfare and all the rest of it. That was the starting point. We know, from a University of York study that was published by The BMJ,that something like 50,000 extra people across the UK died from austerity.
Then, of course, we had covid. Again, we had the background of a poorer, sicker and older nation, where we would have expected, therefore, a much higher death rate. In fact, the death rate above the five-year average was something like 13% in Wales and 20% in England, but of course the average was much higher to start with because we had a poorer and sicker nation. The lower death rate was through the good governance of Mark Drakeford and his Welsh Government.
We are now coming to a situation after having had those massive cuts. Let us face it: in Wales, we are operating at 70% of gross value added, so average wages are about 70% of the UK average. We are having cuts and pay freezes in a very difficult situation, so people are suffering more. We have had Brexit. I know that the Minister is a big fan of Brexit, but 60% of Welsh trade was with Europe. In England, it is more like 48%. The problems that we have had, including problems with the Northern Ireland protocol, are again disproportionately hitting Wales.
Take a typical example of a public sector worker, for instance a nurse who is the only breadwinner in a house in the valleys, or wherever it is. If there are pay freezes on public sector workers, that house is impoverished. We have all heard the sorts of cases that were just mentioned: children who hold back half their free school meal to eat in the evening, because they do not have any food at home; children washing their hair with washing-up liquid; people not having the lights on, and so on. We know from the Trussell Trust that there are now 14 million people in poverty. There are, I think, 2.6 million people using food banks in the UK—up a hundredfold—and the majority of people who use food banks have some level of disability.
David T. C. Davies
If that is such a good idea, why are the Welsh Labour Government not doing it in Wales? They have the power to do so.
I know that, yes. It is not the Welsh Government’s decision: we do not have the money to do that, and it is not devolved. The Exchequer runs UK plc; we all know that. We do not charge the windfall tax. The Welsh Government are not in a position to introduce a windfall tax or nationalise the oil companies, sadly, although they have done something about rail.
David T. C. Davies
The Welsh Labour Government could raise tax to do that, if they wanted to.
I am not talking about raising taxes; I am talking about taking back the money that has been stolen from the travelling public by oil companies. They did nothing to earn that money: it was simply that Putin invaded Ukraine, and they said, “We’ll put the price up, take the money and fill our pockets.” The Government belatedly took a small share of that money, and now they are going to give 90% of it back to drill for more oil, when what they should be doing is investing in scaling up things like organic batteries. Swansea University has identified that the renewable energy from wind farms is only put into the grid at breakfast time and teatime, and is saying, “Let’s use that wind, create hydrogen, and put that hydrogen in the gas grid”—which takes up to 40% of hydrogen, as used to be the case for coal gas. That would reduce the carbon footprint.
It is permissible on a Wales-only basis, and that is what Swansea University suggests we do. Obviously, we would have to work in co-operation with the UK Government to do that, but the idea would be to put that gas into the grid, or put the hydrogen into cylinders and send it to Ceredigion in place of the oil, so that people in rural environments would have a lower carbon footprint and a lower energy bill.
Whether it is those innovations or whether it is the tidal lagoon, there is no shortage of ideas; what there is a shortage of is Government focus on greening the economy and powering us up in a sustainable way. Instead, they just go to their mates—the oil barons—who say, “You’ve had to do this windfall tax. Give us 90% back to drill for more oil and destroy the environment.” Look at the temperature outside! It is absolutely disgraceful. The Government would not even help us with the tidal lagoon. That is not going to stop, is it? Of course, they said, “We are not helping.” That does not make any sense, even though it will go on for 100 years. The council and the Welsh Government have had to deal with it on their own.
We need a Government who care about people and stopping them starving. People may have heard of Professor Amartya Sen, a Nobel prize-winning economist who had the joy of teaching me on one occasion. He wrote “Poverty and Famines”, and found that famines were not a function of food shortages, but a function of high prices, low wages and some food logistics. He was not writing about the UK at the time, but that is precisely what we are now finding in the UK. We see pockets of starvation. We should stop that. The Government are empowered to stop it and they should, whether by indexing social security and universal credit, increasing rent, investing in green technologies, or stopping obeying everything the oil barons say. I will leave it there.
It is always a pleasure to serve under your chairmanship, Ms Nokes. I congratulate the hon. Member for Newport West (Ruth Jones) on securing this highly important debate. I rise with some trepidation as the sole Scot among so many Welsh colleagues, but I rise in support of some excellent contributions.
As everyone is saying, this is about families who are right up against it. One of my daughter’s best friends is a single mother who lives in social housing. I sat down with her and said, “Can we go through the budget?” She went through how difficult it is to make ends meet, and how everything matters. Each week and each month is down to just a pound or two. That was a year ago, and we are where we are now, which is a very different situation indeed. It is with her in mind that I think of my huge, far-flung constituency. The hon. Member for Pontypridd (Alex Davies-Jones) said that this affects all of the UK, and it does—right up to the north of Scotland, which I have the honour of representing. The village of Altnaharra in my constituency is—
Very well. In that case, I will echo two points made by the hon. Member for Ceredigion (Ben Lake). We need a cap on the price of heating oil. As he said, so many homes in Wales have no alternative at all. They are off grid; they cannot use gas. I approached the Minister of State for Energy in March this year, and he said that it was not going to work because of a survey done in 2011 that said so. How different is our situation now from March of this year, let alone 2011? The first point made by the hon. Member for Ceredigion is absolutely correct. His constituents—and I might say, sotto voce, mine too—are petrified of their bills. They are really terrified. I am the oldest member of the Lib Dem group in this place; I am getting on. I know that old people feel the cold more than young people, and they worry about money more than young people. I go back to my young friend who I mentioned earlier on, who is trying to balance a budget. It is a pretty desperate situation.
The other point made by hon. Member for Ceredigion was about the lack of choice other than to use a car. The price hike on petrol and diesel is really cutting into budgets. Some years ago, a scheme was put in place for certain parts and certain postcodes of the UK. As he said, we seek to extend that to other needy areas, such as Wales and—dare I mention, also sotto voce; I fear that I am sailing close to the wind—the north of Scotland..
I have one final point, in a Welsh context. There is such a thing as digital poverty. We have social tariffs, but their take-up is lamentable. When we look at a food bank anywhere in the UK, many of those people would not quite quality for the Department for Work and Pensions triggers to be put forward for a social tariff. However, we still look at them and say, “I bet you need help.” We need to mobilise. All of us—the Government—need to think about getting people access to social tariffs. It is about information, and working through local authorities and, maybe, banks. Who knows? There could be a huge, much bigger take-up, which would help families all over the UK to balance their budgets.
It is a pleasure to serve under your chairship, Ms Nokes. I add my congratulations to my hon. Friend the Member for Newport West (Ruth Jones) on securing today’s debate and the passionate way in which she started the case.
It is clear that the Government have a case to answer for their cost of living crisis, which is so damaging for people in Wales and across the UK. The Government’s response to the deepening crisis has been hugely disappointing. At the moment, they are too wrapped up in internal wrangling to care about dealing with the issues that matter to people. It is clear that the Government are out of touch, out of ideas and out of excuses. After 12 years of Conservative Government, we have a high-tax, low-growth economy, with the country suffering the biggest drop in living standards since records began, and the highest tax burden since world war two.
The Government initially refused to implement Labour’s policy of a windfall tax, until the pressure was too much and they finally caved in and had to take action. The Labour party’s plan to deal with the cost of living crisis would cancel the rise in national insurance contributions, which has come in during hugely challenging times. Labour would also cut VAT on home energy bills, and the red tape that has been created by the Prime Minister’s chaotic Brexit. Our policies would make it easier to buy, make and sell more in Britain.
We have had a passionate debate this afternoon. It is disappointing, though not surprising, that we have yet to hear a Tory voice. There are no Tory MPs here to defend their record. We heard from my hon. Friend the Member for Newport West, who talked about the worry and fear faced by many of her constituents. She put the blame for people not being able to provide for their families squarely on the crisis in Downing Street. She highlighted that prescription charges in Wales ease the burden somewhat, compared with the £9.35 cost in England, and that council tax band D properties on average pay £167 less than in England. There is also the £244 million council tax reduction scheme that helps 270,000 households in Wales. All those are policies of the Welsh Labour Government.
I am sure my hon. Friend is aware of the food and hamper scheme that I have run in my constituency for the past six years. We provide food and hampers at Christmas and Easter, and during the summer. This year, more people who were previous contributors are becoming dependants. Does he agree that we are at a dangerous point, and that demand will eventually outstrip supply and we will not be able to help people?
I congratulate my hon. Friend on the excellent work she has done over many years on this issue. I absolutely agree that we are in danger of demand outstripping supply. I have talked to food banks and food support organisations in my constituency in recent weeks, and they all tell me of that concern. Week on week, they are extremely worried that their supplies of food will not be able to meet the ever-increasing demand.
Last week, I spoke to another couple, who go for a swim three times a week, which obviously helps with their health and wellbeing—it is supported by Welsh Government funding—but they use that opportunity to have a shower in the baths to save on water and heating at their home. The danger is that such examples are becoming normalised in 21st century Britain. That is worrying, scary and shameful.
I want to contrast the Tories’ record with that of the Welsh Government. As we have heard, the Welsh Labour Government have invested more than twice what they received in consequential funding to support households with the cost of living crisis. My hon. Friend the Member for Cynon Valley talked about the delivery of the £51 million household support fund, which is targeted at people who need the most support. The Welsh Government have doubled the winter fuel support payment to £200, which has helped 150,000 people across Wales.
My hon. Friend the Member for Newport West said that, from September, all primary schools in Wales will begin to receive free school meals; an additional 180,000 primary school children will benefit from the scheme. The Welsh Government’s warm homes programme has invested almost £400 million in more than 67,000 homes since 2011 to improve home energy efficiency across Wales, saving families money on energy bills. More recently, 57,000 unpaid carers across Wales became eligible to receive a £500 support payment.
The budget available for the Welsh Government to support the people of Wales is hampered by the reality that, over the spending review period, it is likely to be worth at least £600 million less than it was when it was first announced last autumn because of rocketing inflation. The Welsh Government’s spending power is likely to deteriorate further because of that. That is why they have called on the UK Government to update their settlement to reflect the significant impact that inflation is having on important budgets in Wales.
The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)
It is a pleasure to serve under your chairmanship, Ms Nokes.
I thank the hon. Members for Pontypridd (Alex Davies-Jones), for Newport West (Ruth Jones), for Llanelli (Dame Nia Griffith), for Swansea West (Geraint Davies), for Ceredigion (Ben Lake), for Cynon Valley (Beth Winter), for Cardiff North (Anna McMorrin), for Swansea East (Carolyn Harris), for Merthyr Tydfil and Rhymney (Gerald Jones), and—last but certainly not least—for Caithness, Sutherland and Easter Ross (Jamie Stone). I may have left somebody out; if I have, I apologise. A lot of points were raised during the debate and I will try to deal with them as best I can within the confines of the time that I have.
First of all, may I make it absolutely clear that, although I am pleased that we are having a debate on this matter, there is absolutely no doubt at all in my mind or the mind of anyone in Government not only that we have a cost of living challenge, but that it is a global matter? Hon. Members can just look at the statistics for any countries across western Europe or the rest of the world to see that the problem is not an isolated one; it has come about for reasons that I will turn to in a minute. Before I go into detail on the UK Government’s commitments to support the people of Wales, I just want to make it clear that things such as the pandemic and the war in Ukraine have had a significant effect on the global economy.
The UK Government have been steadfast in our support for the people of Wales throughout these global economic challenges. We have certainly not been asleep on the matter of Wales—far from it. My right hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart), who is my former ministerial colleague, and his successor as the Secretary of State for Wales, my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), who of course is from Llanelli, are well aware of the problems in Wales and have been raising them at all times in Cabinet.
I often stood in for Mr Hart when he was unable to attend meetings—
As I was saying, I stood in for my right hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) many times in Cobra meetings and I know how hard he was working. Incidentally, on the matter of Cobra—I know this issue came up earlier; it may have been the hon. Member for Newport West who mentioned it—it is not normal for the Prime Minister to attend all Cobra meetings, any more than it is normal for the First Minister to attend all Cobra meetings. I attended a number of them during the covid crisis, when—quite rightly—the Welsh Government were represented by the Health Minister, or sometimes by another Minister from the Welsh Government. That is normal, because the principle of Cabinet Government is that Cabinet Ministers, whether they are in the Welsh Government or the UK Government, are there to take decisions. Therefore, quite correctly, we did not always expect to see either the First Minister or the Prime Minister at Cobra meetings. Sometimes they were there; sometimes they were able to allow other Ministers to take their place.
Although I understand the point that the Minister just made, the last two Cobra meetings have been all about the climate emergency, which is happening now. I am surprised that the Prime Minister should not be in his place at these Cobra meetings and I suspect the whole country is surprised, too.
David T. C. Davies
I do not know whether the First Minister was at those meetings, but I imagine that somebody from the Welsh Government was. Does the hon. Lady know whether the First Minister was there, or did the First Minister send a representative? I do not know, but it would be interesting to find out, because the point is valid: the First Minister of Wales should have enough confidence in his Cabinet Ministers to know that they can go along and represent the Welsh Government at Cobra meetings, just as the UK Prime Minister does. Anyway, let us not go down that—
The Minister’s basic proposition is that this cost of living crisis is some sort of global issue. Will he accept that the issue is about the level of underlying resilience before these global shocks occur? If the rate of growth under the Labour party had continued thereafter, according to the Institute for Fiscal Studies, the average wage would be something like £13,000 better, so we would be in a much better place to take the shocks. Instead, we are impoverished by the Minister’s party.
Order. I remind hon. Members and the Minister that they should stick to the question.
David T. C. Davies
If we are going to have an economic history lesson going back to 2010, we will have to look at the enormous amounts of money that the then Labour Government borrowed, the financial crisis and its impact, and then the impact of covid and then a war. Generally speaking, every 10 years or so, a Government will face a serious crisis of global proportions. It could have been the fall of the wall in 1989.
Let me go back to what the Government have been doing. We have been steadfast in our support. We have provided more than £37 billion across the UK to help people with the cost of living challenge. Millions of the most vulnerable households across the UK will receive at least £1,200 of one-off support in total this year to help with the cost of living. The maximum possible benefit for a household is more than £1,600. We put in place a targeted £12 billion energy bill support scheme for domestic electricity customers in Great Britain to help with rising energy prices. We are supporting people across the UK with one-off cost of living payments, including £650 for 8 million households on means-tested benefits, £300 for more than 8 million pensioner households and £150 for around 6 million people who receive disability benefits. We are increasing the national living wage by 6.6% to £9.50 an hour, which was also mentioned here. Along with increases to the national minimum wage, we expect to be able to give a pay rise to 120,000 workers in Wales.
We also want to ensure that people across Wales keep more of what they earn. We are raising income tax personal allowances and freezing alcohol and fuel duty, saving car drivers up to £15 every time they fill up. We have reduced universal credit taper rates from 63% to 55% and we are increasing universal credit work allowances by £500 a year. Those together will see households keep an extra £1,000 a year on average. This July, we raised the national insurance contribution threshold to £12,570, meaning a typical employee will save more than £330 this year. Frankly, I could go on and on.
Opposition Members may say we are not doing enough, but to say that we have slept through this crisis and do not care is ridiculous and outrageous. I have lists and lists of stuff that the Government have been doing to support people across Wales. It is a £37 billion package. To try to suggest that there is not an enormous amount of work going on or that we do not recognise the problem is unfair. We absolutely recognise the problem—I cannot say it enough times. There is a cost of living challenge out there and there are people suffering. I do not want to hide from that in any way. At the same time, it would be nice if Opposition Members could at least recognise that when we put £37 billion into a whole host of schemes, it is deeply unfair to suggest we do not know about the challenge, we do not care about it and we are doing nothing about it. That is simply incorrect.
To take one example, the hon. Member for Newport West, who I greatly respect and who I appreciate is a hard-working MP, made a point about prescription charges. Yes, prescription charges are free to everyone in Wales. Wonderful. I get a free prescription as a Member of Parliament. In England, the number of people who get free prescriptions is very large. People in full-time education, who are pregnant, who have certain medical conditions, NHS in-patients and people on income support, income-based jobseeker’s allowance, employment support allowance, pension credit guarantee or universal credit. Anyone who faces difficulties will not have to pay for their prescription in England, but the hon. Lady did not make that point. She gave us half the story and gave the impression that everyone is paying for their prescriptions in England. That simply is not true. In fact, it is rather more progressive to target free prescriptions at those who need them because they cannot afford to pay than just to give them out to everyone.
I want to raise a point about the English prescription charge. Is the hon. Gentleman aware that men in England who need Viagra are able to get it on prescription?
David T. C. Davies
I was not aware of that, although I would be registered for it in Wales if I was. I do not think the hon. Lady got around to making her fair comment—no doubt the press can have some fun with that. I think she was also going to lead into the situation with women and the menopause; there is possibly an unfairness that needs correcting. She has been very good at raising that issue, and I praise her for it. I am not pretending that we get everything right all of the time, so I always listen to the hon. Lady with interest, because she can sometimes shed light on things that need changing. There might be an unfairness, but I am not here to discuss health policy; I am sure the hon. Lady will raise her point elsewhere.
To go back to Wales, this July we raised the national insurance contributions and I am also pleased that the Welsh Labour Government have used the £180 million Barnett consequentials from the UK Government to match the UK Government’s £150 council tax rebate offer in England. Frankly, that was a scheme brought about by the Conservative Government: the money was given to Wales, and I am delighted that Welsh Labour are following our lead in this. If hon. Members want to take the credit for it, that is fine, but let us remember that it was a Conservative Government policy, brought about by a recognition of the problems that the current crisis creates.
Our support does not end there. We are expanding eligibility for the warm homes discount by almost a third, meaning that 3 million vulnerable households across the UK will benefit as a result. We are increasing the extension of the warm home discount, and shielding the most vulnerable across the UK from the impact of global recessionary forces. I am somewhat concerned because I think, Ms Nokes, you are about to inform me that I am about to run out of time.
Thank you, Ms Nokes. There are still concerns about the cost of living and the challenges ahead, not only for Wales but for the whole of the UK. The one simple thing that I want to do is reassure hon. and right hon. Members present that the measures we have put in place recognise that, and we will continue to put more in place over the next year. We recognise the cost of living challenge, and we want to see our great nation through all adversities. Thank you; diolch yn fawr.
I thank you, Ms Nokes, for your astute and wise chairing this afternoon. I thank the Minister for his speech; I am quite sure that the debate could have gone on all afternoon. I also thank all hon. Members who have spoken on the Opposition side: they have made such powerful speeches and interventions—intelligent, knowledgeable contributions—and demonstrated that they are in touch with their constituents. It is so disappointing to see that not a single Member from the Government side felt able to make time for this debate—I do not include Parliamentary Private Secretaries in that. I am sure they have good reasons for not being here, but I am sure their constituents will equally be asking why they were not.
This has been a collegiate debate, but make no mistake: the friendliness of the debate cannot hide the stark underlying message that the people of Wales are suffering massively from the cost of living crisis. Our Prime Minister has been asleep at the wheel, and we need him to go now. We need solutions for the Welsh people, and we need them now.
Question put and agreed to.
Resolved,
That this House has considered the impact of the cost of living crisis in Wales.
That inaction stands in stark contrast to the decent and pragmatic leadership of the First Minister of Wales, Mark Drakeford. The Welsh Labour Government are not just on the side of the people of Wales; they spend every day doing what they can to mitigate the impact of the Tory cost of living crisis. They have taken a number of steps, which I am sure other hon. Members will mention. In addition to those things, free prescriptions continue to help people across Wales to keep more of their hard-earned money. I note that prescriptions in England under this Conservative Government are currently £9.35 per item.
It is not just universal credit: older people and pensioners are at the sharp end of the Tory cost of living crisis, and they urgently need the Government to act. Pensioners spend twice as much on their energy bills as those under 30, and face spiralling inflation, with the prices of petrol, food and energy all soaring. Let us not forget that almost one in five pensioners now lives in poverty.
Our young people are facing the fierce winds of this crisis, with low wages, rising rent and the cost of living going through the roof. My constituent Bobbie said this:
“Hi, Ruth Jones. I would just like to ask a question, see if you can help. I work 2 jobs most weeks between 50 and 60 hours per week just to live. I get paid minimum wages for both jobs. My current outgoings are £1,200, and there is not much left when I pay the petrol, the electricity and done my food shopping. Where is the help for people like me?”
Bobbie is right. Where is the help for people like her?
I pay tribute to some of Britain’s largest charities, including Oxfam, Save the Children and Fuel Poverty Action, which have formed a new campaign coalition—Warm This Winter. The coalition is calling on the Government and all those who seek to lead the Government to support plans to prevent a catastrophic winter energy crisis. Although we currently face record high temperatures, in just a few months families will be struggling again to heat their homes. Let us not forget that all this shows how much the impacts of the climate emergency can affect all parts of our lives.
Rather than help those in need, what are the Conservatives doing? They have whacked up national insurance payments at the worst possible time, hitting working people hard. And let us not forget how Welsh Conservative MPs have used their place and their votes in this House: they voted to cut the £20 universal credit uplift; they voted against free school meals for children during school holidays; they voted for the increase in national insurance contributions; and they voted against a windfall tax. I suspect that the people across Wales, from Delyn to Clwyd South and from the Vale of Glamorgan to Bridgend, will be very clear about their views, needs and wants come the general election that our country desperately needs.
We live in difficult times, but for all the global forces facing us and the world around us, ultimately we need our Government to act, and to act now, because the cost of living crisis is costing livelihoods, costing lives, and costing businesses in Wales and across the UK. Enough is enough—we cannot waste any more time. My message to the people of Wales is simple: help is on the way with a Labour Government, and the sooner the better for all of us.
I will move on now to the Department for Work and Pensions. We all know that the transition to universal credit has produced all sorts of anomalies and difficulties. The five-week wait has put families into debt. We are not against the idea of reform or of trying to simplify the benefits system, but I wish this Government would get away from demonising people who have to claim benefits.
Who benefits from the DWP? Well, pensioners take the bulk of the money from the DWP. Then, of course, there are people who are working—lots of people have to rely on top-ups, even though they are working—so they are not in any way to be demonised. Then there are genuinely disabled people, and then there are people who have to claim money to help with their housing costs. Why are we in that situation? It is because we have got rid of so much social housing at low rents, so we now find that lots of public money goes straight into the pockets of landlords. Those eyewatering figures do not go to the people who have to make the claims; they go to the landlords. Until the Government get a grip and have a massive housebuilding programme, we are obviously going to be wasting money in that way and leaving families in often unsuitable accommodation. We need to sort out what is being done with benefits and the tax system.
Let me move on to what has gone on over the last 12 years with public sector pay. If we squeeze and squeeze, is it any wonder that we now have a crisis when inflation suddenly picks up but wages have been on hold for years? We have an incoherent policy; the former Health Secretary, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi) threw out a figure of 7%, but the minute he became Chancellor he changed his mind. We cannot have a half-baked system. We have to talk in the round about having a proper public sector pay policy. The problems have been stacking up; they have not suddenly arisen. This Government have not handled the economy or the redistribution of wealth well.
I turn to my favourite topic: energy policy. If we had invested in all the renewables that we should have done over the last 12 years, we would not be so dependent on imported oil and gas. What is this nonsense where, yet again, in the energy security strategy for 2022, the Government are pussyfooting around when it comes to wind farms in England? Luckily, we have a sensible policy in Wales.
It was disappointing to hear the Minster, at the Welsh Affairs Committee, not fully understand the implications of the National Grid situation. I hope he now understands the need for massive investment right across Wales, and between Wales and England, so that we can benefit from being the United Kingdom and all share our energy pools. We really need a strategy for energy and investment, on a wholescale basis, and not leave it to a private company to see whether they fancy it or not. We need a strategy that supports innovation, such as we have seen in the tidal lagoon, which is now being supported by Labour-run Swansea City Council, rather than having had help from the UK Government.
I will finish with a point about dealing with rural areas. As we know, rural areas have particular difficulties in that they have a limited choice of fuel that they can use to heat their homes. Many are dependent on oil, for example, and have seen prices rocket, with no help available. Then there are the massive mileage costs that people in rural areas clock up when they have to go to the shops or to work, or to take the children somewhere; and the hon. Member for Ceredigion (Ben Lake) asked whether there could be some support to help people in those areas through sensible, centrally thought-through policies that could redistribute and help areas with massive inequalities.
On that note, I will leave other colleagues to tell the terrible and heartbreaking stories that we have all heard recently. I ask the Minister: when he is thinking about which candidate he supports in the Conservative leadership contest, will he put to them the questions of how we change the structure to have an equal and fairer society?
As the hon. Member for Llanelli mentioned, in so far as the price cap offers any solace to households, it is only for those connected to the mains gas grid. Sadly, some 72% of properties in my constituency of Ceredigion are not connected to the mains gas grid. We have the unenviable accolade of being the UK constituency that is most dependent on domestic heating oil. As has already been mentioned, the prices for off-grid heating oil and gas are not regulated by Ofgem, so they have increased to astronomical levels. Indeed, average heating oil prices increased by 150% in the past year and by some 250% over the past two years.
Without wanting to labour the point, rural households have particular challenges when it comes to heating their homes. Some are structural, and one of the things that I would like the Government to address before this autumn is standing charges. Wales is particularly badly served by typical standing charges. In April 2022, the daily cap rose by 94% in south Wales—the figure in north Wales was 102%—to a daily rate of 46p. Since April, daily rates for my constituents in Ceredigion are on average about 50% higher than those levied in London. It does not matter how much they use. and it does not matter if they save—that is the daily standing rate.
That is a particular challenge when we consider that most of the housing stock in my constituency performs very badly when it comes to energy performance certificates. Indeed, some 36% of homes in Ceredigion reach an EPC rating of C or above. It is perhaps not surprising that we do so badly when we consider that 35% of our homes were constructed in the 19th century. It is staggering that the vast majority of the housing stock that will exist in 2050 has already been built, and over a third of it was built in the Victorian age.
The reason that I draw attention to that is that, when we talk about energy efficiency measures, off-grid homes and old homes are particularly difficult to bring up to standard. The Department for Business, Energy and Industrial Strategy has estimated that 20% of off-gas grid homes are technically unsuitable for low-temperature heat pumps, one of the major policies of this Government.
Furthermore, the heat and buildings strategy assessment has suggested that the average cost to retrofit an off-gas grid home is around £12,000. However, if we include insulation, which we really need to do, that adds a further £2,000. That is the average figure quoted in the heat and buildings strategy, but a lot of analysts suggest that for certain rural off-grid homes, the cost could be a lot higher. Yet the Government are not providing those homes with enough support or important interventions to help make them more energy efficient. Furthermore, typically—not always, but typically—a lot of off-grid homes are in rural areas, which tend to have lower salaries. That is certainly the case in Ceredigion. We are, therefore, hit with many different challenges that we cannot overcome without Government support.
To summarise the challenges faced by my constituents and the severity of the situation, many have contacted me in recent weeks to say how they are taking extraordinary measures to try to keep their energy bills down. I have been told of people turning the boiler off so that they can save a little bit on that, having cold showers, turning their freezers off and saving on electricity by avoiding meals that need to be cooked in the oven. I do not need to point out to hon. Members that that will result in them making more use of microwaves, with the knock-on impact of typically less healthy meals. The most striking example was of a family telling me that they had bought solar-powered garden lights so that they can use them for indoor lighting in the evening, such was their concern about the electricity bill.
It is not just households that are being affected by the cost of living. I know of businesses and community organisations that are struggling, including to keep swimming lessons going in the community swimming pool. One hospitality business has quoted that energy bills have gone up by 450% in the last 18 months. Sadly, it is having to consider difficult decisions about whether it can continue to operate and stay in business.
I want to finish by referring to another problem we are facing in Wales and in rural Wales: the cost of fuel. We know that Wales is the most car-dependent nation of the UK, with some 83% of journeys being taken by private car as opposed to other means of transport. I would very much like it if, in the near future, the public transport infrastructure in Wales and in Ceredigion was such that we did not have to depend on the car. However, at the moment, many of my constituents simply do not have the choice. I want to put this point on record: we are not saying, as is sometimes suggested by colleagues elsewhere in the UK—though not in Wales, I should add—that car journeys are somehow a luxury. That is not the case. These are car journeys to go to work and to access services and healthcare. They are unavoidable journeys, and due to a lack of alternative options they are very vulnerable to the price increases in petrol and diesel.
I draw attention to one of the impacts that that has on public services. While this can be true across Wales, carers and district nurses in rural areas have explained to me that they will typically drive anything between 400 and 600 miles a week just to care for the residents on their rota, yet they are still having to pay astronomical prices at the pumps. I had a conversation with the previous Exchequer Secretary, the hon. Member for Faversham and Mid Kent (Helen Whately), about the possibility of extending the rural fuel duty relief scheme to parts of Wales. Areas such as Ceredigion satisfy all the criteria, barring the fact that we fall within a hundred miles of a refinery. As the Competition and Markets Authority review found a few weeks ago, there is no real link between higher fuel prices at the pumps and proximity to the refinery. Actually, the major drivers are to do with competition, the volume of sales and the models of garages locally. We need to look at extending the rural fuel duty relief scheme to areas such as Ceredigion so that, if nothing else, we have a bit of consistency and there is not a situation where there is a 4p or 5p difference between prices in Aberystwyth and those in Cardigan to the south. That is a cause of considerable frustration.
What about some solutions? We have already heard about the Government’s £400 payment to households. Is that still sufficient, given the changes to the onward forecast for the energy price cap? I have some particular questions for the Minister, and I will be grateful if he addresses them in his summing up. We are still unsure whether the £400 energy rebate will apply to those living in park homes or on farms without a domestic electricity contract. I know that the Government are looking at that, but I impress on them the urgent need for clarity.
On short-term measures—I will not go into the long term—I think we need to look again at restoring the £20 uplift to universal credit, removing the two-child limit and increasing social security in line with more recent inflation figures, all of which are recommendations made by the Select Committee on Welsh Affairs in a recent report. I would also like the Government to increase the eligibility of those who can claim carer’s allowance better to reflect the true number of people providing vital care. Also, perhaps most boldly, if as has been reported the energy price cap exceeds £3,000, the Government need to consider whether they ought to intervene more directly to limit price rises, as other Governments in Europe have done. I have to say, in closing, that constituents across Ceredigion simply cannot afford any further dithering or delay.
The reality is that without proper, long-term investment from Westminster, people in Wales will continue to be impacted. I know some Members will disagree with my assessment and will be keen to point out that any support failure is that of the Welsh Government, but I must be frank. I speak on behalf of residents in my area when I say that this UK Government have never taken their responsibility to Wales seriously. It is the UK Government’s failure to recognise that wage stagnation and ineffective social security have now led to poverty and destitution, and that could have been avoided.
According to the End Child Poverty coalition, in Pontypridd and Taff Ely a staggering 31.3% of children were below the poverty line in 2020-21. That is almost a third of all the children in my area. It is a sharp statistic and one that all of us in modern-day Britain should be embarrassed by. However, let us be clear: with food banks running dry and the Welsh Government doing everything they can, without immediate action by the UK Government, living standards across the country will continue to fall.
In Wales, local and regional bodies have done everything to address the crisis. The Welsh Labour Government and my Labour-led council in Rhondda Cynon Taf must be commended for their work to relieve the pressures on households. The Welsh Government have committed more than £380 million to address the immediate and severe impacts of the cost of living crisis on low-income households in Wales. From the winter fuel support scheme to income relief for those on council tax bands A to C, Welsh Labour has worked tirelessly to fill the vacuum of support caused by UK Government inaction.
It should shame the UK Government to treat us in Wales with such contempt. They try to palm off responsibility to the devolved Administrations, but refuse to properly fund their efforts. The Welsh Government have moved heaven and earth to mobilise their considerably limited resources, yet the Tories in Westminster refuse to act. It took relentless pressure from Labour for the UK Tory Government to eventually—reluctantly—endorse a windfall tax on North sea oil and gas, or, as the then Chancellor insisted we call it, because he cannot even admit that it was Labour’s idea, the energy profits levy. But they should have implemented it months ago and, for many, the support that the windfall tax will fund will simply be too little, too late.
The Welsh Government have announced that the Welsh fuel support scheme will return this winter to help those in need by providing a one-off £200 payment for their bills. That will bring significant relief to tens of thousands of Welsh residents, and I welcome the commitment of the Minister for Social Justice last week to support people who will struggle this winter. Without UK Government support, however, that will still not be enough.
When I wrote this speech, four candidates remained in the Tory leadership contest; now we have three. To the best of my knowledge, Wales has not been mentioned once—not by a single one of them. It is clear that whoever wins the leadership will continue to forget about Wales and that, sadly, it will be a case of business as usual.
Despite the Welsh Government’s limited resources, their actions show that Labour will always stand shoulder to shoulder with the country’s most vulnerable. The cost of living crisis is not going away in Wales or across the UK, so I implore the Government to do the right thing, to take responsibility, to see the crisis for what it is and to act today to reach solutions.
I shall go on to talk about the solution, but in Wales, despite insufficient funding from the UK Government and an inadequate devolution settlement, the Welsh Government are doing as much as they possibly can within the constraints placed on them. They have invested more than double what they received in consequential funding, to support households with the cost of living crisis, including through a £51 million household support fund announced in December 2021 and a further £330 million cost of living package of support announced in February 2022, which goes beyond, over and above what the UK Government have offered. Carers’ pay has increased to a real living wage, basic income has increased and free school meals have been extended to all primary school pupils. That is in spite of the constraints placed upon them.
As I said, this is a political choice and unfortunately—tragically, actually, for millions of people—the Tories will not listen. They are the architects of low income. They have allowed poverty to become normalised in this country, and we need urgent, immediate action to better distribute the wealth in this country. We have got to change the balance of power from the few, in whose hands it is at the moment, to the many. We have got to tackle and address the horrendous inequality that I witness, and I am sure many others in the Chamber witness, on a daily basis. That would mean emergency measures to prevent wasteful profiteering and dividend payments from essential services. We should jumpstart the windfall tax and ban dividend payments in the public transport and in energy sectors while people are suffering.
The report also contains a number of key recommendations the UK Government need to take. I have consistently argued for an increase in social security benefits. They should have been increased in April, in line with inflation as it currently stands. The £20 uplift to universal credit should be reinstated, as the Welsh Affairs Committee has proposed, and should be extended to legacy benefits. The two-child limit also needs to be addressed, as the hon. Member for Ceredigion (Ben Lake) mentioned. Despite the triple lock, pensioners are suffering inexorably from the cost of living crisis. I am continuing to campaign for ex-miners in my constituency, and supporting the Women Against State Pension Inequality campaign.
We must overturn over a decade of underinvestment through austerity, and end the rip-off of privatisation. I am an advocate of bringing utilities back into public ownership. As the hon. Member for Ceredigion suggested, we should look at what France has done in terms of limiting the increase in the energy cap. We could be doing the same in this country. As well as a windfall tax, we could and should introduce a wealth tax, which could raise in excess of £260 billion a year. The money is here in this country, but it is not evenly distributed. Those are not radical policies; they are about meeting people’s basic needs. Everybody should have enough money to eat, to heat their home, to clothe their children, and to buy pens for their children to take to school—as the NEU representative mentioned, there was no spare money for people to buy pens and rulers for their children to use to learn in school. What kind of a society are we creating? It is extremely distressing. We should have a right to food, and everybody should have access to affordable and decent housing.
I also support the trade union demand—I asked a question on this in the Health and Social Care questions this morning—for an inflation-proof increase in public sector pay. I fully support the actions being taken by the trade unions at the moment. They have been forced to go on strike. It is not a choice; nobody wants to go on strike. They have no alternative. I urge the Government to ensure that proper negotiations take place and that public sector workers, who sacrificed so much during the pandemic, and who continue to sacrifice so much, get a decent, inflation-proof pay award. Pay rises are not simply gifted. Unfortunately, they are having to be fought for. They should not have to be fought for; they should be an entitlement for people.
I will briefly mention the deductions from social security benefits, which drive huge amounts of poverty. There are 5,000 universal credit claimants in Cynon Valley who experienced a reduction in their benefits. That is unacceptable, and has an impact on people’s ability to provide the basics for their households.
We are experiencing unprecedented times. As I have just said, we do not have to be in this situation. Please listen. Please act to stop the extreme levels of poverty and inequality that exist. There is an alternative. I will continue to work alongside colleagues in the trade unions, and in our communities, to organise, mobilise and fight for change. It is such a shame that we have to be doing that. We should all be sitting down around the table. There are solutions that easily resolve the problems. Please sit around the table with us, so that everybody can have those basic human rights. Diolch yn fawr.
There is a pressing case for the Government to act now, whether through indexing social security or the universal credit uplift. There is also a pressing case for doing something about rent, which is not talked about very much. We talk about energy and food, but the local housing allowance has not been indexed. For example, studies by the Bevan Foundation show that, in an online search of private rented accommodation in Wales, only about 1% fits in with the local housing allowance. People are therefore driven into squalid, Rachmanite living conditions—another terrible fact.
In his intervention, the Minister implied, “Whose money is this, anyway?” I suggest that not only have the cuts disproportionately hit Wales but, as he knows from our meeting last week with Professor Mark Barry, there has been a historical lack of investment in Wales—of getting our fair share to boost productivity, jobs and wealth, so that we can pay our way. Over the last couple of decades, rail enhancement investment has operated at about 1.5% of the UK total, and we have 5% of the population and 11% of the rail track. Looking forward, instead of at the historical legacy, if we take 2020 as the baseline, Wales is being promised £0.5 billion out of an England promise of £106 billion, including High Speed 2, which is outrageous. HS2 is north-south. It will help Scotland much more than Wales, yet Scotland is getting its fair Barnett consequential. If we got it—90% of the 5% population—it would be £4.6 billion.
The Minister knows from that meeting that there are plans on the drawing board for about £2 billion to £3 billion. That is about half the amount that we deserve—from now on, I suppose, the legacy—and could make a big difference in moving us towards net zero, in productivity, in speed and in getting people to relocate. The truth is that once HS2 starts running, we will be able to get from London to Manchester in one hour and 10 minutes instead of two hours and 10 minutes, but it will still take nearly three hours to get to Swansea, so where will companies put their investment? In the case of Virgin, the answer is to take it out of Swansea and put it into Manchester. If we want to go to Staffordshire, it will take 45 minutes instead of one hour and 45 minutes, so on top of the historical inequalities I have mentioned, that will hammer Wales again.
The Minister asks, “Who will pay?” The way to pay is to invest in the productivity and future of Wales through moving towards a green future. We have talked about the windfall tax. Let us be straightforward: the big five oil companies have made excess profits of $2 trillion in the past few decades. They were making those operating profits above costs, and then Putin invades Ukraine and we have a price hike. They have done nothing to earn that windfall profit. It is our money, which was paid out of the pockets of the travelling public, and it should be given back.
In Spain, the people are getting free public transport; in Germany, it is €9 for a month. If we did that with the windfall tax, everyone could go to work for cheaper. We could get investment in green public transportation much more quickly, such as hydrogen and electric, and do something innovative. We could provide the background for pay settlements, such as the rail disputes. Instead of the National Union of Rail, Maritime and Transport Workers being told, “You can have 3% and 10,000 job cuts; what are you going to do about it?”—and, as we would expect, a strike is provoked—we could encourage everyone to go on public transport so that we do not need cuts in jobs. There might be a change to jobs, but there would be no cuts, and with more investment, we would not have to ask for so much. We can all agree to that.
My hon. Friend the Member for Llanelli (Dame Nia Griffith) talked about the massive growth in inequality, the need for a redistributive tax policy, and the fact that the UK has the firepower and capacity to take action, but not the will. She gave examples of the work of the previous Labour Government, and some ideas that could be taken forward, such as cutting VAT on fuel. She, along with other Members, talked about the need to tackle issues around universal credit, particularly the five-week wait that causes so much hardship for our constituents.
The hon. Member for Ceredigion (Ben Lake) talked about the impact of the cost of living crisis in Wales, along with the energy price cap. He spoke of his concern, which I we share, about the possible outcome in the autumn, with further increases in the price cap. He talked about the challenges facing rural communities with off-grid energy costs, and the need to tackle the rise in fuel costs. Like other hon. Members, he talked of the need to address universal credit and restore the £20 uplift.
My hon. Friend the Member for Pontypridd (Alex Davies-Jones) talked about how this Government never take their responsibility to Wales seriously, and about the economic firepower of the UK Government—if only they had the will. She talked of her pride, which many of us share, in the Welsh Government, who work so hard and shoulder-to-shoulder with our constituents, to support them through these troubling times. She highlighted the fact that the windfall tax was too little, too late.
My hon. Friend the Member for Cynon Valley (Beth Winter) talked of how we are in a cost of living emergency, and that the freeze on pay over the longer term has caused so many issues. She again highlighted that the Welsh Government are doing as much as they can, doubling the investment over and above the devolution settlement. She raised her concerns about poverty becoming normalised in the fifth richest country in the world, gave examples of parents not being able to buy stationery for children to go to school, and spoke about the need for proper pay for our public servants.
My hon. Friend the Member for Swansea West (Geraint Davies) talked about the impact of the massive cuts on poverty and the family lives of many of our constituents, and pressed the Government to act now. He also spoke about local housing allowance and the recent report by the Bevan Foundation that said that many people are unable to find properties within the local housing allowance rate. Finally, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) talked about digital poverty and the need for a cap on the price of heating oil in Wales—and, of course, in Scotland.
In about two weeks’ time, I will host a cost of living crisis event in my constituency, and I know many others are doing the same. We are bringing providers and support agencies together to offer our constituents support and advice during this awful time.
In recent weeks, I have talked to constituents who have raised concerns. I talked to a young family a few weeks ago. Both parents work full time, and by the middle of the month they rely on the support of the food pantry to get them through the rest of the month—to feed themselves and their young child.
We have seen the smoke and mirrors, and sheer uncertainty, around the shared prosperity fund. There has been a lack of investment, despite the explicit manifesto promise in 2019 that Wales would not be a penny worse off; investment would make a huge impact on the cost of living crisis in Wales. As we heard from my hon. Friend the Member for Swansea West, designating HS2 as an England and Wales project, which it clearly is not, also denies Wales an extra £4.6 billion in consequential funding. The Welsh Affairs Committee and even the leader of the Welsh Conservatives agree with that assessment, but instead the Government are intent on short-changing Wales again. Once again, that money could significantly help to tackle the cost of living crisis in Wales.
What we have seen from the Tories at every turn is that they seem to make decisions to take money from people who can least afford it, such as voting to cut the £20 universal credit uplift, which Welsh Conservative MPs all voted for. They also voted to increase tax during the cost of living crisis, but voted against a windfall tax until they were forced by Labour to perform a screeching U-turn.
Our farming communities are suffering, too. Wales faces a UK Government who have broken their promises to the people of Wales. It has become clear that when providing a replacement for EU farm funding, the Government deducted EU receipts that were due to Wales for work that was due as part of the 2014 to 2020 rural development programme. That means that rural communities in Wales are £243 million worse off. Again, that is devastating for farming communities and the livelihoods of our farmers.
It is clear that this Government have no answers. Although the removal of the current Prime Minister is a step forward, none of the candidates for his job has any meaningful ideas to tackle the cost of living crisis and really make a difference to the lives of people in Wales. Rather than playing musical chairs and having the fourth Conservative Prime Minister in six years, what we really need is a UK Labour Government who will build a stronger, more secure economy, working hand in hand with the Welsh Labour Government for the benefit of everyone in Wales, and getting the cost of living crisis under control.
It has taken me probably a minute just to rebut that single point. That is the problem I face. There are quite a few other points I would not mind rebutting if I get the chance to do so.