In response to Russia’s unprovoked aggression against Ukraine, the Treasury has helped deliver a world-leading package of economic sanctions to deliver severe consequences to the Russian economy. Across insurance, finance, trade, public and private capital markets, clearing, SWIFT, central bank assets and, indeed, bank asset freezes, we are ensuring that the Government play a leading role in making sure that Putin’s aggression does not go unpunished.
Families in my constituency are facing the cost of living crisis, and the planned real-terms cut to social security will force more of them into poverty and into having to make impossible decisions between eating and heating their home. According to the Trussell Trust, one in three on universal credit were not able to dress for the weather last month as they could not afford appropriate clothing or shoes. That is unacceptable. Will the Chancellor increase the level of social security support in his spring statement next week to alleviate some of the worst impacts of the cost of living crisis?
As is common to all other years, welfare is uprated annually by September’s CPI. That will be the case next year as well, as my right hon. and learned Friend the Financial Secretary laid out. For those on universal credit we have cut the tax rate to ensure that work pays, delivering a £2 billion tax cut to 2 million on low incomes—the best route out of poverty.
T3. With the cost of fuel reaching record levels, we face a cost of living rise across the board. Everything we consume has to be delivered, and in Clacton that can be a long way. France is offering rebates and Germany a fixed price reduction. Has my right hon. Friend considered a special reduction, of say 15%, for vital fuel users, such as haulage companies?
My hon. Friend is right to point out the importance of fuel as a cost for both businesses and households. That is why I am proud that we delivered the eleventh freeze in fuel duty in a row. That has delivered huge savings for households and businesses over the past several years.
Millions of people are worried sick about soaring bills. Meanwhile, BP says it has more cash than it knows what to do with and has compared its record profits from inflated prices to a cash machine. Those profits are not being used to fund new investment. They are going on dividends and share buybacks, so why will the Chancellor not make North sea oil and gas companies pay their fair share of taxes to tackle the enormous cost of living crisis?
The hon. Lady talks about a fair share. It is worth bearing in mind that oil and gas companies are already taxed at double the rate of all other companies: 40% versus 19%, currently. Last year saw the lowest amount of investment in the North sea on record—just a few billion pounds. As my right hon. Friends who were at the roundtable yesterday know, there are billions of pounds of projects waiting to be unlocked. We want that investment and those jobs here in the UK.
That is not happening with the share buybacks. The Chancellor is totally out of touch. He does not seem to understand how the cost of living crisis is affecting the least well off in society, as campaigner Jack Monroe highlighted. The Institute for Fiscal Studies confirmed that the poorest households face an inflation rate 50% higher than the richest households. The Resolution Foundation warns that between 2020 and 2022, 700,000 more children will have fallen into poverty. That is devastating, but it is not inevitable. The Chancellor can and must do more in the spring statement to provide people with real help, not just a loan. Why is he so intent on shielding oil executives, instead of protecting the poorest in society?
The best way to help people cope with rising energy costs and bills over time is to make sure we have a diversified and secure supply of energy, more of which comes from here at home. I share the hon. Lady’s concern for those on the lowest incomes. I am proud that all the evidence points to the fact that the decisions made by this Government over the last few years have benefited those on the lowest incomes the most. We have protected those who need our help, and we will continue to do so.
T5. Further to our recent meeting, has the Minister had an opportunity to consider my proposals for a traffic light system to inform the public of the tax approval status of investment schemes?
It was very interesting to meet my hon. Friend, together with his colleagues from the all-party parliamentary group on investment fraud, and to hear his idea. As we discussed, Her Majesty’s Revenue and Customs is very keen to make clear which schemes do not work. That is why, in the Finance Act 2022, the Government legislated to allow HMRC to name promoters and the schemes they promote at the earliest possible stage, to warn taxpayers of the risk of entering into those schemes, and to help those already involved to exit avoidance.
T2. Research by Scope showed that one third of disabled households were already living in poverty last year. NatCen’s recent report on health and disability benefits, which was commissioned by the Government, further illustrates the devastating impact of insufficient financial support. What do Ministers have to say to disabled people who are already struggling and are now living in fear of worse to come?
We are spending record amounts on supporting those who are disabled. Relative to the OECD, I think we are spending in excess of the average for other leading countries. My right hon. Friend the Secretary of State for Work and Pensions has a particular programme of support in place to help those who are disabled to move into employment; plans were announced earlier this year.
T6. In his last Budget, the Chancellor slashed universal credit withdrawal rates, delivering an 8% tax cut for the least well off, but as I explained in “Poverty Trapped”, the combined deductions from income tax and benefits withdrawals often still top 70% for the lowest-paid. If tax rates above 45% destroy work incentives for high earners, why should it be any different for low earners? How much more opportunity, energy and ambition could we unleash if these regressively high and unfair rates were cut even further?
My hon. Friend is right to highlight the effect of a high effective tax rate on incentives to work. That is why the Government reduced the universal credit taper rate from 63% to 55% and increased the universal credit work allowance by £500 per year, which is essentially a tax cut for the lowest-paid, worth more than £2 billion in 2022-23, and means that 1.9 million households will keep an extra £1,000 per year on average.
T4. Waste recycling businesses face an increase in tax on red diesel of thousands of pounds per month from April. I take it that the Chancellor agrees that waste recycling has important economic as well as environmental benefits, so what plans has he to address the sudden rise in costs for businesses that process and reuse waste materials?
The changes to the taxation of red diesel were announced back in 2020, were confirmed in spring 2021 and are coming in this year, so businesses, including in the sector that the hon. Member refers to, have had plenty of time to prepare. It is absolutely right that we tax fuels that are highly polluting; unfortunately, diesel is one of them.