Cost of Living Increases

Nigel Evans Excerpts

Tuesday 25th April 2023 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

I inform the House that I have selected the amendment in the name of the Prime Minister.

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[Stewart Hosie (Dundee East) (SNP)]

I was intrigued by the Chief Secretary’s answer to the right hon. Member for Wokingham (John Redwood) about forecasts: I think he said something along the lines of “For every fiscal event there’s a forecast, and on many occasions it turns out to be wrong.” That may be correct. Is it not passing strange, then, that the Government’s own fiscal charter, which they announced only six months ago, is based on precisely such a forward-looking view, with forecasts on a five-year rolling basis? I think the Government and the Chief Secretary might want to sort their lines out on that one.

I agree with what the Chief Secretary said towards the end of his speech about boosting productivity, which is a perennial problem. He is absolutely right about that, of course, but he will recall from the OBR forecast and the Red Book that productivity growth does not exceed 1.5% in any year of the forecast period. Whatever plan the Government thought they had, they will need to do a little better.

The Chief Secretary quite rightly mentioned the requirement to get more people into the workforce; I think he mentioned having an extra 110,000 people by the end of the forecast period. That is welcome, but it would be a fraction of 1% of the workforce of 33 million. Again, I think it is a case of “Five out of 10—must do better.”

There is much to agree with in the Opposition motion: the condemnation of the Tory Government and their mismanagement of the economy; the regret that the UK is the only G7 country whose economy has not returned to pre-pandemic levels; and the ambition, which I am sure is shared across the House, to secure sustained growth and good jobs. However, I will focus not on macroeconomics, but on the impact on real people of inflation and the cost of living crisis that many of them face, not least because energy price hikes, inflation, and mortgage and rent increases are continuing to erode people’s standard of living. We certainly know from the November OBR forecast that inflation was set to peak at a 40-year high, and that wages and living standards were set to be squeezed by 7%, wiping out all the growth of the past eight years. By March, the OBR was telling us that real disposable income would fall by nearly 6%. We now know that telecoms prices will rise as well: BT confirmed that its costs would rise by 15% on 31 March, O2 is increasing prices for SIM-only customers by 17%, and TalkTalk will increase its prices for landline and broadband customers by 14%.

Grocery prices also continue to climb. In February the increase reached a new record high of 17.1%, and more recently the prices of some goods have risen by 19.1%, which represents the best part of £1,000 per year per household for the average weekly shop. The prices of essential food items have also risen in recent months. The price of two pints of semi-skimmed milk is up from 92p to £1.37, a 49% increase; a litre of olive oil now costs £7.28, which is a 65% increase over the past year, and the price of vegetables has risen by 31% over the same period. However, inflation does not hit all households equally. It has a particularly dire impact on lower-income households, which spend a much higher proportion of their incomes on necessities such as food and energy. For some people, it is even worse than that: those with allergies or special dietary requirements are hit even harder. According to analysis carried out by the Allergy Team, people with specific dietary requirements are now paying up to 73% more for food than those who do not need to buy “free from” products at their local stores.

The Joseph Rowntree Foundation has warned that low-income families simply do not have the resources to go on bearing the cost of soaring inflation. It noted that

“nine in ten families on Universal Credit said they couldn’t afford the essentials in October last year. Since then, inflation has been in double digits”.

Even the Office for National Statistics told us in April that about half the adult population—49%—were worried about the cost of energy or the cost of food. I think that some of the comments we have heard from Tory Members today spoke volumes. It is almost as if they thought that Tory voters would not be affected by these prices, when half the adult population are worried about the cost of energy or food. I think that they should take notice.

We also know that families are beginning to feel the pain of increased mortgage costs, which, while they may have fallen back a little from the high point last October, are still much higher than they were a year ago; and of course, the central bank has increased the base rate for the 11th consecutive time. Let me put that in context. Nationwide has reported that its standard mortgage rate will rise to nearly 8%—7.74%—on 1 May.

It is rather obvious that, when it comes to the cost of living, the Government should have three urgent tasks. The first is continuing to help families with high energy costs, not by simply freezing the cap—although it is not really a cap at all—but by reducing it from £2,500 to £2,000, as well as maintaining the energy bills support scheme. The second is to bear down on inflation; forcing down energy prices would help with that, as it did last year. Thirdly, as this was mentioned earlier, when it comes to the elements that are under the Government’s control—the next round of public sector pay awards, benefits, the minimum wage and pension settlements—they should ensure that no one falls further behind, and should introduce fairness into the system to pay for it. As the motion says, it could be paid for by a meaningful windfall tax, the ending of non-dom status, the taxing of share buy-backs, and the scrapping of costly vanity nuclear projects.

That is not to say that there is no support from the UK Government—the Chief Secretary referred to some of it, which he rightly described as targeted—but it would be helpful for them to look at the efforts made in Scotland and the range of additional measures that have been put in place there. The Scottish child payment has been further expanded to all eligible six to 15-year-olds. It has increased to £25 a week, and 387,000 children are now forecast to be eligible this year. The various family payments, including the Scottish child payment, could be worth around £10,000 by the time an eligible child turns six, compared with around £1,800 for comparable families in England and Wales. There are more free school lunches during term time for all pupils in primaries 1 to 5, which is the most generous free school meals offer in the UK, saving families on average £400 a year per child.

We have doubled the fuel insecurity fund to support people at risk of self-disconnection or self-rationing of energy. The new winter heating payment that replaces the Department for Work and Pensions system will provide a stable, reliable annual payment, helping 400,000 people. We are maintaining investment in the Scottish welfare fund at £41 million this year, and continuing to invest in discretionary housing payments, with £84 million this year. We are also continuing to provide funding to deliver the council tax reduction scheme. So it is obvious that this Government can, and now should, do more.

Of course, the inflationary pressures that have driven the cost of living crisis are not there by chance. They are not all a consequence of external shocks, and they are not all a result of covid or of Ukraine. The inflationary elephant in the room is Brexit. The London School of Economics has said that

“by the end of 2021, Brexit had already cost UK households a total of £5.8 billion in higher food bills”.

Last year, as prices were rising steeply, the former Bank of England policymaker Adam Posen insisted that 80% of the reason why the UK has the highest inflation of any G7 country was the impact of Brexit on immigration and the labour market. Even the Harvard Economics Review has stated that Brexit

“can be seen as the guilty culprit in Britain’s inflationary crisis.”

I agree with this criticism of the Government. I agree that we should seek higher sustainable growth, but until the inflationary impact of Brexit is even recognised, it will be impossible to fully address the cost of living crisis that so many of our constituents are facing.

[Mr Deputy Speaker (Mr Nigel Evans)]

We will, I am afraid, have to start with a four-minute time limit. We will see where we go from there.

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

I want to speak very briefly to commend the Government for their efforts, not just over the last couple of years, and not just since the appalling aggression of Putin in Ukraine and the post-pandemic crisis, but all the way back to 2010, when a Conservative coalition Government inherited the biggest mess out. When I was doing a bit of research for this afternoon’s debate, I looked back through the years since 1973. Just look at unemployment. Every single Labour Government have left office with unemployment higher than when they came in. When I looked back, I could see that unemployment continued to fall very briefly following the excellent legacy left by a Conservative Government, but then, inexorably, it crept up again. And under Labour, there was no money left when the Conservatives took office in 2010. That is the start of the story. When we look at what really matters to people and at how young people want a role model and want to learn, get out there and get a good job for themselves, we see that unemployment matters so much. In the United Kingdom now, we have the lowest unemployment figures since the early 1970s—in fact, since 1975.

When we look at growth, yes, at the moment we are challenged, as are all economies around the world, but actually, looking at the facts, the UK was growing faster than any economy in the G7 over the last three years, as my right hon. Friend the Member for Wokingham (John Redwood) said. Last year, only the UK had growth of 4%; Germany’s was 1.8%. It is easy for the Opposition to talk about the cost of living crisis and what the Conservative Government have done wrong, but they are not looking at the big picture. They should look at our trade policy. The UK has left the EU, and what are we able to do? We can turn to what is predicted to be the fastest-growing area of the world: Asia. We can expand our global trade and be an advocate for global free trade. There is an opportunity for all nations to rise on the back of more global trade. For so many years, the Opposition tried to scupper the will of the people, as expressed in the Brexit referendum, by preventing us from leaving the EU. Instead, we are now free to form our own trade policy and to trade with the rest of the world, which is fantastic.

The hon. Member for Hampstead and Kilburn (Tulip Siddiq), for whom I have a lot of time, talked about pensions and the difficulties for people in the UK. I wanted to intervene to ask her about the Leader of the Opposition. Bearing in mind that he had legislation to protect his own pension—with no lifetime allowance, can protect his family as much as he likes—will he resile from that? Will he scrap that little statutory instrument, so that he can be in the same boat as the rest of us? Or is it one rule for him and a different rule for the rest of the country? [Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Mr Elmore, you have a fantastic baritone voice. Save it for singing.

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[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

I call Angela Richardson.