Cost of Living and Brexit

Debate between David Linden and Philippa Whitford

Wednesday 14th June 2023 Commons Chamber

[David Linden (Glasgow East) (SNP)]

Will my hon. Friend might lend me her Order Paper? The one I have might be out of date, but it does not show an amendment from the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), or his party, to change the composition of that Committee. Am I reading the Order Paper wrong, or is the hon. Gentleman perhaps a little bit out of touch?

[Dr Whitford]

I do not think my hon. Friend is reading the Order Paper wrong.

The combination of rising energy, food and housing costs, on top of years of benefit cuts and stagnant wages, means that, for many families, the sums simply do not add up. The Scottish Government are trying to use their now very limited powers of devolution to mitigate the crisis, particularly for those on the lowest incomes. However, the Scottish budget for the day-to-day running of services is less in real terms than it was in 2010, with no uplift for inflation and—as we all know—no significant borrowing powers. Despite that, the Scottish Government have provided additional funding for the fuel insecurity fund and the Scottish welfare fund. Low-income families are now supported through five childhood grants, including the Scottish child payment, which together provide £10,000 of support during the early years and will provide over £20,000 by the age of 16.

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[David Linden (Glasgow East) (SNP)]

It is a pleasure to follow my hon. Friend the Member for Argyll and Bute (Brendan O’Hara). As the junior deputy assistant viceroy was chuntering from a sedentary position about crackpots and a few hundred thousand pounds, I was reminded of Baroness Michelle Mone in the other place, who I am sure he would probably think is great value for money. However, this is a serious motion for a serious issue. Given that the cost of living remains by far—by a country mile—the single biggest issue that my constituents continue to raise on the doorsteps, I am somewhat intrigued that the Government and, indeed, the Labour party have once again largely boycotted this Opposition debate.

I understand that the Government’s focus is perhaps elsewhere—for example, sorting out a peerage for the positively sycophantic right hon. Member for Mid Bedfordshire (Ms Dorries)—but I am very surprised at the British Labour party’s boycott of today’s debate. I thought it was only picket lines that it boycotted, but I guess variety is the spice of life.

As I have said before, the cost of living crisis has been a persistent issue on these islands for several years, with many people struggling to make ends meet despite working full-time jobs. However, it is important to recognise that the cost of living crisis is not a new thing; it is the culmination of 13 long, cold years of Tory austerity from a Government who Scotland did not vote for. Yes, the issue has certainly been exacerbated by a variety of factors, including stagnant wages and rising housing costs, but the UK’s exit from the European Union has caused significant economic disruption and uncertainty that has further worsened the situation for many of those I represent in the east end of Glasgow.

Prior to Brexit, the free movement of goods, services, people and capital in the single market and the customs union were a benefit to our economy. The arrangement helped to promote economic growth and prosperity on these islands, making it easier for businesses to trade and for consumers to access a wide range of affordable goods and services. However, the UK’s decision to leave the European Union—a decision not consented to by the country I represent—has created significant challenges that have had a profound impact on the cost of living crisis that people across these islands are experiencing.

Since 2016, the value of the pound has fallen significantly against other major currencies, making imports far more expensive and causing inflation to rise. That has had a particularly acute impact on the cost of basic necessities such as food and fuel, which are heavily reliant on imports. According to the Office for National Statistics, consumer prices inflation surged to 3% in September 2017, up from 2.9% in the August and well above the Bank of England target. That was before the war in Ukraine and before covid. That increase was largely attributed to rising food prices, which jumped by 4.1% in September 2017, and to fuel prices, which rose by 2.5%. The weak pound also led to an increase in the cost of travel abroad, making it more expensive for families going on holiday or for those travelling for business.

Another area where Brexit has exacerbated the cost of living crisis is in the labour market more generally. With the loss of free movement of people around the EU, many industries in the UK face labour shortages, which in itself puts additional strains on business. I know from speaking to many businesses in the east end of Glasgow that they are facing additional costs associated with Brexit such as increased bureaucracy and red tape, tariffs, customs duties and the need to comply with new regulatory requirements. Those costs are often passed on to consumers in the form of increased prices, further exacerbating the cost of living crisis for many people.

Scottish businesses are set to be hit with even more Brexit pain, as the Tories have put on the table new inspection charges on food entering the UK from the EU. Plans drawn up by the Government would see a charge of £43 for each shipment of food coming in from the continent. It is not just my party warning against those plans: the former Glasgow Labour MP, now head of trade policy at the British Chambers of Commerce, William Bain—I think he is known in Glasgow as Willie—warned that the changes would hit small businesses particularly hard, as they would be bringing in “smaller, lower-value shipments”.

While supporters of Brexit argued that leaving the EU would enable the UK to negotiate better trade deals and reduce the cost for consumers, the reality is that the process has been fraught with uncertainty and complexity. So far, the UK has managed to agree two rather measly trade deals—we would say capitulations—with Australia and New Zealand, plus a pile of roll-over deals. That has been the sum total of Britain’s achievements on free trade, and let us not forget that the cost to farmers amounts to some £145 million. Negotiations have been slow and difficult, and there is still so much uncertainty about that future relationship between the UK and the European Union.

Meanwhile, people are struggling to make ends meet, and that is the biggest issue that constituents raise at my surgeries in Cranhill, Easterhouse, Baillieston and Parkhead. According to the Joseph Rowntree Foundation, the number of people in the UK living in poverty has risen for three consecutive years, with 40 million people now living in poverty, including, most shamefully, 4 million children.

Ultimately, the cost of living crisis is a complex issue that requires a multifaceted solution. It requires changes to social security policy, and I would argue it also requires short-term price controls on food, diversification of energy supplies and much more. That is precisely what the Committee in the eight-paragraph motion before the House would look at.

[Dr Whitford]

Does my hon. Friend agree that that Committee could propose what other European countries have done in reducing VAT on energy? If prices have doubled, we could halve VAT and it would still be revenue-neutral.

[David Linden]

I would never disagree with my hon. Friend—life is too short for that. The point is that Brexit was about Parliament taking back control. What Parliament has sought to do, via this Opposition day motion, is say, “Right, we have identified an issue with Brexit and the cost of living crisis. We want to empower Parliament to look at this issue further.” Yet the Minister—the deputy assistant junior viceroy—seems opposed to that.

Before I finish, I will touch briefly on rising mortgage rates, which are another aspect of the cost of living crisis that persists—one that will get worse and dominate our inboxes far more. Government inaction on that will mean that millions of households could, by next year, be thousands of pounds a year worse off owing to frankly unsustainable rises on their mortgage payments. On new-build estates in my constituency, such as Broomhouse, Gartloch, Belvidere and Eastfields, many young families are living in fear of fixed rates expiring in the coming months.

Capital Economics reports that 3.2 million households are paying interest rates of 3% or more. By the end of next year, that will have risen to 5.8 million—a rise of 2.6 million. As we look at support for homeowners, households need particularly innovative action and solutions to avoid catastrophe. An example that I would like to see on the table is the concept of employer salary sacrifice schemes, which may provide mortgage-holders with a bit more mortgage relief. Thus far, however, as with food prices, the Treasury believes that it is up to the markets to self-regulate, and I know from speaking to constituents that that simply will not cut it. The very reason butter is security tagged at Tesco in Shettleston is because we are allowing the markets to self-regulate.

The Government are very much asleep at the wheel. The Tories have overseen record food inflation caused by their cost of living crisis and their reckless Brexit. Working people are being forced out of buying basic items while their energy bills and mortgage payments rise, too. All the while, our European neighbours are taking action to tackle food prices and price gouging. So yes, I will by all means support the motion when the Division bell rings tonight, but in truth, I would rather my Glasgow East constituents have decisions about their lives made in Edinburgh by a Government we elect, not by an intransigent Tory Government here in London whom we have not voted for—indeed, one we have not voted for since 1955.