No; that is not news.
The hon. Member for East Londonderry, the Minister and others who have spoken have highlighted a number of ways in which the current situation is affecting people in their daily lives, and in their homes in regard to household bills and their daily consumption. The credit crunch that we have all been talking about is now a consumer crunch, and consumers are now experiencing a situation of crunch and grind as more and more bills are rising higher and higher.
Underlying energy costs are contributing to higher food costs and higher costs for all sorts of other services and amenities. They are also contributing to higher costs for the public purse, as fuel bills rise for hospitals, schools and other public service buildings. The situation is biting on all of us, either as individuals, in households, in businesses or as taxpayers funding public services.
The Minister talked about a global rise in oil prices and referred to the fact that the world was not producing enough oil. In the Northern Ireland Assembly, the Committee for Enterprise, Trade and Investment took evidence from people in the energy market who made the point that a barrel of oil is traded 11 times before it is consumed. Those trade transactions are driving up the cost to the end consumer. Similarly, it was pointed out that gas in the UK is traded six times before it is consumed, whereas the additional ratio of trade in the continental gas market is only 0.6. I know that there is a different structure in the gas market on the continent, including more state ownership, but the fact is that we need to take account of the market factors that are driving up the costs for consumers before they have to pay the end cost. It is clear that they are paying more than just the price of scarce production, and that they are having to take on price increases that are the result of up to 12 transactions for profiteering and speculating purposes.
When we search for evidence of who is doing this trading in oil, we see that banks and institutional investors are significant players in that regard. I accept that, in circumstances in which the property market has taken a hit, banks and other institutional investors are looking for commodities to deal and speculate in usefully and profitably, not least because they are trying to maintain the value of pensions on behalf of us all. However, we really need to see some action that says to institutional investors that the degree to which they trade in commodity indices and in futures is doing wider economic damage. We know from the warnings given to the US Senate Commerce Committee by George Soros, among others, that the degree of dealing that is going on in commodity indices is creating a dangerous bubble. That is creating the immediate price pressure that everyone is feeling, but it will also create a dangerous collapse at a later stage.
When we consider the key pressures affecting the cost of living, it is important to ask whether there are interventions that could be made or brakes that could be applied to ease the pressure from global oil price rises. I hope that the G8 and other international forums will consider such interventions and restraints, and examine whether we could incentivise responsibility among those who seem to be having a significant impact on the oil crisis.
What we are discussing today is the cost of living, but it is clear from the comments of hon. Members who have spoken that looming large within our consideration of the cost of living nowadays is the cost of warmth. I would like to see the Government move forward with a working cost-of-warmth index to show that they are tracking and measuring the cost of warmth for people in their homes, whatever the cost of domestic fuel. They need to gain a real sense of what people have to pay.
The Government should use a cost-of-warmth index to proof and improve their efforts to tackle fuel poverty. To their credit, they have made significant inroads into reducing fuel poverty over a number of years. Of course, the danger of the current crisis is the risk of all that good work being wiped out. Just as they are right not to throw away their drive towards creating a greener fiscal regime in the current economic climate, so they are right to keep their focus on trying to bear down on fuel poverty, curbing and restraining it as much as possible.
In the context of a cost-of-warmth index that tracks what different households have to pay and the changes in relative income bases, it is important for the Government to take into account the argument about windfall taxes to a more considered degree than they have so far. The Government tend to put forward the general surmise, "Well, it is swings and roundabouts; and what we appear to gain here, we may lose somewhere else." It would be helpful if the Government were able to say more precisely what they are or are not gaining in respect of VAT on domestic fuel bills, added revenues from various other fuel duties and any other revenue receipts, which would allow people to judge the argument.
The Government have used reflex arguments before in respect of fiscal issues, including spending a long time saying that it was a figment of everyone else's imaginations to suppose that there would be problems from the abolition of the 10p tax band, only eventually to recognise that there were serious problems requiring fairly dramatic responses and interventions to ameliorate the resulting situation. I would appreciate it if the Government, as well as cautioning the rest of us about the argument, promised to show exactly what is or is not happening.
I particularly hope that the Government will promise to identify what additional VAT income they receive from household energy bills. They should separate out petrol, diesel and other fuels and find out what exactly is happening in respect of added revenue yield coming from ever-increasing domestic energy bills. The hon. Member for East Londonderry referred earlier to the sort of price increases that consumers in Northern Ireland have faced, with one gas company's consumers having to pay 28 per cent. extra and electricity customers facing an interim increase of 14 per cent.
David Simpson then intervened to say that the same, if not worse, increases were going to happen in the autumn. In the circumstances, the Government should look further into those revenues with an eye to redirecting any windfall VAT benefits on domestic energy bills towards adopting measures aimed at improving energy efficiency or curbing fuel poverty for those domestic consumers. We need to target and keep our eye on that issue in circumstances where it is very easy to get distracted and preoccupied with a variety of other issues. We need to keep an eye on the Government's successful drive on fuel poverty. It would be consistent with the Government's approach if Ministers were to refocus their case on the general argument for windfall taxes in order to deal with that particular issue.
I intervened on the Minister earlier about the difficulties faced by the construction and property sector in the current crisis. In a constituency and region such as mine, that is not only a problem for businesses. Yes, construction and property is a very significant sector in Northern Ireland—indeed, it has been a very significant driver of the regional economy recently, just as it was a hugely significant driver in the economic success of the Irish Republic over the past decade—but it is now a sector in crisis. Given the land prices developers were prepared to pay and the house prices that they were prepared to charge, not everyone will have much sympathy for them, but the fact remains that it is not a crisis entirely of their own making. After all, the banks were throwing money at them to buy land at these significant prices, and they were putting up the money in very generous mortgage deals at 100 per cent. and 125 per cent., which fuelled the market, but we are now seeing a virtual collapse of that market with the banks putting the squeeze on some of those very same businesses. Houses are available at much lower prices than were sought last year, so it is paradoxical that they are now in market terms out of the reach of many people, who can no longer access the finance to buy them.
Given the commitments of the Government and the various Administrations around these islands to affordable and social housing, positive intervention is important. We need more effective intervention to ensure that houses that should be available at lower prices are available at lower prices. Influencing the banks is a key factor, because they have moved from over-lending to under-lending as far as that market is concerned. Action needs to be taken to strike a better balance.
I argued earlier that the credit crunch has become a consumer crunch, and I want to close by mentioning my visit to a credit union in my constituency. Those working there told me that they are now being asked for loans so that people can pay their fuel bills or cope with significant household bills, including groceries. That is a new situation for credit unions. Some of the older credit unions may have faced it many years ago and some may have started by helping people to cope in that way, but now that problem is biting again, it really is a call to us all to wake up and see what we can do.
I accept what the Government say about their good economic management over the past 10 years, and I also respect what they say about all their headline macro-policy initiatives, but policy management does not always help people to cope in circumstances where they have to turn to a credit union to cope with an oil bill. If this is happening as we come into the summer, what situation are people going to face as we move into winter? It was good to hear from the Financial Secretary that the Government appreciate the pressures that people are experiencing, as it is important that they feel the pain of those who are struggling on marginal incomes with ever-rising bills. However, it is even more important that the Government translate that into significant action and real intervention that helps real people to cope with very real pressures.
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