Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
I beg to move an amendment, at the end of the Question to add:
“but believe that the Gracious Speech fails to help families, squeezed households and pensioners to deal with the cost of living crisis and the double-dip recession;
regret that cuts to feed-in tariffs and the Warm Front scheme mean that families and pensioners who are paying higher electricity and gas bills have been abandoned by the Government;
call on your Government to ensure that energy companies meet their obligations and provide the cheapest tariffs for over 75s, to protect small business owners, to ensure the Green Deal is offered fairly to all consumers and cuts bills to increase competition in the energy market to drive down energy bills for all;
urge your Government to reverse their out of touch decision to increase rail fares by three per cent above inflation in 2013 and 2014, and to allow train companies to increase train fare prices by a further five per cent;
call on your Government to ensure that train operators cap all regulated fares fairly across all journeys so that no regulated train fare increase is more than one per cent above inflation, to reform the bus market by extending to the rest of England London-style powers to regulate fares, protect services and to require operators to provide a concessionary scheme for young people;
and further call on your Government to help hard pressed motorists by temporarily reducing VAT to cut fuel prices and boost the economy.”.
This Government promised recovery, but they have delivered recession—a recession made in Downing street: the worst unemployment in 16 years; 1 million young people out of work; the first double-dip recession since the 1970s; a lost decade for Britain’s families and pensioners, who are being subjected to the most sustained assault on their living standards in living memory; and a Government who are hurting, not helping.
Unfolding day by day in kitchens and living rooms in every town, village and city up and down this country is a cost-of-living crisis. Two of the biggest pressures on family budgets are rising energy bills and soaring transport costs, so my hon. Friend Maria Eagle, who will close the debate for the Opposition, and I could not let the Queen’s Speech pass without addressing those vital concerns.
The VAT hike will cost a family with children an extra £450 this year and push the price of petrol at the pumps even higher. Just when the costs of child care are rising twice as fast as wages, this Government have cut the child care element of working tax credit. While bankers have seen their taxes slashed, cuts to front-line services will mean fewer police on the beat, longer NHS waiting times and more families pushed to the brink because of the costs of social care and the closure of Sure Start children’s centres and other vital support for families.
We have a Government who stand up for the wrong people, with a Budget in which millions are asked to pay more so that millionaires can pay less; a Government who do more for the rail companies than for hard-pressed commuters; and a Government who put the energy companies before families struggling to make ends meet.
I am sorry to interrupt the rhetoric with some facts, but will the right hon. Lady remind the House what happened to rail and bus fares during 13 years of Labour Government, and can she confirm that Labour’s policy is that rail fares should continue to increase above inflation?
We saw what was happening and put a cap on those fares. This Government have decided to remove the cap and to let fares rise way above inflation, but we have said that when they do rise above inflation they should do so by no more than 1%, so we are not going to take any lectures about supporting families from the Tories and Liberal Democrats in this Government.
The truth is that in every corner of the country families have huge worries when they look at depressed and frozen wages, more part-time work and more people who are long-term unemployed; and every week families worry about energy bills.
Energy bills have now risen up the agenda for families and are one of the biggest worries that they face. The latest figures from Ofgem put the typical annual energy bill at £1,310, so what is the Government’s answer? At their energy summit last year, they told people:
“Check, switch and insulate to save.”
But, in an answer on
The Government said that energy efficiency was a no-brainer, but the Warm Front scheme has collapsed, the energy companies are not delivering the measures that they were meant to and the green deal is in chaos. In last week’s Queen’s Speech the Government promised
“reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair,” but the irony of the Government’s electricity market reforms is that one thing they do not do is reform the electricity market. There is no change to the way in which energy is bought and sold, nothing to open the books of the energy giants and nothing even to improve competition in the energy market and break the stranglehold of the big six: no change, no hope and, I am afraid, not a clue how to help families affected by those pressures on the cost of living.
Our energy market is not working in the public interest. Confidence in the energy companies is at a near-record low, complaints have soared and today five of the big six energy companies are under investigation by Ofgem. Yet they see fit to award themselves huge bonuses totalling millions of pounds and even discounts on their own energy bills, while leaving their customers to struggle.
Last winter, more than 6.6 million families and pensioners across the UK could not afford to heat their homes properly. The number of pensioners dying from hypothermia has doubled in the past five years. Yet four out of five people are paying more for their energy than they need to. Energy prices are already at near record levels, and last year, when wholesale prices rose, every energy company put up its gas and electricity prices, in some cases by as much as nearly 20%. Yet when wholesale prices fell this year, none of the companies cut both their gas and electricity prices. British Gas, for example, cut only its electricity prices, even though it has twice as many gas customers. On the other hand, EDF, which has significantly more electricity customers, cut only its gas prices. Now, with increases in wholesale prices on the horizon again, British Gas, Britain’s biggest energy supplier, is threatening yet another round of price hikes.
These are not the signs of a healthy, functioning competitive market; they are the symptoms of a market that works in the interests of the energy companies, not of the public. There is a reason the market works like that. We have companies that both produce and retail power. They generate the power and sell it to themselves, and then on to the public. When wholesale prices are high, the generation side of the business makes big profits; when wholesale prices are low, the retail side of the business makes big profits. Either way, the energy companies always make big profits and customers always foot the bill.
That was exactly what the respected Institute for Public Policy Research think-tank found a few weeks ago. Its research shows that if the market were truly competitive, efficiency savings alone would knock £70 a year off the average bill. It reckons that over 5 million households in the UK are currently being overcharged and that if something were done about it they could see savings of at least £300 a year. That is why we have said that all energy suppliers should have to sell the power that they generate into an open pool from which anyone could bid to retail to the public. That would allow new firms to enter the market, increase competition and help to drive down bills. Of course it would not be popular with the big energy companies, but unlike the Government, Labour Members are putting the interests of the public ahead of those in the energy industry.
It is all very well for the right hon. Lady to recite a catalogue of problems, but I am scratching my head about the record of her party in government, when prices were going up and we all had problems. I was not aware that the Government of the time were stepping in to look after consumers as prices rose. It is worth pointing out, of course, that Labour’s own leader was Energy Secretary at the time.
Could I first answer the question from Angie Bray?
The truth is that the leader of the Labour party, when he was Secretary of State for Energy and Climate Change, did start to tackle the discussion about the energy market. He said that we should have a pool, and that was in our manifesto. He also undertook to look at better ways in which we could provide for energy efficiency, and I will come to those shortly. In government, we had a good record of helping people with their bills. Millions of people were helped by Warm Front and millions of pensioners were helped by the winter fuel payments. What are this Government doing to help people with that? [ Interruption. ]
Order. There is an excessive amount of noise in the Chamber. It would be good if the issues could be aired in an orderly manner. I am grateful for the assent to that proposition from so experienced and senior a denizen of the House as Mr Leigh, who is himself setting an excellent example that others could follow.
I am always pleased to talk about Labour’s record in government, but let us now talk about the other side of the debate about energy prices—that is, saving energy. As Ministers are fond of telling us, the cheapest energy is the energy that we do not use. I am very proud that over 2 million households were helped with energy efficiency and insulation under the previous Labour Government. Through Warm Front, we helped over 200,000 households each and every year. This year, only 40,000 people are getting help.
“Warm Front does not deliver insulation”.—[Hansard, 11 January 2012; Vol. 538, c. 256.]
He obviously had not browsed his Department’s website, which states clearly:
“The Warm Front scheme offers a package of heating and insulation measures”.
With such insight into his Department’s policies, we can only hope that the job of deciding who was eligible for a Warm Front grant did not fall to him. However, that might help to explain why nearly 30,000 people who applied for help last year were turned down.
Let us reflect on the figures. Under Labour, in each and every year more than 200,000 households were helped by Warm Front. This year, under this Government, only 40,000 households received help and 30,000 were turned down. They were turned down even though there was an underspend in the Warm Front budget of more than £50 million. That is right: hundreds of thousands of families face higher bills next winter and every winter because of cuts to Warm Front, and tens of thousands of families and pensioners who applied for help last year were left in the cold because of the incompetence of the Secretary of State and his Department, while £50 million that is in the Government’s coffers is going back to the Treasury. We asked whether the underspend could be used to provide further help through the programme. The answer, which I received very recently, was that it is going back to the Treasury.
I will try to help the right hon. Lady, because her own Front Benchers are laughing at her. May I take her back to the comments that she made about the Leader of the Opposition? When he was doing my job, he was pressed on what the Labour Government were going to do about energy prices. In 2009, Andrew Marr asked him:
“When it comes to the price of energy…are we or are we not going to have to pay more?”
“There are upward pressures on prices, yes”.
I am afraid that the right hon. Gentleman did very little on consumer prices. Labour had a record of failure.
We have not seen much of the Secretary of State since he took up his post. If that is the best he can offer after a number of absences from the Chamber, I worry about this Government and their handling of one of the most important areas for consumers and for jobs.
It is absolutely true that in reshaping the energy market to provide a low-carbon future, there are pressures. We have never denied that. However, today we are talking about the efforts to make the energy market more competitive; how we can ensure that a trail of energy companies is not investigated for mis-selling and dodgy dealing; and the increasing number of families who, under this Government, are paying more than they need to. The Government are stepping away from any responsibility to help the most vulnerable people in this country to tackle their fuel bills and keep their energy consumption down. It is possible to have policies on that, while recognising that there are pressures in the bigger scheme of things. It is a given that there are pressures—it is what a Government do about them that counts. This Government are doing nothing at all.
In government, we put tough obligations on all the big energy companies to use some of their profits to help poorer customers in deprived areas make their homes more energy-efficient. The community energy saving programme was meant to help 90,000 households. Two and a half years into the scheme—most of it under this Government—and with only a matter of months left, just 30,000 households have been helped. What are the Government doing about that? As far as we know, they are doing absolutely nothing.
We do know that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle, had a meeting with all the big energy companies on
Order. The Minister of State is a rather excitable fellow. I am not interested in whether he thinks he can answer now. He will answer at the point at which the intervention is allowed. The hon. Gentleman is a senior member of the Government. He needs to cultivate a reputation for being a cerebral figure, not an over-excitable one.
Thank you, Mr Speaker. We have tabled parliamentary questions and used parliamentary procedures to get information, because Ministers at the Department of Energy and Climate Change are not especially forthcoming off their own bat. In response to my question, what did the Minister say? He said that he would not tell us, and I quote—[ Interruption . ]
Order. Let me make the point for the last time. We conduct debate in an orderly way. We do not have Members, be they Back Benchers, Ministers or Opposition Front Benchers, yelling out from a sedentary position, encouraged by cheerleaders behind them. It is an unseemly way to operate. The Minister has registered his interest in offering his view, and no doubt he will have the opportunity to do so in due course. In the meantime, he should sit in statesmanlike quietude and the House will benefit.
Thank you, Mr. Speaker. When I asked the Minister precisely why he could not tell us what was discussed at the meeting and what had been decided, he replied that he could not because it would “prejudice the commercial interests”—presumably of the big energy companies. That is a direct quote. I find it hard to believe that the big six energy companies are revealing, in front of each other—apparently, they are competitors—information, so sensitive that it would prejudice their commercial interests, about why they are not on target to meet their obligations to help people with their fuel bills and energy efficiency.
What we said is that we could not give the minutes of the meeting, but I can tell the right hon. Lady extremely clearly that I made it absolutely, perfectly clear that we expect the companies to fulfil all their obligations, we are not backing down and we will continue to hold them to account—unlike the previous Government.
I listened very carefully to that intervention, but I still do not understand why the hon. Gentleman said to me that he could not share the minutes because it would “prejudice the commercial interests”. I am interested to know what commercial interests were in the minutes of that meeting. I find it hard to believe that any of the six companies would discuss such sensitive information in front of each other.
The right hon. Lady will know that no minutes of any meeting were ever shared under the previous Government. We do not release minutes. However, I tell her again, very clearly, that we are holding the energy companies to account, we fully expect them to deliver their obligations and we will make sure that they do.
All fine words, but obviously the excuse for not sharing is changing as the debate continues. What is very clear from that answer is that it is all flannel, all rhetoric. There is no sense of what demands the Government have put on the energy companies, or of whether the companies will have to meet those demands by the set deadline, a few months hence, or of whether the number of families helped will increase from 30,000 to the 90,000 the companies are supposed to be helping. There is no sense of clarity, and no practical suggestions or effort by this Government to get a grip. On delivery, the Minister of State, the hon. Member for Bexhill and Battle, has previous in so many other areas that it is becoming rather a pattern.
The truth is that the Government have not defined what action they will take. They hold private meetings in which they are not willing even to share some practical explanation of what will happen next. Is it impossible to understand why the public are feeling so let down and why organisations that support families in difficult circumstances are worried about whether this Government have the gumption to get on top of this issue, when they are failing in so many other areas? If there is a choice between the interests of the big energy companies and those of people who are struggling to make ends meet, it seems that under this Government the energy companies win every time. That is the real problem with the Government: not only are they out of touch, but they stand up for the wrong people.
Having got quite a lot of exercise in the last few minutes trying to intervene, I welcome the opportunity to point out a few facts. In 13 years of Labour Government there were six or seven energy White Papers, I think, but only one Bill. In two years of this coalition Government, we have got retail market reform coming through from Ofgem; one piece of energy legislation has been passed, and there is a second in this Queen’s Speech. That shows that the Government are absolutely committed to delivering a competitive and fair market to a greatly squeezed consumer.
As my hon. Friend says, we did not leave a recession, that’s for sure. That is at the door of this Government. When we left Government, we were a world leader in setting targets for reducing emissions and signing up to international agreements—acknowledged by the present Government as an historic effort by a British Government in any situation—and unlike in many other countries, we had a consensus around that, which is good. The problem is that this Government are squandering that legacy with the measures they are taking. We have fallen back in investment in renewables. Families are being abandoned, left on their own to deal with rising energy bills. In addition—I am sorry if Laura Sandys did not catch my earlier remark—we do not have an energy Bill that will achieve real reform of the energy market to make it more competitive and fair for British citizens.
Warm Front has collapsed. The Government are not standing up to the energy companies. A lot is resting on the green deal. We want the green deal to work. It is an idea on which the leader of the Labour party worked very hard; it was included in our manifesto and the pilots started under our Government. The truth is, however, that unless Ministers want the green deal to be a good deal, it simply will not work. Time and again, in debates in this Chamber and in Committee, we have proposed improvements, but the Government have refused to listen. Last year, the Government said that the green deal would help 14 million households to improve their energy efficiency, but today their impact assessment forecasts that the programme will reach fewer than 4 million. Even the Government’s own advisers think that is optimistic: the Committee on Climate Change now thinks it will help only 2 million or 3 million households. The Government claimed that the green deal would help to create 100,000 jobs, but today that estimate has been halved to just 60,000—[Hon. Members: “That’s not half.”] I said nearly half. It is still nothing to be proud of.
My next point is very important, because one of the Government’s trails for the green deal was that it would save households money. The so-called golden rule was supposed to guarantee households that the savings they made from greater energy efficiency would cover the costs of the original measures, and just last month the Deputy Prime Minister promised:
“We’ll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”
However, in answer to a written question from me, the Department was forced to admit:
“It is not possible for Government to guarantee people will save money”—[Hansard, 26 April 2012; Vol. 543, c. 983W.]
If Ministers are not careful, they will have a mis-selling scandal on their hands, and it will be entirely of their own making.
The right hon. Lady talks about the Leader of the Opposition, when he was Energy Secretary, working very hard on the green deal. Why then, when we proposed an amendment to the green deal in the Labour Government’s last Energy Bill, which became the Energy Act 2010, was it voted down by Labour Members, and why did the then Minister, Dame Joan Ruddock, say it was simply illegal and impossible to deliver it?
The hon. Gentleman has been a Member of this House for some time and he knows that the last Government, under the leadership of my right hon. Friend Edward Miliband, were absolutely committed to pursuing the green deal. That is why the pilots started under our Government. That is why the measure was in our manifesto. I think the record speaks for itself. The fact that, on one occasion, we did not support an amendment tabled by the Conservatives is proof, and the result was that the green deal was going ahead. The pilots were under way, it was in our manifesto, and had we won the last election—sadly, we did not—it would be in a better state today. The green deal was meant to be up and running by this October, and the secondary legislation should have been laid in March. With just over a week until the House rises, we will not see anything until the middle of June at this rate.
There are question marks over whether the energy companies even have the technology in place to bill people correctly. No green deal assessors have been trained, because the courses have not even started yet. Most importantly of all the public, the people who are meant to be taking up the green deal, have absolutely no idea what the interest rate will be or how much it will cost them.
So desperate are Ministers to prop up the policy that they are now considering whether to force it on people who find that their boiler breaks down. Imagine—a family whose boiler breaks down on Christmas eve could have to wait for the council to come round to do a full audit of the property’s energy efficiency, and then have to agree to take out other measures, before they get their heating and hot water turned back on. That is the type of policy that the Government are proposing, and it just shows how out of touch they are.
The truth is, even when times are tough and money is in short supply there are still things that a Government can do to help families and businesses. I know that the Government are short of ideas. At one of my speeches earlier this year, no fewer than 18 civil servants were on the attendance list, including five from the Department of Energy and Climate Change alone. If the Secretary of State is in the market for good ideas for his energy Bill, here are two that I offer him.
First, let us put all those who are over 75 on the cheapest tariff. We know that the elderly are the most vulnerable to the cold weather, the least able to access the best online deals and the most likely to pay over the odds for their energy. In the Secretary of State’s own constituency, if we put all those over 75 on the cheapest deal it would help nearly 8,000 pensioners. It would help more than 8,000 in my constituency. Across the country, it could save as many as 4 million pensioners as much as £200 a year on their energy bills, not through spending more money but by getting our energy firms to show greater responsibility to their most vulnerable customers. However, I am afraid this do-nothing Government stand idly by, content to leave Britain’s pensioners paying more than they need to.
Does my right hon. Friend also accept that given the number of people who self-disconnect because of the higher charges on key cards, it would be valuable for energy companies to consider how there could be a lower tariff for families who are under pressure? Those families have to take the decision themselves not to continue to heat their homes.
I absolutely agree with my right hon. Friend. There are a number of areas in which more could be done to make energy companies more responsible, but we hear nothing from the Government about issues such as people on prepayment meters or key cards.
We are talking not about a social tariff but about people over 75 missing out on a deal that they could get if they looked online. For all sorts of reasons, they do not necessarily use online systems as much as others do. Putting them all on the cheapest tariff would be a simple way of making the energy companies step up to their responsibility, and it would get those people the deal that they deserve. They should be able to do that, but every time I have mentioned it in the House I have been knocked back by the Government, who think it would be a measure just for rich over-75s. It would not. It is about justice and tackling the way in which energy companies run their customer services, which are not working in the interests of customers. I would have thought the Secretary of State, as a former Consumer Minister, would understand that a little better.
The second idea among many that we have is that we should consider the position of small businesses. We believe that some straightforward, practical steps can be taken to help relieve the pressure on them and give our economy a shot in the arm. First, we should put an end to unfair contracts and the practice of rolling small businesses on to more expensive tariffs without their consent. Secondly, we should stop small businesses being subject to six years of crippling back-billing for mistakes made not by them but by their energy supplier. We do not allow that to happen to households, and we should not allow it to happen to small businesses either. Thirdly, we should ensure that the energy companies act responsibly towards small firms that have fallen into difficulty with their bills. Just as they have to take all factors into account when a family find themselves in trouble, so should we ask them to come up with sensible and realistic repayment plans for small businesses.
There we go—two ideas: helping the over-75s to get the tariff they deserve, which through no fault of their own they cannot get because it requires online technology, and helping small businesses with some of the ways in which energy companies are exploiting them. We are accused of not having ideas, but there are a few for which I hope we can get Government support. We are trying to think practically about ways to rein in the energy companies and make them more accountable to their customer base, whether it is households or businesses.
What is the biggest drag on people’s living standards? The scandal of millions of people being unemployed, and a Government who have no vision and strategy for putting them back to work. I was at the Yorkshire Post environment awards last week and met businesses at the cutting edge of innovation. I saw that Britain is not short of the skills or technology to lead the world to a new low-carbon economy. However, the Government are short of the political vision to do so, and today we learn that even the Foreign Secretary, a fellow Yorkshire MP, told businesses just last weekend to work harder. He does not believe the Government are doing enough to support Britain’s green businesses.
As I have argued many times, the transition to a low-carbon economy has the potential to be a major source of wealth and employment for this country, both for young people looking to get their first job and for older workers looking to put their skills to use in new industries. However, Britain is falling behind. When Labour left office, the UK was ranked third in the world for investment in green business; today we are seventh. Investment levels are still billions short of where they were in 2009, and jobs and industries that should be coming to this country are now going overseas.
Let us look at solar energy. The Minister of State, the hon. Member for Bexhill and Battle—he has his fingerprints all over these projects—took a knife to the solar industry and had the audacity to claim that more people would get solar power and more people would be employed in the solar industry as a result. Today we see that because of his cuts and his strategy, solar installations have fallen by 90% and 6,000 people have lost their jobs, with yet more cuts on the way. In the end, whether it is solar or any other type of clean energy, businesses will not invest, build factories and create jobs until the Government end the dithering, stop shifting the goalposts and get behind the industries of the future.
We have an electricity market reform Bill that does not reform the electricity market, a Queen’s Speech that does nothing to help families with the cost of living and a Government who, I am afraid, are too much on the side of the big energy companies and not enough on the side of hard-pressed households. I am aware that a number of the Secretary of State’s colleagues, led by Mr Redwood, have put forward an alternative Queen’s Speech on energy. The Prime Minister has to decide whether he is going to run with the Vulcans or stick with the huskies.
To advocate cutting support for clean energy, and instead dash for gas when wholesale gas prices are the single biggest factor in driving up people’s bills, is madness. There is an alternative—Labour’s fair deal on energy. It would put the public first, protect the most vulnerable and deliver a competitive energy market with fair prices for all. I commend the amendment to the House.
I am grateful to the Opposition for selecting a debate on the cost of living, which is a very important issue. There can be no doubt that many people in our country have been through, and are going through, some tough times, not least because inflation has cut into their living standards. I am sure that all of us pick that up in our constituencies. I do two advice surgeries a week for my constituents, and the cost of living comes up frequently.
When we talk to and listen to people, we find that the rising cost of electricity, gas and fuel has been hurting the most. We should all be concerned when we see pensioners and families worrying about basics such as food and fuel, groceries and gas. Despite the rhetoric that we have just endured, infused with the memory of an amnesiac, I wish to make it absolutely clear to the House that this Secretary of State and this Government understand those worries, share them and are acting to relieve them. Labour sometimes talks as though it had a monopoly on compassion and caring, but it never has, it never will, and to boot it does not have the record to show that it ever did.
The Government are committed to helping households cope with rising energy bills. We cannot control volatile global energy markets, and I think reasonable people understand that. However, we can act, and are now acting, to ease the pressure on consumers. In the short term, we are making it easier for people to get a better deal from their energy suppliers, about which I will say more shortly. In the medium term, we are making it easier for people to save money by insulating their homes. In the long term, we are making it easier for investors to build clean power plants here in the UK, protecting British consumers from global wholesale energy prices.
I want to set out the short, medium and long-term policies that are helping, and that will continue to help, consumers with their energy bills, not least by explaining the purpose of the energy Bill, as contained in the Gracious Speech, before its publication, which will come shortly. However, before I do so, it is only right to respond to the amendment and the speech of Caroline Flint. The key thing I have learned in my first few months as Secretary of State for Energy and Climate Change is that energy and climate change policies take a long time. They involve big infrastructure, huge shifts in the structure of the economy, and changing behaviours that have developed over years. Therefore, to get results, we must act decisively and strategically. This Government have been doing just that for the two years we have been in office.
We are introducing some of the most innovative and ambitious policies to bring forward billions of pounds of investment, which will be essential for our country over the next few decades. Such investment will help our growth, from the green investment bank to electricity market reform, and enable us to decarbonise our economy, especially our electricity generation sector, so we can tackle climate change.
The problem is that the previous Labour Government did not act decisively or strategically, but lurched from one White Paper to the next consultation document. Unable to make up their mind, they delayed and dithered. This Government have been left to pick up the pieces.
However, let me give the previous Government credit. They were very good at setting targets; they just never hit them. Even on fuel poverty, they set a target. However, Professor John Hills has examined their fuel poverty targets in detail, and it turns out that they could not set a target for fuel poverty competently—they could not even measure fuel poverty properly. This coalition will clear up the Labour Government’s legacy on energy as well as on the economy.
Let me therefore explain to the Opposition why living standards have fallen in the last year. It was partly down to high world prices for oil, gas and food, but it was also partly because they left the country poorer and borrowed to hide the truth. When the economy contracts in one of our country’s deepest ever recessions, when the country’s national income falls by 7%, and when the Government borrow to compensate, there must be a day of reckoning. The problem is that the Opposition are incapable of admitting that.
The right hon. Lady and others make out that the problems are all the Government’s fault because of the cuts to feed-in tariffs or because of lower take-up on Warm Front, but they simply do not understand their legacy or the changes we are making.
I have been in the House for 11 years and have watched the right hon. Gentleman progress in his career. I remember him sitting on the Opposition Benches and consistently calling on the previous Labour Government to spend more. It is interesting that he now completely ignores that fact. What are his targets for reducing fuel poverty and how will he deliver them?
I must remind the hon. Gentleman that the Chief Secretary to the Treasury of the previous Government left a message to say that there was no more money. That is the legacy this Government are dealing with. We will take fuel poverty seriously. My predecessor commissioned a report to ensure we have proper targets and measurements of fuel poverty. John Hills has produced a welcome report, on which we will consult—
We have plenty of policies to tackle fuel poverty and I will come to them, but we want to ensure we are tackling the real thing, not the fake one.
Raising the personal allowance to £9,200 is worth about £220 in cash to the average basic taxpayer. It also takes many low-paid people out of tax altogether. Does my right hon. Friend agree that that is one way of protecting people, particularly the low paid, from the rising cost of living?
My hon. Friend is absolutely right. By next April, we will have saved a two-earner family on the basic rate of tax more than £1,000 a year in income tax. That is a policy to help people on low pay.
The Labour Government left office with 1 million fewer people in fuel poverty than we inherited in ’97. No doubt this is a complex area, but the truth is that in the last two years, according to Consumer Focus, there has been a sharp increase in the number of homes in fuel poverty in England and Wales—it has increased from one in five to one in four. What are the Government doing about that?
The right hon. Lady ought to know that we saw a massive V-curve because of how fuel poverty was measured under the previous Government—fuel poverty came down earlier in their period of office and shot up dramatically as global gas prices increased. She is not living in the real world if she thinks that is the correct way to measure fuel poverty. That is why this Government are getting to grips with the problem. We are ensuring we measure the problem properly so we have the right policies, which the previous Government never did.
To return to feed-in tariffs, I remind the right hon. Lady that we have had to reform the scheme designed by the Leader of the Opposition so that huge windfalls do not go to a few people. Our reforms will ensure that many people benefit from solar PV. We are the party of the solar many; they are the party of the solar few.
On Warm Front, the right hon. Lady offered no recognition of the progress we have made to spend our budget; of the reality that a warmer winter last year reduced demand; or of the fact that the shameful scaremongering by Labour Members on Warm Front, who said the scheme was closing more than a year before it will, might just have put some people off applying.
When it comes to Governments being responsible for putting people’s bills up, the right hon. Lady ought to talk to the leader of her party. Let me refer her to the UK’s low carbon transition plan, published by the Leader of the Opposition when he was in my job. Let me further refer her to the analytical annex, page 66, table 9, and the estimate of the cost of the renewable heat incentive on people’s gas bills, as proposed by Labour. The estimated increase in gas bills by 2020 was £179, but this Government stopped that approach, because we were not going to put £179 on people’s gas bills. That is 179 reasons for not taking Labour seriously on energy bills.
I welcome the right hon. Gentleman to his post. I am a member of the Select Committee on Energy and Climate Change, so we will have a bit of knockabout on some issues, but knockabout on fuel poverty is not right. Whether or not we are changing the measures, more people have found themselves in fuel poverty this year and last year, and the previous Government reduced the number by 1 million people. That is a fact, whether the curve is V-shaped or not. What measures are this Government taking to assist those people who have fallen into fuel poverty?
Let me give the hon. Gentleman one exact policy, for which Labour never legislated: the warm home discount is a way of targeting cuts in people’s bills directly, for the poorest people in our country. We have legislated for that, it is delivering, and we are proud of it.
I congratulate my right hon. Friend on the measured approach he is taking from the Dispatch Box. Further to the previous question, does he agree that requiring the major energy suppliers to notify customers of the lowest tariff every year will help many of the people in fuel poverty with their cost of living?
I was just about to come to that measure. My hon. Friend will know that our right hon. Friend the Deputy Prime Minister announced that package, which will be a big help, last month.
On our agenda for helping consumers in a practical way, I should like to highlight three things—they are part of our short-term approach to ensure that we help consumers and get more competition in our markets so we can make it easier for people to take advantage of good deals.
I will in a second.
First, the consumer deal was agreed with the big six last month and announced by my right hon. Friend the Deputy Prime Minister. Secondly, I have pushed collective switching since becoming Secretary of State for Energy and Climate Change, following on from the work I did as Minister with responsibility for consumer affairs. Thirdly, Ofgem is working on tariff simplification. I will describe the detail of the practical measures that we are taking and that the previous Government never took after I have given way to my hon. Friend.
Talking about energy is important, but I would like to draw my right hon. Friend’s attention briefly to another important utility in people’s lives—water. Water rates are a big cost of living and are particularly frustrating in London, given that we are under serious drought orders, despite the rain tumbling down almost every day. Particularly galling is the discovery that the very slow pace of plugging water leaks is apparently well within the target range set by the water regulator. If the water regulator is not on the side of consumers, who is?
My hon. Friend makes a very good point. I am sure that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will note her arguments.
No, I will not.
Our first priority is to encourage consumers to switch suppliers, which could save households up to £200 per year. I am surprised that the right hon. Member for Don Valley was so negative about switching. The problem is that, despite rising prices, only one in six consumers switched their supplier in 2010. She was right that the number of people switching has been falling. There are several reasons for that, one of which, as she will know, is the plethora of energy tariffs. There are currently about 120 tariffs. We want fewer tariffs and much clearer pricing, so that customers can find a better deal more easily. That is the right approach. We support much of Ofgem’s work as part of its retail market review and will work with it to bring more transparency to the energy market.
Last month, my right hon. Friend the Deputy Prime Minister announced the deal that we secured working with the six big energy companies to give customers a guaranteed offer of the best tariff. From the autumn, suppliers will contact consumers annually to tell them which is the best tariff for their household, and if consumers call energy companies, they will have to offer them the best tariff. That is real progress—progress that Labour failed to make but which I have made in my first few months as Secretary of State.
May I tell the right hon. Gentleman about a constituent of mine living in a two-bedroom flat with her daughter and grandson? She works as a teaching assistant in a local primary school and earns just £1,025 a month, of which she pays £201 on utility bills—nearly 20% off her income is spent on utility bills. She is already on the lowest tariff, and she is in massive debt and worried. What can the Secretary of State offer her from the Queen’s Speech?
Actually, the hon. Lady’s constituent will be a big beneficiary of the coalition’s policy to increase the personal income tax allowance. She will benefit from that big income tax cut—bigger than anything that Labour did. In fact, I remember Labour taking the 10p rate away from people such as her constituent, costing them £236 a year. So I am afraid she has shot herself in the foot.
I thank the right hon. Gentleman for providing the House with more information about what the Government are attempting to do. The chief outcome of last autumn’s summit, however, was that the companies agreed to write to people to let them know that they should switch and save. Labour argued that the energy companies should be much more specific and make it clear to people what cheaper tariff they should be on. I take it from what he has just said, therefore, that we have a Labour policy gain today.
That was a good try, but no one believes the right hon. Lady.
We are working with energy companies in a range of ways that Labour failed to do. For example, we are working to ensure that companies put special barcodes on energy bills, so that people can scan them, search for quotes and switch suppliers. We are also working with consumer groups to make it easier for people to band together, get the best deal and bring down bills without having to negotiate them. That is called collective switching. It brings people together to make a collective purchase based on collective, mutual and co-operative principles. One would have expected Labour to use those principles in government. It did not, we are, and it should be ashamed.
We have already seen the big switch campaign from Which?—the first big collective switching scheme—and I am delighted it was so successful. Through the big switch, people have saved £120 on average—but £200 if they have paid by cash and cheque. [Interruption.] The right hon. Member for Don Valley says we did nothing. Let me explain to her. As consumer affairs Minister, last April I published a consumer empowerment strategy, right at the heart of which were proposals to look at collective purchasing. While working on that strategy, I noticed that under Labour no work had been done on that. As a result of our work, we got Consumer Focus to work on collective switching and we talked to Which? and others, and that work is bearing fruit. She is on the wrong track again.
My right hon. Friend knows that I greatly welcome his robust and clear attitude to these issues and the Government’s strong policy. I encourage him to be really tough with Ofgem and the big six energy companies, which have often had far too easy a time. May I put a suggestion to him? Every year, local authorities send out council tax bills and people address their council tax and housing benefit requirements. Will he see whether, within that same mailing, everyone—in all our constituencies—could be sent information about the cheapest tariffs? That would ensure that local authorities share the responsibility for spreading the news about how housing costs can be kept down.
As always, my right hon. Friend has come up with an ingenious idea. The good news is that the Deputy Prime Minister, following my work with energy companies, is already on to that, through this annual communication that the big six will now send out to ensure that people know the best tariff for them. However, my right hon. Friend Simon Hughes is right that local authorities have a role—in the green deal and many other things. I am happy to talk to him in detail about that.
My right hon. Friend might also be interested to know that the collective switching schemes we are trying to promote through trusted third party intermediaries, such as Which?, are beginning to take off. Many social housing providers and councils are interested in seeing whether they can work with their communities to push these schemes, and People’s Power, a social housing provider, has pushed the huge switch after the big switch. That is exceedingly good news.
One big issue facing all our constituents is the price of fuel for their vehicles. Is it not a sad state of affairs that it costs families more to fill up their cars than to put food on the table? Surely something needs to be done about the 3p increase and other increases.
The Government have taken many measures to try to keep down the cost of fuel, but the hon. Gentleman will know that we do not control the price of oil globally. I am delighted, however, that we are not suffering from a tanker fuel dispute. The resolution of that dispute is extremely important. [Hon. Members: “No thanks to you!”] That shows how little Opposition Members follow these things.
I will shortly be holding a round-table discussion at my Department to continue the momentum building behind collective purchasing schemes. Together with our policies to make markets work better and to help consumers to get the best deal, we are also making it easier for people to save energy. As the right hon. Member for Don Valley reminded us, one of our mantras is that the most affordable energy of all is the energy we do not have to pay for—she is quite right about that—yet too many of our homes and businesses are leaking heat and wasting energy. Making them more efficient will help consumers and small businesses to cope with costs. We can cut those bills and keep people warmer for less.
Later this year, we will introduce the green deal, bringing energy saving within reach for millions of homes across the country. A new Government-backed scheme will enable householders to make energy efficiency improvements at no upfront cost. Trusted local and national brands will pay for the work with the costs recouped from energy bills, and the green deal will help householders to stay warm for less. We estimate, for example, that a three-bed semi could save £120 a year by installing wall cavity insulation.
When costs rise, the poorest are often hardest hit, so we are committed to helping the most vulnerable heat their homes more affordably. I mentioned the warm home discount in response to Albert Owen. It will continue to assist about 2 million low-income households with the cost of heating their homes in 2012-13. Alongside the green deal, parts of the new energy company obligation will deliver heating and insulation measures to low-income vulnerable households, including those in some of the most deprived communities.
Will the right hon. Gentleman provide clarification on the energy company obligation? I understand that about 50% of the money will go to the most vulnerable families and the other 50% to those with hard-to-treat homes—we are talking about solid walls. Within the second group, is he prepared to consider prioritising the most fuel poor, rather than subsidising people on large incomes? We recognise that hard-to-treat homes are a problem, but we must ensure that that side of the budget prioritises the fuel poor and the vulnerable living in such homes and gets the subsidies to them.
Since becoming Secretary of State, I have spoken to Professor John Hills, given all the work he did analysing fuel poverty, and I have made changes to the energy company obligations as originally designed. The
Deputy Prime Minister talked about this issue recently. We will be laying regulations before the House for debate this summer which will contain all the details that the right hon. Lady seeks. I say to her in the nicest possible way that she needs to wait a little bit, but those regulations will be laid before this House.
Does the Secretary of State accept that unless action is taken on the interest rates charged by those providing the loans for the green deal, the green deal is unlikely to deliver what he says its likely benefit is? What action has he taken to get that right, and why is he doing nothing further to ensure that the interest rate is compatible with an effective green deal for the future?
I have been looking at the financial arrangements of the green deal. When we are able to announce even more details than we have already, I believe that people will see that it is a very attractive offer. I also believe that there are many low-income households that will actually welcome the rate of credit that will be asked through the green deal, compared with some of the rates of credit that they have to pay other lenders.
I will not give way, because I want to make some progress and address the Queen’s Speech.
We need to make dramatic changes to our energy policies in the longer term. The right hon. Member for Don Valley said, in a rather bizarre passage towards the end of her speech, that we were not really reforming the electricity market—but we are making the biggest reform of the electricity market since privatisation. It is the sort of reform that Labour Members failed to get their head around and failed to deliver, despite 13 years in power.
There are huge challenges for our electricity market, with 20% of our power plants coming offline during the next decade. There is an energy security issue. We will have to ensure that the infrastructure is brought forward in the most competitive way, otherwise there will be a big impact on bills. We will have to attract more than £110 billion of investment in a way that ensures that low-carbon technology can be introduced, so that we can meet our carbon budgets. That is a heck of a challenge, and this Government have developed the policies to meet it.
If we do not act now, we estimate that by the mid-2020s up to 2.5 million households will be affected by blackouts, costing the economy more than £100 million a year. Even without interruptions to supply, our consumers would be exposed to volatile global energy markets if we did not do anything. Wholesale energy costs already make up half of the average consumer bill. Last year, the winter gas price was 40% higher than the year before. That is the real reason why bills have been going up so dramatically. We have to act and make the strategic changes to tackle that issue.
I am sure that my right hon. Friend the Secretary of State for Transport will touch on those issues. This Government have done far more on petrol duty than the previous Government did. However, I will not pretend that we can isolate ourselves from world oil prices—the hon. Gentleman will know how high the price of oil has gone internationally.
We will do everything we can to insulate consumers from such price spikes. That is why, as stated in Her Majesty’s Gracious Speech, the Government will introduce legislation to reform the electricity market. The measures in the forthcoming energy Bill will ensure that we have secure, reliable low-carbon electricity supplies. We want to build a diverse portfolio of clean-energy technologies, including nuclear, renewables, clean coal and gas, and let them compete on cost.
Is the Secretary of State aware of the proposed 15% increase in gas prices? There is much talk about the increase in oil prices and other prices, but gas prices are also going to cause real hurt. What steps can the Government take to help those who have gas as their sole source of energy?
The hon. Gentleman is right to say that there are people predicting that wholesale gas prices will go up later this year. We had the announcement from Centrica last week, and we also had the announcement from E.ON. I am sure that other providers will be competing on price. However, I have already laid out some of the measures that we have been taking, whether it is the discussions that we had with the energy providers on gas and electricity bills, the collective switching or the work that Ofgem is doing on tariff simplification. All those measures make up quite a strong package to try to help the constituents he has just mentioned.
Returning to the energy Bill, there are four parts to our reforms: new long-term supply contracts to provide stable incentives to invest in low-carbon electricity generation; a capacity mechanism to ensure that we can keep the lights on; an emissions performance standard to keep carbon emissions from new fossil fuel plants down; and a carbon price floor to give investors certainty to commit capital to low-carbon projects. These reforms will attract the investment that we need to secure our electricity supplies. The investment will bring real rewards: up to 250,000 jobs in the construction and operation of new power plants, 19 GW of new electricity capacity, and an energy system that is fit for the future.
This is one of the biggest delivery programmes that this Government will oversee. It will stimulate growth, support new skilled jobs, upgrade our ageing energy infrastructure and bring down consumer energy bills. Our latest analysis shows that over the next two decades the average household energy bill will be 4% lower than if we did nothing. If we do not act now, we face a higher risk of blackouts and more exposure to price spikes, and higher consumer bills for both homes and businesses. That is not a future that this Government are willing to consider, so we will take the right decisions for the long term. The provisions in the forthcoming energy Bill will keep the lights on and our carbon emissions down, at the lowest cost to the consumer.
As the right hon. Gentleman has made specific mention of the consumer benefit that will arise from electricity market reform, would he care to place on the record this afternoon how many consumer-based levies are in his energy market reform proposals, and what price effect their implementation will have on consumer bills?
When we publish the draft Bill for pre-legislative scrutiny, I will set out a range of details, with a lot of technical documents. What I can say to the hon. Gentleman ahead of that is that there will be fewer levies than Labour planned. Labour planned a levy on bills for carbon capture and storage, which I believe would have cost consumers £9 billion. We are not going ahead with that.
This is a difficult time for many households. I am sure that Members on both sides of the House have heard from constituents who are struggling to pay their bills or keep their businesses afloat. Promises from politicians will not make the end of the month come any sooner, but the Government are doing what they can to help. We are making it easier for people to get a better deal from their energy suppliers; we are bringing energy efficiency to the mass market, making homes in every corner of the country cheaper to heat; and we are reforming our electricity system, to protect consumers from a more unstable and more expensive energy future. These three objectives share a common cause: not only will they insulate our consumers from energy price rises, but they will deliver a cleaner, more secure and more affordable energy system for generations to come. This is government for the long term, and that is what this coalition stands for. We are taking action where the last Government delivered inaction.
Welcome to our debate, Mr Deputy Speaker; it is good to see you again.
My intention today is to talk about aspects of family life and how they relate to the “cost of living” theme. However, as a former Energy Minister, I am bound to say that I have been stimulated by the debate to make a few other remarks. Let me offer some friendly advice to the Secretary of State: his soundbite of the speech—that he is in favour of the “solar many” rather than the “solar few”—may not go viral. Indeed, I think it represents a formidable rewriting challenge for his speechwriters, if I may say so.
I will not get too cross with the Secretary of State for saying, as a bit of political knockabout, that the last Labour Government made no strategic decisions at all. Empirically, that is incorrect, as I think of the formidable legislation on climate change, which was supported throughout the House. For the first time, Parliament—the Labour Government were in power—decided to legislate to reduce carbon emissions. That is probably the most radically ambitious piece of legislation ever to go before this House. As I recall—I do not work for News International, so I do have a memory—it was also the Labour Government who set renewable energy targets, although they were more than just targets.
I hear a Member mumbling “Europe” at me from a sedentary position. I do not know whether it was a Eurosceptic, but yes, of course Europe is relevant; our party believes in Europe. We subscribe to European targets and during the period of the Labour Government we became the biggest country in the world in terms of investment in offshore wind. So much for us not having any strategic direction!
As a Government, we also tried to push forward carbon capture and storage—a formidable endeavour, and I congratulate the Norwegians on the progress they have made. It would be good to hear from the Government at some stage where they think we are on CCS because it is a vital part of our low-carbon objectives, given that despite renewables and nuclear, we will continue to invest in and use a great deal of fossil fuels in the future.
We also need to talk about nuclear energy. The withdrawal of the German consortium has been a formidable blow to our plans for nuclear energy, but I put it to the Secretary of State that, despite what he says, the last Labour Government’s decision to allow a new generation of civil nuclear reactors was a crucial strategic decision. As I recall—again I draw on my memory—one reason why Parliament took rather a long time to reach that decision was that one of our major parties, and I think it was the Liberal Democrats—
I am a kind person, and I suppose it was major until recently. That party was adamantly opposed to nuclear energy. I ask the Secretary of State whether he has now made a strategic realignment in his own mind to support nuclear energy. I hope he has. I think the fact that the Prime Minister has appointed Liberal Democrat Members to this important role of Secretary of State for Energy and Climate Change shows that he maintains a sense of humour—one that he will need in the weeks and the trials, which is a term I use in the generic sense, to come.
While I am speaking about energy policy rather than family policy, which I shall come to in a moment, I want to emphasise the importance of the global context. We cannot discuss this issue only domestically. If I am right, the International Energy Agency projects in one of its central scenarios that global energy demand, mainly from non-OECD countries, will rise by about 40% by 2035. We must view our issues within that global context, we have to take energy security seriously and we have to build up what I have always called home-grown energy as much as we can, alongside reducing energy demand—hence the importance of nuclear and of renewable energy.
To rewind, let me say that the Climate Change Act 2008 was an excellent Act, and it had cross-party support. I am delighted that it was enacted. Does the right hon. Gentleman agree that Governments have to take a lead in showing that they can use less energy? He will remember the 10:10 campaign, designed to persuade people across the country to reduce their energy usage by 10%. Does he regret the fact that his Government voted down a Liberal Democrat proposal that the entire Government should sign up to that? Will he congratulate this Government on signing up to it and on reducing energy usage by 14% in their first year?
What I am proud of is that across a range of fronts, including transport, where we saw the development of hybrid cars, for example—I do not say that the Labour Government were responsible for them, but we encouraged them—energy demand reduction in industry and in the service and retail sector, and, of course, literally on the home front, with our domestic dwellings, we made many efforts to reduce energy demand. We need to do deal a great deal more. Irrespective of what party we come from, the first item on the agenda for energy policy has to be energy efficiency. It is the cheapest and cleanest solution and the most secure, as we are not dependent on foreign shores for reducing energy demand. That is vital.
To clarify for the right hon. Gentleman, who raised the issue, the Liberal Democrats are opposed to nuclear power. We recognise that there is no majority in this House for that position, so a deal was done in the coalition agreement that allows the Government to pursue nuclear power provided that there is no subsidy—direct or indirect—for it. My view is that that means it will not happen because it has always needed to be subsidised.
A very senior Liberal Democrat Member says that nuclear will not happen, while the Liberal Democrat Secretary of State for Energy and Climate Change says that it will. I suspect that there may well be more rows in that party in the weeks and months to come—for other reasons, too—but an interesting divide has been opened up.
Let me move on from nuclear energy to the nuclear family—and other families, too—as the main focus of my speech today. I start with the proposition that although we are all currently concerned with how to develop a strong economy in really difficult times of economic austerity, equally important for the well-being of our society—I do not think I exaggerate—is what we might call the strong family. Whether families are based on marriage or cohabitation or whether they be two or one-parent families, it is important that they are strong, but many families are struggling and need our support.
Many issues that we debate in this Chamber—education, for example—depend as much on what I call strong families and strong parenting as on other measures the state can provide, such as support for schools and colleges, Sure Start and so forth. I have always taken the view that parents are as important as teachers for education and that families are as important as schools. Many do very well.
How family life has changed in this country is an issue we need to understand, as the family of today is not the family of 1945, and social policy needs to follow the grain of understanding these changes to family life. Not so long ago, a child left school at 14, 15 or 16 and became an economic asset to the family. Now, of course, as some of us know to our cost, our children are financially dependent on us often right into their early to mid-20s—and for good reasons, because of the development of higher education and the need for children to equip themselves for a more sophisticated society.
The strong family, then, is an important theme, and I want to touch on two policy consequences flowing from it. The first is child care and the related issue of parental leave, which is a welcome feature of the Queen’s Speech. We await the detail of the Government’s proposals on parental leave and we will need to scrutinise them. The importance of these issues relates to my theme of family change. Gone are the days when it was assumed that the father would go out to work full time and the mother would stay at home to look after the children—often, in the past, quite a number of children. The fact that those days have gone is very welcome—as is the water brought over to me by my ever-so-kind Whip. I do not want to get away from the idea that the Labour Whips are tough and fearless and nasty, but they can be kind too.
As I said, those days have gone, and the rise of what many people call the dual-worker family—the rise of women and mothers in employment—has come about for good reasons. It reflects a growing equality in our society, and the high educational achievements of our girls and young women. It also reflects the fact that people are now demanding a higher living standard than was experienced by their mothers and grandmothers. In a high-cost society, two incomes are more desirable than one.
The alliteration is better.
What I mean is that the time when young men and women in their mid-to-late twenties and thirties are working hard at their careers, and when their employers are watching them, is precisely the time when they think about the need to have children. That is a dilemma and a difficulty that we have not entirely thought through.
One consequence of the fact that women as well as men are working hard during their period of maximum fertility is the inability of many women to have families of the size that they would like. There is interesting evidence to that effect in a 2006 study by the Eurobarometer, the most recent that the Library could find for me. It states that in the UK in 2006 the mean ideal number of children for women—as it is an average, a funny statistic emerges—was 2.5, but the actual number of children achieved by women aged between 40 and 54 was only
1.9. As I have said, it is possible to laugh at such statistics, but we can see what lies behind them. Many women, and men, who would have preferred to have, say, three children end up with two, many who might have wanted two end up with one, and others may not be able to have children at all.
I am not suggesting that there is some Utopia in which everyone can achieve their ideal family size, but I do believe that there are economic and employment pressures that make achieving an ideal family size difficult in Britain and, indeed, throughout Europe. That ought to concern us, not least at a time when data show that birth rates are below replacement level in this country.
Another consequence of the care-career collision is the sheer hassle and difficulty that many families have to undergo in order to organise substitute child care. The growth of child care is wholly beneficial—it has improved the lot of families and, in many cases, children—but whenever I discuss the issue with younger families today, I have the impression that there is barrier after barrier. Often it is not just one substitute child carer whom parents need to employ. Because of career patterns, children may have to be dragged out of bed early and sent from one carer to another. What happens when a childminder is ill? What happens when the mother herself, who should be working, knows that her child is ill? Many parents have to resort to fibbing to their employers that they themselves are ill, rather than their children.
What I am saying—not too controversially, I hope—is that I do not believe the development of child care has led to some kind of nirvana. People may say, “It would be better if we had more child care, if the training and the quality of child care were better, and if it were cheaper”, and I understand their argument, but I want to challenge more fundamentally the proposition that we have reached a nirvana. I believe that family decisions made by men and women, by dads and mums, would be better decisions for families and for children if parental leave became a much more important feature of our employment and social policy. We have made some progress and I welcome that, but the average citizen of the 21st century will live until her eighties or nineties, and we are threatened with the possibility that many children born today will reach the age of 100. That is a long life span. Are we really saying that, during the two or three critical years after a child is born, substitute child care is the only way of ensuring the well-being of our children and their parents?
I thank the right hon. Gentleman, and congratulate him on a speech that we are all finding very thought-provoking and stimulating. One aspect of child care that he has touched on but not dwelt on is the role of the grandfather and grandmother. Has the possibility occurred to him, as it has to some people, that the increase in pension age will mean that they cannot provide families with the free child care that grandparents have provided in the past? Might that not also be a critical factor?
It could well be a factor. Certainly I acknowledge the hon. Gentleman’s main point that, although we often talk about the childminder or the nursery or the crèche, as I have been doing today, the role of the extended family—granny and granddad—can be vital.
To support my case that we need to take parental leave far more seriously, let me cite a recent, or fairly recent, pamphlet published in 2008 and written by a number of people, including Catherine Hakim. The publisher was Policy Exchange. Politically I am widely read, or rather the Library has briefed me widely. Catherine Hakim and her colleagues produced some interesting data. When parents were asked what, ideally, they would like, they did not all say “More child care, more child care”. Many simply wanted to spend more time with their own children when they were tiny. According to the report,
“Overall, a two-thirds majority of working mothers of pre-school and school-age children would prefer to work fewer hours or not at all, even if better childcare were available. Given the choice, what mothers prefer is to be at home with their children, not more and better childcare”.
That is an interesting finding, but I would qualify it by saying that we must not turn this into a debate about how mothers should be at home, as we are in danger of doing. Many mothers have educational qualifications that are superior to those of their partners, and careers that are blossoming. The debate about parental leave is not just about mums, but about dads as well. Too often in family and social policy, we talk about families as if they were just women and children and do not talk enough about fathers.
I will give way to all sorts of people shortly.
We need to draw on some of the experience of Sweden and other Scandinavian countries. We need parental leave which—almost in a social engineering way—enables and encourages dads as well as mothers to take parental leave.
I have been listening closely to the right hon. Gentleman’s speech. Before I became Secretary of State for Energy and Climate Change I was in charge of employment relations in the Department for Business, Innovation and Skills, and, indeed, did the work that took place before the announcement in the Queen’s Speech of legislation on flexible parental leave, and I can tell the right hon. Gentleman that that legislation will deliver many of the developments for which he is arguing. For instance, it will ensure that dads and members of extended families can be more involved. Shared parental leave, the extension to all of the right to request flexible working, and an increase in unpaid parental leave will tackle all the issues that he has raised. Those are the most radical proposals that have been made in this area, and they derive from the best practice in the world, which I believe is found in Sweden and Germany.
That is good, and when we see the Government’s proposals we can debate whether they go far enough and what our long-term ambitions might be.
On parental leave, perhaps we should be thinking of several years, rather than shorter periods. However, with dads in more and more families playing a much greater role than their own dads did, we must concoct the policy so that we give them, as well as the mothers, maximum encouragement to take parental leave.
The Secretary of State’s intervention—on an aspect of nuclear family policy, rather than nuclear policy, which he is shyer about—made a point that Government Members need to understand. Getting the right balance between work and family life—not just for parents but for carers of elderly people and many others—is not a distraction from economic growth; rather, it enables us to have a modern work force that will help promote growth.
My right hon. Friend is making an excellent and thought-provoking speech, especially on child care. Only one in five women earn more than their partners, the effect of which on the ability to take shared parental leave we should consider.
That raises the serious and fundamental question of why this inequality still exists. It also raises a more practical question, which I think my hon. Friend was implying: how can dads who are bringing in the great majority of the family bacon take much in the way of parental leave?
I understand that point, which raises the difficult issue of what financial allowance we can make for parental leave. We need to get to grips with this.
I turn to an issue that the House has discussed before. I put it to the Government that their policy on child benefit is a case study in unintended consequences—and I am being kind here. I speak as a great advocate of child benefit, which, along with the family allowance before it, has had its supporters on both sides of the House, right back to the pioneering work of Eleanor Rathbone, who wrote such important works on the importance of what she called family endowment. This Government’s decision to end the universal nature of child benefit by withdrawing it from people who earn above a certain income is a catastrophic strategic decision. It is a move towards potential means-testing that we need to be aware of.
Is the right hon. Gentleman seriously suggesting that people in my constituency, where the average salary is well below the national average—some of my constituents earn £14,000 or £15,000 a year—should pay tax to give child benefit to Members of this House, who are earning £65,000?
Yes, I am, because our welfare state, although a mixture of universal and selective provision, nevertheless needs that universal core if it is to command public respect. Those of the hon. Gentleman’s constituents who have a couple of children, and who will suffer as a result of this provision, have costs, by definition, which the single person or the childless couple do not have. It is part of a decent society that we recognise those costs. It is also important that we do not move toward arguing, as the hon. Gentleman might want to argue, “Why on earth provide free education or a free health service to people earning £70,000? Why not cut that out?” That is a very slippery slope.
That is the logic of the position and, to be fair, many on the free-market wing of the Conservative party—such as the Institute of Economic Affairs think-tank—have been arguing for decades against universal provision and for a move towards a residual welfare state just for the poor, guarded strictly by the means test. That is the logic of some of these arguments.
I want to make two more specific points that I think colleagues understand. As I said, this policy is a case study of unintended consequences. The Prime Minister, the Chancellor of the Exchequer, Treasury Ministers and officials did not set out to say—I am being generous now—“Let’s design a child benefit policy so that a family in which mum and dad earn just under £50,000 combined will maintain child benefit, but if there is only one earner bringing in over £60,000, that family will lose child benefit.” No sensible Treasury policy would have reached that conclusion, but because this one was rushed and ill-thought-out, that is the consequence. I do not know what the constituents of Jake Berry, some of whom will be affected by this policy, will make of that. Where both members of a couple are earning a lot of money—nearly £50,000 each, following the revision, so they will have almost £100,000—they will keep their child benefit. However, if their next-door neighbours consist of a mum at home looking after the young ones, and a father earning over £60,000, his child benefit will be lost. Not even the hon. Gentleman, in his loyalist rash of enthusiasm, would defend that, surely. Would he?
Surely the logical conclusion of the right hon. Gentleman’s argument is that all benefit should be universal. Does he think that all benefit, such as council tax benefit, should be universal? If there is no means test and people get the benefit regardless of their earning capacity, even if they are among the richest people in the country, that is the logical conclusion of his argument.
As I said earlier, any sensible social policy balances universal and selective provision. Many of these higher-income groups are paying substantial amounts of tax and thereby contributing to the community chest.
The story becomes yet more bizarre if we consider the second unintended consequence. Following the reaction against the Treasury decision to introduce a cliff-edge, resulting in the sudden loss of child benefit, Treasury officials were told to think again, and they came up with the idea of a taper. Those whose income is above the magic number will still get some benefit, but slowly but surely, it will be tapered away. As a consequence, it is estimated that 500,000 more people will have to go through self-assessment or PAYE. This Government, who are good on the rhetoric of cutting red tape and the “back room”, as they call it, have come up with a policy so bizarre that 500,000 more self-assessments or PAYE assessments will have to be made. I put it to them that it is time to admit that they have got this one wrong, to think again and to restore the child benefit, which is such an important policy if we are to build stronger family life.
It is a pleasure to follow Malcolm Wicks. We all know that he has not been very well recently, but he gave a fantastic speech and we wish him well. I join him in a lot of what he said about promoting family life. He made some interesting comments about the desire of women to have more children—my wife and I would have liked to have had more children, but perhaps six is enough—and about child benefit, and I will say a bit about waste in Government spending in a moment. I support child benefit as we have always had it, because not only is it the most popular benefit, but there is no fraud, error or means-testing to it and it works. So much of the waste in government is down to excessive micro-management of benefits. That is why I, like the right hon. Gentleman, believe in child benefit as we have always understood it. Many middle-class people may be under heavy financial pressure and we should recognise in the benefits system the cost of children, although I suppose I must declare an interest, as people might say, “Well, he would say that, wouldn’t he?”
What I really want to discuss today is something that perhaps not many others—certainly not many Opposition Members—will be talking about. This debate is about the cost of living, but the greatest burden on families is the burden of government, and heavy and wasteful Government spending. Total Government spending increased under the previous Labour Government by 55% in real terms over the 13 years. We hear a lot from the Labour party, and indeed from the Government, about how we are now trying to correct that. Indeed, it is in the political interest of both the Labour Opposition and the Government to exaggerate what the coalition is doing to try to rein back a disastrous financial situation. Let us just imagine what would happen if a family’s spending increased by more than half but there was a paltry increase in the real wealth coming into that household. This coalition Government’s spending cuts from 2010 to 2015 will amount to only 3% of Government spending, so let us not get too excited when the Labour party tells us that these “horrendous cuts”—up to now there have been no cuts in spending; there have been cuts in the deficit, but no cuts in spending—have produced the dire economic situation we are in.
The Office for Budget Responsibility, an independent body, forecasts that for the coming year almost 41% of all output in our country—all that hard-earned money, from people slaving away in offices, factories and services—will go to the Government. That is more than the figures for America, Australia and Canada. We have heard a lot about the European Union in the past week—we have heard about its difficulties, its waste, its over-taxation and its overspending—but even many EU countries have a lower tax burden than Britain. Such countries include Ireland, Greece, which is apparently the basket case of Europe, and Spain; they all tax their economies less than we do. We are in a dire situation and we have to address it.
The Government expect to borrow a staggering £126 billion this year—imagine an ordinary family having to borrow such a proportion of their total spending every year. I take a particular interest in this because I firmly believe that we can deliver the same outputs for people in effective public services with very much more efficient inputs. I believe that big government is always accompanied by big waste.
When the hon. Gentleman said that other European countries tax less, was he talking about the total tax take, including from industry, or just about personal taxation? As I recall it, personal taxation is significantly higher in the Republic of Ireland than in the United Kingdom.
I am talking about total taxation, which is the important thing to understand. I know that it is difficult to compare countries. For instance, we often talk about Italy being a basket case in terms of Government borrowing, but private borrowing is very low in Italy. We have to address this problem by considering the total taxation of all output, because that is what is of interest to efficiency and an efficient Government.
As I was saying, big government is accompanied by big waste. I am sure that many hon. Members were shocked, as I was, by a National Audit Office report in January—or rather by a report of reports; I am sure that everybody in this House avidly reads what the NAO says every week. This report was published in January, so it was not an attack on the previous Labour Government; it relates to now and the situation this minute. It is about this apparently hard-hitting, right-wing Government who are cutting left, right and centre, and persecuting the people—that is the charge against the Government; I would not say anything like that, of course. The report suggests that there is waste, at the moment, of more than £31 billion across government. Hon. Members may recall that Philip Green carried out an efficiency review, after which he said:
“You could not be in business if you operated like this. It would be impossible.”
His review identified, among other things, £700 million in saving on the Government telephone bill alone. In the past two Parliaments, the Public Accounts Committee conducted more than 400 hearings on waste. Such hearings are carrying on in this Parliament, as they will in the next Parliament and the Parliament after that. Nobody can tell me that enormous opportunities to cut waste do not remain.
Why is that issue important, given that this is a debate on the cost of living? This is not some anorak issue in which only accountants or economists should be interested. Every taxpayer in this country should be interested in what is going on in government at the moment, because the public sector is funded from the pockets of ordinary people and ordinary firms—many of them small, struggling firms—across Britain. Spending money in such a way means that the public and firms are being hit by a double-whammy, as prices are inflated by wasteful government spending, and firms have less of their own money to invest and families have less to spend. That situation is not fair.
We have mentioned the complexities of the benefits system and discussed child benefit. In addition to a hugely wasteful government system, Britain suffers from a horrendously complex tax system. Our tax code is now the longest in the world. Do a Conservative Government find that satisfactory? Our tax code has recently overtaken India’s in length and has doubled in size since 1997. Our horrendously complex tax system may have allowed the previous Government to keep many of their taxes a secret, but it has led to Britain being ranked 89th in the world, behind Nigeria and Zimbabwe, on the burden of government regulation in a recent World Economic Forum report. That simply is not good enough. I know that my friends on the Treasury Bench are doing their best, but they are not trying hard enough. They have to do better, because ordinary people and ordinary firms are paying for all this.
That complexity is structurally biased against ordinary workers and small businesses, because they lack the resources to investigate all the available loopholes. According to the Centre for Policy Studies, the effective marginal tax rate for some people on low incomes is as high as 96%. We know that, because we have done all these studies; the right hon. Members for Croydon North and for Birkenhead (Mr Field) served with me on the Select Committee on Social Security for many years, and for many years the right hon. Member for Birkenhead has campaigned on the issue of the trap for ordinary people, particularly those at the bottom of the heap, of paying marginal tax rates of 96%. We are crushing our own people, and not just with the waste for which we are responsible in our own spending. We oversee that waste in this House of Commons—we are responsible for it; nobody else out there is responsible. We crush our own people under a hugely wasteful system of government inefficiency and with increasingly complex taxes and benefits.
The rich do not suffer from that. The marginal tax rate for top-rate taxpayers is just 57.8%—the very richest do not even pay that. They do not even pay 57%. With the benefit of having successful and hugely expensive accountants, they are paying 10% or 15%.
In the most recent global competitors report by the World Economic Forum, three of the four biggest problems facing UK businesses were identified as tax rates, tax regulations and inefficient Government bureaucracy. Let me set out what I believe we should have in the Government. Apparently we are going to have a reshuffle soon. What we need are Ministers—the Prime Minister has to check on their performance—who are, like a non-executive director on the board of a private company such as Tesco, obsessed not by policy but by efficiency. We have three excellent Ministers sitting on the Front Bench—the Secretary of State for Transport, the Minister of State, Department of Energy and Climate Change, my hon. Friend Charles Hendry and the Minister of State, Department of
Health, my right hon. Friend Mr Burns—as well as our Whip. I am sure they are doing these sorts of things every day, but much more could be done. I hope the Whip is listening to all the kind comments I am making about the Ministers. I sincerely believe that this is one of the most important things the Government could do.
An obvious conclusion to reach, given what I have said, is that the tax system should be simplified. That would reduce costs and simultaneously be likely to increase revenues. As I have argued again and again, this is not necessarily a market-driven, right-wing point of view, because the lower-paid would benefit from it. The natural conclusion of such simplification would be a much flatter rate, or even a flat-rate tax system. Such a system has been successfully introduced in places as diverse as Serbia, Hong Kong and Russia. When I was in Russia recently, I spoke to a young entrepreneur. The flat-rate tax in Russia is 13%. How extraordinary that the former Soviet Union now has a more entrepreneurially based system than we have—a flat-rate tax of 13% in a large economy such as Russia.
There is a precedent for such an approach in this country. When the Thatcher Government more than halved the top tax rate, the proportion of income tax revenue paid by the highest earners rose. As I said in our debates on the Budget, I welcome what the Chancellor of the Exchequer did in cutting the top rate from 50% to 45%; indeed, I think it should be cut from 45% to 40%. Such people do not bury their money in the ground. If they are taxed less, there is more entrepreneurship and more of them stay in this country. They earn more and give more, and less effort is spent on tax evasion and tax avoidance.
As important as tax reform is, the key to Government finance is a reduction in spending. If we spend less, we can tax less—it is that simple. There is nothing inherently good about Government spending, although Ministers from parties on both sides of the House have apparently congratulated themselves on how much they have spent on the health service and education. They congratulate themselves on spending inefficiently what other people earn.
The hon. Gentleman says there is nothing inherently good about Government spending, but good can come from Government spending if it is on assets in order to redevelop capacity in the economy. We could have that rather than the current austerity programme, which is starving the economy.
We all accept that the Government can usefully spend on assets. I do not deny that. There is nothing wrong with Government spending, but there is something wrong with wasteful Government spending. In a recent global competitiveness report, Britain was ranked an unbelievable 72nd in the world behind Ethiopia and Tajikistan on the wastefulness of Government spending. That simply is not good enough. If a private company was ranked so low in the pecking order, questions would be asked about the people serving on the board, would they not? We have to try harder and do better. Government money does not come from nowhere. Every pound wasted by Whitehall is a pound that could have been invested by a British company or spent by a British family.
Before I conclude, let me speak about a few other issues, including aspects of the Queen’s Speech which I welcome. The right hon. Member for Croydon North talked about family life. One reason I have supported a marriage tax allowance, which sadly was once again not in the Queen’s Speech, is that it would address precisely the point he was making—the tax disincentive for a parent, usually a woman, to stay at home to look after her children. Nobody pretends that a tax gets people married or keeps people married. It simply deals with the totally unjust situation that a married person, normally a woman, who stays at home and looks after her young children is uniquely attacked by the tax and benefit system. That cannot be right.
I am glad that the high-speed rail line was not in the Queen’s Speech. I will do a deal with my right hon. Friend the Transport Secretary, who will sum up the debate. I will support her high-speed line, which will admittedly cut the journey time between London and Birmingham—no doubt that is all very good and means spending the assets that Mr MacNeil spoke about—if she will support the building of a third runway at Heathrow airport.
She shakes her head, sadly, but one never knows: we might win this argument in the end. This is about ensuring that the UK is globally competitive. I have talked a lot about waste in Government spending and about spending less. We have to be globally competitive, and Heathrow has to remain globally competitive. The City of London and Heathrow are the two things that have really propelled the British economy forward over the past 15 years. The situation seems madness to me. If Heathrow is prepared to expand with virtually no cost to the Government, we should do it. I know there is a long way to go on that argument, but we will keep trying. By all means, if people want to build a new high-speed line between Gatwick and Heathrow, I am all in favour of that, but I want to create the biggest and best international airport in the world, because I want Britain to be a successful transport hub. I cannot believe that on, frankly, spurious green grounds—I do not think the argument has been particularly well made—we are denying ourselves the opportunity of creating the best airport transport hub in the world.
If I may change the subject before I conclude, I am sorry that we are not going further on education. The Secretary of State for Education gave a marvellous speech last week. He rightly bemoaned an issue about which there is very little conversation in the House. Why is it that half the places in our best universities are taken by private school pupils, despite the fact that only 5% or 10% of people go to private school? That is scandalous. What is the left doing about it? Why do we have a situation in which people are able to afford such an extraordinary advantage for their children by sending them to a private school?
I believe we should go further with the education reforms. We have created academies, which are a great success, and the Secretary of State for Education is one of the most successful members of the Government, but as well as creating academies we could learn from the success of the independent sector and create independent academies. I am not saying that the existing academies that perform well should be allowed to become independent, but what if the bottom half—those that are not performing very well—were allowed to become independent academies? What about free schools not being allowed to charge but in all other respects having the total freedom of independent schools? Let us set them up in the poorest areas and see if we can remove what is almost an appalling bias which prevents people from rising up from the ghetto and our poorest areas. Let us try to be innovative in education.
I was talking to a Labour councillor last week. Funnily enough he was from the Speaker’s constituency; I was amazed that there were any Labour councillors left in the Speaker’s constituency, but apparently there are. That councillor, who is a very good man, not a market-driven, Thatcherite, right-winger like myself, said, “This situation can’t carry on; perhaps we should actually pay some of our poorest people to go to private school.” As a way round, we could say that any child who has never been to a private school—so there would be no deadweight cost—or any pupil coming from one of the 100 poorest postcodes should be subsidised by the state to go to private school. Why should we not at least try that? Why should we, whether we are on the right or the left, be prepared to accept the great elephant in the room: that a smaller proportion of people on free school meals across the entire country get into Oxford or Cambridge than those from schools attended by the leader of the Conservative party and the deputy leader of the Labour party? Why do those two private schools send more people every year to Oxford and Cambridge than come from the entire stock of pupils in the country on free school meals? Why are we not prepared to be radical and try to think of new solutions to help those at the bottom of the heap to rise to the top and get the same opportunities enjoyed by people going to private schools?
Those are the kind of radical ideas that the coalition could propel. We have a coalition and we have to live with that. There is no point bemoaning its existence, because we did not get enough votes to get a purely Conservative Government. There are many areas where our two parties can work together. One of the best things the Liberal party has done in recent years is to make the economic the ideological case for taking people out of tax. That is the best way to help the low-paid—ordinary people—and it is one of the very best things the Government are doing.
We heard an excellent speech from the Secretary of State. He talked about freeing up the electricity sector. That is something we can work on with our Liberal friends—radical ideas to free up the economy.
This morning, there was a press conference about reforming the Public Order Act 1986 and getting rid of section 5, which outlaws insulting language. Again, Liberals, Labour people and Conservatives can unite. Section 5 has a chilling effect on debate out there. We want more vigorous debate not just out there, but in here. We want fresh and radical ideas to try to free people from the overwhelming incubus of wasteful Government spending and regulation that holds down families and small businesses. I firmly believe that this Government—a coalition of Conservatives and Liberals—is moving in that direction.
Although the hon. Gentleman claimed that he was seeking to bring us into the real world, he was actually creating a world of fantasy. He gave us two exemplars of countries with lower taxation rates. The first was Russia, one of the most corrupt economies in the world, and a country run to a large degree by corrupt oligarchs, where democracy is only marginal. In the United States, under their posturing President, taxation may be lower, but such is the extent of poverty that many, many millions of people live in abject poverty in slums, without jobs and food, under a Democrat President—something I never thought I would live to see. Statistically, the hon. Gentleman may claim those countries as exemplars, but I fear that in the real world not one of us would want to live in the United States or in Russia under the conditions that prevail there.
The hon. Gentleman talked about education, and young people rising from the ghetto. I represent a constituency that has some of the greatest deprivation in the kingdom. None of my constituents, whatever their income, would wish to be described as living in a ghetto, but the result of what the Government have done in two years, and what they propose in the Queen’s Speech, will be to turn parts of my constituency into a ghetto. I do not believe that the people I represent deserve the fate of living in such conditions.
The hon. Gentleman talked about cutting waste. Yes, of course all of us are strongly in favour of cutting waste, but it depends how we define waste. What the hon. Gentleman might regard as waste, large numbers of my constituents would regard as essential. For example, one of the best high schools in my constituency has opened a new kitchen—with finance from the Labour Government and Manchester council, although the building was completed under this Government—and the head teacher told me that for many of the children the meal they get in school is their only solid meal that day. We have to look at contexts.
I do not say this rudely. Just as the hon. Gentleman is an avowed reactionary, I am an avowed Keynesian. I believe in spending our way out of recession—while of course cutting out waste, as the hon. Gentleman recommends—because recession and poverty mean people out of work. According to today’s figures, just announced, 10.7% of people in my constituency are out of work. We have to give them benefits, however miserable they are to be, whereas if people had jobs they would be taking home money and paying taxes in order to fund the essential public services that the Government are attacking, downgrading and in some cases destroying.
In response to an intervention from one of my hon. Friends, the Secretary of State alleged that shameful scaremongering was coming from the Labour Benches, but the most shameful scaremongering of recent months was when the Prime Minister and the Minister for the
Cabinet Office created a totally unnecessary panic about petrol supplies, which had appalling effects throughout the country. The Session that the Queen’s Speech covers will take us beyond the halfway point of the Parliament and into the run-up to the next general election, so one might think that the Government’s programme would deal with the problems and challenges of the present while looking to the future, including the cost of living issues referred to by my right hon. Friends the Members for Don Valley (Caroline Flint) and for Croydon North (Malcolm Wicks). No such luck.
The Queen’s Speech proposals are a combination of irrelevance and actual damage. The Government have no more idea how to deal with the cost of living problem and the severe economic problems they have created than before they created them. Instead, they are making the poor and deprived, and average families, pay the price for the massive handouts they are providing for their rich cronies, including big business and the banks. Their cronies do not worry about the cost of living. Sir Philip Green, an adviser to the Government, whose money is stowed away in Monaco through tax dodges, and Lord Ashcroft are not interested in what anything costs; they are only interested in how much tax they can dodge and in what they can buy with the money on which they pay little or no tax.
From young children to pensioners, from Sure Start to winter fuel payments—one of the most valued innovations of the Labour Government, but which the Conservatives opposed—this Government are already deliberately inflicting grave harm. Public service pensions, including those of the police, are being wrecked. Massive unemployment is being created; as I said, in my constituency, the figure announced today is 10.7%—the 47th worst constituency for unemployment.
The policing cuts are having devastating consequences. Inspector Damian O’Reilly, one of the greatest police officers in this country, and a recipient of the national award for community police officer of the year, told me that in my constituency the ability of the police to prevent and pursue crime, on both of which they have a first-rate record, will be harmed irreversibly. No wonder he and other police officers took part in the march last week. Today in Bournemouth the Home Secretary is being told by the chairman of the Police Federation that because of her policies, we are
“on the precipice of destroying a police service that is admired throughout the world”.
That is the situation under this Government.
Meanwhile, not only are the cruel cuts continuing while the cost of living continues to rise, but we are told that further cuts are planned—that this Government are planning £25 billion-worth of cuts, all targeting the most vulnerable in our society—and all this comes from Ministers who themselves will not in the slightest feel the impact of those cuts. The whole ethos of this Government was demonstrated a few days ago when it was disclosed that the Prime Minister had sent a text message—one of a barrage of such messages—to a wealthy and controversial crony, saying that they must avoid being seen together. And where? At the Heythrop point-to-point. It almost makes one laugh out loud—or should I say, lots of love?
This, in terms of cost of living, public services, creating unemployment and not creating wealth, is not only the most incompetent Government of my political lifetime, but the most right-wing that this country has had, with the connivance of the Liberal Democrats, since Neville Chamberlain in the 1930s—the most corrupt, but the most arrogant. The Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Home Secretary all refuse to sully their lily-white hands by replying personally to letters from Members of Parliament. The Prime Minister threw an infantile tantrum when he was called the other week to this House to respond—incompetently, inadequately and offensively—on a further example of current Government corruption.
The contrast with previous Conservative Governments is stark. Conservative Cabinet Ministers such as Douglas Hurd, Michael Heseltine, Willie Whitelaw and Margaret Thatcher all made themselves available to MPs seeking access on behalf of their constituents. Indeed, Margaret Thatcher issued an open invitation to MPs to come to No. 10 and discuss employment problems in their constituency with her. This Government, neither party of which has a majority and neither party of which has a mandate, are behaving in a far more right-wing way than Margaret Thatcher did when she had an overall majority with big electoral victories, which she scored over the Labour party at its worst.
If the Home Secretary, the worst in my experience, had been willing to take a hands-on approach to immigration problems, we might have avoided the awful crumbling mess in border control that she personally has created and which is in danger of humiliating this country as the Olympic games approach.
Meanwhile, the Liberal Democrats pursue irrelevancies, seeking always to advance not the interests of our constituents, but their own party’s self-interest, with an obsession with constitutional change which is irrelevant to the lives of our constituents, such as the alternative vote, on which happily they were defeated, and now the House of Lords, their action on which would gum up the parliamentary works—which might not be a bad thing, considering what damage the Government would otherwise seek to legislate.
I hope the right hon. Gentleman realises that he is the one who has raised this obsession. It was in his party’s manifesto as well, so I am sorry he feels that way. We have been focusing on things such as giving 24 million people who are poorly paid a tax cut, lifting the lower-paid people up. Will he welcome that as a Liberal Democrat obsession that will help many constituents across the country for all of us?
What I would welcome would be for the hon. Gentleman, as parliamentary representative for a university city—the second university as between Oxford and Cambridge, naturally, but not a bad university in its way—to go to his constituency or stand up here and apologise for the deception of the Liberal Democrats on the issue of university fees.
I will make no apology for the fact that I voted against fees. I will make no apology for the fact that I campaigned against them when Labour introduced them, having a large majority and having promised not to do so, and when they tripled them, having promised never to increase them again, and claimed that they had legislated against them. Will the right hon. Gentleman apologise for that deceit?
Order. Before the right hon. Gentleman resumes his speech, I remind the House that this is not a general debate; it is a debate on the cost of living. Touching on one or two other things I will allow, but not an in-depth debate on other matters.
I am grateful to you, Mr Deputy Speaker, for that reminder, and I am sorry that I was diverted by the irrelevancies of Dr Huppert. I will simply say to him that if he is talking about higher education, it is not only university fees, but the education maintenance allowance, the withdrawal of which is depriving thousands of my young constituents of getting advanced education.
The hon. Member for Gainsborough knows that I would have responded to him, but I have been banned from doing so by the Deputy Speaker, and I must maintain my cringing relationship to him.
On issues such as the cost of living, which was very much to the fore in my city, the Conservatives were obliterated in Manchester and the Liberal Democrats were massacred the week before last. One Liberal Democrat now ex-councillor in a formerly safe Liberal Democrat ward moaned at a hustings meeting that he was local and had nothing to do with the Government. But it did him no good.
The Roman historian Tacitus said of the emperor Galba, “Capax imperii nisi imperasset”, which, for those who did not have a public school education, translates as, “He would have been judged capable of government had he not governed.” Tacitus said as well, “Solitudinem faciunt pacem appellant”—“They make a wilderness and call it peace.” That will be the epitaph on this Government.
It is entertaining to follow the speeches from Mr Leigh and Sir Gerald Kaufman, who have shown that there is an obsession about House of Lords reform, at least in trying to stop it, among certain people who have been in this House for a very long time. It is a project that has been going on for a long time, too. It was in all three party manifestos. We can achieve it; it does not have to be an obsession for any of us.
I do agree, and at some point we can have the debate about why we need that reform to have a properly democratically accountable Chamber in the other place, but now is not that time.
We heard an interesting take from the hon. Member for Gainsborough on how the Government would be doing much better if they were a pure Conservative Government—they would be cutting much more—and we heard from the right hon. Member for Manchester, Gorton that they are cutting far too savagely. The truth is that a pure Conservative Government probably would be cutting more and we are acting as a restraint on that and trying to achieve the correct outcome, which lies somewhere between the—in my view—excessive cuts advocated by one side and the continued overspending advocated by the other.
There is often a debate about Keynesian economics. Keynes was a good Liberal and a good Cambridge man, and he said a number of very sensible things. One was about making sure that we spend in recessions, but the flip side of that is that we do not spend as much during the boom years, so that we have money left. We cannot spend in the boom and also have money to spend in the bust; it simply does not work. Keynes was also clear about how much could be spent and, indeed, the high priority on keeping bond yields low so all that could be afforded. He was a very complex man and his work should not be reduced to a simple catch phrase.
I want to talk about the cost of living in relation to transport, because it is one of the areas I focus on in this House and on which I lead for the Liberal Democrats, but also because it is one of the few parts of Government activity that affects most people pretty much every day of their lives. Transport has a huge effect on us, and the cost of travel affects a huge amount of what we do throughout our lives. Governments for many decades, when focusing on the cost of transport, have thought principally about cars; too little thought has been given to cycling, walking and public transport.
Let us consider the railways, as the Minister suggests. We know about the cuts. The length of our railway network has halved since 1950, but ever since 1980 the number of people using the network has doubled, resulting in a crippling downward spiral in which fare rises have been used to prop up a creaking system while services have declined. British railways are now 30% less efficient and 30% more expensive than their European counterparts. Under Labour, fares rose significantly above inflation year on year. The shadow Secretary of State for Energy and Climate Change did not seem to know the figures when I challenged her on this earlier, so let me give them to the shadow Secretary of State for Transport. Rail fares during Labour’s 13 years in government went up by 66%—inflation over that period was 17% in real terms—which is a huge increase. Even now their policy has not changed; it is still to have rail fares going up above inflation. Even the amendment to the motion calls for rail fares to go up 1% above inflation.
The hon. Gentleman fought the last general election on a promise to cut rail fares. His party and the Government whom he supports now support rail fare rises of 3% above the retail prices index. He voted for that. He is being just a tad hypocritical.
I am sorry that the shadow Secretary of State is not prepared to defend her party’s record in government or the fact that it is still calling for fares to rise above inflation. I would like them to go below inflation—[ Interruption. ] If the hon. Lady listened more and spoke less, she would hear what I am going to say. I think that rail fares need to come down, but we do not have a majority Government. As we heard earlier from the hon. Member for Gainsborough, this is not a pure Conservative Government, but it is not a pure Liberal Democrat Government either.
Does my hon. Friend agree that it was the Labour-led Transport Committee that produced the analysis revealing that the Labour party had shown “breathtaking complacency” towards value for money on customers’ rail fares?
The hon. Gentleman is absolutely correct, as he so often is on rail matters. The Labour Government failed on trains and, rather than trying to patch it up now, are looking for short-term political advantage.
Let me move on from trains to buses. We talk a lot about trains, but buses are used hugely. What is Labour’s record on buses? Bus fares during Labour’s years in government went up by 76%—24% in real terms—which is a huge amount, and that affects the cost of living for people who try to travel by bus. We know that there is a different socio-economic distribution for people who take buses, compared with those who take trains, so this is very tough.
In 2008, Dr Iain Docherty of Glasgow university and Professor Jon Shaw of the university of Plymouth reviewed Labour’s 10-year transport strategy and said that it was a failure. Bus services were described as “poor” compared with the rest of Europe. They said that the Government had pursued the
“wrong kinds of transport policies”.
To their credit, we saw some success in London, but that was the only part of the country that saw the sort of devolution and innovation that we would like to see across the country. Outside London, from 1997 to 2008, when the report was written, the number of bus trips fell by 10%, which is not exactly a resounding victory for Labour’s centralising 10-year plan, and something that the Under-Secretary of State for Transport, my hon. Friend Norman Baker, is taking steps to change.
We all know that our roads are utterly unsustainable. We have not yet managed to decarbonise our cars adequately. We failed to support the basic principle that road users should have to pay to use the roads, and the tax system has problems. Treasury Ministers are already nervous about how they will fund road infrastructure in future as we manage to reduce the use of fossil fuels.
I am proud of much of what the Government are doing on transport, although not absolutely everything, and pleased about the work being done by the Under-Secretary on issues such as cycling and bus use, which I will say more about later. I am also proud of the work being done by the other Transport Ministers. However, we need more radical and liberal thinking to heal our sclerotic transport network. What we need are bold reforms, but I am sad to say that what we have from the Opposition is short-term politicking, not long-term and evidence-based public policy making.
Let me give an example. The shadow Secretary of State made an interesting series of comments to The Guardianrecently. She said that she accepted two thirds of the coalition’s transport spending cuts. I think we all agree with her when she said:
“Labour will not be elected unless it has credibility on the deficit and recognises the new economic reality.”
She said that she was committed to two thirds of the cuts. The interesting question is this: which two thirds? It is a nice game to keep whichever third of things seems politically sensible and cut the things that are not popular. I have been trying to find out from the hon. Lady—
I have replied to the hon. Gentleman’s letter, but I can tell him that Labour supported the entire £1.7 billion of efficiencies that Ministers have required across the transport expenditure. We have not opposed cuts beyond those efficiency savings in the Highways Agency totalling £3 billion or in Transport for London totalling £1.7 billion, a total of £4.7 billion, so we have not opposed £6.4 billion of cuts, which is more than two thirds of the efficiencies and cuts that the Government are making. But we would not have made the other £3 billion of cuts, which would have given us extra money so that we could cap annual fare rises, protect local bus services and deliver additional investment. Our plan is quite clear.
Thank you, Mr Deputy Speaker. It took the hon. Lady over a month to direct me to a speech in which a shadow Minister outlined some of those figures. I do not know how much was made in the London election about the fact that Labour proposed taking £1.73 billion out of the TfL budget, which is interesting, but the key point is that she is yet to reply to a letter I wrote to her a month ago asking, of the £3.36 billion that she would take out of the Highways Agency’s budget, as opposed to the half a billion she would leave in, which—
I will if the hon. Lady lets me finish my sentence. Which half a billion pounds would she leave in, and which £3.36 billion would she take out? She has not responded to the letter, but she can respond now.
I promise to respond in great detail to the hon. Gentleman when he gets his ministerial team to reply to letters from me and to answer parliamentary questions properly.
I am flattered by the shadow Secretary of State’s faith that I have the power to control the ministerial team. She can certainly control when she responds to letters, and I think that a delay of over a month is rather poor. I am sure that she thinks she has better things to do, but I would still love to hear how Labour would fund the rest of its budget on this area.
If the Opposition are truly concerned about the cost of living, surely one way of addressing that is to let people keep more of the money they earn. Raising the income tax threshold puts money back into people’s pockets and lets them spend it on whatever they want: rail fares, fuel for their car, a new bike, bus tickets, training, or whatever it is that they would like to do with that money. Of course, that is something that Liberal Democrats campaigned for and it was on the first page of our manifesto, and it is exactly what Liberal Democrats in government are doing and which, for reasons I simply do not understand, the Opposition voted against. I simply fail to understand why they are against giving money back to people who earn £10,000 a year. It makes no sense to me. I assume it was some sort of error, like the fact that they failed to vote on various aspects of the Budget which they said they would vote on.
In my view, this tax cut, combined with the uprating of unemployment benefits and the triple lock in pensions so that pensioners get a better deal than the 75p that Mr Brown offered them, is exactly the right mix of measures. It allows people to keep their money and spend it as they please when times are tight. It is a responsible, liberal approach, and one that we need to take further, as I am sure we will do during the rest of the Parliament, but it is there—[ Interruption ]—and it has been supported by the Conservatives, as George Freeman reminds me.
But let me return to rail fares. I passionately believe that rail fares are too high and need to be lower, and, unlike Labour and the Conservatives, both of which have argued for above-inflation increases, we in the
Liberal Democrats believe that they are too high and should not be made any higher. I am delighted that we managed to persuade our coalition colleagues to reduce the most recent rise by 2%, and I have to say that Conservative Transport Ministers supported it.
I hope that we can do the same or better in the years to come, but it cannot be a one-off measure; it has to be part of the kind of serious structural reform that the McNulty review will bring. If it is true that the McNulty changes will save £1 billion a year, half of it should be used to reduce rail fares and half to invest further in rail infrastructure, although this Government are already investing massively in our railways—more than any Government since Victorian times.
We have committed to electrifying more than 800 miles of track. How much did Labour manage? The answer is less than 10 miles, in 13 years: less than 1 mile per year. The Victorians would not have been impressed by that rate. The Liberal Democrats in government are firmly committed to getting people and freight on to our railways so that they do not take up space on our roads, and that applies to my local road, the A14, where we have to ensure that as much freight as possible is put on to railways in order to avoid the congestion that we see. We need to invest in services to make them cheaper, more affordable and more attractive. That is the right thing to do.
What about buses? We believe firmly that the way forward is devolution, community involvement and more effective funding. Services have to be local for them to be popular and effective, and communities must have their say in the governance of local buses. I believe, from what the shadow Secretary of State says, that the Labour party is finally looking at ways of devolving bus services. We have argued for that measure for decades, so I am delighted that Labour agrees, and I hope that we will be able to deliver it. We have had less than two years with very little money to spend; Labour had 13 years, so I am delighted that it is finally coming around to the idea and I hope that we will be able to deliver it. Indeed, I hope that Labour supports the reforms that we are implementing, such as the local sustainable transport fund, which is delivering £500 million to local communities. Just before the Queen’s Speech my hon. Friend the Under-Secretary announced new funds for better bus areas and green buses: a £120 million boost for buses which will enable people to take affordable buses more easily.
By trusting communities to do what is best for themselves, we are revolutionising bus travel. Already since 2010 we have seen bus patronage rise outside London and throughout the country, and seen funding for 439 low-carbon buses, helping us to be a much greener Government. That is a fantastic achievement after a decade of decline and without spare money to slosh around.
Of course, if we really want to reduce the cost of living, we will find that there are even cheaper forms of transport. A huge number of journeys could be taken on foot or by bike, and that really would save people money. More people should do that. This Government have invested millions of pounds in promoting cycling, from the local sustainable transport fund, to Sustrans funding for new routes, bikeability training and new cycle-rail links, and they have also taken other steps to promote safe cycling by, for example, making it easier to introduce 20 mph zones.
We have heard much from the Opposition about the lack of a Bill in the Queen’s Speech to deal specifically with the cost of living, but we have heard also from my right hon. Friend the Secretary of State for Energy and Climate Change about the steps being taken with the Bills that are in the Queen’s Speech, and in any case the Opposition should know that it is not necessary to announce a Bill in a Queen’s Speech in order to help with the cost of living. Not everything needs legislation.
This Queen’s Speech is very much directed at the consumer and at consumer prices. We have a draft water Bill, which is looking at supporting water prices; the grocery adjudicator measure, which is looking to develop a much more effective supply chain and to deliver better prices to consumers; and we have an energy Bill, which will make the market more responsive to the consumer. This is a consumers’ Queen’s Speech.
I thank the hon. Lady for her comments—and I will leave out the next paragraph of my speech. She is absolutely correct to highlight the importance of all those issues, which will make a real difference to consumers, as will a range of other activities, such as breaking up the banks so that they can focus more on consumers and less on the casino capitalism that we saw in the previous decade.
We do not need to legislate to make a difference. We gave money back to millions of working people without any new Bill; it did not take a Bill to make that happen. After reams and reams of failed legislation, one would have thought that Labour would have learned one simple fact: we cannot just legislate our way out of a problem. But I am not surprised that Labour’s response to a Queen’s Speech that, as well as the items mentioned earlier, finally tackles defamation law and Lords reform is that we need more legislation. It is certainly true that if the test of a successful Government was the volume of laws they introduced, 13 years of Labour would have been an unmitigated success, because the sheer volume of legislation was a record, but that is not what government is about.
I am deeply proud to be a Liberal Democrat in government, standing up to vested interests to ensure that every citizen, no matter how poor, will be able to protect their reputation from defamation—and that we will not see the chills that we have seen from the threat of action. I am proud that we are tackling constitutional reform, because I am sure that all honest politicians know that the Government are quite capable of doing more than one thing at once, and of course we are cleaning up the mess that this country was left in by Labour and continues to be left in by what is happening in the eurozone.
There is much more to do on fares, and I should like to see a more efficient local transport system with greater support for community services, which is something we are already working on, but we have achieved a lot with what we have got—much more than can be said for the squandered Blair-Brown years. In 1997 a Liberal Democrat majority Government, enjoying an unprecedented period of global growth, would not have jacked up fares year after year. We would not have let transport services decay in the dead hand of Whitehall, and we would certainly not have introduced tuition fees in the way the Labour party did.
I should like to conclude so that others can speak.
I welcome the Queen’s Speech and all the things that Liberal Democrats in government have done already to help with the cost of living. I hope to see members of the Labour party welcome those achievements and support our measures, which will put our transport system on a sustainable footing for the long term and help to reduce the cost of living for everyone in this country.
There was little, as we have already heard today, in the Queen’s Speech to do with the rising cost of living. We have recently had a Budget that helps millionaires with tax cuts while penalising pensioners and families, and throughout the country people are struggling with the impact of a double-dip recession made in Downing street, so the Government, whether in the Budget or in the Queen’s Speech, are offering little help to those working people or pensioners on modest and low incomes who are struggling to manage.
But I want to talk about the Government’s failure to introduce in the Queen’s Speech a Bill on the financial reform of social care, because it has implications for the cost of living of the millions of vulnerable people who need care. There is also a major effect on carers who drop out of work or reduce their working hours in order to care, because that has an impact on the economy.
First, however, I send best wishes for a speedy recovery to Sarah Newton, who I understand has had a fall—an accident here—and is in hospital. She is the vice-chair of the all-party group on social care, and we work well together. This is a vital time for social care, so I am really sorry that she might not be with us for a few weeks, but I wish her well.
Every few weeks we see another article or report about the crisis in social care. The Association of Directors of Adult Social Services has reported cuts of more than £1 billion in local council budgets for adult social care since the general election, with a further £1 billion of cuts expected this year. Those cuts have led to service reductions and to substantial increases in charges.
We learned today from research by my hon. Friend Liz Kendall that the number of vulnerable, older and disabled people who have home care services fully paid for by their local authority has fallen by 11% in England over the past two years, and a survey by the Care and Support Alliance also shows that services to 24% of disabled adults have been cut, even though their needs are the same or have increased.
Research by Age UK shows that cuts to council budgets mean increased fees for services. Two thirds of local councils are increasing fees for services such as meals on wheels, and fees have increased by 13% over two years. Almost half of all local councils are charging more or making new charges for home help or day care services, and my hon. Friend’s research shows that the average charge for one hour of home care has risen by 10% in the past two years, from £12.29 to £13.61. On average, older people pay for 10 hours’ home care a week when they are using it, so the annual bill for care has risen to more than £7,000, an increase of £680 since 2010. Yet, as we know as Members of Parliament, these services are a lifeline to many vulnerable people. The Age UK research also showed that one in six councils has reduced personal budgets for care packages and that almost half of councils have frozen the rates that they pay for residential care, leaving older people and their families who pay top-ups to absorb any price increases—and there have been price increases. Care homes have been increasing their fees. The fees for residential care have increased by 5% on average over the past year, taking the average up to £27,200 a year. Nursing home fees have risen by a similar amount and now cost £37,500 a year on average.
In addition, councils are raising or abolishing the caps on the care costs met by individuals who need care. Four out of 10 councils have abolished funding caps in the past two years, with another four out of 10 increasing the cap so that people now have to pay more, while rates charged for respite care have tripled in some parts of the country. My hon. Friend the Member for Leicester West is calling these increased care charges a stealth tax on the elderly and people with disabilities, and I agree. More and more people are footing the bill for care themselves, and that bill has grown. The need for care often starts suddenly and unexpectedly due to a medical event such as stroke or the sudden worsening of a condition such as Alzheimer’s or vascular dementia. That often leads to bills that are very hard to meet. A quarter of people are faced with care costs in their lifetime of over £50,000, with one in 10 paying £100,000. These care costs can be catastrophic. Indeed, more than 20,000 pensioners every year have to sell their homes to pay for residential care.
It is not just a question of care charges, which are bad enough. People needing care often tend to be disproportionately hit by increases in the everyday cost of living. People who are older and frail, or ill or with a disability, spend more time at home and need to keep warm, so increases in heating and electricity bills hit them hard. Besides paying more for care, they have had to cope with VAT increases, higher fuel and travel costs—this group of people spends a lot of time attending GP surgeries and hospital visits—and increased prescription charges. All these have increased the cost of living for people needing care.
Under this equation, reduced care services and increased costs for care ultimately mean that unpaid family carers take on heavier caring workloads. Carers UK has estimated that 1 million carers have given up work or reduced their working hours in order to care. Over two thirds of those who had given up work to care were more than £10,000 a year worse off as a result. Over 45% of the carers it surveyed were cutting back on essentials such as heating or food in order to make ends meet. Sadly, the cost of caring can push carers into debt. Almost half the carers surveyed by Carers UK had fallen into debt. While over half the younger carers had been in debt, for carers over 65 the debts were greater; 15% of them had debts of at least £25,000. Unsurprisingly, the stress of this financial hardship had affected the health of nearly half those carers.
We can therefore say that the need for reform of the funding of social care is urgent. In fact, it is so urgent that 78 charities wrote an open letter to the Prime
Minister ahead of the Queen’s Speech reminding him that social care is in crisis. They said that without reform
“too many older and disabled people will be left in desperate circumstances”.
The hon. Lady is making a very good speech outlining many of the problems with caring for the elderly and the challenges that carers face. Will she accept, though, that while it is right to highlight these problems, the Labour party, when in government for 13 years, did nothing substantially to tackle these problems, many of which have taken a long time to manifest themselves and should have been dealt with under the previous Government when this country had more money?
The hon. Gentleman was not here in the previous Parliament. As somebody who was here, I can say that we did take substantial steps. I have been speaking on these issues ever since I came into Parliament in May 2005. With cross-party talks, we came very close to achieving consensus until the Conservative shadow Secretary of State—now the current Secretary of State—walked out on those talks and did a lot of scaremongering in the general election with posters about a “death tax” featuring tombstones. I am sure that Members will remember that.
Moreover, we did not just have a draft Bill; we had the Personal Care at Home Bill, which went through Parliament. That would have helped the 400,000 people with the greatest needs, while 300,000 people with very substantial care needs, such as those with dementia, could have had personal care at home, and over 100,000 people would have been helped with reablement. I know from working with the hon. Gentleman on the Select Committee that he is very keen on dealing with issues such as reablement, for which support would have been provided. Those 400,000 people are now paying for that themselves. They could have been helped if this coalition Government had not got rid of that Bill, which they could have enacted, as it had gone through this House. It is not true to say that we did nothing on this; we did a lot.
It is wrong to say that Members who came into the House in the 2010 intake do not understand these issues, because many of us, including me, were working in the real world picking up the pieces of the broken care system. The hon. Lady is looking around for little bits and pieces that the previous Government may or may not have done to address the issue. The previous Government had 13 years to deal with these big challenges of elderly care, of better integrating health and social care, and of dealing with the funding crisis. They did nothing substantial to deal with those things; will she accept that?
No, I absolutely do not accept that. In our 13 years in government, the first thing we did was to fix the health service following the mess that we inherited from the Conservative Government. We had a lot of other priorities in dealing with what the Conservative Government had done through privatisation. I am amazed that Members are arguing about bus fares and train fares. It was not a Labour Government who privatised these things. All the privatisations and reductions in services came about through Conservative Governments, not Labour Governments. We were tackling these issues.
We now have a Minister for social care who believes that there is no funding gap. He is arguing with all the directors of adult social care services, who say that £1 billion has gone out of adult social care in the past couple of years, with the loss of another £1 billion to come. The crisis that I am detailing as regards the cost of living impacts on individuals and their families is undoubtedly made hugely worse by the £2 billion that is going out of adult social care. However tight things were or whatever struggles were going on during the last Parliament, when I did a lot of work on this topic, it was never said that social care is in crisis, whereas now that is said every single week.
In the open letter to the Prime Minister ahead of the Queen’s Speech, 78 charities reminded him that social care is in crisis. As I said, they feel that older and disabled people will be left in desperate circumstances. There are 800,000 people with unmet needs, and that figure will possibly grow to 1 million. Some people will struggle on alone and do not even have an unpaid family carer to help them.
I do not always like to quote outside agencies or charities in this House. However, Age UK successfully put together a campaign, with a petition that was handed into Downing street, in which it acknowledged that the chance to tackle this issue was flunked by the previous Government and should have been better dealt with. That was an inherent part of that campaign. This is a creeping crisis that began and was manifested over a number of years, and it is very disingenuous of the hon. Lady to say otherwise.
It is very disingenuous of a member of a Government who have just massively ducked this issue in the Queen’s Speech, causing huge disappointment across any organisation that is involved in social care, to talk about the previous Government.
Whether or not this goes back to the letter from the 78 charities before the election, the Local Government Association, on behalf of all the parties represented in social services authorities throughout England and Wales, wrote to the Government immediately before the Queen’s Speech highlighting the fact that there was this crisis which needed to be dealt with now, and that if they did not do so in the Queen’s Speech—not as a draft Bill but as proposed legislation—an already alarming position would be made far worse.
I thank my hon. Friend for that clarification. The letter went on to say that “delay or half-measures” cannot be tolerated because of how hard it is for people to manage, as I have just outlined.
In July 2010, the Government promised that they would introduce
“legislation in the second session of this parliament to establish a sustainable legal and financial framework for adult social care”.
That could not have been clearer, but we do not have that legislation. All that was mentioned in the Queen’s Speech was a draft Bill on social care law, with no Bill on the funding of social care.
What does the delay in reforming the funding of social care mean? It means that people who need care will have to continue paying larger and larger bills or go without and struggle. There are also costs to the NHS and to the economy. That should concern us. The lack of appropriate social care for older people at home is costing the NHS £18.5 million a month, or more than £600,000 a day, in delayed discharges. Since August 2010, the total bill to the NHS of delayed discharges has been £324 million. Delayed discharges keep on increasing, which is an indication that the crisis in social care is deepening.
On the cost to the economy, a recent report by Carers UK suggests that failing to address the funding of care, as other countries have done, means that we are missing out on jobs and growth. The biggest thing that was missing from the Queen’s Speech and the Budget was action on jobs and growth. In France, a development strategy for the home care sector led to a growth of 100,000 jobs a year. A recent report by Dr Linda Pickard of the London School of Economics shows that it costs about £1.3 billion a year in lost tax revenue and benefits when carers give up work to care. The adult social care system has been pushed into crisis by cuts, and that is costing the economy more than a billion pounds and the NHS hundreds of millions of pounds. Surely that shows that we should do something about social care.
The Government’s distinct failure to deliver on their promise to bring forward legislation, which I think will become more apparent in the coming months, is hitting older people and those who need care. It has cost £324 million since 2010, and that bill is climbing by £18.5 million every month. As carers give up work to care, it is costing the economy £1.3 billion every year in lost revenue. It is time the Government delivered on their promise and addressed the vital issue of the funding of social care.
It is a pleasure to follow Barbara Keeley, who made a thoughtful speech on the important issue of social care, about which people from all parts of the House feel strongly. I echo her good wishes to Sarah Newton.
It is a pleasure to be called to speak in the debate on the Gracious Speech and to be able to mark, as MP for the faithful city of Worcester, the celebrations that will rightly take place around the country for the diamond jubilee of our sovereign. After the splendour and pageantry of last week’s Gracious Speech, this debate focuses on its grittiest elements—those that relate to the cost of living. I am constantly reminded on the doorsteps of Worcester and in my surgeries that the cost of living is a matter of prime concern for many constituents. I will first address the parts of the speech that relate specifically to the cost of living, before making a few broader points on the economy, which is referenced in the Opposition amendment.
There was much to be welcomed in the Gracious Speech on the cost of living. Contrary to the rhetoric that we have heard from Opposition Members, the speech is imbued with concern over the cost of living. It promises vital reforms that will make a difference to the price of the water and electricity in our homes and the food in our shops.
There are some things that I would have liked to have been included in the Queen’s Speech that were not present. In some quarters, the speech has been criticised for not doing more to tackle the issue of fuel duties or to spearhead vitally needed growth. I will return to the latter point at the end of my speech. On the former point, I have enormous sympathy for people across the country and from all parties who want to see a permanent shift in the balance of fuel duties. Although I am doubtful that a programme of legislation is the right place for such a move, I will continue to push for it in future Budgets and Bills. The price of petrol has become too high. It is a major cost to our economy and a driver of inflation. I hope that the Government will listen carefully to the many voices that have been raised—from Upper Bann and Belfast to Harlow—to call for more action on this front.
I want to see a Government who are resolutely focused on supporting the economic growth that will deliver better living standards. I am confident that we will see that, without the need for further legislation. The best weapon that we can wield against the cost of living is material prosperity for the many, not the few. In that regard, we should look at what has been done to help the lowest-paid workers stay out of tax and at the commitment in the Budget to extend the tax-free threshold to up to 2 million more lower-paid workers, which have been mentioned by my hon. Friend Mr Ruffley and Dr Huppert.
I do not accept the suggestion from some quarters that economic growth is the enemy of sustainability and that we should juxtapose the need to grow our economy with the desire to be green and efficient. Nor do I accept the argument so often heard from the Opposition that fiscal stimulus is the only path to growth. I believe that we can deliver greener, more diverse and more sustainable economic growth that will increase the wealth of our nation and provide individuals and families with the tools to overcome a higher cost of living. That does not mean that the Government can neglect the need to deal with the cost of living.
I am delighted that the Government are committed to major reforms in the provision of electricity and water to make those industries more efficient, to ensure that there are clean, secure and affordable supplies, and to ensure that prices are fairer over the long term. It is a shocking indictment of the last Labour Government that we inherited a situation in which a fifth of the UK’s energy generation capacity was due to be taken offline within 10 years, while electricity demand is to double in the next 40 years. We need to act fast to secure the £100 billion of investment that is necessary to keep the lights on.
I am glad that the Government are setting out detailed plans for an energy Bill to bring market reform. Winston Churchill said that energy security is energy diversity. The Bill must reflect that by supporting all technologies, whether nuclear, renewable or gas-based, that can make our electricity more affordable, more efficient and more sustainable. The introduction of a capacity mechanism will be vital to improve our security and to maximise the enormous potential for diversity that our island nation has.
The introduction of an emissions performance standard, alongside the Government’s earlier decision to look at carbon pricing, should ensure that we have cleaner, greener generation in the future. However, that must be carefully balanced, so as not to push costs too high.
I understand that the Government’s analysis shows that although some years might see higher prices as a result of the electricity market reforms, the overall impact will be to bring prices down. That is to be welcomed, but I urge the Government to recognise the need to do everything in their power to accelerate that trend. By 2020, it is expected that bills could be 7% lower than they would have been without the reforms. As the Secretary of State said earlier, over two decades, bills are expected to be 4% lower. I would like to see more progress and a greater impact as the Bill makes its way towards becoming an Act.
After months of drought followed by torrential rain, it might be suggested that water reforms would be best focused on regulating the weather. However, I am pleased to see a serious focus on that industry as well. It cannot be right that we have one of the lowest proportions of metered households in Europe, and that prices are rising so sharply for everyone, including the poorest in the country. The measures to encourage the water companies to introduce cheaper tariffs to support the most vulnerable customers are welcome. It is vital that the Government work to drive down water bills by increasing competition in the water industry.
Across water and energy, there is increasing pressure from a growing population for finite resources. As Malcolm Wicks pointed out in a thoughtful speech, it is important that we do not just concentrate on the day-to-day minutiae of market structures and prices or on what is happening just within the boundaries of the UK, but that we raise our eyes and recognise that there are big strategic challenges for our management of energy and water supplies. In a world in which the population is growing fast and where the wealth of those who previously consumed the least is rising more swiftly than that of the formerly gluttonous west, we will face increased competition for all resources. Realistically, politicians of all colours have to admit that we cannot wave a magic wand and bring prices down every year for the resources we need. We have to face up to a far more competitive and far more volatile world and take on the long-term challenge of keeping costs under control and reducing consumption. Acknowledging that entails an ever greater focus on efficiency and on ensuring that resources are not wasted—itself a potential driver of growth for businesses such as Worcester Bosch, which makes energy efficient boilers in my constituency, or Vickers Electronics, which I visited recently and which has opened an office in Worcester to market its energy saving devices for factory heating.
There is an old saying, “Where there’s muck, there’s brass,” and we should ensure that where there is a waste of resources, there are opportunities for British businesses to get involved in reducing it. Previous actions by the Government, such as the green deal and the renewable heat incentive, are important elements of that, and I encourage Ministers to take those measures forward further and faster. The creation of the Green investment bank will provide vital investment for the sector and encourage its growth. That does not mean that the Government are wrong to be acting on prices and reforms, but action must be part of a bigger strategic approach to ensure that Britain is best placed to compete in the 21st-century world. In that respect, I recognise the enormous value of many of the initiatives discussed in yesterday’s debate on foreign affairs: the emerging powers initiative, the commitment to work with the Commonwealth, and the broad focus that this country is putting on maintaining our place on the world stage. Our energy and water resources will not be secured in isolation, nor can we feed our nation purely from the produce of our own shores.
Moving closer to home, I strongly welcome the introduction of a groceries code adjudicator to regulate the big supermarkets, ensure a better deal for our farmers, and put fairer food at the heart of our food system. The adjudicator must have strong powers to act on behalf of shoppers and suppliers and it must be prepared to take on some of the powerful vested interests that have dominated the sector hitherto. Diversity of production is as important in food as it is in energy and we must support diversity of supply so that there are more farmers markets, more co-operatives and more direct selling of food by growers or producers. Worcestershire has some fantastic food producers, whether it is our fruit growers and asparagus champions of the vale of Evesham, our dairies and sheep farmers across the county, or global brands, such as Lea & Perrins Worcestershire sauce, which is produced in the very heart of my constituency. I want all those producers to be able to get a fair price for their product and to market those products at a reasonable price to consumers. I believe that the groceries code adjudicator can play a key role in achieving that.
Keeping down the price of food would also be helped enormously by a reduction in the price of diesel, which is important both in the growing and harvesting of our crops and in their delivery to market. That is another reason why the Government should consider further action on that important issue.
My hon. Friend is making a very good speech. On the subject of the groceries code adjudicator, I am sure he agrees with me that it is important to have fair prices not only for consumers, but for producers, and that if we do not look after our food producers prices will go up for our consumers, because we will be far too reliant on food imported from overseas. Does he also agree that one of the key purposes of establishing the groceries code adjudicator must be to support producers better and ensure that we have a more sustainable food and agriculture sector in this country?
The hon. Gentleman mentioned the importance of diesel prices. This is not a party political point, but one of the stark problems confronting this country is our lack of diesel refining capacity. Much of the oil extracted from the North sea is exported to India and the sub-continent, refined there and brought back to this country, which puts up the price. As a result, we have a shortage of diesel and pay more for it. Surely we should all work together on ways to increase distillery capacity, so that we can refine diesel in this country? Diesel used to be a damned sight cheaper than petrol, but the reverse is now true because of this problem.
I absolutely agree that we need to work together on long-term planning to get back some of the refining capacity that we have lost. I also think we should consider the potential for differential taxation of diesel and unleaded petrol, which most other countries in Europe already have, and I have mentioned that idea in previous debates. This is an issue that should be debated and explored in more depth.
Pensioners are people living on fixed incomes and are directly affected by changes in the cost of necessities. I am proud that our coalition Government have not only restored the link between the basic state pension and earnings, which the Labour Government failed for such a long time to do, but strengthened it with the triple-lock guarantee. It is crucial that the Government legislate to make public sector pensions sustainable—to reduce the cost not just for the sake of it, but so that we can continue to provide high-quality pensions for public servants.
Council tax is a major issue for pensioners, and we have a good record on keeping it frozen. Earlier, we heard a little Labour triumphalism from Sir Gerald Kaufman about the local election results, but I am pleased to say that, in Worcester, the Conservatives remain the largest group, although Labour gained seats and the Liberal Democrats lost one to us. The Liberal Democrats are now working with the Conservative administration in Worcester to try to make the council more efficient and to keep council tax down.
As I said, Barbara Keeley spoke passionately about social care. I am pleased to see in the Queen’s Speech a draft Bill on modernising social care, but I agree with the hon. Lady that there is more to be done and that the Government have to take yet more action to tackle the enormous challenges set out clearly in the Dilnot review. I urge the Government to make swift progress on that issue, which is hugely important for the long term. As has been pointed out, Labour does not have a strong record of addressing it.
Part of the cost of living is the need to ensure that there is the best possible support for those in the later stages of life, which means better provision of social care as well as more investment in palliative care, an issue that is dear to my heart.
I am glad that the Government are doing more to support families by expanding child credits for those most in need, protecting child benefit for people earning up to £50,000 and expanding the provision of nursery education. Malcolm Wicks described the changes to child benefit as a “case study in unintended consequences”, and that accusation certainly could be levelled, but I would say they are a case study of the Government listening to concerns and doing something about them. That is to be commended.
My hon. Friend Priti Patel, in an earlier part of the Queen’s Speech debate, and the right hon. Member for Croydon North today, pointed out that child care is a huge cost to many families. Like them, I hope that the Government can do more to help on that front in the future. I hope the contentious and argumentative line in the Gracious Speech that states:
“My Government will strive to improve the lives of children and families” will enable the Government to act on both that issue and the essential one of delivering fairer funding for our schools.
The greatest thing that the Government can do to improve the standards of living of people in this country, and to help them overcome the challenge of the rising cost of living, is to succeed on the economy. As I mentioned earlier, there has been some commentary that there was not enough about the economy in the Queen’s Speech. As I discussed with businesses at my business breakfast in Worcester last week, that misunderstands what the Queen’s Speech is about. It is not a description of everything that the Government must do but a programme of legislation. As the hon. Member for Cambridge eloquently pointed out, the Government do not need to legislate to make a difference. Most of the major issues affecting our country and economy do not require legislation. As shown by today’s welcome job numbers, which have improved in Worcester, across the country, we can create jobs and grow the economy without new laws.
One thing that the House desperately needs to do is give a feeling of hope to young people, who are being particularly badly hit at the moment. The hon. Gentleman mentions the unemployment figures. In Bridgend, I had five youngsters between the ages of 18 and 24 claiming jobseeker’s allowance in April 2011, and in April 2012 I had 70. That is an increase of 1,300%. That is not a message of hope, and the House has to do something about it. There was nothing in the Queen’s Speech about—
Order. We must have shorter interventions. I know that it was important to the hon. Lady to get that point on the record, and she has done so now.
The hon. Lady is of course right to be concerned about youth unemployment. In my constituency it is lower than when we took over from the Labour Government, but there is clearly more to be done. The Government are already investing in apprenticeships and many other schemes to help people into work, and we must continue to do more, but I do not believe that that required legislation to be announced in the Queen’s Speech.
Fixing the deficit and getting our country to live within its means is firmly at the centre of the coalition’s programme for government, and there it must remain. The cost of living for millions of families and for businesses that employ young people would increase appallingly if the Government were to lose control of those central aims and allow interest rates to spiral out of control. It is our responsibility to all our constituents to ensure that that does not happen, and good government and efficient management, not legislation, will deliver what we need.
As my hon. Friend Mr Leigh suggested, we need not more laws and regulation but less. However, there are some important measures that require legislation, including supporting enterprise and encouraging small businesses. As a former entrepreneur, I am glad that the Queen’s Speech included an enterprise and regulatory reform Bill, which will repeal many unnecessary requirements on business and promote early resolution of employment disputes.
Earlier this week, I was pleased to attend the launch of the all-party small business group’s recent report on breaking down the barriers to entrepreneurship, and to hear from local entrepreneurs such as Neil Westwood of Magic Whiteboard. The more the Government can do to implement the all-party group’s proposals the better.
Safeguarding our banks and ensuring that they continue to lend is another vital matter for economic growth, and I am pleased that the Government will bring forward measures to ring-fence commercial banking and encourage lending. I also welcome the fact that they are already beginning to support alternative lending sources, including community development financial institutions such as Impetus, which is doing good work in Worcestershire, and innovative new private sector solutions such as ThinCats.
Of course issues beyond our control affect the economy, and at a time of crisis in Europe, when the eurozone appears to be teetering on the brink, it would be wrong to omit a mention of the broader economic crisis that persists and is driving up the cost of living for everyone. I am as disappointed as anyone that the UK’s growth figures have not been stronger, and as determined as anyone that the cost of the European project should not become an unfair burden on our country. I am glad we have a Prime Minister who is prepared to stand up in Europe and say no when he needs to, and I am confident that he and our Foreign Secretary will continue to hold the line that the UK cannot be asked to pay for the failings of a currency we rightly stayed out of. Britain must continue to forge its own path through this crisis, working with our friends and allies all over the world, not just in Europe, to ensure that we have the best possible opportunities for growth and to protect our economic stability. We should continue to refuse to allow the costs of the EU to increase and guard our own interests in foreign policy and international trade. I believe the time will come when we have to renegotiate our relationship with the EU. Although that is not referred to in the Gracious Speech, it is essential the Government stand ready on that vital matter.
Overall, I welcome the Queen’s Speech. I welcome the fact that, in the year when we celebrate a glorious 60-year reign, we have a Government who are firmly focused on the future. I want to see a thousand flowers flourish in small business and I am excited by the opportunities that will be created in this programme of legislation, whether for companies engaged in helping us to manage energy and resources better, for small enterprises, or for food producers, who will benefit from the new groceries code adjudicator. The economy is at the heart of the Government’s programme, and growing it will be key to allowing Government and people to deal with the cost of living in the years to come.
Order. We have quite a lot of people to get in and speeches are getting rather long, so I have to put a 12-minute time limit on speeches.
Energy Minister—I will discuss energy reforms later in my speech. When I lobbied him when he was Secretary of State and a Minister, I found that he agreed with me more than he agreed with Mrs Thatcher, his leader at the time.
The grocery market ombudsman is a very good inclusion in the Queen’s Speech. In the previous Parliament, I introduced a private Member’s Bill on a supermarket ombudsman, which gained cross-party support and went into Committee. We unfortunately ran out of time, but there was a consensus. The Conservative party said at the time that such an office would be a priority in government, as did the Liberal Democrats and the Labour party, and here we are, two years down the road. I am a bit disappointed that it has taken two years for the Government parties to achieve action on a “priority”, but I welcome the fact that it has been achieved.
If we are to have an adjudicator for the code of practice, it is important that it has the right tools and the teeth to do the job. The adjudicator should not exist in name only. We should work together to continue that consensus to ensure that our suppliers, producers and consumers get a better deal out of the code of conduct by having an independent adjudicator to oversee it. I look forward to scrutinising and improving the Bill.
As hon. Members know, the code of conduct has been in place for a couple of years, which is why it was a priority to have an adjudicator. I want the adjudicator to be more proactive in looking at the industry—not just waiting for there to be victims of rogue trading in the grocery market industry. It is important to include in the legislation provision for a third party to bring a problem to the attention of the grocery market adjudicator.
I welcome that proposed legislation, but given that it has been two years since the last Queen’s Speech—Her Majesty has not visited Parliament in only three years of her 60-year reign—many people, including me, were expecting this one to be a beefy Queen’s Speech. However, it is paper thin. Dr Huppert, who is not in his place, said that we do not need a legislative programme to create growth and do many of the things we need to do in the country, but then he mentioned Liberal Democrat taxation policies. I must remind him that getting taxation measures through the House needs a Finance Bill, so he was not quite correct.
It is important that we have a programme, particularly after what has been described—not by Labour Members, but by the Tory-friendly press—as a botched Budget and a Queen’s Speech that lacked any strategy for growth and job creation. I welcome the drop in unemployment announced today, but it is not a trend and we should not get carried away. As the Prime Minister said in Question Time earlier, we must do more to stop the increasing number of part-time jobs. The rate of full-time equivalent employment is falling not rising. Many people are moving from full-time employment into part-time jobs, and as a result their cost of living is rising and their standard of living falling. We need to address that issue.
I want to mention the Chancellor’s botched Budget. Like the hon. Member for Worcester, I have been visiting businesses in my community, including Conservative businesses that have never been particularly Labour friendly. They have told me that the measures on VAT have reduced their capacity to invest, and that is hurting them. The fact that the Foreign Secretary, the Defence Secretary and others have said that businesses need to work a little harder shows, unfortunately, how out of touch the Government are. Those businesses are telling me that they are working flat out, while their costs are rising. Some of those rising costs are the result of external factors—I acknowledge that energy and wholesale prices have risen—but many extra burdens are not as a result of that.
For instance, the Budget contained a 20% increase in taxation on the caravan and hospitality industry. Many hon. Members either abstained or voted for that measure and did not vote against it. Operators have told me that it is a huge burden, because 60% of their turnover comes from the sale of caravans. In the past, it was from that profit that they could reinvest in their parks—and they invested substantial sums. In my constituency alone, an estimated 300 jobs will go if that measure is introduced, because operators will be unable to reinvest. That is a tax on jobs. Before the election, the Chancellor, with his political hat on, talked about a tax on jobs, yet now he has created a tax on jobs by increasing VAT.
The hon. Gentleman knows that I do not always vote with my party, and if he checks the record, he will see that I have voted for several SNP measures. If they are sensible, I will vote for them, but not many are. [Interruption.] I cannot speak for the rest of Labour, but I can speak for myself very comfortably in this House, and have done from both the Government and Opposition Benches.
It was wrong to increase VAT. It took money out of the economy at a time when we needed a fiscal stimulus. That is what business is telling me. That is why it is disappointing that the Budget increased VAT instead of addressing the situation. As the Institute for Fiscal Studies said, VAT is a regressive tax which most hurts the poorest and most vulnerable in our society. The Prime Minister and the leader of the Liberal Democrats said as much before the general election, yet when they entered government, they increased it. That is what turned small economic growth into a double-dip recession. That is what business tells me. I am willing to stand up and speak for businesses, especially hard-working businesses. It is a disgrace for senior Ministers to say that businesses should simply work harder, given that the Government are increasing taxation and taking money out of the economy, as a result of which people are not spending on their businesses.
I had many debates with my right hon. Friend when he was in office. I did not shirk that responsibility. He felt that increasing VAT was the best thing to do but was outvoted in Cabinet. It was not a Government decision. He wanted to increase VAT, but he was wrong. He also wanted to increase vehicle excise duty, but I argued and voted against that measure because it, too, was wrong. On those issues, he was wrong. He did many brave things. For instance, he introduced the 50p rate at the end of our time in office.
Government Members laugh. He did it at the end, but he did it because we were in a crisis and needed extra revenue. That was supported by a lot of people at that time, yet this Government have managed to reduce the taxation for the richest while putting VAT on businesses and as a result a tax on jobs.
Does the hon. Gentleman accept that the biggest tax on jobs would be if this country tried to spend its way out of debt, which is exactly what Labour would have us try to do?
I understand what has come from the Government Whips—I have seen copies of it, and it says that all the time; indeed, it has probably got into the psyche. However, let us look at proper economics. When we have low interest rates—and we have had historically low interest rates—it is during a recession. That is what happens; it is a natural phenomenon. Since January 2009, interest rates have been at an historic low. That did not start when this Government came in; it started in January 2009. Gilts and bonds are low as well, which gives us a golden opportunity to borrow at lower rates. That is how we got out of recessions in the past across the world. Pure austerity measures have never worked. People should look at economic history. Austerity is part of the package, but unless we get growth and jobs, we will not get out of the double-dip recession we are in.
We sometimes get accused of being deficit deniers. I am neither a deficit denier nor a deficit extremist. It is extremism that gets us into trouble, and I have to say that there are many people in this House who are recession deniers—they are denying the fact that we are going down. Many people are paying the price, and that is why the cost of living is so important.
Let me move on to energy and electricity market reform. I support reform in principle, although we do not know the details, so it would be a little naive to support it fully until it is implemented. I am a member of the Select Committee on Energy and Climate Change, and we have looked at the principle of electricity market reform. We produced a report highlighting some of our concerns. There has been a White Paper for a long time, but we are only going to get pre-legislative scrutiny. We need to know what is in the Bill in order to deal with the issue properly and provide the certainty needed to invest in our infrastructure.
The Government have missed an opportunity in this Queen’s Speech. On one side, yes, there should be incentives for investment—that is very important—but there is very little protection for consumers. I have long argued in this House that Ofgem, the energy regulator, should have more teeth. It should be standing up. It is a damned cheek for the new Energy Secretary—whom I welcome to his place today—to try to claim some credit for the fact that energy companies are providing greater transparency in their bills. It is campaigns by the likes of Which? and Consumer Focus and so on that have highlighted the problems and embarrassed the energy companies, while the Government stood by and watched. Ofgem should have greater teeth. I make a plea to the Government to take that on board, because energy costs are hurting people, in peripheral areas in particular. Many are off the gas mains and off the grid. I want Ofgem, the regulator, to have the same powers to protect customers who are not on the gas mains as it enjoys in protecting those who are on the gas mains.
Finally, let me move on to the subject of transport. I welcome the concept of High Speed 2, but I want to see it up and running. The Transport Secretary is quoted as saying, “Well, we’re preparing for legislation.” The legislation is vital, so can she give some indication of when it is likely to be introduced? We have done the consultation and the matter has been agreed by this House, although it is not popular with certain sections.
The hon. Gentleman is right that there is an awful lot of preparatory work to be done to ensure that the hybrid Bill contains the information that this House needs to scrutinise the proposal properly. We expect that preparatory work to be done through the course of this year and next, and for a hybrid Bill to be introduced by the end of next year.
I appreciate that. A hybrid Bill in itself will take a long time, so we are unlikely to see anything soon. However, I support the main thrust of high-speed rail. We saw benefits under the previous Government in north-west Wales, north-west England and Scotland after we invested in faster line speeds. High-speed rail is important.
My final point is about VAT on fuel duty. Every time people spend £1 on petrol, they have to pay an extra 2.5p. That really hurts people. It is wrong, and it should be reversed.
We needed a Queen’s Speech that set out proposals for jobs and growth. This has been a missed opportunity, on top of a botched Budget which has led us into a double-dip recession. That is damaging the living standards of my constituents and those across the United Kingdom.
The title of today’s Queen’s Speech debate is “Cost of Living”, yet at 10 o’clock this morning, only 10 Members had put their names down to speak, and the Whips were rushing around trying to get more people from all parts of the House to participate. That suggests to me, despite the Opposition amendment, that the serious financial situation facing millions of low-income and disadvantaged people is considered to be a lower priority than the subjects debated on other days when so many MPs wanted to speak that there had to be a time limit of as little as six minutes for each speaker.
The Chancellor’s decision to cut the top rate of income tax from 50p to 45p was a political error on a big scale, for it gave the impression that this Government are one who favour the rich at the expense of the poor. The notion that “we are all in it together” lacked credibility because of the Cabinet’s decision on that. It is the way the Chancellor tells them that is the problem. Regrettably, his announcement on the reduction from the 50p top rate completely overshadowed the good news that 20 million people would have lower taxes. In the context of the cost of living, that is wonderful news. The last Budget resulted in a tax cut of a further £220 on top of the £550 income tax cut already achieved since Labour lost the 2010 general election. That has to be good news, too, in the context of the cost of living. In my Colchester constituency, nearly 5,000 low-income people will, thanks to the coalition, be lifted out of paying any income tax. That is the second-highest number in any local authority area in Essex.
The hon. Gentleman is right to say that the thresholds have raised and that some people are coming out of paying income tax. Does he not acknowledge, however, that his party and coalition colleagues voted in favour of VAT rises, which will wipe out any gain that the lower-paid will have had? The VAT has increased Budget on Budget.
If the hon. Gentleman checked the record, he would see that I voted against the VAT increase.
The headlines were all about the cut to the 50p top tax rate for those earning more than £150,000 a year. There are very few people in my constituency who get paid upwards of £3,000 a week. Thus, all the good things done to help those on low incomes—whether they be families or old-age pensioners—have been lost in the minds of many people because of the cut in the 50p tax rate.
Before the Opposition get excited, I must point out that, for all but the final few weeks of the last Government—and let us not forget how Labour left the country in a financial mess—the top rate of tax under new Labour was 40p for high earners, and that for almost 13 years. Our 45p rate is higher than the 40p rate levied by new Labour.
Let me remind the House of what I said on
“The Labour Government took Britain to the brink of bankruptcy. The gap between rich and poor widened, and nearly 4 million children were left living below the poverty line. Last month, the coalition Government cut income tax, liberally helping millions of people, but I have to ask the Prime Minister this: if we are all in this together, what is he going to do about the obscenity of 1,000 multi-millionaires boosting their personal wealth by 18% in the past year?”
Responding, the Prime Minister said:
“One of the things we absolutely will do—and we have put in the money to make sure it happens—is crack down on the tax evasion that takes place so widely in our country. The Treasury has put money into that campaign to make sure it happens. The hon. Gentleman makes a good point.”
Well, I normally do. He continued:
“Because of our coalition Government, we have lifted 1 million people out of income tax and, at the same time over the past year, we see exports up, private sector jobs up, the economy growing and borrowing down—all radically different from what would have happened if we had listened to the recipe from the Labour Party.”—[Hansard, 11 May 2011; Vol. 527, c. 1158-9.]
In concluding today’s debate, will the Minister give us a progress report on what the Prime Minister said a year ago? Perhaps what is needed on both Front Benches are people with experience of the university of life, and the school of hard knocks.
Given his experience in the university of life, would the hon. Gentleman recognise, albeit grudgingly, that some people who have done particularly well in our society are major employers and major taxpayers in the UK, so they should be viewed as positive contributors, not the negative contributors that he portrays?
I appreciate that intervention, because my point was that the problem was not necessarily the content but the presentation, and the perception of millions of people out there that the Government were interested only in the rich. I endorse the hon. Gentleman’s point and hope that he will endorse my observation.
Increasing the personal allowance to £9,205 takes us within touching distance of the Liberal Democrats’ No. 1 manifesto pledge to ensure that no one pays any tax on the first £10,000 of earnings. I hope that that figure will be reached or, better still, raised even further in the next Budget. That would be good for the cost of living of those with limited financial means.
For most people, the most significant cost is that of housing, whether it be a mortgage or rent. One does not have to be an economic wizard to know that the more of the family budget is spent on housing, the less will be available to be spent on all other aspects of the cost of living. If the rent or mortgage goes up there is less money to be spent, and that has an impact on the economy, particularly the local economy.
I will concentrate my remarks on rent, because the subject of social housing—that is the current terminology, although I prefer the concept of democratically accountable council housing, given that successive post-war Labour and Conservative Governments strove to outdo each other in the building of hundreds of thousands of homes—has interested me throughout my political life, the 42nd consecutive year of which, in my home town, began this week.
As a nation, we need to follow the excellent record of successive Labour and Conservative Governments in the 35 years or so that followed the second world war, and to put right the damage inflicted by successive Conservative and Labour Governments from around 1983 onwards. I look to the coalition Government to follow the lead of the Governments of Attlee and Churchill, Eden, Macmillan, Douglas-Home, Wilson and Heath, Callaghan, and Thatcher in her first Parliament. It is a startling fact that the Thatcher Government built more council houses for families than new Labour managed to build in 13 years.
We need to build council houses today, on publicly available land. That would help to boost the economy, create jobs and provide decent homes for the hundreds of thousands of families living in accommodation that is not suitable for their needs. I am grateful to the National Housing Federation, whose East of England bulletin states:
“155,900 households are on social housing waiting lists in the East of England, one in 16 of all households in the region, and a 59% increase since 2000.”
Let me issue one caveat. We must not, in the process, sacrifice the special greenfield sites that provide a positive contribution to the quality of people’s lives.
I merely ask that the coalition seeks to follow the post-war consensus of politicians from all parties: people who had grown up in the terrible times of the 1920s and 1930s and who, in post-war Britain, knew that providing decent family homes would transform lives. Incidentally, I have no objection to the right to buy provided that each house sold is replaced by a new house, and I understand that that is the policy of the coalition. I invite Ministers to read the report of the housing debate that I led in Westminster Hall on
I also invite Ministers to look at the Education Act 1944. On studying it, I realised that it was about more than just teaching, and that it adopted an holistic approach to the upbringing of children. It dealt with education, of course, but also with such matters as school health, dental checks and school meals. The architects of that Act recognised the importance of bringing everything together. If we are to succeed with a jigsaw, we need to fit the pieces for the corners and edges first, and the same applies to the jigsaw of life. If a decent home is provided for a family, the other pieces of the jigsaw of life are more likely to fall into place.
All this has a bearing on the cost of living, because if people have a decent home at an affordable rent, they will have money to spend in local shops and on local services. It is not a cap on housing benefit but a cap on rents that we need. While building council houses is the mid to long-term solution, a cap on rents is the immediate requirement.
The private sector and housing associations—the latter being dependent on public money—have not been able to fill the gap caused by the near-collapse of council house building under successive Governments over the past 30 years. Private landlords have made a killing and tenants have been given a worse deal at a much higher cost, much of it coming from the public purse. Public money is far better invested in public housing than lining the pockets of those who have become property millionaires courtesy of the publicly funded housing benefit regime. If a family’s housing benefit is cut, they have less money to spend on food, clothing, energy bills, local services and so on. The landlord still gets an inflated rent—or the family is forced to move. I call the latter economic cleansing. The local economy also has less money circulating because tenants spend more on rent and less on local purchases.
At the weekend, celebrity chef Jamie Oliver and England footballer Steven Gerrard called for better knowledge of food nutrition to be made part of the national curriculum. However, before getting carried away with this good idea, I have concerns that the school meal service is not what it used to be, and I fear that Government policies are not helping the needs of many children. I urge Ministers not to damage the school meal service even more.
I return to the good idea from Messrs Oliver and Gerrard. What would be even better is if first aid training also became part of the national curriculum, as I called for in a ten-minute rule Bill that I put to the House on
If every child in this country knew first aid and, over time, took this knowledge into adult life, the national health service would make huge savings. As I said when I introduced my Bill, it would
“save many hundreds of lives every year, produce annual savings to the national health service of hundreds of millions of pounds and result in a better quality of life for all age groups throughout the land.”—[Hansard, 19 November 2003; Vol. 413, c. 808.]
It would lead to savings in people’s spending, because they would be more knowledgeable about what constitutes a healthy lifestyle. Today, an increasing number of children suffer from obesity, but I fear the prospect of a return to many children being under-nourished, because they are becoming the innocent victims of rises in the cost of living. Our Government must not allow this to happen.
I shall support the coalition Government in the Lobby this evening and tomorrow, but I urge Ministers to look at what was achieved on the housing front by Governments between 1945 and the early 1980s, and seek to emulate them.
I want to address the transport rather than the energy aspect of today’s debate, and raise three issues that affect my constituency: the local airport, the big Hitachi investment, and the state of rural bus services not just in Sedgefield but throughout County Durham, including Darlington.
As local people know, Durham Tees Valley airport has gone through difficult times in the past few years, especially recently. Just three or four years ago, some 1 million passengers used the terminal. That figure has gone down significantly recently, but at an engagement at the airport a couple of weeks ago, it was good to see KLM making everybody aware of its ongoing commitment to the airport. Hopefully, at some point it will put some more routes on, or use the airport more often than it currently does.
I want to discuss the long-term sustainability of regional airports—I am pleased that the aviation Minister, Mrs Villiers, is in her place, and that she has agreed to a meeting next week—and air passenger duty. The latter is critical to the aviation industry in more ways than one, and to the passengers who have to pay it. It has gone up by twice the rate of inflation in the Budget. The aviation industry has told me that we need to look at regional variation of the APD. That does not mean varying it region by region, but having one rate for the south-east, where there is a lot of passenger congestion, and another for the rest of the country. Some would say, especially the Scottish National party, that we should devolve this matter to each of the devolved Administrations—Scotland and Wales, for example—but that is not the way forward. Devolving it to Scotland would impact on Durham Tees Valley airport and Newcastle airport. We need to gain the evidence for our approach. I am meeting a Treasury Minister on
I also wish to discuss Hitachi, which I always mention when I can because it provides a massive boost to the north-east economy; it is providing the biggest private sector investment in the north-east since Nissan. Hitachi is going to build a £90 million factory—a train-building facility—in my constituency at Newton Aycliffe. The company is going to refurbish the rolling stock for the east coast main line and for the great western line into Wales. Hitachi is going to create 500 jobs, with thousands in the supply chain. This will be one of the most exciting industrial stories that we have in the north-east of England. I congratulate the Government on making the right decision on it and I pay tribute to the previous Labour Government, whose idea it was in the first place.
The big issue I want to talk about, which is really affecting not only my area but all rural areas, is the state of rural bus services. The Sedgefield constituency covers about 150 square miles and contains about 30 to 40 towns and villages, some of which are very small. Brafferton, for example, has a population of only about 200, whereas Newton Aycliffe has a population of 20,000-odd. There is a lack of rural bus services and subsidies that have gone to local authorities have been cut. The subsidies are then withdrawn from bus companies such as Arriva, the big one in our area, and if they do not get the subsidies, the bus does not run. Sometimes that happens without the local people having been consulted, so they find that their bus does not turn up at their bus stop because the service has been pulled off the road and nobody has bothered to tell them.
The situation is creating problems in the area. For example, people are having difficulty getting to work. We have actually had to write to the local jobcentre and the Employment Minister to say, “If someone cannot get to work any more and they pack in their job, what does that mean for their benefits? It is not their fault that they have had to resign their job, so will they still not get benefits for six months?” I have been told that this would be looked at on a case-by-case basis, but the local jobcentre has pointed out to me that it has actually considered buying bicycles to get people to work because of the state of the local bus services. It seems to me that we are going back not to Victorian times but to mediaeval times in respect of the state of transport in the area. A sophisticated society such as ours must be able to put on adequate bus services for people.
I, too, represent a semi-rural constituency, where bus services, and school buses in particular, are becoming a real issue. Just last week, a mum contacted me about the removal of the school bus in Bagthorpe. Getting children to school is not a luxury; it is a necessity. Should not Ministers take that on board?
Ministers do need to take that on board, because the state of bus services is not just an issue about people getting to work, getting to see their family or getting to medical appointments; it is also an issue for schoolchildren and their parents.
This issue is having an impact on every rural and semi-rural constituency across this country and it is having an impact on our future. Young people are now telling me that they are choosing courses on the basis of where they can get to, not on the basis of what the right course is for them or for the future economy of this country.
These are all issues to address. Ultimately, they are not just about bus services; they come down to the effect on society in rural areas. People living in rural areas should have the same rights as those who live in urban areas, which on many occasions have adequate transport facilities.
I wish to discuss one or two villages in my area. Hurworth, Sadberge and Brafferton are all in the Darlington borough, and my hon. Friend Mrs Chapman, who is in her place, wishes to discuss these same issues, as they are affecting our communities in that borough. For example, Sadberge has lost its shop, its post office and its school, and from the end of the year it will lose its bus service, too. At a surgery there two or three weeks ago, I was told by a disabled person who works at Lingfield Point in Darlington, “If that bus route is withdrawn, I do not know how I am going to get to work, unless I hire a taxi.” We all know that going by taxi is a very expensive way of getting to and from anywhere, never mind just using it to get to work.
Brafferton is, as I have said, a very small community, containing 60 to 70 houses and perhaps 100-odd people. I have been contacted by Mrs Firby, who lives in that village, and I want to read one or two extracts from her letter to explain the state of transport in the area. It says that now the bus has been withdrawn, residents
“must walk to the A167”— the main road—which is
“much too far for elderly or infirm, or anyone to carry much more than a light bag. There is no shop in the village and the partial footpaths away from the village are poorly maintained.”
The letter goes on to explain that 50% of households have someone over the age of 60, and states:
“More people are becoming reliant on family and friends or a second car when retiring from work and losing easy access to shops.”
In fact, the nearest shop to that village is the motorway garage at the interchange on the A1. Imagine the nearest shop being at the motorway caff and having to go there to get groceries. That shows the issues affecting our local villages and the stark contrast of the situation in those areas.
Darlington council, because of the cuts it is facing, has had to take some really difficult decisions about subsidies to buses and how it will deal with adult care. Because of the cuts, it will not be able to continue giving subsidies to bus companies, especially at the end of this year. What it is able to do—there are particular grants for doing this—is set up community transport systems. It does not want to run the systems itself but wants a third party to do it. It is currently consulting with local parish councils and others to find a way of doing that. I am pleased about that and I and my hon. Friend the Member for Darlington will help and support the council in its efforts in that regard.
The report of the Select Committee on Transport on its financial scrutiny of the Department for the 2010-12 Session says that £500 million was handed back to the Treasury. It says at page 8, paragraph 10, that that money is
“likely to have exceeded the total reduction in annual revenue for the English bus industry following the Spending Review.”
The report goes on to say:
“Money voted by Parliament for expenditure on transport should be spent on transport, not handed back to the Treasury.”
We have all these constituents facing these cuts and having difficulties getting to work. We have elderly people having to walk a mile and go to a motorway caff and back to get groceries, but this £500 million was sent back to the Treasury. I think some questions need to be asked about that.
The Bridgend Coalition of Disabled People recently held a transport summit at which they pulled local bus and taxi companies and train operators together to talk about how disabled people can access transport. Increasingly, moving around is expensive and difficult for disabled people and requires prior planning. That money could have been spent on facilitating access to transport for disabled people. Does my hon. Friend agree that it is bad that that money was sent back to the Treasury?
That amount—£500 million—is not a drop in the ocean. It is a lot of money that could have done a lot of good for transport throughout our rural areas. I hope that Ministers will address this issue in winding up tonight.
Finally, let me make one or two other comments. Arriva runs bus services in County Durham, where a lot of those services have a bad name. With Arriva buses in London, if you see one, you see three at a bus stop, but in some of the villages we represent, people are lucky if they see one all day. Obviously bus companies need to make a profit to invest in better buses and so on, but the private sector also relies a lot on subsidy. Those companies have a right to make a profit but, given that they are providing a social service, they should have some kind of social conscience.
For me, this issue highlights elements of all the talk about the big society. People cannot get to work or see their friends.
It is interesting to hear the hon. Gentleman talking about the cuts at Darlington council. All of us in politics accept that in tough financial times, we have to take decisions about how we serve our constituents, but why has Darlington council chosen to cut the bus subsidy when in March 2011, on its own admission, it had more than £10 million in cash reserves?
Those are figures we do not recognise, but—[ Laughter. ] Let me answer the question. Tough decisions have to be made, but they are even harder when the amount of money given to local authorities is being cut drastically.
Darlington borough council has had £100,000 withdrawn from its bus operating grant and has made some very difficult decisions on adult social care. It has a responsible reserves policy. It is a sensible council, which shares a lot of its back office functions with neighbouring authorities. It is a low taxing council; we have the lowest council tax in the north-east. It is a well run council and there is not a lot of fat. These decisions are being taken—
I thank my hon. Friend for clearing up some of the issues. There certainly are choices, but if grants and subsidies are being cut, the difficult decisions that have to be made are even harder. It is not just that the council has to take those difficult decisions, but that particular things have been thrust upon it.
The whole situation undermines the big society. There is a lot of hot air and a lot of big words, but what is actually happening is that people are suffering at the grass roots.
Thank you, Mr Deputy Speaker, for cutting me off in my prime.
When Her Majesty read the Gracious Speech, I picked up immediately on a couple of things that I felt were extremely important for my constituents, but when I read the newspapers over the next few days, I did not recognise the speech I had heard in the commentary about it. I know exactly what my constituents are concerned about: the cost of living and the bills that come through the door.
I heard that there was to be a draft water Bill and that we would be focusing on electricity market reform, on which the Energy and Climate Change Committee has done a lot of examination, and as a member, I am particularly interested in that. The draft Groceries Code Adjudicator Bill has also been announced. Those measures represent the three biggest bills regularly faced by my constituents, and where the Government can actually have an impact, so they have decided to focus on them in their second Queen’s Speech.
I felt that it was very much a consumer’s Queen’s Speech, but there is a backdrop. Costs are increasing for water—a resource where we face particular pressure at the moment—for energy in the international wholesale markets and for food, which consumes energy and is subject to global pressures. It is crucial that we put consumers at the heart of the proposed legislation to ensure that we develop greater resilience for them, while making sure that their rights are protected and secured.
The water Bill is in draft form, but I was pleased to hear during the Budget debates that the south-west is to have a dispensation on water bills. There will be an obligation on the regulator to secure social tariffs. The water system will be under more stress. We have had drought alerts over the past couple of months, and those problems will not go away. I find it extraordinary that, as I understand it, the regulator cannot take into account issues of climate change when a water company puts forward a proposal to build a reservoir. We need a total review of what Ofwat believes its priorities are, and we must make sure that the water Bill ensures that the overall water system delivers sustainability and good pricing, plus a strong responsibility to work with consumers to protect and conserve water.
Earlier there was discussion of the proposed energy legislation. Members of the Energy and Climate Change Committee from all parties have been persistent in pursuing consumer issues in relation to the energy market, such as the retail market review that Ofgem is putting in place, which is crucial for consumers. We have doggedly pursued the issue of mis-selling. Doorstep mis-selling has been going on for years and it is only in the past year or 18 months that the public have received recompense from the companies that were putting many of my constituents under pressure.
One thing that the Secretary of State mentioned which I think is an exciting dynamic and an exciting new level of engagement is consumer activism. Consumers are starting to find their voice. Because they are under financial pressure, they are starting to look, for example, at energy switching. Which? came down to my constituency and we signed up about 3,000 consumers who are under considerable pressure financially. They have switched energy supplier, we have got a better deal for them, and we are in a much stronger position because consumers are exercising their voice. I urge our Government on every level to support consumers to have a voice, to exercise their choice and to make sure they are getting the best deal for water or energy or in the food sector.
The green deal is a fundamental part of creating a more resilient consumer. I am honoured to be the chairman of a commission that has been set up to look at hard-to-reach homes when it comes to the green deal roll-out. We should not deceive customers about energy prices. We need to put in place measures to ensure that consumers use less energy and are more resilient.
The third key piece of consumer legislation relates to the grocery adjudicator. I have concerns about the legislation, because I do not believe that it necessarily drills down far enough into the supply chain. It is an important step in relation to the large retailers, but we have to understand how the agricultural supply chain works. Often the producer—the farmer—does not have a direct relationship with the retailer. Sometimes wholesalers and intermediaries have that relationship with the producer. It is crucial that the grocery code is open and that it is offered to all parts of the supply chain, and that the market is much more transparent and effective and does not allow the market power of the retailers to distort it.
Let us be frank with the consumer. Food prices are going in only one direction, and that is up. There will be a doubling of the global calorific intake in the next five years. Energy prices will increase. We must redesign our food system to ensure that it is not that food prices are going up and costing our constituents money, but that our constituents have the ability to feed their families at a cheaper price. That will include much more work on food education, which has already been mentioned, which I think is crucial. We need to ensure that we waste less within the system and value food more across the whole supply chain.
One other thing I urge the Government to do is look at where consumers are, in my view, being ripped off. On Friday I had a meeting with a group of young mothers at a Sure Start centre. I brought along a range of different products that I had bought in a supermarket, including a packet of corn flakes, a third of which was empty, and other products in packaging that, in many ways, was meant to deceive consumers—for example, a full packet of biscuits in which a large chunk was filled with plastic padding. We must not allow the consumer to be unable to make the smart choices. I used to work for the Consumers Association and know how smart consumers are, but they must be given transparent information and must not be deceived by presentation or packaging. We must ensure that we protect them so that they can make the smart decisions and ensure that they get the best value for their food, water and energy.
I am pleased to follow Laura Sandys talking about consumers being ripped off, because that is an area I want to explore. Thousands of hard-working people in my constituency and across the country looked to this Tory-led Government to provide some support to ease the pressure on their squeezed living standards and help them cope with ever-rising bills, but they looked in vain. They got an energy Bill that will do nothing for the consumer, no legislation to reduce water bills and nothing on soaring train fares. There is no help for those people who saw their mortgages rise by 0.5% last month, pushing them off the step of “just about coping” and into the pit of “not managing”. There was no help for the people in my constituency who lost their tax credits because they cannot get extra hours from their employers. Where are those people to go? Far too often they go to payday lenders. If we are talking about people who rip consumers off, let us talk about payday lending.
Debt Advice research has shown that one in four people who take out a payday loan needed the money to buy food or essentials for their household and 44% used them to pay off other debts, but that does not help the situation. Indeed, if there is too much month left at the end of the money one month and a payday loan is taken out, the pressure is exacerbated the next month, and so on until the individual either rolls over the loan, using it as a long-term credit facility—an extremely expensive one—or takes out more and more loans from different companies.
I have met a constituent who took out a £300 loan. Unfortunately, she lost her job within two weeks when the company she worked for closed down, and 18 months on she owes £2,700 to the payday loan company, Toothfairy, which still refuses to negotiate a payment plan with the citizens advice bureau. I hate to disillusion thousands of children, but in this case Toothfairy is really the wicked witch. Over a three-month period I have collected 29 cases locally from the local citizens advice bureau and the local credit unions; it is a short time to amass the evidence that I am presenting to the Office of Fair Trading.
At the Credit Today conference on alternative lending last week, research was submitted showing that the average borrower from a payday lender also has overdrafts and credit card debts and is often paying only the interest on those. A payday loan is not a way of managing a deficit budget, and I worry that the lack of credit and affordability checks by these companies is pushing individuals into a worse situation, because by providing expensive loans they are delaying those individuals facing the issue and seeking help with their debts, which they need to do earlier. Nobody wants to push people into the arms of loan sharks or into offshore lending, but there has to be a point when the realities of the situation are pointed out and people are encouraged to seek free debt advice. Loans cannot keep being provided to people who cannot afford to pay for them time after time, but companies do not stop.
There were many excellent suggestions in the Business, Innovation and Skills Committee’s report, which came out on
The implementation of any measures has been delayed by commissioning the university of Bristol to carry out a study. In the meantime, people such as the constituent to whom I referred can continue to obtain 14 payday loans in one day because of the lack of a real-time database owned by the regulator. My unemployed young constituent, who took out a loan with repayments that were higher than his benefit payments, with no affordability or credit check, will continue to be unprotected.
What of the people who realise their problems and look for debt advice to help them? They are still at risk from the fee-charging debt management sector. In December 2011 I highlighted the fact that if someone types any combination of “debt”, “advice” or “citizen” into Google, they find that the first three companies shown are fee-charging. I typed them in again yesterday, and yes, the first three that came up were adverts for charging companies.
The first site titles itself:
“Government Debt Help—Write off up to 70% of your debts.”
The second one states:
“Write off Your Debts—Debts over £3,000? Government help available to clear your debts”—
I was not aware that that was in the Queen’s Speech. And the third one titles itself:
“Citizens Debt Help Bureau—Help for debts over £2000.”
I have said many times that such loans are a distress purchase, and these sites are where people who are awake at 3 o’clock in the morning go to look for help to clear their debts. If I was up at 3 o’clock in the morning after being worried by the bailiffs or by bills, I am not sure that I would see that those sites were adverts and scroll down to the first search ranking, Citizens Advice.
To provide the advice that is needed, not just advice at the point when someone loses their home, the agencies need to be given hope—the hope that money is available to help their clients. In the UK last year, one home was repossessed every 15 minutes: somebody lost their home every 15 minutes. To stop the misery and the costs of that, early advice is essential, not advice at the point when someone loses their home.
So where was the help for the big society, the organisations that use volunteers, supported by paid staff, to deliver advice? It was certainly not in the Queen’s Speech, and with the advice review once more kicked into the long grass—I believe that it might report in the autumn—there will be more uncertainty and more unplanned closures of law centres, citizens advice bureaux and other invaluable local advice agencies. There is no hope in this Queen’s Speech for the agencies, and that means no hope for their clients. The cost of living is going up, debts are going out of control, payday lending is proliferating and there are no measures to deal with it.
This Government are out of touch with the real lives of the people I represent in Abram, Ashton, Hindley and throughout Makerfield. They do not want Lords reform. They want practical help to keep their heads above water and to pay their bills, not a Government who allow an industry to flourish unchecked. This industry appears to throw a lifebelt to people, but it is all too often lead-lined, and it ends up finally drowning them in debt.
I want to focus my remarks on the parts of the Queen’s Speech relating to rural affairs, particularly farming and the groceries code adjudicator, as mentioned by my hon. Friend Laura Sandys.
I hope that all of us, whatever our politics, would at least have been relieved and encouraged when we saw this morning’s unemployment figures, while not finding them the source of a desire to punch the air and celebrate. I guess that during the day most of us will have seen in our inboxes reference to the unemployment levels in our own constituencies; we always look at those, as I did. I can claim pretty much no credit whatsoever for the fact that Westmorland and Lonsdale has the lowest unemployment in England. When we look at these stats and what they mean for the cost of living and for people’s ability to keep their heads above water, we see that nothing is more important than whether someone has a job and whether it pays well. The latter is equally important. The fact that we have very low unemployment in our part of the world is a credit to businesses and the public sector, both local and national, but it overlooks the fact that our local average income is less than £20,000 a year while the average house price in Westmorland is £240,000. That means that the average person is earning a twelfth of what it costs to buy a home. That is why we have so many people on the social housing waiting list and why so many people find it a struggle. If someone lives on my patch, the chances are that they are in work but that they are still struggling because the cost of living is a significant problem given the nature of what it is to live in a rural area.
When we talk about the cost of living, it is worth reflecting on something that has changed drastically during the post-war period. In 1954, 33% of the average household budget was spent on food; today, that figure is about 11%. Of course, that progress is welcome, but it has not happened entirely for good reasons. It is good that food is less expensive these days—Members will be delighted to know that I do not claim credit for that either—but we need to remember that one of the reasons for that is the imbalance in the food market. We have a handful of very powerful retailers who do a good job; they do what any of us would do if we were given the freedom to do what the supermarkets are enabled to do.
We have a handful of processors and many hundreds of suppliers. In such a market, as everyone knows, the powerful few are able to take advantage of the relatively powerless many. Let us be honest—the reason why food prices have been as they have over the decades has as much to do with exploitation as with progress.
Last year, during the long summer holidays, I was told by the chief executive of the local hospital trust that children in my constituency had been admitted to hospital with malnutrition. Would the hon. Gentleman and his Government like to take responsibility for that?
As a human being and as someone who is involved in politics, I do take responsibility and do not pretend that it is somebody else’s fault. It is not peculiar, two years into a particular Government, to point the finger at them for something that is a moral crime. If those things are genuinely happening—I am absolutely prepared to believe that they are—then we all take responsibility. One of things that I find unseemly about this world of politics in which we work is how we can sometimes be delighted at people’s misfortune because there is a political point to be made. I try to be reasonable, non-partisan and non-tribal, although I do not always succeed, and I try not to bracket together those in one party or another as having a collective psyche. However, similarly to the hon. Lady’s stance on this issue, I suspect, I observed earlier Labour Members cheering when someone mentioned that we are in recession, as if that were a good thing; I suppose that it might be seen as a political benefit. There was almost embarrassment on the part of Labour Front Benchers about the fact that there was some good news today on unemployment. We must be prepared to take collective responsibility for the things that are wrong and celebrate the things that are positive.
Let me therefore point out something that is wrong. Over the past month, there has been a drop of 2p a litre in the amount paid to dairy farmers for milk. That means that the average dairy farmer is now getting 3p to 4p less per litre than it costs him to produce it. At the back end of the previous Government’s time in office, I tabled some parliamentary questions which showed that the average annual income of a hill farmer, after all the relatively small payments that they get through the single farm payments scheme, was £5,000. Now, I do not know how many hours most hill farmers work each day, but the ones that I know work 16, 17 or 18-hour days. That means that they make about a quarter of the minimum wage. That is an outrage. I wonder whether Pat Glass would take responsibility for that, given that it happened under her Government. Of course, we all bear collective responsibility and it is right to say so. The exploitation of dairy farmers, sheep farmers and farmers in general happens because of an imbalance in our market and because of market failure.
Everyone in this House ought to be committed—I am sure that we all are—to fair trade. However, there is something peculiar about the fact that we can wander down one aisle in a shop and buy some Colombian fair trade coffee, and feel good about ourselves for having done so, and then go down the next aisle to buy the milk to put in that coffee, which has been ripped out of the hands of some underpaid Cumbrian farmer. We want fair trade for British farmers, as well as for farmers across the world. Fair trade at home matters. That is why the announcement in the Queen’s Speech of a groceries code adjudicator with teeth is a massive step forward for rural areas and for food producers of all kinds. It is fair and just to do that, but it is also sensible because unfairness damages us all.
Over the 15-year period of 1995 to 2010, which is not entirely coterminous with the Labour Government, there was a 50% drop in the number of dairy farmers in this country. Over the past 30 years, there has been a 25% drop in our country’s capacity to feed itself. If we do not take account of that, we will go down together. It has happened partly because the supermarkets and the food processors are too keen to make a quick buck at the expense of the exploited supplier and producer, rather than looking to the long term.
There is a bunch of things that we can do. I thank my hon. Friend for asking the question. We can ensure that there is a fair and decent referee in the groceries code adjudicator. Through the Foreign and Commonwealth Office and our other missions, we can help our farmers to have an export market, because they will get a much better deal from the supermarkets if the supermarkets know that there is someone else who the farmers can sell to and who will compete. We also need to invest in research and development to help people improve their effectiveness and efficiency. I will come back to that point if I have time.
Does my hon. Friend agree that the issue of contracts is also important? The relationship between supermarkets and producers is extraordinary in that they often have no contracts whatsoever.
Yes, farmers need to be encouraged and enabled to co-operate. I always thought that it was peculiar that the milk marketing board was got rid of because it was a monopoly—what the heck is a supermarket, for pity’s sake? It is important that there is balance in the market.
The reality is that unregulated markets do not work. I believe in a free market, but markets are not free when there are powerful entities that control them. Markets do not always work in the interests of the people who are being exploitative. It is not in the interests of Tesco, Sainsbury’s, Asda or Morrisons to exploit their farmers, even though they often do so. I acknowledge that they do good things too. As John Maynard Keynes once said, among the many other wise things that he said,
“The market can remain irrational longer than you can remain solvent.”
The supermarkets are putting people out of business, despite the fact that it is not in their long-term interests, just because it is in their short-term interests.
That highlights something that this Government and all Governments have failed to do—set out a coherent food production strategy for the country. As my hon.
Friend the Member for South Thanet said earlier, over the next 40 years the population of planet Earth will increase by about 50%, but the demand for food will roughly double. If we as a country preside over a 25% drop in our ability to feed ourselves, as we have over the past 30 years, it is completely witless and massively damaging. The food crisis—I say that with no exaggeration at all—that the planet faces and that this country will face is at least as big a concern as climate change and, dare I say it, is a bigger concern than the economic crisis.
That challenge must be met. It must be met by having regulation of our market, with a referee to make sure the market is fair and effective, and the groceries code adjudicator will do that. We also need to have an integrated strategy, so that our approach to common agricultural policy reform is focused primarily on maximising sustainable food production; we have a science policy that has food production at the top of the agenda—research and development is crucial to ensuring that we maximise the amount of food we produce in this country—and we have a planning policy that is fit for purpose and allows rural areas and rural businesses to develop, so that they can meet the needs of this country. The reality is that people’s ability to enter the farming industry and to provide the food that this country desperately needs also depends on young people being able to afford a home of their own for their family in a rural area.
The cost of living is an excellent theme for our debate on the Queen’s Speech, because alongside and intertwined with the strength of the economy and the availability of jobs, it goes to the core of what ordinary people are most concerned about right now, as I see in my inbox and hear from constituents on the doorstep and in my surgeries. Frankly, I am amazed that the Secretary of State was able to speak for so long, given the lack of action to help with the cost of living in the Her Majesty’s Gracious Speech.
I think the Queen’s Speech was best described by the deputy political editor of The Daily Telegraph, as
“a ragtag bag of second-order legislation and moderate tinkering, partly to address some quite important issues, but also simply to look as if they’re doing something.”
There are one or two Bills that I am pleased to see and will discuss later, but where was the meat? Where was the creativity? Where were the drive and ambition to get this country out of the first double-dip recession in almost 40 years? Nowhere. There was no change, no hope, and Ministers still act like they have no idea of the impact of their policies on the lives of my constituents. Quite frankly, they just do not have any ideas.
One of the biggest cost of living pressures that working families are feeling is child care. According to the Daycare Trust’s annual child care costs survey, the average price of nursery provision in the north-east has increased by 7.5% over the past year, but the cost of out-of-school child care has increased by more than 25%. That is but one part of the triple whammy that parents are facing, because at the same time the help they receive from the Government has been cut by 12.5%, and child care places are becoming scarcer as the money councils get to ensure availability and affordability is slashed and de-ring-fenced, and private nurseries face a daily struggle to stay afloat, due to the increasing number of women who are leaving the work force or finding alternative care, coupled with increased costs and cuts to child care tax credits.
Add to all that this year’s changes to working tax credit eligibility, which affect an estimated 355 families in my constituency, and ever-rising costs of petrol and public transport, and the result is a situation where the cost of working is forcing parents, particularly women, out of work at an alarming rate. After last year’s cuts to child care tax credits, about 44,000 parents stopped claiming. Many will have left work because continuing just did not make financial sense any more. Last month’s changes will no doubt exacerbate that worrying trend. Where were the measures in the Queen’s Speech to help? Again, nowhere.
The cost of child care is normally higher for children who are disabled or who have special educational needs. In addition, places for those children are scarce: according to the Daycare Trust, only 12% of councils have sufficient places to meet local need. A children and families Bill was announced in the Queen’s Speech; I welcome that and look forward to working on it when it comes before the House. I am delighted that, as part of that debate, the House is to discuss how we can improve outcomes for children and young people with special educational needs and disabilities. Where, though, is the commitment to increase the availability and affordability of child care for children with special educational needs and disabilities, to allow their parents to hold down a job, which is not only important financially, but provides much needed respite in some cases?
The Government have also said that, in that Bill, they will continue Labour’s reforms on flexible working, allowing mothers to transfer some of their maternity leave to their partner. There are of course social benefits to that, but where are the financial benefits for families? Research commissioned by my right hon. and learned Friend Ms Harman back in 2010, when she was Minister for Women and Equalities, showed that only about one in five women earned more than their partner, although the number is thankfully rising. With that in mind, transferring statutory leave will come down to a practical economic decision for many families. It will be a luxury that most cannot afford, especially if the Government continue to do nothing to mitigate the rising cost of living.
Colleagues have mentioned a number of other pressures on household budgets, and I will echo their points if I have time. Those pressures include rising energy bills, rising shopping bills exacerbated by last year’s rise in VAT, which took £450 out of family budgets at a stroke, and the rising cost of fuel and public transport, about which we have heard quite a bit.
One particular problem that has been raised with me, and mentioned in the media in the past few months, has been banks hiking up mortgage interest rates while the base rate remains at a record low. Mr Edward Cairns of Washington called my office to complain that on the same day as the Royal Bank of Scotland announced a total bonus pool of £785 million for 2011, despite the fact that the bank had made an overall loss of £2 billion, he had received notification that the interest on his mortgage was being increased by 0.25% to 4.25%. I wrote a letter to Stephen Hester asking him to explain that hike and the fact that it coincided so insensitively with the announcement of the huge bonus pot. Unfortunately, I am yet to receive a response from Mr Hester, so I also wrote to the Chancellor to see what he was going to do about it. I received a letter back from the Financial Secretary to the Treasury saying, in a nutshell and in a very polite way, absolutely nothing.
RBS is a bank in which Mr Cairns, as a taxpayer, has an 84% stake, yet it and other banks are needlessly hitting people like him in the pocket while their executives are being rewarded for failure. That is bad news not just for consumers but for the Government.
I am sure my hon. Friend is aware that in the letter that Halifax sent out to mortgage customers, it stated that the reason why it had increased its rate was the parlous state of the economy and the recession born out of No. 10.
Very interesting. I hope that Ministers are listening and that my hon. Friend’s point will be fed back.
Banks putting their standard rates up means that average interest rates increase, so the amount that the Government have to pay out in support for mortgage interest also increases. It also means that people have less disposable income to spend in shops, pubs and restaurants, so tax receipts are hit as well. Did the Queen’s Speech do anything to address that worrying trend? No, it did not.
What my constituents wanted from the Queen’s speech was a sign that this Tory-led Government had listened to the message that had clearly been sent to them through the ballot box on
Ministers need to listen to Paul Dixon, who lost his seat on
May I say what a privilege it is to have the opportunity to speak on the cost of living? All hon. Members would accept that the cost of living is the issue raised most often with us in our advice surgeries. In an era of static if not falling incomes, ensuring that our constituents can live their lives, support their families, continue to get work, put fuel in their car and keep their houses warm, is one of the most important issues we can debate in the House.
Recent media coverage seems to revolve around whether MPs know the cost of a pint of milk, and that decides whether they are in or out of touch with their constituents. I know the cost of a pint of milk, because I am particularly fond of a milky coffee with two sugars on a Saturday morning before I go to my advice surgery.
It was 46p when I bought it last weekend, but since the general election, the cost of the pint of milk that I buy for my milky coffee has gone up by 10%. Although that is not the world’s greatest economic indicator, all hon. Members can accept that it is a symptom of the huge increase in the cost of fuel, which puts pressure on families in all our constituencies.
I am a great supporter of the great British pint—I am sure some of my colleagues think that litres are a European abomination—but one thing that we buy in litres is fuel. The cost of fuel in my constituency is 6p or 7p a litre more expensive than in the neighbouring towns of Bury and Bolton. I became absolutely fed up with that, so I wrote to the major supermarkets to ask why there is such a difference. Apparently, for people who live in rural isolated areas such as Rossendale and Darwen, the local supermarket sets the cost of the fuel at the pump. Therefore, in a small geographical area that encompasses my constituency alone, the biggest retailer in my patch—the supermarket—sets the price and is the major supplier.
People in my area say, “Welcome to rip-off Rossendale or dearest Darwen if you want fuel in your car.” That situation cannot be right. It is wrong that supermarkets behave in that way on fuel pricing. I can find out the price of a Tesco pint of milk or a can of beans by going on its website, but it is not prepared to set a tariff for fuel nationally and instead discriminates against rural and isolated areas.
I support the Government’s idea of getting energy suppliers, particularly the utility companies, to write to their customers to offer them the lowest tariff, but supermarkets should offer petrol at the cheapest price to the young, hard-working families in my constituency—they might have to put diesel in a van to go to work or petrol in a small car to take children to school—and not at a price that they know they can get away with just because of location. The major supermarkets have had a monopoly—Tim Farron, who is no longer in his place, spoke extremely well on farming and the price of milk in that respect. Anti-competitive practices on fuel are pushing small, independent fuel retailers out of business, which is bad for businesses and for my area.
That extra £5 a week where I live to put fuel in a vehicle to go to work is the difference between people being able to turn the heating on or not, being able to feed their children healthy food or not, or being able to go out and spend money in the economy or not. I hope fuel price setting is part of the Government’s programme to look at the relationship between supermarkets and their suppliers.
The cost of gas and electricity is another major issue raised by all our constituents. Those costs have ballooned beyond anyone’s increase in income over the past few years. They have risen by as much as 20%. We tell people to switch supplier. When people visit me in my patch, they say they will not switch supplier because they are nervous of bill shock. Uniquely, virtually, in a service industry supplying utilities to our houses, it is expected to be self-service. People are asked to read their own electricity meter. People in my advice surgeries have told me that they purposely underestimate how much electricity or gas they have used to help manage their cash flow. That builds up a huge legacy bill. Others simply have underestimations having had their meter readings underestimated over a long period.
Those people are worried about switching, because they know that when they switch they will have to give an up-to-date meter reading and will have a huge legacy bill that they cannot pay. These people, sometimes those on the most expensive tariff, are unable to switch because they cannot pay their historical bill. That is why it is absolutely right that the Queen’s Speech sets out a programme to introduce smart metering. Bglobal, a successful business in my constituency, which I am delighted to see has retained its profitability, does business-to-business smart metering. There is an opportunity for us all to have smart meters in our homes.
However they are paid for, ultimately the consumer will pay, because if the electricity company pays, it will be added to the bill somewhere.
I am glad that Dr Whitehead is interested in smart metering. As I said, Bglobal, a business-to-business smart meter supplier in my constituency, is doing very well. The great thing about smart meters is that they enable us to pay only for the energy we use. There is not the bill shock; there is not the legacy bills which make people nervous. Paying only for the energy we use helps us to manage our electricity consumption and means that we can reduce it over time. People underestimate their readings so that they can manage their cash flows and pay their bills, but that is not real; they are simply putting off the pain. I want people to understand that by smart metering they can regulate their utility use and genuinely reduce their bills.
Bill shock is a real block to switching, as too is the fact that switching between the majority of energy suppliers involves an online medium. I refer to the uSwitch website, which I am sure many Members have used. That is a real block for the elderly and people on low incomes who do not have an internet connection. There are plenty of silver surfers in my constituency—they e-mail and tweet me—but that is not for everyone, so switching online is not right for all. People without phone lines or internet connections cannot switch.
Having said that, uSwitch does make the switching facility available in paper form. I am sure that many Members, like me, have collected the uSwitch envelopes and taken them out to elderly constituents, saying “Get your last utility bill, put it in here, and uSwitch will write back telling you the best tariff to go on.” As MPs, we should be publicising that and ensuring that vulnerable constituents are not excluded from saving what can be hundreds of pounds by switching their electricity supplier.
I support the Government’s proposal that energy suppliers should be compelled to write to their customers every year offering them the cheapest tariff. That does not enable people to switch between suppliers, but it at least ensures that they are on the best tariff. Of course, that is not always the one with the lowest electricity charge. Some people—those with very low usage, for example—might choose not to pay the standing charge and pay slightly more for their electricity. Tariffs have to be tailored to individuals.
Finally, I turn to the proposal to ensure that power generation in this country is environmentally sustainable. Often in this place we obsess far too much about short-term issues. As important as things are such as the eurozone, part of our job has to be horizon scanning. If I scan the horizon and think about what might affect our children or grandchildren, global warming is probably the biggest issue that I spot. I absolutely support the Government proposals to move to more sustainable electricity generation, but we have a problem with wind energy. In my constituency, 30 planning applications for wind turbines are currently under consideration by the local authority. That points to a market that is completely out of kilter with commercial reality. We saw it with solar energy: we had a sort of gold rush, because people suddenly realised that they could get 16% guaranteed by the Government tax-free. We are now seeing similar speculation by major energy suppliers, with the applications for large wind turbines in my constituency.
We all support wind generation, but I do not want to see my patch become the wind capital of the UK—although colleagues might look at me and think that it already has become that. I hope that the Government will have a look at the subsidy for wind generation and try to ensure that we cut the “get rich quick” merchants—the speculators—out of the market. I am happy to see the development in my area, but I want to ensure a local benefit, so that it really works for our children and grandchildren.
I am conscious that there are many more Members—certainly on the Opposition Benches—who still wish to speak, so I shall be as brief as I can. I am happy to speak in today’s debate on the Queen’s Speech about the cost of living, and to support the amendment in the name of my right hon. Friend the Leader of the Opposition, concentrating as it does on energy costs, fares and petrol prices.
Fares, and particularly rail fares, are critical to people in Lewisham generally, and in my part of it especially, as we have the highest proportion of residents in any London borough who commute to work outside their borough, although we do not have as many people in work as we once did. I welcome today’s marginal fall in unemployment, as any sensible person would, but in Lewisham in particular there are still 20 people unemployed for every vacancy. The cost of commuting by rail from my part of the constituency into London Bridge, Charing Cross and Victoria is extremely important, which is why I am keen to support what the Opposition are saying today.
Following on from what many other colleagues have said today, my constituents are also very concerned about the conduct of the big six energy companies. There is a strong feeling, not just across my constituency but across the country, that people do not get a fair deal from the big six—that they effectively operate a cartel, with myriad deals, special deals, “supersaver” deals, “half-past-Tuesday deals” and God knows what else, so that people do not know whether they are getting the best deal. I accept that the big six have stopped the scandalous cold-calling campaigns of recent years—as far as I am aware, all but one do not do that any more. However, there is still a major concern among the public generally that the big six are not as accountable as they should be.
The previous speaker, Jake Berry, mentioned smart metering and the opportunities that it provides. Smart metering could be a huge benefit to the economy and to the public more broadly, provided that it is done in the most objective and reasonable fashion, and not merely to accommodate the whims of the big six, which of course have a critical role to play in its implementation.
I also had a passage in my speech about the social care Bill, or rather the lack of a social care Bill in the Queen’s Speech. However, as my hon. Friend Barbara Keeley dealt with that issue far more elegantly and eloquently than I could, I will not belabour the point—although it is not unusual in this place for at least half a dozen people to say something that somebody else has said already. Nevertheless, the absence of a social care Bill is a huge missed opportunity, given the amount of spadework that has been done on the subject by local authorities and by the Dilnot review.
I want to deal with an issue mentioned by Laura Sandys, my hon. Friend Albert Owen and others—the setting up of an adjudicator on the groceries code of conduct. Everyone has welcomed it, quite reasonably, but I fear that there is not as much to it as meets the eye.
I am sorry that Sir Bob Russell is no longer in his place. He used to be vice-chairman of the all-party small shops group back in 2005 when I was the chairman. We conducted an inquiry into “High Street UK 2015”, looking into what the future of the high street would be 10 years on from 2005 if the current trends in retailing and the current regulatory regime remained in place. Staggeringly, we are now only three years away from 2015, and much of what we suggested in the report has, sadly, proved to be true. That was echoed in the report by Mary Portas and the proposals she made to address the situation.
Having looked at this subject in great detail over a long time, I have to admit, sadly, that I am deeply pessimistic. I am not sure that many of our traditional high streets have not changed for ever—and not necessarily for the better. The belief that something probably cannot be achieved should not stop us from making the effort, and I welcome the efforts of those involved.
One recommendation in our report was to establish a supermarket ombudsman, but one who would have power across the whole sector, not just across the supply chain, important though that is. When the detail of the Government’s legislation is made public, I believe people will see that only a narrow and restrictive role is proposed for the adjudicator. We wanted the office and the office holder to have the ability to examine in detail the effect that the disproportionate power of the big supermarkets—the big four, as they are known—has on dictating the climate for retailing, and the disproportionate impact they can exert on small and independent retailers.
All we are likely to get from the Bill will be enforcement of a code of conduct that already exists. Even six years ago, a code was in place, but no one ever used it. The suppliers were able to take things up directly with the big supermarkets, but nobody ever did. There was not a single recorded case of suppliers ever taking forward an official complaint about one of the big supermarkets they supplied. Some would say that it is fairly obvious why they did not do so—because they would have lost the business, and it was better for them to carry on with the business, even under onerous terms, than to lose it altogether. On the other side, some argued that it showed how effective the code was—that it did not need to be enforced, that nobody needed to have recourse to it and that people could continue their relationship with their suppliers.
Incidentally, the bulk of suppliers are not, as many people think they are, small farmers with small supplies. That is not true. The bulk of suppliers to the big supermarkets are large corporations and large food processors. Most of the supermarkets’ product comes from them. While I welcome the introduction of the new office, I am pessimistic about its effect, as I do not think it will address the real problem, which is the disproportionate market power of the big four.
I shall skip over a few other matters and move on to the heart of the debate on the Queen’s Speech. I accept the qualification that some Members have highlighted—that the Queen’s Speech cannot say everything and that a Queen’s Speech cannot necessarily legislate for everything. That is perfectly true. Within the past few weeks, however, we have become aware of both the Budget and the Queen’s Speech. Those two items together should demonstrate the priorities, direction and intent of the Government. We now have a pretty good view of what their priorities are.
All this should be seen against the economic background of a double-dip recession at home and a eurozone crisis abroad. We are witnessing convulsions in Greece, Portugal, Italy, Spain and perhaps even France: the southern economies in the eurozone are in a parlous state. There is also growing concern, both nationally and internationally, not about debt, inflation or interest rates, but about growth, or rather the lack of growth. The Federation of Small Businesses drew attention to that last week, and yesterday the Bank of America Merrill Lynch Survey of Fund Managers observed:
“The proportion” of leading international investors
“saying global fiscal policy is ‘too restrictive’ has… doubled to a net 23 percent” within a month. That lack of demand is the most acute problem. It is more significant than either employment law or the impact of regulation. Even access to finance and credit is cited more often than those factors as a cause of businesses’ inability to expand and become profitable.
Today the Governor of the Bank of England downgraded the growth forecast from last year’s 2% figure to 0.8%. The Government must look, listen and learn, and reverse the damage that they are doing to the people, businesses and social fabric of this country, for it is that, more than anything contained in the Queen’s Speech, which will determine whether the future of the people of Britain is bright or bleak.
It is an enormous privilege to have the opportunity to contribute to the debate on the Queen’s Speech, and in particular to speak today about the cost of living, which I think is the subject that touches the constituents of every Member most closely. It is a subject that resonates especially in rural areas such as the one that I represent, because for us the cost of living differs in so many respects from the cost of living for those who live in urban areas. One of the reasons for that is associated with the cost of fuel, and the cost of filling our cars at the pumps.
For those who live in my constituency and in other rural parts of England and the rest of the United Kingdom, having a car is not a luxury but an absolute necessity. The car is the thing in which people drive their kids to school in the morning, it is the thing that they need in order to get to work, it is the thing that they must have in order to do their shopping, and it is the thing that gets them to the doctor and the dentist. For my constituents, journeys that can be made on public transport in London and other metropolitan areas must be made by car, and are quite often lengthy.
When the hon. Gentleman talks of metropolitan areas, he should recognise that they include areas such as South Yorkshire. Two thirds of Barnsley is rural, but it is also a metropolitan area. The issues to which the hon. Gentleman refers apply in many metropolitan as well as rural areas.
They certainly apply in such areas to some extent. I do not dissent from that proposition. However, the hon. Lady needs to know the direction in which I am going. Because our constituents—including hers—are so affected by this issue, it is an issue on which the Government should take what action they can take. We are debating the cost of living, and one of the principal costs for those who live in the rural areas in her constituency and in rural areas such as the ones that I represent is the cost of fuel. The Government have tackled that. My right hon. Friend the Chancellor has scrapped £4 billion in duty increases that were planned by the last Government. The Opposition do not like to hear this, but the truth is that the price of petrol at the pumps is 10p a litre cheaper than it would have been if the Labour party had won the last election.
Is there more that could be done to deal with the cost of living? Of course, but Opposition Members also need to remember the huge debt bill—£120 million a day—with which the country has been left. If we were not paying that bill, my right hon. Friend the Chancellor and the other Treasury Ministers would have far more scope to tackle this and other aspects of the cost of living. We have heard Opposition Members criticise the Government today, but they need to remember who was responsible for getting this country into the mess in which we find ourselves.
I remind the hon. Gentleman that we are in a double-dip recession, and that when we left power, growth was increasing and unemployment was coming down. Until 2008, before the crisis, the Tories were supporting our public expenditure plans pound for pound.
The hon. Gentleman and his Opposition colleagues are very keen on saying that this double-dip recession is a recession made in Downing street, and they are absolutely right—it was made in No. 11 Downing street under the last Government, and then made in No. 10 when the previous Prime Minister finally made his transition from No. 11. The truth of the matter is that we need not only an apology but a bit of humility from the Opposition. It is they who got us into this mess.
I would desperately like to see more action on the cost of living, and specifically fuel pricing, from this Government, but I know, as I have had to tell many of my constituents, that it is simply not possible because of the mess with which we have been left.
That is the first aspect of the cost of living that principally affects my constituents, but there are of course others, including the other great cost associated with ordinary living: energy. The Government have taken action on this through their agreement with the suppliers, as we know, but again there is more that can be done. I am enormously heartened by not only the measures the Government have taken, but those in the Queen’s Speech that will be brought before the House in due course. The truth is that we face a great problem with energy security and the cost of energy as the developing countries across the world become richer. We need to reduce the reliance on fossil fuels that we have had for the last 50 years.
However, there is a related issue that affects constituencies such as mine and that of my hon. Friend Jake Berry, who spoke earlier: the impact of onshore wind power on rural areas. He may have 30 planning applications outstanding for wind turbines in his constituency; I suspect I have a similar number. The great problem with onshore wind, which the Government will have to grapple with, is that it seems universally to attract no support whatsoever from the communities where the siting of such wind farms is proposed. Some of these very large structures—including in my own constituency—over-top the spire of Lincoln cathedral to a considerable degree. These things are generally not wanted and are uneconomic, to the extent that the subsidy is removed.
The Government will have to look at this issue. Yes, man-made climate change is important, and this generation will have to grapple with it if we are going to live responsibly and hand a decent United Kingdom to our children. However, the problem the Government face—notwithstanding the Localism Act 2011 and everything that was done in the last Session—is that there is no national framework within which wind power is planned. I want to hear from Ministers that that will shift, either in this Session or in other Sessions during the remainder of this Parliament.
The third issue I want to talk about is the cost of food. Government and Opposition Members have spoken about the Government’s plans for a grocery adjudicator. Those who farm in my constituency have too often seen the power of the supermarkets bearing down to such a degree that they have effectively been unable to make a living. That is certainly true of dairy farmers in my constituency, many of whom went out of business long before I became the Member of Parliament. Many farmers in my constituency and other areas of the United Kingdom have been struggling for a number of years. That is why the grocery adjudicator is so important. It is important that we sustain our farming industry in this country, so that we can ensure not only a decent living for our farmers, but future food security. That form of food security will, ultimately, feed through the supply chain and ensure reasonable prices for our constituents. So that is another important aspect of this Queen’s Speech. It is not, as one Opposition Member said, a ragtag Queen’s Speech or a Queen’s Speech full of a ragtag of Bills; it is a Queen’s Speech full of measures that are important to take during this Session and this Parliament to try to rectify some of the damage done to our country between 1997 and 2010.
In today’s debate on the Queen’s Speech we are principally concerned with the cost of living, and I had wished to make contributions on other days on other of the topics that have been debated. I would not wish to find myself ruled out of order, so I shall confine myself to saying that the Government took some brave decisions in the previous Session on foreign policy, and the manner in which the United Kingdom has conducted itself overseas and sought to ensure that democracy is fostered and grows throughout not only the middle east, but the remainder of the world. However, other conflicts that do not find their way into the newspapers and in which civilians are dying are taking place all over the world today. One such conflict is occurring on the borders of South Sudan. I hope that the Minister answering for the Government in this debate will convey my concerns about that and about what is happening in the other areas where humanitarian disasters are occurring, which I know other Government Members and doubtless some Opposition Members share, to my right hon. Friend the Foreign Secretary, notwithstanding the fact that I failed to find my place in yesterday’s debate.
Order. May I remind the House that the wind-ups will begin at 6.30 pm? There is a 10-minute limit, but if hon. Members feel able to speak for less time, demonstrating great concern for their colleagues, that will be an additional benefit. However, it is not obligatory.
I promise to speak quickly, Mr Speaker, and I thank you for giving me the opportunity to take part in this debate and give a voice to my constituents, who are really struggling with the cost of living. Like other Labour Members, I wish to concentrate on the realities of how those on lower incomes are coping during these times.
Like other hon. Members, I found, in Newport, that the cost of living was the No. 1 issue on the doorstep during the local elections. The good voters of Newport had their say on the Government’s policies, voting out the Tory-Lib Dem coalition in Newport and electing a new Labour council. I feel very much that people are sending a message, and we must listen closely to them.
As other hon. Members have said, the Queen’s Speech undoubtedly contains some worthy ideas; many moons ago in this debate, my right hon. Friend Malcolm Wicks mentioned flexible parental leave, a Labour idea, and I wish to mention the attempt to speed up the process of adoption, which was a real issue for the couple I met last week in my constituency. They have waited a long time to adopt and have left me in no doubt as to the difficulties of that process, and this is well worth tackling.
However, the Queen’s Speech is about priorities, and last week the Government failed to offer a glimmer of hope to those families and constituents of mine who find themselves struggling to get by and just managing to keep their heads above water. These are families who are living in the real world, where careful budgeting is thrown out by the washing machine breaking down or by a child needing a new pair of shoes—by just a small unexpected bill. They were looking to this Government to help or at the very least understand, but instead the Queen’s Speech came on top of the measures announced in the autumn statement and in the Budget, particularly the cuts to tax credits, and has done nothing to help and offers little hope.
While food, energy and fuel prices and transport costs are up, wages are stagnant or cut and the Government are taking away tax credits. In April, 730 families in my constituency will have had their tax credits reduced unless they have been able to find extra hours to work. They will have lost around £3,800 a year, but they are the people who can least afford to lose that money. They are on incomes of about £16,000 or £17,000 a year and are those most impacted by the price rises because they spend a disproportionate part of their income on fuel and food. They are the people who are now turning up at my citizens advice bureau with three children saying that they are staying in private rented accommodation, have had their income reduced by £70 a week and are really struggling.
I have a lot of sympathy with what the hon. Lady is saying, but does she welcome the fact that the core measure in the Budget this year raised the very people she is talking about out of the taxation system altogether? The Budget and the Government’s strategy are aimed at helping the very people she is talking about.
I have a lot of respect for the hon. Gentleman but the Government are giving with one hand and taking away with the other. I just need to say
“VAT” and “tax credit cuts”. I am sure that the family I am talking about who presented themselves at the CAB will not recognise themselves as being better off in any way as a result of the measures he mentions.
As other hon. Members have mentioned, there was nothing in the Queen’s Speech about helping with the cost of child care. For many families, it is as much as the mortgage or housing costs, if not more. What are the Government doing for families in my constituency whose child care costs are rising by 4% to 6%? The Childcare Trust recently pointed out that those costs are increasing, particularly for the under-twos, whilst wages are stagnant and the child care element of the working tax credit has been cut. There is an urgent need for creative solutions in this area of policy, as child care is a massive part of the cost of living for many of my constituents.
Last week in my constituency office—I cannot be alone in experiencing this—I saw constituents who are having to wait months, not weeks, for appeals on tax credits. In the meantime they are struggling along. I see people with disabilities who have medical evidence backing up their situation having their benefits withdrawn. Half of them then appeal successfully, but they have to wait months for their appeal. I am even seeing parents who cannot afford to take up nursery places because of the cost of petrol. In my local CAB there were 1,900 extra benefits cases in the last financial year, and that figure is going to increase.
There are two food banks operating in my constituency, with the churches in Caldicot looking to set up and operate another one. In December alone the food banks distributed more than 3,000 parcels. I have to pay tribute to the food banks in my constituency run by the Raven House Trust and the King’s Church. They are a fantastic example of the good society and have heart-warming community support. However, the new people turning up at food banks are often those affected by benefits changes who have to be helped until an appeal is heard or who, because of low pay, just cannot make it to the end of the week.
Finally, into this picture of people struggling with the cost of living in Newport we throw the fact that the Government are raising the spectre of regional pay. There are 23,000 public sector workers in Newport, which has a lot of public sector workers precisely because of the previous Government’s policy of relocating jobs out of the south-east to increase employment in targeted areas, which was a fantastic thing to do. As a result, our employers include not only the local authority and the NHS but the Office for National Statistics, the Prison Service and the Intellectual Property Office, to name a few. Those jobs have been a boost to our city and a huge success story, but public sector workers in Newport have had a pay freeze for two years now and there will be a 1% cap for a further two years. They are also having to pay increased pension contributions. We have had 9,000 public sector job cuts in Wales and the TUC predicts a possible 39,000 more in the years to come.
Regional pay would be devastating for Newport and Wales. Last week, the Welsh Government published their response to the Treasury consultation on regional pay, and all the parties in the Welsh Assembly have expressed their opposition to it. I agree with the First Minister, Carwyn Jones, that the proposal is just
“code for cutting pay in Wales”.
The Welsh Government point to the lack of Treasury evidence that high public sector pay crowds out the private sector. We believe this is a back-door way to drive down public sector wages and will be bad news for Welsh workers and the Welsh economy.
Not only will struggling public sector workers see their pay driven down; there will be a devastating effect on the economy in Wales. In my area, the public and private sectors are inextricably linked—they are intertwined. Money taken from public sector workers means less spent in the local economy, which then hits the private sector.
In Newport, we saw how close that connection was when the Home Office tried to close our passport office. Closure of the office would have devastated our city centre, which relies on the throughput of its staff and customers to survive. The argument that holding down public sector wages will make private sector jobs magically appear is ill thought out.
In Wales, women make up 64% of the public sector work force and 87% of part-time workers. The previous Government made particular efforts on equal pay. Average pay might be higher, but I ask the Government not to roll back progress for women.
In March, like many hon. Members, I challenged Ministers about where the extra hours would come from for families who would lose their tax credits as a result of the Government’s proposals. We said then that the Government had demonstrated no understanding of the real difficulties faced by families. Nothing in the Queen’s Speech demonstrates that they have any more understanding than they did then. I urge them to do all they can to help people with the cost of living.
Order. Six hon. Members are still seeking to catch my eye and I am keen to accommodate all of them. It will be deliverable with an eight-minute limit on Back-Bench speeches, to apply with immediate effect, and some self-restraint as far as interventions are concerned.
Today, we heard that energy prices for the average household went up by 12% over the last 12 months, and by 34% over the last four years. That clearly has a tremendous impact on the cost of living and, as we have heard already, on the rise in fuel poverty.
Bills are not increasing because of green initiatives, although they contribute. The Daily Mail and others who have suggested that green and environmental initiatives add hundreds of pounds to energy bills are wrong. They are increasing mainly because of the non-transparent energy market and global fuel prices. The latter are not about to change, but we can do a lot about other issues.
Investing in green energy and the low-carbon economy is one route to lower fuel costs in the future, because of the disaggregation of fuel costs and world mineral energy prices. We can keep getting indigenously produced and stably priced fuel in the future. Investing in energy efficiency in homes and offices—using less energy more efficiently—is a no-brainer, as has been said. Lower energy usage will bring smaller bills. The best method for combating fuel poverty is to fuel-poverty-proof UK homes.
All that investment in energy and the low-carbon economy means jobs, energy security and the development of technologies where the UK can play a world role. In some instances, we already have a world lead that needs sustaining. I understand that the Foreign Secretary recently intervened on these matters in a letter to various Departments. He said:
“I am in no doubt that we must meet this challenge, not only to safeguard the sustainability of our planet and the security of our energy, but also to ensure we are at the front of the queue when it comes to the jobs and industries of the future.”
I agree with many of those sentiments, but it is remarkable that the right hon. Gentleman felt it necessary to write that letter if the Government are indeed the greenest ever, as has been suggested.
Current policy on the challenges is patchy; in practice the Government even fail to get to grips with the targets in their own legislation. It looks as though the carbon emissions reduction and community energy saving programmes will end ingloriously, seriously short of their targets. The targets and likely achievements and ambitions of their replacements—the green deal and the energy company obligation—are being downgraded before our eyes. The green deal is stuck on the question of interest rates.
On fuel poverty and hard-to-treat homes, the overall ambition is being bound by the imposition of levy caps. That is a peculiar element of forward Government policy, in that the response to the question of levies for environmental and green purposes is first to introduce them as a policy instrument in energy policy in the future, and then to disembowel their effectiveness by capping them. There is no plan B, and we can see the results of that process in the recent solar PV feed-in tariffs fiasco. Hence the serious binding of the energy companies’ obligation at £1.3 billion a year, even if successful, leads us only halfway towards those hard-to-treat homes’ insulation targets. If a switch is made towards dealing with fuel poverty, that target will be further downgraded and there will be no serious impact on long-term fuel poverty.
The levy theme is recurrent in future energy policies, as well as in present initiatives. We have a levy for the energy company obligation, a levy for smart meters, a levy for the warm home discount, a levy for feed-in tariffs and a levy for carbon reduction commitments. In the energy Bill, levy mechanisms are the engine oil of the measures to reform the energy market, although as I have commented previously, the Bill is remarkable in seeking to promote energy market reform without reforming the way the energy market works—that is, it continues with the loose regulation of non-transparent bilateral deals a long time ahead, without any change in the new energy Bill.
We will shortly see what the Bill consists of, but we know already that there will be a new levy, effectively for capacity payments, a levy for contracts for difference, a likely levy for a fund to underwrite the counterparties to the contract for difference, and indirectly at least, a levy fund to anticipate payments into Government when energy prices rise above the agreed strike price level. So a series of new levies will come in with new legislation, undoubtedly being capped by the Treasury in the process.
That seems to me not to be a sensible long-term form of green and low-carbon energy policy. It is a dead-end in policy development, and one that we need to get over if we are to meet the ambition, among other things, set out in the Foreign Secretary’s recent letter. We can start to do that, in the context of this Queen’s Speech, by redesigning the Bill that is coming up on energy market reform genuinely to reform the energy market, so that it works around a transparent pool which will drive prices down through full contract transparency and the ability of new and competitive entrants to come in on a level trading playing field.
There seem to be no demand-side measures in energy market reform, unless there are big surprises in the Bill when it emerges, to incentivise and support reductions in energy demand and the advance of energy efficiency in our energy market. Is it because DECC cannot negotiate further levies with the Treasury that there are no demand-side measures in electricity market reform as it stands? We should go further and look at the relationship of green taxes in the future, not the hypothecation of current taxes, to the advancement of the low-carbon economy.
Why should new green taxes that are supposed to tax bads and reward goods simply disappear into the Treasury, thereby underlining the often unjust accusation that they are not green taxes at all, and are merely stealth taxes? Should not those new forms of taxation, such as the carbon floor price and the auction of EU emissions trading scheme credits, be placed behind our move to a low-carbon economy and our support for low-carbon technologies within it, rather than acting as an arguable one-way tax that does not connect with the promotion of environmental goods in any way?
The energy bill revolution campaign suggests that at least some of these taxes should be applied to the promotion of energy efficiency, and in particular to home insulation. I applaud that idea. I would like to go further, to relate green taxes to our support for green initiatives, instead of the dreary round of levy imposition, followed by Treasury cap, followed by policy fiasco. This can be, among other things, mediated and given enormous added value by the green investment bank, the other environmental measure contained in the Queen’s Speech—a green bank hobbled at present by Treasury formulae so that it cannot be a bank and do what banks do as far as credit, bonds, lending and so on are concerned until 2017 at the earliest. Legislation to make it a real bank early is another important matter.
It is the lack of ambition for the green and low-carbon economy, and the difficulty in creating policy instruments to move the low-carbon economy forward, that stand out in the proposed measures. These are measures to which we should pay urgent attention as we debate the Queen’s Speech.
Mr Speaker, I am mindful of what you have said about time and self-restraint when it comes to interventions. I would like to focus my remarks on something that the Queen’s Speech seems to have flown past: the cost of living. Right hon. and hon. Members are no strangers to my concerns about the cost of living, particularly in Na h-Eileanan an Iar, an island constituency that feels the impact of UK Government changes harder than most. Fuel duty and VAT are exacerbated in remote, rural and island communities and businesses face ever-increasing costs for services. However, we do welcome the rural fuel derogation, which will hopefully lead to a b