– in the House of Commons at 2:04 pm on 11th January 2022.
I beg to move,
That this House
calls on the Government to cut the rate of VAT for household energy bills as soon as possible;
and makes provision as set out in this Order:
(1) On Tuesday
(b) any proceedings governed by this order may be proceeded with until any hour, though opposed, and shall not be interrupted;
(c) the Speaker may not propose the question on the previous question, and may not put any question under
(d) at 3.00 pm, the Speaker shall interrupt any business prior to the business governed by this order and call the Leader of the Opposition or another Member on his behalf to present a Bill concerning a reduction in Value Added Tax on energy of which notice of presentation has been given and immediately thereafter (notwithstanding the practice of the House) call a Member to move the motion that the Value Added Tax (Energy) Bill be now read a second time as if it were an order of the House;
(e) in respect of that Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.
(f) any proceedings interrupted or superseded by this order may be resumed or (as the case may be) entered upon and proceeded with after the moment of interruption.
(2) The provisions of paragraphs (3) to (18) of this order shall apply to and in connection with the proceedings on the Value Added Tax (Energy) Bill in the present Session of Parliament.
Timetable for the Bill on Tuesday
(3) (a) Proceedings on Second Reading and in Committee of the whole House, any proceedings on Consideration and proceedings up to and including Third Reading shall be taken at the sitting on Tuesday
(b) Proceedings on Second Reading shall be brought to a conclusion (so far as not previously concluded) at 5.00 pm.
(c) Proceedings in Committee of the whole House, any proceedings on Consideration and proceedings up to and including Third Reading shall be brought to a conclusion (so far as not previously concluded) at 7.00 pm.
Timing of proceedings and Questions to be put on Tuesday
(4) When the Bill has been read a second time:
(a) it shall, notwithstanding
(b) the Speaker shall leave the Chair whether or not notice of an Instruction has been given.
(5) (a) On the conclusion of proceedings in Committee of the whole House, the Chairman shall report the Bill to the House without putting any Question.
(b) If the Bill is reported with amendments, the House shall proceed to consider the Bill as amended without any Question being put.
(6) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph (3), the Chairman or Speaker shall forthwith put the following Questions in the same order as they would fall to be put if this Order did not apply—
(a) any Question already proposed from the Chair;
(b) any Question necessary to bring to a decision a Question so proposed;
(c) the Question on any amendment, new clause or new schedule selected by The Chairman or Speaker for separate decision;
(d) the Question on any amendment moved or Motion made by a designated Member;
(e) any other Question necessary for the disposal of the business to be concluded; and shall not put any other Questions, other than the Question on any motion described in paragraph (16) of this Order.
(7) On a Motion made for a new Clause or a new Schedule, the Chairman or Speaker shall put only the Question that the Clause or Schedule be added to the Bill.
Consideration of Lords Amendments and Messages on a subsequent day
(8) If any message on the Bill (other than a message that the House of Lords agrees with the Bill without amendment or agrees with any message from this House) is expected from the House of Lords on any future sitting day, the House shall not adjourn until that message has been received and any proceedings under paragraph (10) have been concluded.
(9) On any day on which such a message is received, if a designated Member indicates to the Speaker an intention to proceed to consider that message—
(b) proceedings on consideration of Lords Amendments or on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement; and any proceedings suspended under subparagraph (a) shall thereupon be resumed;
(c) the Speaker may not propose the question on the previous question, and may not put any question under
(10) If such a message is received on or before the commencement of public business on Tuesday
(11) Paragraphs (2) to (7) of
(a) any reference to a Minister of the Crown were a reference to a designated Member;
(b) after paragraph (4)(a) there is inserted—
“(aa) the question on any amendment or motion selected by the Speaker for separate decision;”.
(12) Paragraphs (2) to (5) of
(a) any reference to a Minister of the Crown were a reference to a designated Member;
(b) in paragraph (5), the words “subject to paragraphs (6) and (7)” were omitted.
(13) Paragraphs (2) to (6) of
(15) No Motion shall be made, except by a designated Member, to alter the order in which any proceedings on the Bill are taken, to recommit the Bill or to vary or supplement the provisions of this Order.
(16) (a) No dilatory Motion shall be made in relation to proceedings on the Bill to which this Order applies except by a designated Member.
(b) The Question on any such Motion shall be put forthwith.
(17) Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to the sittings of the House.
(18) No private business may be considered at any sitting to which the provisions of this order apply.
(19) In this Order, “a designated Member” means— (a) the Leader of the Opposition;
and (b) any other Member acting on behalf of the Leader of the Opposition.
(20) This order shall be a Standing Order of the House.
Prices are rising, bills are soaring, inflation is at its highest level for three decades and the growing cost-of-living crisis is leaving families across our country worse off. People deserve security, prosperity and respect, but what does the Chancellor give them? The highest tax burden in 70 years and no action on rising costs. The Chancellor’s national insurance rise is a tax on jobs, it is unfair and it is yet another broken promise.
The Conservatives are becoming the high-tax, high-inflation party because they have become a low-growth party. Today they can take a straightforward step to show they want to start breaking us out of that cycle. Voting for Labour’s motion would allow us to bring forward legislation to cut VAT on household energy bills from 5% to 0% for one year, and it would reserve parliamentary time on
The Labour party has spent the past six years campaigning against Brexit, which is the only reason we can do what Labour wants us to do today. Will the hon. Lady be honest with the House and say, from her heart of hearts, the measure she proposes would not be possible if we went back into the European Union?
We want to make Brexit work. We have this power, so let us use it now. A VAT cut is something practical that the Government could do right now, and it would be felt automatically in all our constituents’ bills. It would give security to people across our country, and I urge all hon. Members to back Labour’s motion today.
Does the hon. Lady accept, however, that cutting VAT on household energy bills would give a disproportionate tax break to those with the biggest houses and the deepest pockets?
In fact the poorest households spend a higher proportion of their income on gas and electricity bills, with pensioners spending the highest proportion, so the beneficiaries of this measure would be the people we know need that support more than anyone.
We have had a decade of dither and delay from the Conservatives on energy policy. There is indeed a global price spike for gas, but this Government have left Britain uniquely exposed. They have failed to insulate homes properly and they have failed to invest in the new nuclear or renewables that we need. They have failed on gas storage, leaving us reliant on Russia and Qatar for our gas supply. They have failed to regulate the market, with 27 companies now having gone bankrupt, which has left rising prices hitting millions.
Does the shadow Chancellor share my incredulity at the suggestion by Harriett Baldwin that, somehow, giving assistance to people in big houses is the wrong thing to do when the Conservatives are giving them £300,000 of levelling-up money to do up their driveways?
That is levelling up in action, filling in the potholes at the Lord’s manor.
On this side of the House we want to keep bills low, which is why Labour is bringing forward this vote to reduce VAT on home energy bills to 0% for a year. It is why we would spread out the price increase that is about to hit bill payers because of the collapsing energy firms, and it is why we would help the squeezed middle, those on lower incomes and pensioners by increasing and expanding the warm homes discount to 9 million people. Our plan would save households £200 from their bills, and up to £600 in total for those who need it most. We would pay for this with a windfall tax on North sea oil and gas profits. These companies have profited massively because of exploding prices, so much so that some in the industry have referred to soaring energy prices as a “cash machine” for producers and their shareholders.
I welcome the hon. Lady’s proposals but, although I welcome and support the green energy push as the only way forward, does she agree that the Government should, in these extreme circumstances, consider removing the green tax during the current fuel crisis to bring down prices and thereby prevent the £750 bill increases that each household will receive this year?
I welcome the hon. Gentleman’s concern for reducing gas and electricity bills for his constituents and all our constituents, and we are willing to consider anything that can be done to keep bills low this year. Our proposals would take £200 off everybody’s bill and £600 off the bills of those who need support the most. Labour thinks it is only right that cash from the companies that have done well from this price spike should go back to hard-pressed families, yet this Government seem to think differently. In fact, the Education Secretary said on Sunday that he thinks that oil and gas companies are “struggling”, even when they are expected to report “near record” incomes this year. Struggling—really? The people struggling in our country right now are those seeing their bills going up and up.
My constituent Gillian Fish from Billingham has seen her dual fuel bill go up from £39 to £94.28 a month, and she fears that, with just £33 left each month from her employment and support allowance after she has paid her essential bills, she will not be able to afford to leave her home. She does not smoke, she does not drink and she is ill enough to need a mobility scooter. I do not know what to say to her. Can my hon. Friend offer me some advice?
I would say to my hon. Friend’s constituent that, under Labour’s plans, £600 would be taken off her bills in April compared with what will happen without Government action. That protects my hon. Friend’s constituent and many millions of constituents like her who are struggling through no fault of their own right now.
During his Budget speech, the Chancellor said that the role of “Government should have limits.” I wonder if the Chancellor’s refusal to act so far is because he does not politically believe it is the role of Government to help alleviate soaring energy bills, or is it just that it is not a priority for him right now? The complete absence of action from Government speaks for itself. People deserve a Government who are on their side. Labour has a plan for action now to help with bills and to prevent the Government’s mistakes of the last decade from being repeated again. We want to give support and security to families now and to keep bills low for the future. That is why Labour will reduce our reliance on imported gas by accelerating home-grown renewables and new nuclear. Our plan to make sure that 19 million homes are warm and well insulated will save households £400 not just for one year, but each and every year on their bills. We will regulate the market better, with a pledge to never again let energy companies make promises to working families that they cannot keep.
I am grateful to the hon. Lady for giving way, but I am incredibly disappointed. She is making some very good points about the cost of living, but today’s motion is cynical. It has nothing to do with trying to save costs for consumers, and everything to do with Labour Members trying to make a point about taking control of the Order Paper, just as they tried to do during the Brexit debate, to try to undermine the Government. They know full well that the Government cannot possibly accept such a cynical tactic from Labour, so we will have to vote it down without any consideration whatsoever. She knows that. This is not about Labour trying to save costs for consumers; this is just about Labour playing politics, is it not?
“We are unable to get rid of VAT on fuel bills” because the EU prevents us from doing so, despite fuel poverty, but nothing prevents the right hon. Lady from doing the right thing today by voting with us this evening.
There is a straight choice in today’s vote. A cut in VAT will make a real difference. If someone is on a lower income, they will feel the benefit of a VAT cut on their bills because they spend more of their household budget on energy. If someone is a pensioner, they spend twice as much on energy and will be hit even harder by the rising energy price cap. A cut on VAT for home energy bills would be an immediate relief for all. I can understand why the Government do not want to back Opposition policies, as the right hon. Lady has said. However, they would in fact only be honouring the Prime Minister’s own commitments, because the Prime Minister was once the greatest advocate of the VAT cut on home energy bills. In 2016, he said:
“When we Vote Leave, we will be able to scrap this unfair and damaging tax.”
Not once, but three times he has backed a VAT cut on energy bills. Many on the Government Benches have since joined that call. The Chief Secretary went halfway there just last year when he said that VAT on electricity should be cut. But now that the Prime Minister has a chance to actually do something, and he and his Chancellor say no. The problem is that you cannot pay bills on broken promises.
Speaking of the Chancellor, yet again he is in hiding. He was not here yesterday when we debated fiscal responsibility, and he is not here today to debate the cost of living. Maybe he has gone back to California. Had he been here, I would have asked him not just about his broken promises on VAT; I would also have asked, given that he lives and works next door to No. 10 Downing Street, how long he has known about the party on
In just 80 days’ time, on
I am very grateful to the hon. Lady for giving way. She talks about levelling up, but it is Stoke-on-Trent’s Conservative-led council and this Conservative Government that have delivered £56 million from the levelling-up fund, £29 million from the transforming cities fund, and 550 brand-new Home Office jobs. The only Stoke that the hon. Lady knows is Stoke Newington, not Stoke-on-Trent.
Order. Let us just take the temperature down a little. I did not want to interrupt the hon. Lady when she was in full flow, but she must not call the hon. Gentleman “you”, because that might confuse him with me, and we would not want that.
Literally no one would want that, Madam Deputy Speaker. I look forward to seeing the leaflets in Stoke-on-Trent at the next election and seeing how the hon. Member will justify not voting to keep VAT down on gas and electricity bills for his constituents.
In April we will see a national insurance hike and a council tax hike, and gas and electricity bills are going up too. Together we can today force the action that would reduce those bills for all our constituents—for people across our country—and ease the burden of a cost-of-living crisis that is spiralling out of control.
The Prime Minister seems to think that a cost-of-living crisis is when he cannot find a friend to pay for the luxury refurbishment of his flat, but for working people in our country it means struggling to pay gas and electricity bills. When it comes to the energy crisis, as with so much else, the Conservatives have been asleep at the wheel, and now it is ordinary people who are picking up the bill for their failures.
There is a clear choice with today’s vote: MPs can either vote for this motion, allowing us to bring forward legislation to cut VAT on household energy bills from 5% to 0% for one year, or they can vote against it and block bringing in the practical, automatic and immediate support that would give security to all our constituents. People will soon be hit by yet more rising bills, rising prices and rising taxes. These are the everyday worries that politics must address. People want a Chancellor who understands this and has a practical plan to help. The Chancellor might not care about turning up the heating, but the very least he could do is turn up for this debate and take the action needed to help our constituents.
I inform the House that Mr Speaker has not selected the amendment in the name of the leader of the Liberal Democrats. A great many Members wish to take part in the debate, as is obvious from the number now on their feet, and there will therefore be an immediate time limit of four minutes on Back-Bench speeches, after we have heard from the Minister.
I am pleased to respond to this debate on behalf of the Government, although, as my right hon. Friend Dame Andrea Leadsom has said, the motion has clearly been put forward to seize control of parliamentary business, which we cannot and will not accept.
The Government recognise the pressure that people are facing in their household finances, including on their energy bills, and we have taken steps already to ease those pressures where and when we can, and will of course continue to look at other things we can do. The reality is that the higher inflation that we have seen is primarily due to global factors relating, to a large degree, to the fallout from the pandemic and a global spike in energy costs. This Government are never afraid to do what is right, or to take big decisions on behalf of this country, and the action we have taken during the pandemic is testament to that fact—£400 billion of direct support to the economy, protecting millions of jobs and livelihoods. We are also investing over £600 billion in gross public sector investment over this Parliament, investing in our health service, in our education system and in controlling our borders, bringing tangible improvements to the lives of millions.
Wholesale gas prices remain at very high levels. Some of the key drivers of the current price spike are the cold winter last year and wider international events that are driving demand. It is true, of course, that gas remains an important part of the wider energy transition that is under way. The current situation in the global gas market underscores the importance of diversifying our energy mix and accelerating the deployment of renewable energy in this country. The shift away from carbon-intensive generation is likely to help insulate the UK from global swings in the prices of commodities such as gas in the future, and indeed, precisely because we have invested in renewables and energy efficiency, UK demand for natural gas has fallen 26% since 2010, which has helped to reduce our exposure.
The Minister heard me speak earlier about Gillian Fish from my constituency, who has seen her dual-fuel bill jump from £39 to £94 a month, leaving her with just £33 for food and travel. What has he got to say to her? We have given the House our answer to the crisis; what is the Government’s answer to this crisis for Gillian?
Well, this is the Government who have introduced the £500 million household support fund, which is designed to help the most vulnerable households during the course of this winter. This is the Government who are making sure that we are delivering through our action on universal credit and on the national living wage, the rise in which will come into effect in April, and through the wider package of support, which I will come on to in a moment, including the warm home discount, cold weather payments—all the things that are designed to ensure that we give targeted support to people like Gillian who need it. I would remind the hon. Gentleman that Teesside is one of the best examples of levelling up that we have had anywhere in this country. One only needs to look at the response of the Teesside public to what is happening in our area to see the difference that a Conservative Government are making for our community.
Our record of investment in renewable energy is, of course, in great contrast to that of the last Labour Government. Labour’s 1997 manifesto specifically stated:
“We see no economic case for the building of any new nuclear power stations.”
The legacy of that is now seen today. While in government Labour failed to diversify our energy supply, with renewables making up just 7% of our energy mix, compared with 43% today.
While the up-front costs of certain technologies may be high in the early years of their deployment, they are falling over time. We have already seen the cost of offshore wind fall dramatically, together with that of solar panels and batteries. Our heat and buildings strategy set a clear ambition of working with industry to reduce heat pump costs by at least 25% to 50% by 2025, and to parity with gas boilers by 2030.
On the specifics of this debate, as I alluded to a moment ago, we have already introduced measures to support vulnerable households with the costs of energy, including increasing the warm home discount, winter fuel payments and cold weather payments, which together provided almost £2.5 billion in support to households last winter.
Can the Minister tell me how much the Government pay for the warm home discount?
Can the Minister tell me how much funding the Government put into the warm home discount that he is bragging about?
The share of our support is going up. We are also increasing the number of people who are likely to be in scope. We are consulting on increasing the number of people for whom that discount provides a benefit by 780,000. It will also likely rise in value from £140 to £160, so it is an expanding benefit.
Vulnerable households will also be supported with the cost of essentials through the £500 million household support fund. That funding has been made available to local councils across England to support their residents this winter. Importantly, in recognition of the fact that families should not have to bear all the VAT costs they incur to meet their needs, domestic fuels such as gas and electricity are already subject to a reduced VAT rate of 5%. In response to the Opposition’s calls to go further on VAT costs, I would note that that would mean our spending a significant amount on subsidising the fuel consumption of some of the wealthiest. When we look at our response to all these challenges, we need to ensure that we spend taxpayers’ money on the most effective possible interventions to support the households struggling the most with the cost of living.
The cost of living is not about any single bill or expense. That is why, at the autumn Budget, the Government put in place a host of measures to help families with the cost of living.
There has been a £67 council tax rise, a national insurance rise of £250 and an income tax rise of £150—those are averages, for the average person. How on earth can the Chief Secretary say that his Government have put measures in place to help the ordinary person in this cost-of-living crisis when he will be clobbering them with, on average, a £1,405 bill? What they are doing is disgraceful.
That was a typically temperate intervention from the hon. Gentleman. To make sure that work pays, we have cut the universal credit taper rate by 8p, from 63p to 55p. That is an authentically Conservative response to make sure that we target our interventions to help people. We are increasing the work allowance by £500. Taken together, that is a tax cut for 2 million low-income families, which is worth £2.2 billion, or an extra £1,000 a year in their pocket. It was a Conservative Government who introduced the national living wage in 2016, and it will be a Conservative Government who increase the national living wage in April by 6.6% to £9.50 an hour for workers aged 23 and over.
Why did the Government scrap the green homes grant? It would have cut £400 from the average household bill. Will the Government be returning it?
It is vital that we make sure that we support households to make the changes to their homes that are needed to improve their energy efficiency. That is precisely why we have £471 million of spending, to date, on the social housing decarbonisation fund, which is worth £121 million, and the sustainable warmth programme, which is worth £350 million. Those are estimated to save households an average of £350 to £450 a year on their energy bills. In addition, the Government have consulted on expanding the energy company obligation to £1 billion a year of improvements for fuel-poor households. Those are precisely the kinds of things that we need to do to help with bills and deliver the net zero transition.
I am interested in the Government’s estimate of the cost of transitioning a typical three-bed semi to a zero-carbon home using that fund. How much would it cost to put in an air source heat pump and all the necessary insulation to make it effective in the way that the Chief Secretary described?
The hon. Gentleman is right to say that we need to be moving towards technologies such as air source heat pumps. That is why our heat and buildings strategy sets out a plan to bring parity with gas boilers by 2030. That is precisely what we want to see, because those costs need to come down, and that is what we are enabling through our net zero strategy.
The Government are focused on protecting jobs, incomes and livelihoods through, by common assent, one of the most challenging periods in our lifetimes. Nineteen months of furlough protected almost 12 million jobs across the UK. The self-employment income support scheme, worth £28 billion, benefited nearly 3 million people. We significantly increased the generosity of the local housing allowance for housing benefit, and more than 1.5 million households are benefiting from an additional £600 a year. For those who need extra help with their housing costs, we provided £140 million for discretionary housing payments. Four million families are getting help with their council tax bills. We have provided nearly £5 billion for schools catch-up and we are rewarding our valued NHS and care workers, with more than 1 million NHS workers receiving a 3% pay rise in a year of otherwise wider pay restraint.
It has been a goal of successive Conservative Governments since 2010 to keep down the cost of living for working families. I mentioned the increase in the national living wage from April, which represents an increase of more than £1,000 in the annual earnings of a full-time worker on the national living wage. That sort of thing matters in places such as Stoke. We are committed to going further so that the national living wage reaches two thirds of median earnings for those over 21 by 2024, providing economic conditions allow.
The Chief Secretary seems to be suggesting that everything is going fine, but the reality on the ground for many families is very different. The Trussell Trust had to give out nearly 1 million food bank parcels between April and September last year. That is an 11% increase on the same period in 2019. Why is that the case if everything that he is doing is working just fine?
I do not think anyone is saying that we are going through an easy time. We have just emerged from the teeth of an international pandemic, which is still causing major challenges. We have now got to a situation where, despite all the dire predictions, we are back at almost pre-crisis levels of economic activity, and unemployment is fully 2 million fewer than was forecast at the height of the crisis in 2020. That is thanks to the co-ordinated policy decisions of this Government and it is certainly why this situation has not been much, much worse in millions of homes across the country.
Does the Minister agree that it is really interesting to hear what is happening from the Opposition today? If we had followed what they wanted to do, we would still be in lockdown and would have millions more people out of work or not working, and incomes reduced because there would still be people sat at home not working. It is the Government who have taken the bold decisions necessary to get the country moving again, opposed at every step of the way by the Opposition.
My hon. Friend is absolutely right. I think one of the Prime Minister’s bravest decisions was in July last year, when he took the decision to move to step 4 of the roadmap. Keir Starmer was all over the airwaves saying that that would lead to disaster, and of course it led to us being able to unlock our society and restore economic activity and our social life, which is obviously so important to people’s mental and physical health. These changes would not have been made without that very clear example of leadership, in the face of, frankly, a complete absence of it from the Opposition.
The activity that we have undertaken includes doubling free childcare, worth around £5,000 per child per year, introducing tax-free childcare, and helping working parents with 20% of childcare costs up to £10,000. These are practical interventions of the kind that make a real difference to working homes. They are the sort of thing that bears down on the cost of living and makes sure that many people are weathering the storm.
As a Government, we want to help people into work and to gain the skills they need. We are investing £900 million in each year of the spending review on work coaches, who will provide effective support to help jobseekers on universal credit move into work and, for the first time ever, help people progress once they are in work. We have also invested over £200 million in the JETS—job entry targeted support—scheme, for those unemployed for over three months. Applicants are supported with CV writing, interview skills and job search advice, worth £1,000 per person. We also know that young people were disproportionately affected by the pandemic, which is why we invested in kickstart to fully fund and create hundreds of thousands of jobs for young people. So far, over 112,000 young people have started a kickstart job. To help those affected by long-term unemployment, we launched the restart scheme, which provides up to 12 months of intensive, tailored employment support.
We are giving employers £3,000 for every apprentice of any age they hire before the 31st of this month. That is a significant 35% wage subsidy for an apprentice on the national living wage and is in addition to the Government paying 95% of the training costs for smaller employers, who do not pay the apprenticeship levy. These are the kinds of things that this Conservative Government are doing to boost work and jobs and keep the economy moving forward, and our plan for jobs is working spectacularly.
The Minister seems to be talking about everything except the crisis facing families on the lowest incomes as a result of rising energy bills. Will he address that issue and recognise that families in my constituency will face choosing between heating and eating, as well as unmanageable debt that will break their budgets? Does he recognise that the sort of action needed—earlier he mentioned the warm home discount, for example—needs to go far further to totally offset the additional bills if those families are not to face untold misery?
I do not think that focusing on a jobs-led recovery is the wrong thing to do. Indeed, that is precisely what is vital to the life chances of families up and down the country. I have already set out all the measures that we are undertaking, from the warm home discount to winter fuel payments and our wider action on energy costs, which go to the heart of our programme to ensure that the cost of living remains affordable. However, it simply cannot be the case, and I do not think that even those on the shadow Front Bench are suggesting this, that we can completely offset fluctuations in the market price of energy. All we can do is provide families with targeted support, and that is what we are doing, openly, honestly and I think effectively, this winter.
We also need to remember the overriding context of this whole debate, which goes back to the issue we were debating yesterday evening: fiscal responsibility. That needs to be factored into this debate as well. When it comes to managing the economy throughout this challenging period, we have acted quickly, effectively and responsibly. For all that this Government have done to support families and businesses over the last couple of years—I remind the House again: £400 billion-worth of support—we cannot, and will not, abdicate our fiscal responsibilities. Our level of debt means that we are vulnerable to shocks, including changes to interest rates and inflation. A sustained one percentage point rise in interest rates and inflation would cost over £22 billion by 2026-27. As things stand, inflation is expected to average 4% this year and 2.6% next year. The good news is that we are on course for a return to target by the end of 2023, but, as I told the House yesterday evening, the fact that we have faced two “once in a generation” shocks in just over a decade highlights starkly why we must have the buffers to provide support when it is needed most, and why we must act to rebuild those buffers over the years ahead.
No one in this Government is under any illusion about the challenges that families are facing with their household finances, and we will of course continue to look closely at all the options that exist. The Business Secretary has been meeting industry representatives regularly, and we in the Government are committed to doing the best job we can to protect consumers. We have acted, not just on energy bills but in dozens of ways, to support working families. Our record on handling the economy during the pandemic and, indeed, over the last decade of recovery speaks to our commitment to see right by the British people, and that, I assure the House, is something that we will continue to do.
It is incredible, given the current cost-of-living crisis, that the UK Government seem to be incapable of doing anything different. The Chief Secretary reeled off a list of measures that the Government were already taking, but there was nothing new in his speech. There was nothing about what the Government are doing to tackle the current crisis, and they need to think again.
We have already seen the broken promises about lower energy bills post Brexit. Now all the Tory Back Benchers who campaigned for lower VAT on energy bills are queuing up to back the Government not to introduce a VAT holiday, and that makes no sense either. The fact is that without Government action, a real crisis looms. It is not credible for the energy cap to rise to approximately £2,000 a year in April. National Energy Action estimates that there are already 4.5 million fuel-poor households in the UK, which is a disgrace, and if the cap rises, as is predicted, the number will rise to 6 million. The Government really need to think about that, and take action to prevent it.
It is also worth looking at how the cap operates at present. It does provide protection for the vulnerable, but not enough protection. A constituent of mine who is on the standard variable tariff is struggling to pay her bills. Because the cap is based on average energy units, she is already paying £200 more per annum than the predicted cap. I urge the Government and Ofgem to look at how the cap works in reality.
As has been said, raising the cap to the extent that the average user will pay £600 more per annum would be so damaging that it cannot happen. I therefore support the calls for Government loans to be used to help energy companies to smooth over the transitional costs over, say, 10 years. I certainly support further direct intervention to mitigate any fuel rises. On that basis, I am happy to support the VAT holiday proposed in the Labour motion, although the predicted £89 annual saving will be wiped out if the Government do not take action to mitigate the cap.
I am glad that the hon. Member appreciates one of the benefits of Brexit, namely that we now have the option of reducing VAT—and I do not understand why the Government will not do that—but does he recognise that as a result of the flawed deal in Northern Ireland and the fact that the Northern Ireland protocol leaves Northern Ireland under the EU VAT regime, any reduction in VAT could not apply to consumers in Northern Ireland, because EU VAT rules still apply there?
I was not aware of that, but it appears from recent figures relating to the impact of Brexit that the protocol is protecting Northern Ireland, and it is not taking the same hit to its economy as the likes of Scotland. It is swings and roundabouts. The Northern Ireland economy is doing much better than it would have as part of Brexit Britain.
I have said that I certainly support the VAT holiday, but I am not sure that some of the rest of Labour’s £6.6 billion package and rhetoric has been completely thought through. The real windfall tax should be levied on the Treasury. As our energy bills have increased, so have VAT returns to the Treasury; as fuel prices have increased, the Treasury has raked in more money in fuel duty and VAT; and as for the North sea, it was confirmed in the Red Book for the November Budget that this financial year the Treasury will receive an extra £1.1 billion in oil and gas revenues compared with the March 2021 prediction, and the Treasury will receive an extra £2 billion from oil and gas revenues in this coming year and £6 billion in total over the Parliament. The Treasury should release the additional windfall revenue it has received.
Although to impose a windfall tax directly on oil and gas companies is an easy political soundbite, it has potential implications, so what discussions has Labour had with the industry? What assessment has Labour made of the levels of investment—which could be part of the decarbonisation agenda—that might be clawed back because of such a tax? The harsh reality is that every previous windfall tax on the oil and gas industry has led to a drop in capital investment.
In our transition to net zero, we do need to get off our dependence on oil and gas, but the reality is that carbon capture and storage is part of the pathway to net zero. What assessment has Labour made of the potential impact on such projects, and particularly on the Scottish carbon capture cluster, which has already been sacrificed to reserve status by the Tory Government?
On low-carbon energy, if the hon. Gentleman wants us to get on a more sustainable footing where we do not rely on oil and gas as much, why did he, his SNP colleagues, the Lib Dems and even some Labour MPs oppose the Nuclear Energy (Financing) Bill last night?
Let me come to the next part of my speech, which will address that point. I am absolutely incredulous that, as the hon. Gentleman pointed out, Labour MPs were whipped to vote for that Bill, which will add billions of pounds to electricity bills. The Bill’s impact assessment, published by Ministers, shows an upper estimate of £63 billion for the capital costs and financing of a new nuclear power station. That is to be paid for by bill payers. That is not low cost: it is a burden of something like £40 billion to £60 billion added to our energy bills—and Labour voted for it. How can Labour MPs talk about lowering energy bills when they just voted to add £50 billion to our bills as bill payers? It is nonsensical and they need to rethink their nuclear policy rapidly.
On nuclear, the Chancellor allocated £1.7 billion for the development of Sizewell C to the final investment stage. That sum of money could pay for the Coire Glas pumped hydro storage scheme in Scotland, as well as the Cruachan dam extension. Those projects could be delivered quicker than Sizewell, they do not come with a £50 billion capital finance burden, and further investment in pumped hydro storage would save £700 million per year in operational costs compared with a reliance on nuclear.
Greater imagination is required in energy policy. The policies from both major UK parties sum up Scotland’s place in the Union: the Scottish CCS project has been relegated to reserve status; Scottish bill payers are having to pay for a new nuclear power station; and we are stuck paying the highest grid charges in Europe, which not only disadvantages Scottish renewable projects but means higher bills for everybody across Great Britain. Meanwhile, the Scottish oil and gas industry is asked to pay to mitigate high fuel bills throughout the UK. What about demanding that at least some of the additional oil and gas revenues are released to match fund the Scottish Government’s £500 just transition fund for the north-east of Scotland?
The Business Minister said it was a “mistake” for the UK Government to withdraw support for the UK’s gas storage site in 2017. That site provided 70% of UK storage capacity and helped to protect consumers from price shocks; we now have some of the lowest gas-storage capacity in Europe. Does my hon. Friend agree that the Minister should have acknowledged that and apologised when he was on his feet?
I agree wholeheartedly. It is interesting that the Government are now revisiting the Rough gas-storage scheme. Yes, there has been a global impact on wholesale prices and prices would have risen, but it is clear that storage facilities would help to provide a buffer for the UK in times of need.
If we look at the history of North sea exploration, Scotland has paid £375 billion of oil and gas revenues to the Exchequer, which has been squandered by successive UK Governments. For all these years, the SNP has called for an oil and gas fund to be set up, which could have been utilised in this time of need. Norway did not start its oil fund until 1990, yet it is already the largest sovereign wealth fund in the world. It grew by £90 billion during 2020—one of the covid years—and now has assets worth well over $1 trillion. That is the kind of long-term strategic planning that has been missing in the UK but that would create a buffer when required.
I may have missed it, but an element of clarity may be needed in the SNP’s position. The hon. Gentleman said that the SNP will support the reduction in VAT. Is it right that the SNP’s ambition is to be an independent country in the EU, under which his ambition to have 0% VAT on fuel would be completely scuppered and dictated to by other people in Brussels? Is that the SNP’s position?
I will make it clear for the hon. Gentleman: yes, our ambition is to be an independent country and yes, we want to join the EU. The vote today is about a temporary VAT holiday. The argument could be made that that could not happen under the EU, but energy policy would be reserved to Scotland so we would have much fairer policies. We would be able to do more and make other decisions, which would not rely on us having to back a 5% VAT holiday in Westminster. We would be able to do a lot more as an independent country, even in the EU.
I am interested in the hon. Gentleman’s point about an independent Scotland being able to make its own decisions. Within their devolved responsibilities, the SNP Scottish Government announced the £500 million north-east just transition fund. Is he aware of any announcement yet from the Scottish Government of precisely what the money will be spent on?
That will come out. There have been some initial announcements. I presume from that intervention that the hon. Gentleman does not welcome the development of a £500 million fund that will serve his area and that he does not support any calls for the UK Government to add to that. Does he not welcome it?
I take that to mean that the hon. Gentleman does not welcome it.
I welcome any funding in support of the energy transition. Much of it comes from the oil and gas companies themselves. In that respect, I welcome the stance of the hon. Gentleman and the SNP against Labour’s calls for a windfall tax on the oil and gas industry. I believe that is what he said, so I welcome that. The specific question that I am asking of the Scottish Government via SNP Members of this House is what precisely that nice-sounding £500 million will be spent on. It is not that I do not welcome it.
I am not responsible for the administration of the £500 million fund, but the hon. Gentleman should just be grateful that it is there. It is for a 10-year investment period, so clearly it is for long-term planning.
I am confused about where the hon. Member stands on energy policy for Scotland now. He wants to have an independent country that is a member of the EU and subject to EU VAT rules, which unfortunately will still apply in Northern Ireland. I also understand that the Scottish National party does not actually want to exploit the oil and gas that lie around our shores, so how does it hope to reduce the cost of energy for consumers in Scotland and ensure the supply to them?
The right hon. Gentleman seems easily confused, but of course he is a climate change sceptic. If Scotland was in charge of its own energy policy, there would be more investment in renewables and greater hydrogen development, and we would not be paying for nuclear power. I have already said that the nuclear power stations will put up to £63 billion on to our bills; that is the estimate. We would have a much better energy policy that we could implement as an independent country and we would not have the highest grid charges in the whole of Europe.
I am looking on with a degree of bemusement—Craig Mackinlay is engaging in a debate about Scottish independence. Does my hon. Friend welcome the fact that the Government are finally engaging in the debate about Scottish independence? Perhaps the hon. Member for South Thanet will come up and campaign in the coming referendum.
I welcome that intervention. It is good that people recognise that Scottish independence through a referendum is going to happen, and we look forward to a continued debate about the nuances of what will happen in an independent Scotland that has control of its own policies and can choose to go back into Europe.
As I said, we need to understand that the warm home discount is actually paid for by other bill payers. I am uncomfortable with the fact—the Chief Secretary did this earlier—that the Tories brag about the warm home discount as if it is a Government-funded measure. The reality is that, as a stand-alone tax measure, the warm home discount is actually regressive, because the people who can least afford it pay the same levy as those that can afford to pay more. So while the warm home discount does help people that require help, it is actually a regressive tax measure. If Labour’s proposals were implemented in the way the scheme operates just now, that would add £200 per annum to the bills of those who are left paying for it. It is inferred that Labour’s proposals would be funded from £3.5 billion of additional Treasury receipts, but that needs to be made clear. We also need to make sure that the Tories are not allowed to do a fudge when they raise the warm home discount, but by making other bill payers pay for it, giving them a free pass to pretend they are doing something. Similarly, there has been a call for policy levies to be removed from our electricity bills. I have argued this for a while because state levies on bills are also regressive, so we need to come to a fairer taxation measure to pay for our transition to net zero.
I have another concern about current Labour rhetoric about tax rises. It is as if all tax rises are bad. That plays to the Tories’ narrative and encourages them to make tax cuts ahead of the next election. So yes, the national insurance rise is an unfair tax on workers, and it is correct to highlight that, but we need to debate fair taxation. The Chancellor shied away from setting capital gains tax at the same rate as income tax. Had he done that, it would negate the need for a national insurance rise.
In Scotland the Scottish Government have shown that this can be done differently with a low starting rate of income tax and incremental increases across the bandings so that those can afford to pay a bit more do so. This is a model that Labour should be espousing. It should be demanding that the UK Government match our £20 per week child payment and reinstate the £20 per week universal credit cut.
It has been highlighted that tax burdens are the highest in peacetime since world war two. If this were to create a fairer society as part of a genuine levelling-up agenda, it could be managed. But we have right now in the UK the worst levels of poverty and inequality in north-west Europe and the highest levels of in-work poverty this century. The UK has one of the worst pensions in the world, made worse by the Government’s cap on the triple lock, so the Chancellor is balancing the books on already hard-hit pensioners struggling to heat their homes. How is it credible to reduce pensioners’ income by over £500 a year on what it otherwise would have been this year? The UK has one of the lowest sick pay rates in the OECD with the current rate of £96 per week. That is wholly inadequate, especially if people still need support in self-isolating.
Small independent countries continue to demonstrate that they can create a fairer, more equitable society. It is time Scotland had these powers rather than having to continually tinker around the edges and have decisions imposed on us. The debate has started today. I look forward to continuing the debate in that form.
We now have a time limit of four minutes on Back-Bench speeches, beginning with Gary Sambrook.
I have never been called first, Madam Deputy Speaker, so I will have to buy you a cup of tea later to say thank you.
We saw at the beginning of this debate what it is really about. It is not about people’s energy bills or VAT. We saw the mask slip from the shadow Chancellor as she got quite angry with my hon. Friend Jonathan Gullis and the former Leader of the House, my right hon. Friend Dame Andrea Leadsom. It is about cynical moves to try to control the Order Paper in this House—to try to rehash the old tricks of the Brexit Parliament to paralyse this place for cynical political gain. That did not work in the previous Parliament. When Labour Members start behaving like adults in this place, they may actually try to win general elections, when they can have control of the Order Paper.
Today’s debate is very important, because we can all see that there is a problem coming down the line with the cost of living. That is why this Government have been taking practical action over the past couple of months, after the past year or so, to make sure that the most vulnerable people in this country are shielded from the effects of inflation and the cost of living. I see it in my constituency and in my city of Birmingham: the £500 million household support fund that the Government have put together gives £12.7 million to Birmingham to help the most vulnerable people with clothing bills, food and utilities. The fund will help 3 million to 4 million people across the country, including 75,000 to 80,000 people in Birmingham, with support targeted at the people who need it most.
The way we will help people across the country is with jobs and wages. The Government’s 6.5% increase to the national living wage will put an average of £1,000 in the pockets of people earning that wage across the country, many of whom are constituents of mine in Birmingham, Northfield. The freeze in fuel duty is saving people money at the pumps every single day as they fill up their car to go out to work; they have each saved £1,900 since 2010. People in Birmingham know only too well that when the Labour party is in control of government, as it is in Birmingham, the motorist is always the first person it comes after and tries to squeeze.
As I say, it is about jobs. I had a letter yesterday from the Minister for employment—the Under-Secretary of State for Work and Pensions, my hon. Friend Mims Davies—telling me that a new jobcentre will open in Kings Norton in my constituency, with a huge expansion in the work coach scheme to ensure that people are in work and getting the support they need with the protection of a pay packet. That jobcentre will be next to the Three Estates, where there are lots of people who have been left behind for far too long; it will help them to get into the workplace.
It is right that we should target our approach at the people who are most vulnerable up and down the country in constituencies such as mine. I am pleased to support the Government today in making sure that we do not pander to the cynicism of the Opposition, who are trying to take control of the Order Paper and play silly political games while this Government are doing the serious job of government, delivering for people up and down the country and protecting the most vulnerable in our communities.
Far too many people of my age lived through the harsh cold winters of the Thatcher Government. That was to be expected in the Tory Britain of the ’80s and ’90s, but several decades later it is no better: children are having to grow up facing exactly the same hardship. How did we get here? The Office for National Statistics reports that two thirds of people say that their cost of living has increased in recent weeks. Come and ask people in Tooting market or on Balham High Road: they will say that the choice is between heating and eating—between freezing and going into debt.
A single mother got in touch recently. She is a housing association tenant, but because of the increase in gas prices, her property’s managing agent is demanding more than £1,300 up front for the year; otherwise she will be disconnected in February. She has had to tell the managing agent that she can afford only £40 a month. This is my question to the Minister: what should I tell that single mum? How will her children sleep at night?
I know what it is to be cold in my own home. My brother, my mum and I gathered around the only heater we had for moments of relief from that gnawing, biting cold that saps energy and robs concentration. I know how hard it is on children to do homework when they are freezing, or to hear their mum awake at night worrying about how to keep them safe and warm. With the perpetual fear of debt and disconnection in the background, every moment of every day is consumed by uncertainty. A home should be a place of warmth and security; the Conservative cost-of-living crisis has filled millions of people’s homes with anxiety and cold.As an NHS doctor in A&E, I and my colleagues see older people and young children coming into hospital with burns on their skin caused by electric heaters and painful scalds from burst old hot water bottles. As people cannot afford to heat their homes properly, they turn on electric heaters for a little warmth—just as I did when I was growing up—and more of them are getting injured and ending up in A&E. What a terrible indictment of this Government’s failed energy policy.
What should the Government be doing? Well, Labour has a plan: removing VAT on domestic energy bills, expanding the warm homes discount for all working people on universal credit, and reducing the level of the price cap by £94 for a typical customer. [Interruption.] It is interesting hearing the opposition chuntering from a sedentary position.
No, you are my opposition.
Regardless, my opposition are chuntering from a sedentary position, proving once again how absolutely out of touch they are with ordinary working people, who are feeling the cold, and who are going to A&E with their toddlers with third degree burns.
The Government have an opportunity today to do something about this. Why do they not act? They should stop playing games and vote with us. Why do they not do something to help the families huddled around heaters, the pensioners shivering under blankets and the children growing up in the cold, and why do they not care?
I rise to make a plea to Members from all parties that, regardless of the emotions that are raised in this debate, we maintain our united commitment to decarbonisation and energy transition, because, ultimately, net zero was part of all of our manifestos. I worry about having debates such as this, because they tend to become the start of a slippery slope. The shadow Front-Bench spokesperson, Rachel Reeves, mentioned that this was going to be a temporary VAT cut. Rarely are tax rises or tax cuts temporary. We need a responsible debate about the form that taxation takes, particularly in a post-covid era where Government spending has, regrettably, been at record levels. The fact is that the VAT tax base raises about £134 billion a year—6% of GDP. If we get into the situation of whataboutery where we suddenly say that we will take VAT off here versus VAT off there, it is very difficult to argue a case for maintaining a tax that is actually one of the most sustainable forms of taxation in terms of raising revenue—revenue that is spent on the NHS, on welfare and on the vulnerable constituents mentioned by Dr Allin-Khan in her powerful speech just now.
I want to make the case that the best long-term form of ensuring that we reduce energy bills is investment in renewable forms of energy and in insulation. We need to take a long-term view to achieve a long-term gain, as opposed to this short-term perspective of taking a one-year windfall tax as a revenue-raising exercise. It is not a sustainable mechanism by which to deliver a systems-based approach to net zero. We need everyone, not just in this Chamber, but in the country, pulling together to be able to deliver on net zero. Making certain organisations pariahs will not turn the dial back.
While the right hon. Gentleman is eulogising about the target of net zero, does he not recognise that the large size of the bills that he says consumers have difficulty paying is a result of the green levies, which are stealthily placed on the consumer and which have reached 26% of what people pay every time they have an energy bill?
That is what I mean by the slippery slope. It is the slippery slope of suddenly saying, “Well, what about reducing VAT? Let’s turn to the green levies—they are actually making up 12% of total cost —which are one of the best ways in which we can enact levelling up and regeneration in former coalfield communities and post-industrial landscapes by ensuring that we have future green investment, such as in Net Zero Teesside or on the Humber where we have seen a revolution in offshore wind. If we want to debate how we deliver on energy prices, it must be by looking at the energy sources for the future, and not at the energy sources of the past. The reason we have an energy cost crisis at the moment is that wholesale gas prices have risen by 400%.
The hon. Gentleman talks a lot about sustainability. He is quite right. That has been the big question about energy for as long as I can remember. On that basis, was it a wise decision to close the biggest gas storage facility in the country, which this Government did?
No, it was not the correct decision to close that gas storage facility. We have the lowest gas storage in the whole of Europe—I think it is about 4% or a couple of days’ worth of gas storage. That historic decision demonstrates why we need to take a long-term perspective, rather than short-term political wins.
We need to act like a Government, which the Opposition are clearly not prepared to do at the moment, and that is to think that difficult decisions need to be taken and need to be taken now, in order for us to think how we not only decarbonise, but reduce our emissions by 70% by 2030, as part of our nationally determined contribution. It beggars belief, to quote Alan Brown, that countries attending COP26 in Glasgow will turn to us, thinking, “Actually, an Opposition party was calling for a reduction in taxation on gas and fossil fuels as a result of reducing VAT.” I do not think that that is a responsible position for the Opposition to take.
Instead, when looking at raising taxation, we need to think about how we responsibly introduce a carbon tax, in the same way as we introduced a carbon tax on coal back in 2012—£18 a tonne on CO2 ended up quite quickly reducing carbon emissions from coal from 140 million tonnes a year to 80 million tonnes a year, and they have dropped ever since. We could do the same with other forms of fossil fuels if we worked responsibly and together, just as we did when we introduced the Climate Change Act 2008 or net zero. We can work together to come up with a consensus that will outlive any one Government or any one party, because that is what we need to do if we are going to be able to deliver net zero by 2050.
I am grateful for the opportunity to speak in this important debate on an issue that is already causing so much distress to my constituents.
The covid-19 pandemic has exacerbated the stark inequalities in our society. The poorest families are the most likely to feel the greatest impact, whether that is in seeing their incomes shrink while on furlough or struggling with increased data bills to ensure that their children can continue learning. Those families were already suffering, even before the pandemic, from the effects of a decade of austerity, insecure work and stagnant wage growth.
Those same families are now being hit hardest by the cost-of-living crisis. That crisis calls for competent leadership, but the Government have failed to step up to the challenge. In the face of soaring inflation and families struggling to put food on the table, what did the Government do? They took £20 a week away from those who needed it most. It comes as no surprise that the Government have turned their heads and looked the other way while the UK hurtles towards an eye-watering 50% rise in energy prices in April.
Only a few months ago, I stood here and raised the impact that the cruel cut to universal credit and the tax rise are having on my constituents in Sheffield, Brightside and Hillsborough, but the Government refused to listen. Now we stand in the midst of yet another hammer blow to working families as energy costs soar.
It is not just Labour that sees the devastating impacts that Government policies are having on working families; economists have warned in the Financial Times that inflation will outpace wages this year and that, at the same time, high energy costs and tax rises will hit those on the lowest incomes the hardest. Covid has of course affected all nations, but decisions by this Government have meant that we are on track to see living standards lag behind those of our European neighbours.
Many constituents have contacted me because they simply do not know what they will do if their energy bills rise by those monumental amounts. On their behalf, I ask the Government a simple question: how are families who are on the breadline, already making choices between heating and eating, supposed to find an extra £600 a year to pay their bills? How are they supposed to put food on the table when the cost of their weekly shop continues to rocket upwards?
Those are the questions that so many families are now having to ask themselves. It should bring shame to us all that in 2022, people are still making choices that we should only expect in a Charles Dickens novel. That is the impact of this Government’s policies on my constituents.
It is not too late to avert that crisis, however. The Government can and must step in to protect people from the energy price rise in April. Labour’s fully costed and common-sense proposals would be a crucial step to support my constituents on lower and middle incomes. By scrapping VAT on domestic energy and expanding the warm home discount, many households in my constituency would see their energy prices rise by only £5 a month in April, instead of more than £50 a month.
The Government talk a lot about levelling up, but that is just an empty phrase without the policies to back it up. My constituents need Ministers to step up to the plate and stop burying their heads in the sand in the midst of this cost of living crisis. I urge the Government and Conservative Members to act now before even more families are plunged into never-ending poverty.
It is a pleasure to be called in this debate on household energy. I have a number of problems with today’s motion, which is not a rational debate on how to manage the spiralling cost of living while recovering from the pandemic and meeting our climate change goals. This motion is designed to do nothing more than construct a misleading trope for social media. The Opposition are bringing it forward this afternoon in an attempt to wrestle control of the Order Paper, which they have no business doing, in order to deliver a blunt instrument that will not benefit those on low incomes. They ignore their own role in the spiralling cost of living in Wales.
I notice that what is missing from the motion is anything about the rural cost of living—something that I am desperately concerned about. We understand that we pay a high price for the beautiful landscape in which we live, but that price is becoming unreasonable. Looking at energy, around 12.5% of those living in rural areas across the country are in fuel poverty. The Energy Saving Trust estimates that this is slightly higher than in urban areas. We invariably have antiquated heating systems and poor insulation, and around two thirds of my constituents live off the gas grid, myself included.
I have a similar situation in my North West Durham constituency. Does my hon. Friend agree that some of the other issues, particularly around the cost of transport, also need to be addressed? I take her point wholly that this debate today is very much about playing politics with the situation. Obviously the Government are thinking about important measures for the future, but that is not about handing everything over to Edward Miliband and his pals, who failed to win general elections themselves.
I agree with my hon. Friend, and I find it somewhat ironic that the last time the Opposition tried to take control of the Order Paper was during the Brexit debate. They had no mandate for that, and they have no mandate for this.
This also means that we in Brecon and Radnorshire will find it harder to play our part in the fight against climate change. Many of my constituents are deeply worried about how to replace their boilers at the end of their useful lives, so I was deeply reassured to hear the Business Secretary restate during Business, Energy and Industrial Strategy questions today that the UK Government are determined to support residents in Wales as well as those in the rest of the United Kingdom. BEIS is making £450 million available for upgrades, as well as £1.1 billion for lower income households. This is the type of action that my constituents very much welcome.
Having spoken to my right hon. Friend the Chancellor, I am reassured by the way in which he is focusing on the issue of rising household costs. He is approaching it in a sensible and measured way, not with social media clickbait but with targeted interventions that will make a meaningful difference to those who need it most. As a result of investment in the kickstart scheme of around £2 billion, peak unemployment is now forecast to be 2 million fewer than previously feared. Keeping to the energy price plan and increasing the warm home discount and the winter fuel payment are all steps that will curb the rising cost of living, and the increase in the universal credit taper is a tax cut for 2 million low-income families. I and many other colleagues on this side of the House will be meeting the Chancellor again later this evening to discuss this in greater detail. I am extremely grateful to the Treasury and BEIS teams for the listening mode that they are so clearly in.
There are many in this House and beyond who often mistake rural areas such as mine for extremely wealthy areas, but this is simply not the case. The cost of living is hitting hard in Brecon and Radnorshire, but that is on top of other pressures that are ignored by the Labour Government in Cardiff. We have next to no public transport, so we are forced to drive everywhere in cars powered by ever more expensive fuel. I commend my hon. Friend Mr Holden for the work that he has done to draw attention to this. Our broadband is slow on a good day, because funding is targeted at densely populated and, curiously, Labour-voting areas. Our schools have to close and our council tax is higher because our local authority has been given one of the lowest budget allocations in Wales for the last 10 years. If only we could have the level of investment and support that has been directed at the cities and the south Wales valleys, household bills in rural areas such as Brecon and Radnorshire would be lower.
I will not support the Opposition motion today. I want the House to have a meaningful debate on household costs that is not motivated by knocking lumps out of the Government, but puts the rural poor at its centre. I commend the Government for their mature and grown-up efforts to tackle the cost-of-living crisis.
I rise to speak briefly in support of the motion.
I beg the hon. Gentleman’s pardon, but I have to reduce the time limit to three minutes.
Thank you, Madam Deputy Speaker.
Families in Merthyr Tydfil and Rhymney and across the country face a bleak start to the new year. Rising energy costs are especially concerning at the coldest time of year. The cost-of-living crisis is growing. Shopping baskets were £15 more expensive this Christmas than last Christmas because of inflation, and the price of petrol was 24% higher. Families face real pressures on their household incomes this winter, yet so far the Government have not stepped up to the challenge and offered anywhere near adequate support.
Next month, a new price cap is likely to be announced to take effect from April 2022, and there is some alarming speculation that bills could rise by as much as 46%. Undoubtedly, some will point to the rise in energy bills being partly due to the short-term increase in the global gas price, but let us be clear: the reality is that a decade of Conservative government has left us exposed to the market. Do the Government recognise that their failure on regulation and gas storage, the delay in new nuclear and renewables, and the failure to insulate homes properly have led to working people paying the price for the Government’s incompetence?
Labour’s plan, which the motion outlines, will go some way to support families up and down the country who face a cost-of-living crisis here and now. We know that oil and gas producers in the North sea have posted huge profits during the pandemic. A windfall tax to help cut VAT on home energy bills and ease the burden on working families is appropriate at this most difficult time for families across the country.
Cutting VAT on energy would save most households around £200 on their bills at a time when the poorest need support. We also know that the Prime Minister, the Levelling Up Secretary and the Home Secretary backed cutting VAT on fuel in the past. Therefore, the Government could support the motion. Why are they so far refusing to do so? As I said, Labour’s plan would save most households £200 while targeting support at low earners, and pensioners would save £600. The plan tries to ensure that people do not have to choose between eating and heating.
The Welsh Labour Government have already announced a £38 million winter fuel support scheme that directly supports families to cover their energy costs and keep their homes warm this winter. That demonstrates the Welsh Government’s willingness to offer support to those most in need. The Welsh Government never shied away from trying to support families through the crisis. We now need the UK Government, with all their financial clout, to step up to the plate and deliver for those who need it most at this most difficult time. I urge all Members, particularly those on the Conservative Benches, to do the decent thing and support the Opposition motion.
Now then, if Labour Members really wanted to help the poorest people in society, they would not come to this House with a motion to cut somebody’s bill by £61 a year. There were Labour MPs drinking in the Terrace bar last night who spent more than that on a round of drinks.
Do I want VAT removed from our energy bills? Of course I do. Everybody does. That is why last week I signed a letter to the Chancellor, asking him to cut the VAT on bills. I also want the removal of levies on domestic energy, which are nearly a quarter of an electricity bill. That sort of saving is a real saving, which would make a real difference to the people in Ashfield and Eastwood, but of course there is not much of an appetite for that in this place as we strive to be net zero in record time.
No one disagrees with what we are trying to do to save the planet, but a lot of us are sat here on over 80 grand a year—and some people have second jobs—and we are telling poor people that they must pay more to heat their homes. Frankly, when it comes to heating homes, people do not care where their gas or electricity comes from, in the same way as they do not care where their petrol or diesel comes from when they go to fill up their cars. All people want is to be able to afford their bills—that is all.
Labour Members are trying to play politics with people’s lives so that they can get a cheap social media clip saying, “The nasty Tories are voting against a cut in VAT.” They rely on the great British public not knowing how the process works in this place. It is a pitiful way of conducting themselves.
Let us be honest, this is not a vote to help poorer people pay their bills. It is a vote to take over the Order Paper so the Opposition can return us to the disastrous days of a few years ago that almost cancelled Brexit. There is no doubt that people are struggling and the cost of living is increasing with the increase in fuel prices, but who is to blame for that increase? We cannot just blame the pandemic, as we are all to blame. Successive Governments have never taken this seriously. We closed all our pits and we do not produce gas like we used to. Both Conservative and Labour Governments, let us be honest, have ignored this for years.
I see Labour Members shaking their heads, but they are not really interested in helping people in places like Ashfield, which has been ignored for decades. Ashfield has had no investment at all, but so far under this Government we have had £70 million, two new schools coming and hopefully a new railway line. We have millions of pounds coming to Ashfield, and what is Labour’s answer to levelling up Ashfield? A saving of £1 a week on energy bills. That is absolutely disgraceful, and Labour Members should hang their head in shame.
The last two years have been brutal and miserable for millions of people in this country, but not everyone has had a bad pandemic. Last year the number of millionaires in Britain increased by 10% and the number of billionaires increased by 15%. In fact, The Sunday Times estimates that, between them, the 171 billionaires in the United Kingdom are worth £600 billion, which is enough for them by themselves to fund every single pound of Government covid support over the last two years and still be the richest people in the country.
I take on board what the hon. Gentleman is saying. I am confused, because Alan Brown signalled that the SNP will be supporting today’s motion, yet this is a tax cut for the very millionaires Tommy Sheppard is talking about.
I am not sure of the relevance of that intervention. I was describing the manifest economic injustice apparent in our country, and that is the context against which we need to examine rising energy prices.
It might be thought that any Government would want to do something about the extremes of wealth and poverty in Britain, but in fact this Government are making it worse. Last autumn they chose to cut the household income of the 6 million poorest families in the United Kingdom by £1,000 a year—that was a political choice. They are now preparing to introduce tax increases this April, and tax is always a political choice. One could choose to make the wealthiest pay more or one could choose to tax accumulated wealth and capital, but no. This Government are increasing taxes for average and low earners in order to avoid increasing tax for the wealthiest people in the land, for whom tax is at a historically low level. That is the moral tapestry against which we should judge this.
The Government need to take serious action, because standing aside and doing nothing about the cost of living crisis would be to abdicate government. Of course there should be a cut in VAT on energy bills. In fact, consider what it means not to do that. It means that families the length and breadth of the land will face the misery of higher gas and electricity bills and, at the same time, the Government will profit from that misery by bringing in more money from the tax levied on those bills. That is immoral, and of course this proposal should be supported.
Two other things are required. First, the energy cap must be maintained and the Government must take action to make sure energy suppliers are capable of delivering on it. Secondly, as a matter of priority, the Government need to make a heating and energy payment to low-income families that will allow them to deal with the increases that have already happened.
I would hope that these are reasonable asks of the Government of the United Kingdom, but I do not doubt what is going to happen. I know those asks will be ignored, and I know this Government think their 80-seat majority makes them impervious to reason and logic, so they will continue as they wish. That is why, in Scotland, people will be looking again at whether we have to forever be hitched to this Government—whether we have to go along with them and these policies, which benefit the well-off at the expense of the poorer—or whether it is time to take matters into our own hands and, through the political agency of being an independent country, be able to deliver things in a better way, and build an energy supply system and an economy based on fairness and community solidarity.
I struggle to believe what we are seeing from the Labour party today: a party that has repeatedly opposed Brexit and did everything it could to try to stop us leaving the EU is now proposing something that would have been impossible had we remained in the EU. We see right through these underhand attempts by the Labour party to subvert democracy and take over control of Government time. The reality is that, yes, our constituents across the country are feeling the pressures of inflation and increased energy costs, but this is not just a UK issue; this is an issue faced by the global economy as we emerge from the pandemic, as well as a result of the actions of adversaries, including Putin’s Russia, which are ramping up global energy costs in an attempt to prop up their own domestic failings
The challenges of the cost of living faced by my constituents in Stoke-on-Trent South are nothing new. For decades the neglect of our city by the Labour party has seen wage levels remain far below the national average. It is only now that we are starting to see things change, with wage levels increasing with a resurgent Stoke-on-Trent economy.
My hon. Friend is talking about the deprivation and years of neglect in his own patch in Stoke; does he agree that that pattern was repeated all over the country in the north and the midlands and that we are finally putting it right?
I absolutely agree. We are seeing that right across the north and the midlands, in towns and cities that were neglected for decades by the Labour party, including Stoke-on-Trent, and which are now growing faster than most other UK cities. According to Office for National Statistics figures, in the last decade the average weekly pay in Stoke-on-Trent has risen by more than £125 a week. That is due to the policies of the Conservative Government: increasing the national living wage, cutting tax for the lowest income families and freezing fuel duty repeatedly. That is the only way we are going to get out of this cost of living and energy price crisis: continuing to see people’s wages rise and ensuring people take home more.
Government can put off the inevitable cost increases, but for how long? What is being proposed today would only delay them, as this is a global trend of increased energy costs that shows little sign of reversing. This measure would also not focus enough on those who need help the most, and given that cost increases are not just being seen in electricity and gas prices we must take broader action to ensure that people are able to earn more and are better able to cope with the pressures of increased costs of living. The only way this is achieved is through helping people to increase skills levels and take on better job opportunities, and getting more people back into meaningful work through schemes such as kickstart and the lifetime skills guarantee that this Government are focused on delivering.
After decades of decline under Labour, Stoke-on-Trent is a city with renewed confidence, and not only have we seen wages go up, but we have seen record numbers of people in work. The number of jobs available in the city over the last decade has increased by around 17,000 and the number of workless households has almost halved, such was the legacy of a Labour party that condemned people to a lifetime of worklessness and benefits, with hopes and dreams lost. We as Conservatives are determined to reverse that by delivering on the Government’s levelling-up agenda and rebalancing opportunities for our whole country, which has recently seen us secure £56 million for Stoke-on-Trent from the levelling-up fund. It is through these actions that we will see people rising out of poverty and address the cost of living challenges we face.
I am really concerned that some Conservative Members simply do not understand the reality or scale of this problem and just how many people are truly fearful of the impact of the cost-of-living crisis that is coming down the line.
Of course, first and foremost we need to help those in the greatest need—people in serious poverty who are struggling to put food on the table—but the reality I see in my constituency of Batley and Spen, and which I am sure is the same across many other areas, is that people in many households are already experiencing genuine anxiety and hardship. There are many families that the Government are putting under huge pressure; they are not desperately poor but they are not rich either, and often both partners are working full time. They are trying to do the best for their kids, but they are really struggling through no fault of their own.
I have heard from many such families in my constituency. They are proud, hard-working people, but too many face the embarrassment and—I know some would say—humiliation of having to rely on food banks. When I see Conservative Members on social media going to food banks and telling them what an amazing job they are doing, quite honestly I think that they are the ones who should be embarrassed. Those food banks are there for a reason: the policies pushed by the Conservative party over the past 12 years.
I was contacted last week by a couple whose story really shocked me. He works full time helping people with drug and alcohol problems, and she is a children’s crisis counsellor. They cannot afford to pay this month’s gas and electricity bills and are worried about what will happen if they fall behind on their rent. They are desperately trying to ensure that their kids do not suffer, but things are so tight that they cannot afford to go to the shops for the next two weeks. He described it as a
“matter of survival getting to the end of the month.”
These are good people trying to help those even less fortunate than themselves, and we should not be making their lives even more difficult in the coming months.
I also have elderly constituents and constituents with disabilities who are trying to navigate complex procedures around heating costs, reductions in benefits and a lack of housing provision. Many are struggling with anxiety and depression on top of their physical health issues. Indeed, this afternoon we are focusing, quite rightly, on the financial impact of the cost of living crisis, but we should also take a moment to remember that the past couple of years have had a huge impact on people in other ways. Many have already paid a heavy price with their physical health and mental wellbeing. So why would the Government want to add extra stress and pressure to people who are already struggling by not supporting the motion, which would help them? There are things that we could do to make a real difference to people’s lives. For me, it is very simple: if we can act, we should act. I urge Members on both sides to recognise the seriousness of the crisis that many people are facing by supporting the motion.
People in Redcar and Cleveland will remember the last time the Order Paper was wrestled from the hands of Government. It was, of course, when ardent remainers, ably supported by the Labour party, tried to block the decision made in the 2016 EU referendum. The irony of this situation should not be lost on us, because the Leader of the Opposition is attempting to use the same tool he used then to try to block Brexit, but this time to exploit one of the freedoms that Brexit gave us: the ability to get rid of VAT on energy bills.
Axing the 5% VAT on energy is clearly an option to support people, but it is an expensive and incredibly poorly targeted one. The Labour party usually complains about tax cuts that help high earners, yet that is what it is supporting here. I am left asking why I or any of us, given the salaries we are on, should expect the Government to subsidise our energy costs. My view is that we should be focusing our support on those who need it most, not those who want it. That must be the cause of any responsible Government.
How are we supporting people right now? We are supporting people through winter fuel payments, the warm home discount, cold weather payments, the energy company obligation and the household support fund. That is on top of our general measures, such as increasing the living wage to £9.50 an hour and freezing fuel duty for the 12th year in a row, and the help given over the course of the pandemic. The Government supported 12,500 people in Redcar with furlough payments, and spent more than £16 million supporting businesses in my area.
Of course, for the Labour party it is never enough. During the pandemic Labour criticised the cost of test and trace, and then demanded that covid tests remain free indefinitely. Labour criticised the Government for not producing enough personal protective equipment fast enough, and then demanded investigations into why contracts were given quickly. They want it both ways. They want to go back into the EU while benefiting from the freedoms that Brexit gave us. I begin to wonder whether “Goldilocks and the Three Bears” is required reading for the shadow Cabinet—everything is a bit too much and a bit too little; nothing is ever just right.
What we are discussing today are short-term measures to support people, and I think that it is as important to discuss how we handle energy in the long term. We are in this position today because policy decisions—some good and some bad—made over the decades have left us without an alternative to imported gas for baseload supply, whether that was Blair’s Government rejecting new nuclear in the early 2000s, Cameron’s Government and hesitancy about fracking, or this Government and our decision to phase out coal completely. We have made these policy decisions, which have left the most vulnerable vulnerable to the swings in gas prices that we are seeing today.
Energy prices are going to increase enormously. That is just a plain fact. The question is, of course, what we do about that and about the long-term cost of living crisis, which predates the pandemic, and particularly child poverty, which has been tragically high and indeed endemic in Wales for decades, since the deliberate destruction of our heavy industry for political reasons over 40 years ago and the neglect of manufacturing, all leading to chronic, deep poverty.
Nearly 20% of Welsh workers earn below the real living wage, earning essentially poverty wages. People are now indeed making the choice between whether to cook food or heat their homes. They are cutting back on spending for themselves and even having to cut down on spending for their children. On top of that, millions of people across Britain are already facing a rise in national insurance and are weeks away from a catastrophic rise in energy bills. We in Plaid Cymru agree with the Opposition proposal to cut VAT on energy bills, but this does not go far enough to cover the average estimated bill surge of £750, nor does it target support sufficiently at those who need it most.
The further top priority should be support for lower-income families, those unable to cut non-essential spending, all of whose spending is essential, and those who cannot draw on savings—they have no savings. We call for immediate Government action through the tax and benefits system. It is beyond belief that the UK Government have taken over £1,000 a year from the poorest through the £20 cut to universal credit. That direct attack on the poorest people in Wales and across the UK should be reversed both for those in work and those not working, for it has pushed 275,000 Welsh families even further into poverty.
The Government say that work is the answer to poverty. Forty per cent. of Welsh households claiming universal credit are already in work, and many are key workers, so the £20 uplift should be reinstated and extended to those on legacy benefits. Equally, we call for the warm home discount to be increased and the eligibility criteria extended to include all poorer working-age households. The cold weather payment should also be reformed, as per my private Member’s Bill in 2018, which was on an issue that I have campaigned on subsequently. However, in the long term we must end our dependency on fossil fuels and move to more renewables and, I should say, greater use of pumped storage, with retrofitting of our homes to make them more energy-efficient.
Sadly, this Opposition day debate is, I believe, an opportunity lost for the Opposition. Energy prices and how we can help the lower-paid—and all of us, frankly—to weather the storm of high energy prices is a great topic to be debating. We could have had a debate this afternoon about why that has happened, rather than just papering over the crack of the problem that we are in, which is frankly all we can do at the moment.
Of course, VAT is one measure that is in our gift to take, now that we are outside the European Union. It is quite funny. Labour spent weeks, months and even years trying to frustrate the Brexit referendum. Mr Deputy Speaker, you were here at the time of what I would call the Brexit wars. We remember the scars of the Letwin amendment, the Grieve Bill and the Benn-Burt Bill, when similar activity was indulged in this House and people tried to take over the Order Paper and get their way, in opposition to the elected Government of the day.
I hate to break it to the Opposition, but the Government of the day are on these Benches, and they have a pretty big majority. They control the agenda, and I do not think we want to go through the shenanigans of the past. However, if Labour had left today’s motion to about the first line, I think I would be speaking greatly in support of it. The first line says:
“That this House
calls on the Government to cut the rate of VAT for household energy bills”.
I agree with that absolutely and entirely, but we need to go further in addressing the papering over the cracks during 20 years of failed energy policy. It is not just our energy policy that has failed—I will admit that—but the Opposition energy policy that failed when they were in government.
I am absolutely delighted that Edward Miliband is with us today, because I think I can put at his doorstep many of the problems that we face, through the climate change levy, the renewables obligation and the Climate Change Act 2008, which added all those extra green and renewable levies on to our energy bills at a time when we really do not want or need them.
I will quote what the right hon. Gentleman said in 2008, justifying rising costs to business in energy prices. He said that it was a good price to pay and that we should sacrifice economic growth to cut emissions. That is exactly what we are doing now. We need cheap energy. We need a debate on our energy supply. Is it at all sensible that Britain and the European Union spend billions on gas with Putin’s Russia, so that he can have more money to create weapons of offence on the borders of Europe and the UK? It is a mad policy. We need a new policy, but today is not the time for supporting the Opposition.
People are having to make difficult choices in their shopping lists to keep food on their family table. People are having to decide between staying warm or facing the chill this winter because of rising energy bills. People are literally emptying out their savings to cover everyday costs because of the rising level of inflation.
The Prime Minister and his Government have lost their grip across the board and are tearing down our economy and our country with poor planning and incompetence time and time again. They had years to plan for Brexit and boost skills and jobs for workers in Britain, yet all five flagship policies in their “plan for jobs” are failing. Last September the British population felt the brunt of their poor planning when they had to queue for hours just to get fuel for their cars, due to a shortage of HGV drivers. The energy price rises set to take place in April will be catastrophic, with bills set to rise on
The Prime Minister and his Government are in complete denial and empty of any solution to this crisis, probably because the cost of living crisis does not affect him. When the going gets tough and the Prime Minister has to slum it out, he texts his Downing Street chum and he can simply drop a message to his rich mate the Lord, who will cough up from the coffers to fund the designer Lulu Lytle-inspired £840 a roll wallpaper, or a Baby Bear sofa for just under 10 grand, or a three grand Lily Drum table. What is an extra 15 quid on the Christmas shopping list for him this year compared with last? How will the rise in inflation, the 24% increase in petrol prices, rents at the highest level in 13 years, or the price to heat our homes going up by 50% this April bother this Prime Minister, or anyone on the Government Benches? The Government are totally out of touch with what it is like for real families in Britain—working-class people, people in Bradford West and across this country.
That is why we, the Labour party, are providing a solution to protect families, especially in places such as Bradford West, to protect lower and middle-income earners—and pensioners—who have already been squeezed by years of underfunding and under-investment, and face the choice between food and heating. We have the highest rates of child poverty in Yorkshire. This is not something that we did not know was going to happen; we knew it was going to happen. The Prime Minister stood there and said that inflation was all made up; yet two months later it is the highest that it has been in decades. The Government are in complete denial and they fail every child and every person in Bradford West by not supporting our motion.
The debate on the cost of living and energy bills is obviously very important and pertinent, and I hope and trust that it is going on in the corridors of this place all the time, because it is a matter of huge importance to my constituents.
It is clear that cutting VAT on energy bills is one option to consider. The last I understood, I think it was the Prime Minister who said last week that it was under active consideration. There is obviously a decision to make on how targeted and effective that support might be. Clearly, such a measure would reduce energy costs, but it would mean spending taxpayers’ money on cutting energy bills for a lot of people who are not struggling and do not need that support. Indeed, it would be a tax cut for all of us in this room, despite the salaries that we are paid.
We have a duty in this place to ensure that taxpayers’ money is spent in an effective way and where it is most needed, so it is understandable and right that the Government will want to consider a whole range of measures to ensure that they come to the most effective conclusion both in targeting that support and for cost-effectiveness for the taxpayer. There are other options, including some of the green levies on bills, which have been discussed already, that make up a higher proportion of many energy bills than VAT. While it is true that the long-term answer may be investment in sustainable energy production, in the short term it makes bills more expensive. Reports from the TaxPayers Alliance in recent weeks suggest that the burden of those green taxes is likely to rise by as much as 40% in the coming years, and that will have an impact on the cost of living.
My hon. Friend is most generous with his time. We talk about the green levies, which affect poorer people the most in society, and we talk about cutting VAT, which will benefit the most wealthy in society, such as people in this place earning £80,000 a year. Does he think that that is unfair?
I thank my hon. Friend for that intervention, and he is absolutely right to say that many of our constituents who are ably described by Opposition Members as struggling to pay their bills would I am sure prioritise paying those bills and putting food on the table, rather than paying green levies on their energy bills for some future that they may or may not see. We know that that may be a short-term solution, but this is a short-term problem that we need to tackle now, and those levies are not helping people put food on the table tomorrow and to pay their bills tomorrow. We do need to think more about this than just to chuck an answer out there that may seem all right on social media, but actually relates to something in the region of about £1 or £1.10 a week for such constituents. It is certainly not the answer.
It is clear that there is an awful lot of work to be done, but there is already a lot of work being done to support people in need. We have had the list already from Conservative colleagues. There are warm home discounts, winter fuel payments, cold weather payments, winter support grants—it goes on and on—so let us not pretend that the Government are not acting on this. We know that these are tough times for a lot of people, but through covid, uncertainty, inflation and rising costs, the Government have acted, and they will act further and will help.
That debate is a legitimate and important one, but this is not that debate. The bit of the motion that may pass many of my constituents by—on the surface it is dry, internal administrative stuff, but it is actually really important to recognise this—is that it does not just ask the Government to tackle the cost of energy bills, but seeks to take us back to a time in the midst of Brexit negotiations when the Government lost the ability to control the business of the House through such a motion. The chaos that surrounded that whole scenario, with the damage that that process caused at the time to our Brexit negotiations and the illegitimacy of the premise that elected Governments should no longer decide what laws they introduce, was of absolutely no help to anybody. In fact, it made a mockery of this House and its procedures, and undermined both the democratic outcome of the referendum and the democratic outcome of the preceding general election, because it is of course Governments who are elected to make laws, not the Opposition.
This Opposition day debate does not just ask the Government to remove VAT; it asks the Government to give up control of the legislative agenda. It means we would just forget the measured consideration of which of the measures I described earlier might have the best impact and value, and instead allow the Opposition to set the agenda and timetable, and to legislate. That is not how Parliament works and it is not how democracy works. We have been there and tried that, and it was wrong at the time and it is wrong now. Sadly, the Opposition have turned what is otherwise a reasonable debate into something wholly unacceptable. If Labour Members’ answer to the rising cost of living is to knock a quid a week off energy bills and tell people it is a silver bullet, I think they need to go away and think harder, as the Government are doing, about how we genuinely support people in need.
The cost of living is ratcheting up, but it did not need to be this way. It did not need to be this way because the Government have implemented a number of tax increases. It did not need to be this way because the Government have failed to ensure that food prices, energy prices and other costs of living, including housing costs—with the inflated housing market, people are paying far too much for renting their houses—have been controlled.
It did not need to be this way because, for over a decade, this Government have made poor choices on energy. They banned onshore wind farms. This is now one of the cheapest forms of electricity known to this country, but it was banned for 10 years by this Government, who only U-turned last year, in the midst of a pandemic, when they realised there were very few options left for them. They cut the solar feed-in tariff, which meant that hundreds of poor families who would otherwise have chosen the option of having solar panels on their roofs could no longer afford to do so, and it became a luxury limited to the rich and middle classes. And, of course, they failed to invest in truly insulated green homes, and their insulation schemes have been a disaster.
I am no fan of the tactics of Insulate Britain, although I defend to the hilt their right to protest, but what they are right about is the simple failure of this Government to insulate every single home in the country. It is possible that family energy bills could have been reduced, almost decimated. We could still do that now, in just a few years: every council house, every social house, every house in the rented sector and then the houses that are owned could be transformed through a street-by-street measure. However, this Government have no answers apart from silly giveaway grants that do not even touch the sides of the insulation of a home, let alone its transformation into a Passivhaus or something approaching it.
As for our proposal, it is a short-term fix for the year. It means slashing VAT, but also ensuring that we make long-term investments in green energy. Investing in our country and our infrastructure can be a possibility, but only by voting for this motion today will we start to turn the tide of Government failure on the cost of living, on bills and on our climate.
Real pressures on the cost of living are obviously coming down the track. I recognise that, and I also note the work that the Government have done and are doing to address it. It is worth noting in passing the contributions made by Treasury Ministers in the last year: reducing the universal credit taper rate and putting £1,000 in the budgets of 2 million low-income families, increasing the national living wage by more than 6.5%, freezing fuel duty for the 12th year in a row, and introducing the housing support fund for lower-income families. However, more clearly needs to be done. The debate has been helpful in identifying some of the options that are open to the Government, including the possibility of a cut in VAT on energy. I note that the Chancellor is considering that option among many others. However, it is worth observing that a cut in VAT on household fuel would disproportionately benefit those with larger homes. I think it is right for the Government to consider it as part of a suite of possible interventions and measures to support families during the current energy price spike.
There is one option that I have not heard mentioned today, although according to news reports last year it was probably being considered then. I refer to the policy of what is called a carbon fee and dividend. The fundamental challenge that we face, given our net zero commitments, is to reduce carbon emissions without hurting low-income families and the economy more generally. One way of doing that is to ensure that as we tax carbon emissions—as we bear down on carbon using fiscal levers—the income that is generated for the Treasury is reallocated directly to families, and to low-income families in particular, in the form of a carbon dividend or climate income, as it is sometimes called. Other countries have been experimenting with this. I accept that it is quite a statist solution and one that might not come naturally to Conservative Members, but I think it is worth considering the option of enabling the income from carbon taxation to go directly to low-income families.
Finally, let me make a point that I think must be made in every speech from the Government Benches. It is very wrong and very regrettable that the Opposition are using the opportunity of a debate on this important matter to propose taking over the Order Paper. I was a spectator in the last Parliament, but I saw very clearly during that terrible time a paralysed Parliament, a Government unable to govern, and the public looking on in bewilderment as their representatives serially failed them and betrayed the promises that they had made in their manifestos—
Order. We must leave it there.
It is an honour to speak in today’s debate, even though it is a very frustrating one. I cannot get my head around the fact that Government Members seem more offended by the Labour party trying to take control of the Order Paper than the cost-of-living crisis facing this country. That is not coming down the line; it is here and it is now. We have inflation at its record highest level in the last 10 years, a stealth tax that the Government introduced by freezing the tax threshold and a hike in national insurance, all of which are making a bad situation worse. Let us not start reheating pointless Brexit arguments; let us try to deal with the issue.
The Liberal Democrats believe that cutting VAT is a blunt instrument, so in principle, we would prefer to see targeted measures, doubling the warm home discount and the winter allowance. That is what we need, but we will support the Labour party today because it wants address the issues that people in our constituencies care about: how they will heat their homes, feed their children and keep themselves warm if they are elderly. That is what they care about, not debates that happened two years ago or, for that matter, Scottish independence. They care about how they pay their bills now, so we will support the motion.
Will the Government please stop speaking to us all as though we are not aware of what is going on in the country? Perhaps they are not aware—perhaps they are detached from it—but we Liberal Democrat Members are very aware of the problems that our constituents face due to the cost of living, inflation and energy prices going up, and the economic impact of the pandemic on our local businesses and independent traders, who provide vital income not just to our local communities, but to the people who work for them.
Two years ago, the Chancellor promised us that he would do whatever it took to fix the economy. It is a crying shame that he and the rest of the Government are apparently not prepared to do whatever it takes to help the people of this country through an economic crisis and a cost-of-living crisis that is hitting them hard.
This debate highlights the fact that a severe cost-of-living crisis is upon us, as I think we can all agree. There are many factors and I will not spend my three minutes debating the whys and wherefores of those, not least because we know of the global gas price hike. I want to draw a line on what we should be doing about it and what interventions we should make and discuss. The bottom line is that with inflation running at 5% and energy bills soaring, this very real issue needs to be tackled urgently.
Labour has talked about cutting VAT and there are three reasons why that causes me great concern. It is a blunt instrument, as we have heard. That is not necessarily a bad thing, but if it is going to have an impact on people who do not necessarily need that cut, that blunt instrument needs to be reformed to make it better. Also, the change would be immaterial—the bottom line is that this crisis requires more than a 5% cut in a bill. Therefore, more targeted measures, which I will come to in a moment, would be far more hard-hitting for the people who need them. Also, as we have seen in this pandemic, there have been difficulties when we have had to take something away and then bring it back again, and my right hon. Friend Chris Skidmore made a compelling case on that.
I would not necessarily agree with some Government Members about cutting green levies. If we are serious about dealing with the climate crisis we are in, then, for exactly that reason, we have to keep those levies to ensure that in the future we have energy security from sustainable sources that will help to alleviate the problems that we have today.
I want to outline two positions. As we have seen, winter fuel payments help 8 million pensioners and the warm home discount helps 2.2 million people on low incomes. That is the targeted intervention that we need. My North Norfolk constituency is particularly rural. It has the highest demographic of older people in the entire country. Those are the people who particularly need support: our older citizens, who had the triple lock taken away for one year only, for understandable reasons. I would like to see the Government taking targeted measures very seriously and costing them up to help people.
Finally, we should look at the energy companies. There are clear regulatory failures. We should look at Government-backed loans to smooth out the problem that we have seen this year and ensure that it does not recur in the next few years.
This is the second day in a row that the Chancellor of the Exchequer appears to have been posted missing. At the beginning of the pandemic, he was absolutely everywhere: we could see all his branding on Instagram and he was clearly trying to pump himself up in advance of a Tory leadership bid. This Government often talk about their plan for jobs, but it is becoming increasingly clear that the Chancellor has a plan for only one job: his next job, which the Prime Minister seems to be doing his best to expedite today.
Yesterday, I met Age UK and Age Scotland, which told me that 96% of respondents to their snap survey last week were worried about their energy bills. People are already making really tough choices between heating and eating: for example, some people are making the decision just to live in the one room in their house that they can heat.
The Government need to reflect that, when people fall into destitution, the state bears the cost anyway, so there is a preventive argument as well. What we need from the Government is not just a plan for jobs, but a plan for their cost-of-living crisis and a plan to tackle pensioner poverty. We need a one-off payment to low-income households, which could be identified by way of the council tax reduction mechanism. We need to increase and extend the warm home discount, delivered through customers’ bills and funded by the Government. We need the April benefits uprating to better reflect inflation rates and certainly to reinstate the £20 that was cut from universal credit, which was so callous on the Government’s part.
We need to reinstate the pensions triple lock, on which the Government broke their own manifesto commitment only a couple of months ago, because pensioner poverty is on the rise and the UK already has one of the poorest pensions in the OECD. We were told that an 8% rise in pensions would be disproport- ionate, but reasonable economic forecasts now expect inflation to run at 7% in April. We need bold action on pension credit. Over 3,000 constituents in Glasgow East are eligible for pension credit but do not take it up, so we need more action from the Government to promote it.
The Department for Work and Pensions needs to look again at the £500 million household support fund. Initially, we had £41 million of that Barnettised to the Scottish Government. Rather than winding the fund down, the UK Government should increase it. We need to reintroduce and mandate the social energy tariff, reinstate the free TV licence for over-75s, who largely spend more time at home, and reduce or remove VAT and environmental levies on energy bills.
Those are just some of the things that could be in the Chancellor’s plan for the cost-of-living crisis but, as we all know, his only plan for jobs is for his next one. This place is clearly not going to deliver anything for Scotland, so the only way to do it properly is with Scottish independence.
In rising for the first time since Friday, I want to place on the record my sadness at the untimely passing of the Member for Birmingham, Erdington. Jack Dromey was a lovely man and a staunch trade unionist, and he always stood up for working people. If he were with us today, I am sure he would be speaking in this debate, because it is about fairness, decency and supporting those who are most in need.
I know from speaking to residents of Newport West how worried they are about the rising cost of living. They are paying more for their food, more for heating, more for gas and more in tax. In short, the people of Newport West and this country are worse off under the Tories, and they need a break. Today, the Opposition are forcing a binding vote on a VAT cut on home energy bills because the Conservative party refuses to back a windfall tax that would support families. Simply put, it is not interested in giving working people the support that they need and deserve.
Incomes are still falling relatively, but for those with the least, living costs are still rising. More than half of Welsh households have seen their food costs increase, while more than 60% have seen their utility bills increase. The impact on children is worsening: more than one in five families with children has had to cut back on items for them, including books, toys, nappies and clothing, while one in 10 families with two children has had to cut back on food for them.
My pledge to the people of Newport West is this: I support removing VAT from domestic energy bills for a year from April 2020; I support expanding and increasing the warm home discount; I support smoothing the cost of supplier failure; and I welcome the establishment of a contingency fund that would be directed at supporting energy-intensive businesses. Those are real and tangible actions that would make my constituents’ lives better. I cannot understand why the Conservatives will not support us.
I say to the Minister that someone in Newport West on the energy price cap with typical usage is currently paying £1,277 a year for their dual fuel bill. That is expected to rise to £1,865 a year from April according to the latest estimate, which is a £588 increase. We need less time to be spent on agreeing excuses for lockdown parties and more time to be spent on standing up for those most in need. We need less time to be spent pretending that energy costs are not rising and more time to be spent cutting the cost of gas and electricity.
Simply put, we need more action for those most in need and less dither, delay and letting people down. Dither and delay are exactly what Tory Ministers will do if they vote against this important motion. The Opposition’s motion will make life that bit easier for those most in need, so what are we waiting for?
January is the toughest month for most people, but this year, people’s financial worries are at a whole new level. In December, emails started coming in from my constituents telling me that they are having to choose between heating and eating.
It is not just pensioners, those unable to work or workers on low incomes who are worried about spiralling food, fuel and energy costs, but the majority of people—many millions of workers—who are not entitled to Government help. They include the self-employed hammered by IR35 and those excluded from help during the pandemic. Most of them can normally withstand the odd unexpected bill, but they cannot now budget for the spiralling costs, income tax hikes, council tax rises and the cost of inflation heading towards 7%, alongside real-terms pay cuts and stagnant growth.
In 2016, the Prime Minister and the Secretary of State for Levelling Up, Housing and Communities promised us, as they outlined their plans to cut VAT on household energy payments, that gas bills would be lower for everyone and wages would be boosted if voters backed Brexit. A year after Brexit, the opposite is true. Ministers should make good on their promise to ease the burden on families by cutting VAT on energy bills, but instead of action, all we are left with is a tissue of false promises.
The Government cannot keep hiding behind the cost of the pandemic as an excuse to do nothing, when other Governments have faced the same difficulties. The Labour party has a plan that I hope the Government will listen to today. UK households are already under pressure from inflation and face a sharp rise in costs in April when the cap on energy prices will be raised. The poorest 10% of households will see their spending on energy increase from 8.5% of their total budget to 12% according to the Resolution Foundation. Again, the people who can least afford it are footing the bill while the millionaires and billionaires are untouched.
We must act now to prevent the devastating consequences of sky high bills that many people simply cannot afford. The need to reform our broken energy and regulatory system has never been clearer. We must unleash the vast potential of British renewable and nuclear energy and we must insulate our homes. To deliver the green transition, we need energy security and affordable bills.
It is undeniable that the cost of living is spiralling out of control and the situation is being made bleaker by sky rocketing energy prices. The Government have failed to prepare for and refused to respond to the problem. When the new energy price cap is announced, households in Durham and across the country face a potential 46% rise in their energy bills, yet the Government are doing nothing to protect ordinary people from that hammer blow.
Fortunately for the Government, while they dither, the Labour party has a plan to protect households from the worst of the spiralling energy costs. The Government must act immediately to reduce the financial burden on households. According to polling by YouGov, a third of people say that a £25-a-month increase in their living costs would be unaffordable, while 50% say that they could not afford a £50-a-month increase. I do not think the Government truly appreciate the gravity of the situation for ordinary people. Labour’s plan would mitigate the impact of energy price rises by temporarily scrapping VAT on domestic energy bills, while taking steps to prevent the costs of supplier failure from being passed on to consumers.
We also recognise that there are those who need greater protection from these rises, which is why Labour would expand the warm homes discount and increase it from £140 a year to £400 a year, ensuring that it reaches squeezed middle-income and low-income households as well as pensioners. This, combined with our other proposals, would give eligible households a £600 a year reduction in energy payments.
The Government will no doubt protest that these plans cost money, but what is public money for if not to be spent on the public? At a time when households are experiencing greater pressure than ever on their resources, it is the Government’s duty to relieve that pressure. The best bit about this is that it could be paid for by a windfall tax on North sea oil and gas profits. As ordinary people are left to shiver in their cold homes or to pay through the nose for energy, these oil and gas companies are expected to report near record income in 2021-22. That simply is not right, and Labour would make these companies pay.
However, we cannot just look at short-term solutions to the crisis. We must also look to the future. Our energy system is broken, and it needs reform to make it greener and more sustainable by accelerating the switch from gas to homegrown renewables and by ensuring that millions of people in Britain have warm and well-insulated homes.
MPs have a simple choice today: we can vote to ease the squeeze on families across Britain or we can leave many to choose between heating and eating. I know which I will be voting for.
The wind-ups will begin promptly at 4.25 pm.
Thank you, Mr Deputy Speaker.
Annual fuel bills are expected to rise not by a little bit but by a whopping 50% when the current energy price cap is raised in April. This motion is right. To provide some temporary relief, the Government must cut VAT on household bills as soon as possible. Beyond that, the longer-term problems must be addressed.
We could see this crisis coming for a long time. Closing the UK’s largest gas storage plant in 2017 without a plan to replace it was illogical, and the Government were repeatedly warned at the time that the country faced more volatile winter gas prices and was becoming too dependent on energy imports, but they ignored all advice.
The bigger issue is the business model of the energy sector as a whole. For years since privatisation, the monopoly grid companies prioritised dividend extraction over upgrading the system for renewable energy. The generators did not really start investing in renewables until public money was put on the table, and the supply market is in complete disarray. Many smaller suppliers are now folding, creating even less competition and leaving huge market shares for the bigger players. In response to that collapse, we see the Government setting aside billions in public funds to prop up firms that are too big to fail, but with that public money comes no change in the broken energy market, no reduction in household bills and none of the benefits of public ownership.
If our energy system were brought into public ownership, such public companies would not be duty bound to prioritise huge returns for shareholders. They could invest in the system and in renewables, and they could use financially buoyant times to build up reserves to protect against the price fluctuations we are seeing. They get this in Germany, where two thirds of electricity is bought from municipally owned energy companies. They get this in France, where two thirds of electricity comes from EDF, which is majority owned by the French state. EDF also runs the French grid and generates most of the electricity. In fact, EDF supplies the UK, yet the Government do not think we are good enough to have our own public energy company.
Until the Government recognise that public ownership is central to addressing the crisis we face in our energy system, our constituents will continue to pay the highest price. Today’s motion would help them, but ultimately the Government have to look at the bigger picture and examine public ownership.
May I just put on record how much I miss Jack?
Working families everywhere are feeling the pinch. Energy prices are rocketing, housing is increasingly unaffordable and inefficient, food prices are rising and there is a global gas price crisis. Ten years of failed energy policy has left us particularly exposed, including through the closure of the Rough gas storage facility. It was vital to keep that open. That facility would have ensured some energy stability and resilience. Now, our storage capacity is only 2% of our annual usage, compared with 25% in France and Germany.
Meanwhile, in February Ofgem will announce a new price cap for April 2022 onwards, under which bills can rise by 46% or £600 a year. That compares with wage growth of 4.2%. How on earth are families going to survive this increase? Without Government support, they will not. Research from YouGov shows one in 10 Brits could not afford a £5 per month increase in their cost of living, a third could not afford a £25 per month increase, and half could not afford an additional £50 per month. Almost 4,000 households in my constituency are already in fuel poverty—that is 8.9% of all households—and they will be hit the hardest and have to choose between heating and eating.
Inflation is running away at over 5% and it is going to hit 7%, according to Goldman Sachs and the Bank of England. As my hon. Friend Rachel Reeves has said, we are facing a high inflation, high cost and low growth economy. That is why Labour is calling for measures now to reduce the expected energy price rise in April. Removing that price rise and increasing the warm home discount would save most households around £200. The lowest earners and the squeezed middle would save up to £600 on bills, preventing all the expected increases in energy bills.
Pensioners have also been abandoned by this Government through the Chancellor’s failure to protect the triple lock. That simple action would have avoided a short-term crisis but there is more to do to protect our constituents from future shocks. Our housing stock is poorly insulated, the worst in Europe. British homes leak heat up to three times more quickly than the more energy-efficient homes on the continent, resulting in higher bills and colder homes. The last Labour Government introduced a legal requirement for new homes to be zero carbon by 2016. We would have had a million homes built in the past five years if that had been allowed. Labour would make the green deal deliver 19 million warm and insulated homes, saving households an average of £400 a year, but the Government do not see the advantage of that. The Government have also failed to accelerate quickly enough to domestically produced clean energy, as we have heard. Then there is house price inflation and rent inflation, and the exorbitant costs that people living in this country face. I understand how hard this winter is going to be for my constituents, and I believe that the Government have to act urgently to address that.
Our country faces the worst cost-of-living crisis in recent memory as families grapple with rising inflation, soaring food costs and an energy crisis that has rapidly got out of control. This Government’s decade-long failure to reduce the country’s foreign energy dependence has left us especially exposed to the devastating impact of wholesale gas prices. In the space of just a few short months, no fewer than 27 energy providers have collapsed, and ordinary people are being forced to reckon with the real possibility that their gas and electricity bills could rise by as much as 45% to 50% by spring 2022, according to the trade association Energy UK. No one has been spared the fallout from this spiralling crisis, but it is the poorest communities, such as those in my constituency of Birkenhead, that are being hit hardest of all.
Last autumn, I warned the House that thousands more people across Wirral risked being pushed into poverty as a result of changes to the energy price cap and the cut to universal credit. At that time, those concerns were dismissed out of hand by complacent Ministers, but now National Energy Action is warning that 2 million more people could be plunged into fuel poverty as a result of rising costs, bringing the overall total to the highest level since records began.
At this challenging time, the country has the great misfortune to be governed by a party more interested in its own internal power struggles and the increasingly untenable position of the Prime Minister than in giving British households the support they so desperately need. Ministers rushed to take to the airwaves this weekend to condemn Labour’s plans to bring energy bills down, but it is clear for all to see that they have no realistic plan of their own. Some Conservative Members have seen this crisis as an opportunity to take aim at the net zero agenda, calling for the environmental levy on energy bills to be scrapped and for the resumption of fracking and the expansion of drilling in the North sea. That is not prompted by the slightest concern for people struggling to get by. Instead, those Members are motivated by a deep-seated and ideological objection to climate statute.
Let me be clear: we cannot solve the problems of today by trading away our grandchildren’s future. Hard-won progress on the climate must not be sacrificed to make up for the Government’s monumental failings. In truth, only my party has put forward credible proposals to meet the immediate needs of British households and industry. I commend my hon. Friends on the Front Bench for the proposal that they have brought before the House today, including the removal of VAT on domestic energy bills, a windfall tax on North sea gas and oil, and a £600 contingency fund to support energy-intensive industries such as British Steel.
The Minister must put partisanship to one side and engage constructively with those proposals in the national interest. But I believe that he must go further, too. The current crisis has exposed enormous vulnerabilities inherent in our fragmented and privatised energy system. Wholesale reform of the sector is badly needed. By bringing energy into public hands, we can—
The Tory Government of the super-rich are presiding over a cost-of-living crisis that will hit the most vulnerable the hardest. Between the uncontrolled pandemic, inflation, soaring energy bills and the end of covid support schemes, households across the country are facing a difficult start to 2022. UK household incomes could be down £1,000 this year, according to analysis by the Resolution Foundation think-tank, as rising prices combine with welfare benefit cuts and rising raxes.
The truth is, when faced with a crisis, this Government balance the books on the shoulders of those who can least afford it, while leaving the fortunes of their rich mates untouched. The unjust policies of the Government will push more people over the brink into destitution. Inflation increased by 4.2% in October alone, the highest figure in a decade. Everyday items are getting more expensive and, on top of that, the Government’s planned national insurance increase is a regressive tax, which will hit the poorly paid the hardest, as workers’ pay packets are raided at a time when wages are failing to keep up with the UK cost of living.
That means a landlord who rents out dozens of properties will not pay a penny more, but the tenants working in full-time jobs will. Meanwhile, the billionaires, large corporations and super-rich whom this Government truly represent will continue to pay a lower rate of tax than people who are struggling to make ends meet. For all their empty talk of levelling up, the Conservatives continue to rig the economy in favour of the privileged few. Even before the current energy price rises, an appallingly high number of Leicester East residents were forced to make the impossible choice between keeping their family warm or going hungry.
When I became an MP, 5,800 households in Leicester East, or 14.4% of the constituency, were in fuel poverty. That has worsened during the pandemic to 18.6%, or 7,659 households in fuel poverty. Faced with a sharp energy price rise, the Government are now refusing to take the necessary action to combat poverty and protect families in Leicester and across the UK.
The Government must raise their ambition by setting a fuel poverty eradication target, as well as committing to end all forms of poverty for good. That can be achieved by raising taxes on those who can afford it most, the super-rich and big businesses. Failing energy companies must be brought into common ownership.
The crisis is not one that will be felt equally. Those in poverty already spend the highest share of their income on daily essentials. Poorer households pay as much as 50% more on their utility bills than the wealthiest. I will end with this: as the inspiring James Baldwin once said—
Order. To resume his seat no later than 4.25 pm, Grahame Morris.
Thank you, Mr Deputy Speaker. In another place, those who were last will be first. It is an honour to follow my hon. Friends the Members for Leicester East (Claudia Webbe) and for Birkenhead (Mick Whitley).
This issue, the cost of living, shows the disconnect at the heart of Government and the realities on the ground for the vast majority of people, including many in my constituency. When the book is finally closed on the last chapter of the Conservative Government, they will leave a legacy of insecurity—the gig economy, zero-hours contracts, fire and rehire and the loss of workplace rights. Sadly, the Conservative party will be remembered as the party of child poverty, food poverty, fuel poverty and homelessness. We see that in the growing queues for food banks, the rising levels of private debt, and the unprecedented numbers of people sleeping rough on our streets. The political choices of the past decade have not put the resources of the state behind addressing these critical issues. Working families are facing tough choices this winter, and, in the months ahead, many will be pushed below the poverty line.
Apologies to those who did not get in. There were quite a few of you.
I want to thank all hon. Members who have spoken in this debate. I particularly thank my hon. Friend the shadow Chancellor, my hon. Friends the Members for Tooting (Dr Allin-Khan), for Sheffield, Brightside and Hillsborough (Gill Furniss), for Merthyr Tydfil and Rhymney (Gerald Jones), for Batley and Spen (Kim Leadbeater), for Bradford West (Naz Shah), for Brighton, Kemptown (Lloyd Russell-Moyle), for Newport West (Ruth Jones), for Bedford (Mohammad Yasin), for City of Durham (Mary Kelly Foy), for Salford and Eccles (Rebecca Long Bailey), for Warwick and Leamington (Matt Western) and for Birkenhead (Mick Whitley), and my hon. Friend Grahame Morris for his just-a-minute speech, which was excellent.
There are three questions at the heart of this debate. How did we get here? What short-term action should we take? And, what is the long-term plan to stop it happening again? First, on the crisis, there is no question but that there is a global dimension to this crisis. Many countries are facing strains as a result of what has happened to wholesale energy prices, but there are some undeniable facts about how badly we have been hit. No other country has seen 28 energy companies go under. They are failures that we already know will cost consumers £100 on bills. No other major European country has gas storage equivalent to just 2% of its energy demand. No other country in western Europe performs as badly on fuel poverty and insulation as the UK. These undeniable facts are symptoms of Government failure over the past decade. There were failures of regulation. They were warned repeatedly about the regulation of the sector, and did not act—in fact they loosened regulations. As the recent Citizens Advice report said:
“From 2010 onwards, dozens of companies entered the market with limited checks. Some offered good services to consumers, but others were poorly prepared.”
It went on to say that the regulatory system
“allowed unfit and unsustainable energy companies to trade with little penalty.”
It is consumers and businesses that are paying the price. There were failures of strategic decision-making, too, such as the closure of the Rough storage facility, which my hon. Friend Rachel Reeves warned about when she was Chair of the Business, Energy and Industrial Strategy Committee.
Let me get to the heart of this debate, and I say this to the anti-net zero tendency in the Conservative party. We can reach two different views. Some Conservative Members say that it is because we have gone too fast on the green transition. I say that they are dead wrong; it is because we have gone too slowly. It is continued dependence on fossil fuels that makes us more vulnerable and less resilient. Let us take energy efficiency. A 2014 study showed that a comprehensive programme of energy efficiency could cut gas imports by a quarter, but what have we seen? We have seen the abolition of the zero carbon home standard, the fiasco of the green deal and the fiasco of the green homes grant. That is why emissions from buildings are now as high today as they were in 2015, and it is not just about energy efficiency. Before this debate, I looked up the number of onshore wind turbines being constructed each year in the past four years—it is because I am a nerd. I will not do a guessing game in the House as I do not have the time. The answer is that just four turbines a year were granted planning permission in the past four years. It makes no sense, because onshore wind is the cheapest power at our disposal—so much for being the Saudi Arabia of wind power; it is just hot air.
I come now to what short-term action should be taken. There is a divide in this House between a party that has some proposals and a party that does not. Fundamentally, that is it. Conservative Members can talk all they like about the Order Paper and all that stuff, but they do not have an answer. We have come forward with an answer. What is the principle of the answer? It is this: we help all families, and we give most to those who need it most. I want to explain this to the House. We have said that we want to increase the warm home discount from £140—£150 from April—to £400. We want not just to increase it, but to extend it from 2.2 million households to 9 million households, or one third of families. That is the right decision to help the poorest people in our society who are going to be so badly hit. But we all face a dilemma, and we need to be honest about this. It is right to help the poorest, but it is not just the poorest who are facing tough times as a result of this crisis; it is those in the middle as well, and the swiftest, most direct way of helping those families is to get rid of VAT on energy bills.
Perhaps I am a bit naive in thinking it surprising that this idea is controversial, because this is a Government whose Prime Minister and Home Secretary, along with 26 Conservative MPs, used to think that it was the bee’s knees. They thought it was a great idea. It was not some random, chance remark made by the Prime Minister; it was a promise made over and over. Given the Prime Minister’s long and distinguished record of integrity, demonstrated again today, surely the British people were entitled to take him at his word when he said that
“we will be able to scrap this unfair and damaging tax”,
and again, just two years ago, when he said:
“Not only will we be able to reduce VAT in the UK, but we will be able to do it in Northern Ireland as well.”
As Conservative Members consider how they will vote in a few minutes’ time, instead of making arguments about the Order Paper, why do they not look at the substance of the motion? Labour Members say, “Let us take action”; their Government have nothing to say. That is the difference, and they should join with us. The problem is not just that the Government have nothing to say. I think we got to the heart of where they really stand on Sunday when we heard what the Education Secretary said when he was sent out to comment. It is not great being a Government Minister going out there at the moment, to be honest; I remember times like that in the Labour Government too. The Education Secretary—I had to double and triple-check this quote—said:
“A windfall tax on oil and gas companies, who are already struggling in the North Sea, is never going to cut it.”
“Already struggling”? As my hon. Friend the Member for Leeds West said, the chief executive of BP, Bernard Looney, said that the price rises were a “cash machine” for his business. It is not putting that money into investment; it is putting it into dividend share buy-backs from its shareholders. Who is filling up that cash machine? It is working people. All we are suggesting is something quite simple, which is a one-off windfall tax for a year to get some of that money back and help families right across this country.
Short-term action is essential, but we need long-term action as well. There is a very big difference we could make to families, and that is a national mission to retrofit homes in this country. It is the closest thing there is to a no-brainer with regard to energy policy. We could cut bills by up to £400. We could make ourselves much less dependent on volatile fossil fuels. That is why we put forward a plan for a £6 billion a year retrofit and zero-carbon energy programme to insulate 19 million badly insulated homes. But the Government refuse to act. They offer piecemeal privatised programmes that do not work, and they are still short of their very inadequate manifesto promise on this. We can get a sense of where the Government stand. When they had the fiasco of the green homes grant—I do not blame them for thinking it was not going very well—they did not plough the money saved back into retrofit but simply cut £1.5 billion of investment. We need to go faster on energy efficiency. We need to invest in our ports and grid so that we can meet and exceed 40 GW of offshore wind. We need to end the effective moratorium on onshore wind, embrace tidal power and other forms of renewable energy, drive forward our nuclear programme and invest in clean energy storage.
There needs to be a proper inquiry into how we ended up with the disastrous regulation system under this Government and a root-and-branch reform of that system so that we never again have a situation where so many companies go bust and it is the British people who are left to pay the price, with such a dramatic impact on their bills. I am afraid to say that the culpability lies directly at the Government’s door: they were warned and they did not act.
This debate has been revealing in very many ways.
Will the right hon. Gentleman give way?
I will not.
We have a Government who got us into this mess and have no clue how to help the British people out of it. They are paralysed in the face of this cost-of-living crisis. They do not have any answers for the British people, either now or in the future. That is why we are acting. I urge Members from all parties to join us in a few minutes and vote for relief for hard-working families across this country.
I thank right hon. and hon. Members for their valuable contributions to this debate.
I can fairly describe the main thrust of our debate as: wholesale gas price volatility has caused many problems—what are the Government doing about it? By contrast with what Edward Miliband said, we have everything to say about this issue. There are two main parts to the Government’s answer, and the first is about making significant improvements to our energy supply, with more energy.
Our long-term strategy is about finding effective replacements for fossil fuels that are reliable and do not expose us to the volatility of international commodity markets. That means investment in renewables, as my right hon. Friend Chris Skidmore pointed out, and in nuclear energy, which will be key to achieving that aim. In both areas we have made massive progress since 2010 and continue to do so. As of 2020, renewables contributed 43% of our electricity mix. I checked who the Secretary of State for Energy and Climate Change was in 2010: of course, it was the right hon. Member for Doncaster North. Renewables are now six times the level they were when he was Secretary of State, when they contributed just 7% in that year.
There is a key role for nuclear. I am delighted that the Labour party supported in principle the Nuclear Energy (Financing) Bill last night. That is a far cry from Labour’s 1997 manifesto, in the writing of which I think the right hon. Member for Doncaster North was involved. In that year, the Labour manifesto said:
“We see no economic case for the building of any new nuclear power stations”.
The lost time on nuclear is entirely down to the Labour party.
I am delighted that we have the new regulated asset base model for the financing of new nuclear power stations.
I am not giving way.
There is £1.7 billion of funding to support our objective of approving at least one new large nuclear power project by 2024, as well as the new £120 future nuclear enabling fund. Nuclear will play a vital role in the reduction of volatility in the energy system and work hand in hand with renewables to produce reliable power for generations of consumers to come.
Let me turn to the points raised by my hon. Friend Craig Mackinlay. It is a misnomer to say that the Government are not appreciative of the efforts currently being made on issues such as the North sea. It is not right to say that we have not welcomed more investment in the North sea. In the final quarter of 2020 alone, five new gasfields came onstream: Arran, Columbus, Finlaggan, Tolmount and Blythe and Elgood. The majority of our gas consumption still comes from domestic production; of the rest, the biggest part comes from Norway, which provides more than half our imports.
There is this idea that storage would have helped. Storage does not help when there is a price issue. It might help when the issue is supply, but here it is price. Being able to store high-cost gas does not help with a price crisis.
The protection of households is vital to the Government. We are committed to supporting vulnerable households with their energy bills. My right hon. Friend the Chief Secretary to the Treasury pointed out many of the important schemes that we have in place, not least the energy price cap, the warm home discount scheme, the energy company obligation, the solar process, which has led to the ability to transfer people’s energy provision from one company to another seamlessly and without cost to the consumer, the winter fuel payment, and the £500 million household support fund. They are all in place to help and protect consumers.
We have had a very good debate. If I may say so, we had some fantastic contributions from my own side of the House. My hon. Friends the Members for Birmingham, Northfield (Gary Sambrook) and for Stoke-on-Trent South (Jack Brereton) spoke passionately about Government help for residents in their constituencies. My hon. Friend Fay Jones spoke about her rural constituency and again highlighted support from the Government in her area. My hon. Friends the Members for Ashfield (Lee Anderson) and for Mansfield (Ben Bradley) forensically and skilfully took apart the Labour motion. We had thoughtful speeches on net zero from my right hon. Friend Danny Kruger and for North Norfolk (Duncan Baker), who also looked in detail at the workings of the energy market.
My hon. Friend the Member for South Thanet called for changes in energy policy. There are changes. The main one is that we are producing more energy. We are producing more renewables and more nuclear. We are making sure that we get as much gas as we can from UK domestic sources. That is the basis of our energy policy.
In contrast to the Opposition, we have a plan. I have outlined what it is. Labour Members do not have a plan. A four-page motion is not a plan. This is a student union tactic, which they rehearsed well during the Brexit years. I thought that the departure of Jeremy Corbyn as leader of the Labour party might herald a return to serious Opposition politics. To be fair to Rachel Reeves and the right hon. Member for Doncaster North, they were part of what was a more serious Labour Opposition from 2010 to 2015. I give them that credit, having done Opposition politics myself from 2009 to 2010. It all started well for them. On Sunday, there was that classic briefing to The Observer about their plans, and a full media round on Monday. It was all looking good until they arrived here today and produced this four-page, 20-clause, student union motion. The first line mentions “households” and “bills”. In the following four pages, there is no repeat of those words. Instead, we have multiple mentions of “motion”, “proceedings”, “amendments” and even the term “dilatory Motion.” They have completely lost the plot and disappeared into their own world of procedural gobbledegook. The Opposition have no new plan and no new thinking. Their motion does not deserve serious consideration today and should be comprehensively rejected.