My Lords, when we discuss the cost of living crisis, we often talk in narrow economic terms, but this debate gives us the chance to look at the human impact. I thank the noble Lord, Lord Eatwell, for that opportunity, although I join the noble Lord, Lord Davies, and the noble Viscount, Lord Stansgate, in being rather intimidated by the intellectual quality of so many of the speeches. I shall do my best.
I am also thankful to the noble Viscount, Lord Stansgate, for laying out, as the noble Lord, Lord Eatwell, did too, the background economic crisis in which we currently sit, with inflation at 10%, the highest in the G7; rising interest rates; a further drop in business investment; and the slowest growth in the G20 except for Russia—and, as the noble Lord, Lord Eatwell, pointed out, no growth at all according to the OECD.
I want to pick up first on some of the issues developed by the noble Lords, Lord Griffiths and Lord Howarth, regarding the impact on those who are the most vulnerable in our society—the people on the lowest incomes. The OBR Welfare Trends Report, and the Government’s own work, states:
“The lag in benefit uprating in the context of rapidly rising inflation means that non-pensioner benefit rates are forecast to be 6 to 7 per cent lower in real terms this year than they were in 2019-20. This would be a deeper trough than in the wake of any of the preceding three recessions”.
That gives us some sense of the extraordinary scale of the problem so many people are facing.
Picking up on issues raised by the right reverend Prelate the Bishop of St Albans, according to the Food Foundation, nearly half the households on universal credit have experienced food insecurity in the past six months. This statistic really left me aghast—that almost one in 20 of all British households say that members of their household have gone a whole day without eating because they could not afford or get access to food. Of course, that feeds into the nutrition problem that the noble Viscount, Lord Stansgate, underscored.
No one has particularly mentioned those with mental health issues. Very sadly, this affects an increasing part of our community, given the impact of Covid. The Money and Mental Health Policy Institute has taken a deep look at this issue, and its results are shocking. It says that there are deep links between money and mental health and that:
“A greater share of people with mental health problems are in debt, and those debts are harder to manage”.
It also says that:
“The stakes are incredibly high, with strong connections between financial difficulties and suicidal thoughts or attempts”.
I shall pick up on another issue, which feeds a little bit into the discussion of social capital as glue, which the noble Lord, Lord Griffiths, expanded on. A quick survey of the impact of extraordinary price rises, especially for the basics such as energy and food, absolutely makes it clear that we are not all in this together. The IFS has made the point that the 1% highest paid workers have been pulling away from the rest of us. This point was picked up by the noble Lord, Lord Davies, and to some extent by the noble Lord, Lord Sikka. At a time when most people are finding that wage increases are tiny—and one of those noble Lords made the point that real wages have actually declined—the City is once again an exception, with the FT reporting that bonuses paid to the UK’s bankers, insurance brokers and other financial sector workers have hit a record high and are rising six times faster than average wages in the UK.
I am especially concerned about the impact of all this on young people. As the Resolution Foundation has said, they were the
“hardest hit by the economic impact of the pandemic”.
Many have bounced back, and the furlough scheme played an important role, but we hear that
“1 in 3 young people who experienced worklessness during lockdown have returned to atypical contracts, which often means insecure work”.
We also hear that
“the number of young people dropping out of education and the labour market altogether has risen—especially young men”.
I do not think that I had recognised that; it is a very high-risk issue. Some 50,000 young men have quit both education and labour. Some of that may be associated with work/life balance. I buy very much into everything the noble Lord, Lord Brooke, said about needing to rethink how work is structured. That is part of social capital. But the loss of those people and the impact on social mobility is really important.
Again, let me pick up the Financial Times, because that had active quotes from young people:
“the disparities are just going to grow, the wealthy are going to grow wealthier and those that aren’t will get more and more removed.”
There is a sense of real disenfranchisement among so many of our young people, which I suggest is really dangerous. We risk a real rift between the generations. The disparity in economic security is already compounding an alienation that has risen in response to our slow response to climate change, as people realise they are going to bear the brunt of all this inaction in the future, as well as deep generational divisions, which are inherent in Brexit and which often get glossed over but are really deep and significant, if you look at the surveys of young people and their opinions.
We are also seeing self-employed people hit harder than employed people. According to IPSE, the Association of Independent Professionals and the Self-Employed, a quarter of self-employed people only have enough money to cover basic costs for three months if they are unable to work. Combine that with the impact of Brexit on trade, hitting a lot of the supply chains that involve self-employed people, and recent changes to IR35, we have, according to IPSE, seen hundreds of thousands of solo self-employed people leave the industry. Self-employment, since 2010, has been the primary source of new jobs in the UK, particularly in crucial future sectors including IT and the creative sector. If we have this crash in self-employment, the whole economy is seriously put at risk.
Small businesses are also bearing the brunt, and they are genuine engines of the economy in the UK. I quote the British Chambers of Commerce:
“For business, the toxic mix of inflation, raw material costs and supply chain disruption is the flip-side of the coin to the problems facing consumers. Unless steps are also taken to ease business costs, they will likely feed into the inflationary pressure on the economy”.
Last time I was in the debate, I quoted some of the BCC’s reports on the indebtedness that is beginning to drag down one small business after another.
We have been asked to come up with ideas, and I have to say this is an area where I have to do a great deal more work. But I am interested in something that has not been raised at all here, which is the idea of basic minimum services. It strikes me as something really worth exploring, possibly with more potential than universal basic income, because it addresses the problems of the poorest. How much does it cost to have a roof over your head and decent food on your table, to be able to access health and the basics of a lifestyle? That is an area we have to explore.
It also leads me to think we need to rethink the way we structure public finances, because as we change society, we have such a narrow concept of what an investment is rather than day-to-day spending. To me, education is investment, not day-to-day spending, for example. The transition to a green agenda, which the right reverend Prelate the Bishop of St Albans raised, which may often look like day-to-day spending, is again more in the investment category and needs to be treated completely differently in public finances.
I am coming to the end of the time I can spend, but I think there is a great deal of opportunity here to explore some new ideas and recognise we are in a changing era. We have to respond to a world that is fundamentally different from that which existed ten years ago and which, at least in my case, formed the framework for a lot of my thinking. New thinking, I do think, is required.