On the day on which inflation has broken a 40-year record, Labour members are using our debating time to call on the Scottish Government to unlock a further £10 million for local cost of living support for families on low incomes. Clawing back additional payments of the £400 October energy bill discount from people with second homes, which the Scottish Government amendment appears to accept the principle of, would close a loophole that allows those who are best off to get a double or, potentially, treble payment from the cost of living measures that the United Kingdom Government announced.
The cost of keeping our homes running, safe and warm is at the heart of the crisis. It is summer, but there are already hundreds of thousands of families that dread winter and desperately wonder how they will survive. Mortgages are up £90 a month. Rent increases now surpass those in England and Wales, as the Office for National Statistics confirmed this morning. Water bills are up 4.2 per cent and, as of Monday, the energy cap is estimated to go up by £1,000 in only 100 days.
We often talk about people having to choose between heating and eating, but that is a polite way of putting it. The reality is that thousands will choose between starving or freezing. People will die this winter. The crisis will only get worse, so the Government must respond with action.
The people who are best off—those who are able to afford to run not one but two homes—are set to pocket a windfall of almost £10 million between them simply because they have another home that is not their main residence. The irony of that will be lost on no one.
Homes are for living in. A cost of living support package should benefit the people who need help most. That is what we have demanded agreement on and I believe that we have secured it. Allowing a select few to pocket a £400 bung because collectively they own or rent 24,000 second homes, which is 1 per cent of all stock in Scotland, will not deliver the fairness that we expect.
No, we will not support the Conservative amendment because it deletes large swathes of what we are trying to do. We are trying to focus acutely on the £10 million that is going to second home owners, who should not receive it.
We welcome the fact that the chancellor has introduced the payment but he took too long to accept that it was necessary and his support package rewards people with second homes with their own windfall, thereby wasting £10 million of taxpayers’ cash. That was Rishi Sunak’s error but, following pressure from Labour, the Scottish Government appears to be willing to act.
Local authorities, which are required to be consulted under the amended Local Government in Scotland Act 2003, will be desperate for the powers to unlock a further £10 million to help the most vulnerable in their communities. I am delighted that the Government has chosen to change course on that because, only two weeks ago, the Cabinet Secretary for Rural Affairs and Islands told me that we would have to wait for the remote, rural and islands housing action plan and, as the Cabinet Secretary for Social Justice, Housing and Local Government had previously done, indicated that the additional dwelling supplement was enough to tackle second homes.
I will not do so at the moment because I still have a lot of progress to make. I apologise to Mr Balfour.
I hope that, when the Minister for Public Finance, Planning and Community Wealth stands up, we can get a cast-iron assurance that the Government will not hang about on the matter. The powers are already in play. Councils already remove discounts on second homes and charge a 100 per cent surcharge on homes that are left empty, raising £45 million a year for local house building.
The work has to be done, with money being with councils by the autumn. We cannot accept the matter being kicked into the long grass, which is what the Government has done with issues such as the transient visitor levy. We also cannot accept quibbling over issues such as patchy collection of council tax on empty homes. We cannot play politics on the matter. We need to recover funds and get them to those who need them most.
There is a wider moral argument for taxing second homes more. Until today, Scotland was the outlier across Great Britain in that it lacked plans for a surcharge on second homes. Even Michael Gove is introducing a surcharge on second homes, which seems to have passed by the Conservative amendment.
Even before the pandemic, tens of thousands of Scots were unable to find a place that they could afford to call home. They have been stuck on waiting lists, unable to get their foot on the property ladder, and have been struggling to make ends meet to pay private rents. They do not have a warm, affordable and safe home.
Broadly, second homes are left empty for much of the year—they are furnished holiday homes or, for some, crash pads. They are a luxury that communities that are crying out for family homes cannot afford. With inflation set to reach double figures by the end of the year, and with 100 days until the cap is increased, the Government must use the summer to prove its willingness to act.
That the Parliament notes that, under the UK Government’s Energy Bills Support Scheme, second home owners across Scotland will receive a double payment of the £400 credit for their energy bills; considers that this funding would be better used to support low-income households struggling with the cost of living crisis, and calls on the Scottish Government to allow local authorities to recover this money through a one-off increase to the council tax levied on second homes in order to support local cost of living responses.
During portfolio question time, I alerted members to the fact that we are really tight for time across the afternoon, and decision time is later than usual, so I would appreciate it if members could stick to their speaking allocations. They might get a little bit of time back for interventions, but really not an awful lot.
Shortly, I will turn to the Government’s response to the motion and our wider response to the cost of living crisis, but, before I do so, let me set out the Government’s position on second homes. We recognise that good-quality affordable housing is essential in supporting communities across Scotland to prosper. Although second homes bring benefits to those who own them and to the tourism businesses that they support, we know that, in some communities, second homes can have an impact on the availability of properties to meet local needs. Just as important, second homes can have an impact on a community’s sustainability.
That is why we have already taken action on second homes. Since 2013, councils have been able to vary council tax discounts on second homes and, since 2017, they have had the power to remove the discount in all, or in part of, their council area. In January 2019, we increased the additional dwelling supplement to land and buildings transaction tax from 3 per cent to 4 per cent of the total purchase price of any additional home of £40,000 or more. That is intended to protect opportunities for first-time buyers in Scotland, but it can act as a disincentive to second home purchases.
We will consider all options as we take forward our commitment to introduce powers for local authorities to manage the number of second homes in their areas. The powers will recognise that urban and rural areas face different challenges, and we will explore fiscal and non-fiscal options to support the housing needs of different communities across Scotland.
Turning to the issue that is raised in today’s motion, we agree that it would clearly be wrong for second home owners to benefit from the £400 energy rebate that the UK Government is making available. Using the council tax system to recover the £400 has merit, but that would not be straightforward, so we will work with the Convention of Scottish Local Authorities and local government in examining all options to recover the money, including through a council tax levied on second homes. In fact, we will explore options beyond those that apply only to second homes; we will consider applying a similar measure to long-term empty homes, too. We will explore using the funds that will be raised to support local cost of living responses on a fair and equitable basis across councils, and I confirm that I will write to COSLA this afternoon.
I welcome what the minister has said about exploring the issue with COSLA. Obviously, we are living through a cost of living crisis and, given that emergency, we need to ensure that additional support goes to those who most need it. We do not have time to waste in recovering the money, so what are the timescales for that engagement?
The member may have missed that I am writing to COSLA this afternoon on the matter. I want the discussions to begin in earnest, because I recognise the issues that he raises.
I am conscious of time, so I turn now to cost of living support. This Government has shown that we respond quickly and effectively to economic crises, ensuring that appropriate support is in place for those on low incomes. At the height of the pandemic, we moved at pace to introduce our £100 Covid winter hardship payments for families, becoming the first Administration in the UK to introduce such vital support. Through that measure, we put more than £14 million in the pockets of low-income families in December 2020.
We followed that with our £69 million investment in a £130 low-income pandemic payment to support more than 530,000 low-income households that were in receipt of council tax reduction, or were exempt or not liable for council tax, by the end of November 2021.
Through the budget for 2022-23, the Scottish Government has allocated almost £3 billion to a range of supports that will contribute to mitigating the impact of the increased cost of living on households. That includes work to tackle child poverty, reduce inequalities and support financial wellbeing, alongside social security payments that are not available anywhere else in the UK. Our resource spending review prioritises £22.9 billion for social security assistance.
In responding to the crisis, we took the decision to uprate eight Scottish benefits by 6 per cent and to invest a further £10 million in our fuel insecurity fund to support households at risk of severely rationing their energy use or self-disconnecting. That is significant financial support for those living in Scotland; it will provide protection for those on the lowest incomes that people in the rest of the UK do not have.
However, while we do all that we can, we must not forget that it is Westminster that holds most of the powers that are needed to tackle the cost of living crisis, both in the immediate and longer term. Those include powers over energy, the minimum wage, national insurance and 85 per cent of social security spending.
The Scottish Government has continually urged the UK Government to use all the powers and fiscal headroom at its disposal to address the cost of living crisis. As part of that, on 25 May, the Cabinet Secretary for Finance and the Economy wrote to the Chancellor of the Exchequer, setting out policies that would offer a long-term solution to the cost of living crisis. By ignoring our call for a comprehensive funding package to fully address the unprecedented cost of living crisis, the chancellor’s piecemeal approach makes it highly likely that more support will be needed when energy bills rise significantly again in the autumn.
I say again that the Government welcomes the issue being raised in the motion. We will constructively examine all options to recover the money through a council tax levied on second homes and long-term empty properties in order to support a local cost of living response on a fair and equitable basis. We will engage with COSLA and local government on the most effective ways to do that. Taking that approach fits with this Government’s commitment to tackling the cost of living crisis with all the tools that we currently have at our disposal.
I move amendment S6M-05106.2, to leave out from “calls on” to end and insert:
“agrees that the Scottish Government, in consultation with COSLA, should examine all options to recover this money through a council tax levy on second homes and long-term empty homes in order to support local cost-of-living responses on a fair and equitable basis.”
I, too, thank the Labour Party for bringing the debate to the chamber.
Every MSP will be acutely aware of the cost of living pressures that are currently facing people across the country, and the need for every level of Government to work to help support individuals and families during this difficult time.
The economic pressures that we are facing are considerable. Those pressures are created by global events—rises in fuel prices, Putin’s illegal invasion of Ukraine and the fact that the country is still recovering from the Covid-19 pandemic are causing a strain on all aspects of the cost of living, and families and businesses are being negatively impacted due to inflation and the rises in everyday prices. That is why the debate is welcome, and why I have lodged my amendment.
The UK Government has taken a number of key actions that will support the most vulnerable households in our country, with £1,200 in support payments. The new measures that UK ministers are bringing forward to help address the cost of living crisis are welcome, and they represent the start of what must be a concerted effort to drive down cost of living pressures.
The energy bill support scheme will see every household receive £400 off their energy bills, with additional funding being provided to those on benefits, people with disabilities and pensioners. It is also important to note that raising the national insurance threshold and cutting the universal credit taper rate will allow people to keep more of the money that they earn, in addition to actions to cut fuel duty and lower fuel costs. Taken together as a package, that is £37 billion of focused spending on the most vulnerable families in Scotland and across the UK.
From next month, around 8 million people on the lowest incomes in the country will also receive a cost of living payment of £650—support that is worth well over £5 billion—to give them the support that they need during these challenging times. The Department for Work and Pensions will make those payments in two lump sums, the first in July and the second in autumn, with payments from HM Revenue and Customs to those on tax credits following shortly after. The Social Security (Additional Payments) Bill was tabled at Westminster today and is progressing through Parliament there. That is welcome and worth reflecting on.
We know that pensioners and disabled people are disproportionately impacted by higher energy costs. That is why, from the autumn, the UK Government will deliver additional support to more than eight million pensioner households that receive the winter fuel payment: the extra, one-off pensioner cost of living payment of £300. Direct help is being provided to people, and we need to make sure that every level of government is doing just that. Many disabled people will also receive a payment of £650, taking their total cost of living payments to more than £800. That is real action from the UK Government.
However, we on the Conservative benches want to see more—
Discussions are taking place as we speak, and it is important that they are being developed. We have seen action already with the 5 per cent cut. I think that we all want to see more action, and I am pleased that the chancellor has been leading on that.
On the Conservative benches, we also want to see more action from the Scottish Government, which we are here to debate today. That is why I have proposed in my amendment—indeed, we stood on the proposal in our manifesto at the council elections—that we look towards increasing the single person discount on council tax from 25 to 35 per cent. That measure could be used directly by SNP ministers now to help every single person in Scotland save, on average, £134 a year for an average band D property. That would not require a bureaucratic process; it is a measure that this Parliament could pass to deliver support that is needed.
I am disappointed that the Labour Party and, I take it, SNP ministers will not be supporting that—
In that case, I cannot give way.
Scottish Conservatives want to see, and support, the measures that have been brought forward by the chancellor, Rishi Sunak in the spring statement and in the cost of living statement to deliver support, which all of our constituents are looking for.
Supporting people across Scotland and the UK with the cost of living crisis is critical, but we also need to focus on building a stronger economy. That is why we must see a relentless focus from both Scotland’s Governments on creating more well-paid jobs, cutting taxes for working people, driving business investment and innovation, unleashing a new skills revolution and levelling up across all parts of Scotland and the United Kingdom.
I move amendment S6M-05106.1, to leave out from “second home” to end and insert:
“every household in Scotland will receive £400 off their energy bills, with additional funding being provided to those on benefits, people with disabilities and pensioners; further notes that raising the National Insurance threshold and cutting the Universal Credit taper rate will allow people to keep more of the money they make; agrees that cutting fuel duty will help tackle this crisis by lowering fuel costs; notes that the £243 billion that the UK Government spends on welfare will support some of the most vulnerable families in Scotland; believes that the huge £251 million cut to Scottish local authorities has resulted in higher council tax rates across the country, and supports increasing the single person discount on council tax from 25% to 35%.”
There is no doubt that Miles Briggs presents a very reasonable case. However, the truth is that his amendment deletes the central purpose of Labour’s motion, which is to pull back from the owners of about 25,000 properties about £400 each.
He never defended that position today, and he also did not defend the reprehensible behaviour of some of his colleagues, particularly at Westminster, who seek to blame the poor for their budgetary difficulties at times. That has included saying that they should cook better and budget better.
We do not have the mechanism that the Labour Party and the Scottish Government are proposing, so it is quite clear that that cannot happen now. My amendment proposes something that can happen, so that a £134 discount can be delivered. The fact that the Scottish Government has asked COSLA to look at doing something is one thing, but it is not delivering help here and now.
The motion and the fact that the Government accepts the principle of the action indicates that it is possible to do it. I am disappointed that Miles Briggs was not prepared to even explore that proposition in his speech.
The scale of the problem is significant. The ONS data that was released today is really quite stark. Food, drink and clothes costs for a typical family are now at £5,780 a year—up £425 in one year. The fuel costs for a typical family are up £310. In addition to the Conservatives’ tax hike, which is running at about £640, that is a £1,300 hit, and that is before we even get to energy costs. That is an enormous cost.
The increase in value-added tax take means that an extra £8.6 billion will go into the Government’s coffers over the next year, so the UK Government could go much further than it does currently. I would have liked to hear Miles Briggs put pressure on the UK Government to do something along those lines, which would mean another £430 per family. We should take immediate action to cut VAT from 20 per cent to 17.5 per cent, which would bring immediate help to families. That is what we should support.
I would like to, but I am really short of time.
The fact that this debate is happening probably signifies a wider problem in society. The fact that 25,000 properties are now classed as second homes indicates that we need to take wider and firmer action on the increasing numbers of homes that are taken out of circulation for working families. In places such as my constituency of North East Fife—particularly the east neuk of Fife—people cannot afford to live in the communities in which they work. The prices of properties are sky high, and properties are often occupied by second-home owners who live there only very periodically. That speaks to a wider problem, which is why I have pressed the Government for a clearer indication about where it will go to tackle the number of second homes. We took some steps on short-term lets, but the other half of the equation is taking steps on second homes.
We will support Labour’s motion today. It will introduce another £10 million to the Scottish Government’s finances, which we can target to those who are most in need. I will conclude on that point, Deputy Presiding Officer.
I support the motion that has been lodged, and I am pleased to support the Government’s amendment. We need to look at how we can support people, especially those who are in the greatest need. The issue is about targeted support and how we deliver it.
The Tories plan to relax control over city bosses’ pay. We can see whom they want to target—more money to the rich while the poor suffer—and it cannot be acceptable.
We need to recognise that older people and people with disabilities will use a lot more energy. We can imagine the difficulties that they face right now, and they are just one group of people.
The fact is that wages have stagnated over a number of years. The Tories say that we need to hold wages down because of inflation, but it is the energy costs, which are spiralling out of control, that are leading to high inflation. I fear greater inflation as we go forward, and even greater pressures.
There are things that the Scottish Government can do. Let us consider public sector workers and the wage claims that are coming forward now. The Government has offered 5 per cent to national health service workers. That will be £1,000 a year for NHS workers on the lowest pay but £5,000 a year for those workers on much higher pay—and the unions are rightly saying that that is not fair.
For local government, the offer on the table now seems to be 2 per cent, which is quite an offer for the chief executive of Fife Council, who earns £200,000-odd a year, but it is not the same for low-paid workers on £15,000 or £20,000 a year. The Scottish Government will have to look again at wages and ensure that local authorities have the funding to tackle the problem and be able to pay the lowest-paid workers.
The Tories are quite happy to help the rich but not the poor.
Gordon Brown said at the weekend:
“It is time for all people of conscience and goodwill—faith groups, charities and foundations, local councillors and mayors and concerned business leaders in all our country’s nations and regions—to call on the chancellor for a fourth budget to prevent what is likely to be the biggest rise in family poverty we have seen in our lifetimes.”
I hope that the Parliament can unite behind such a call. Yes, the Scottish Government can do more and there are things that we all need to do to help, but the reality is that the chancellor needs to bring forward a budget that will tackle the problems head-on. The Scottish Parliament could begin by uniting behind our call for the Government to restore the £20 universal credit uplift and take steps to help those families right now.
As we came towards this crisis, the Tories cut money from some of the poorest people in the country, as well as from people who were in work. We should remember that tax credits were there to help the low paid. We need this Parliament to unite and ask the Government to restore that £20. By next winter, it is likely that more than 5 million children across the UK will be living in poverty in one of the wealthiest countries in the world because our Government is refusing to act.
! I am frightened now.
I thank the Labour Party for lodging the motion. I absolutely support the clawing back of the £400 payment that is being credited to people who have second homes—and, indeed, third or fourth homes—and long-term unoccupied homes.
They will not. The Labour members seem to know more than I do.
The idea was obviously roughed out so that the Conservatives could be seen to be doing something. As members will understand, I support the motion and I am glad that Labour will support the SNP amendment, which adds value and detail to the substantive motion.
If people receive that £400 credit one time, let alone multiple times, and they can manage without it, they can always donate a similar sum to a food bank. It cannot be got around any other way.
That said, it is a sticking plaster. As in all inflationary circumstances, the economically vulnerable, such as single parents, people on low incomes, pensioners and the disabled, always suffer—and worse is to come. The days are mild now. Heating is off or on low, although some people who are housebound will need to have the heating on, whatever it might be like outside. Domestic energy costs are set to rise to around £3,000 a year, and food inflation has not yet peaked. There is also, of course, no cap on the price of home heating oil—which is much used in areas such as Midlothian South, Tweeddale and Lauderdale—because it is unregulated.
The war in Ukraine is having an impact on the UK economy, but why is it that we have one of the highest inflation rates in the G7, with the exception of Russia? That is because of the destructive impact of Brexit, and it can no longer be camouflaged by Covid. Those are not my words. Analysis by the Centre for European Reform shows that Brexit has cost the UK billions of pounds in lost trade, lost investment and lost taxes. That is money that this country could really do with at a time of rising debt and falling living standards. That is all relevant to the crisis in which people find themselves.
According to the London School of Economics, Brexit alone has caused a 6 per cent spike in UK food prices. These are independent sources.
As for Covid, the National Institute of Economic and Social Research, which is the oldest non-partisan economic research institute in the UK, criticised the chancellor, Rishi Sunak, after he failed to take out insurance against rate rises in quantitative easing reserves. That cost £900 billion, which is £900,000 million, or £2,000 per person. That is economic chaos and mismanagement. Add to that the—at least—£11 billion in wasted and useless personal protective equipment that requires to be incinerated and the profligacy and incompetence of the UK Government in running the economy are there for all to see.
The people who suffer are not the bankers and not the people who made a lot of money and will continue to make money during inflation; it is the people who are already vulnerable who will suffer.
I call on the chancellor to slash the 20 per cent VAT on fuel, which has already had duty levied on it, so there is a tax on a tax. That would reduce transport costs for commercial and essential personal travel.
I also call on the chancellor to reinstate the uplift in universal credit of £20 per week, and I call on the UK Government to proactively pursue the uptake of benefits. For example, 40 per cent of people who are entitled to pension credit do not claim it. The UK Government should be pushing for those people to claim it—perhaps the Treasury just wants to keep that money.
However, I know that that is not enough. Here, we have stretched mitigation to its limits. We must detach ourselves from the failing UK Government and, with independence, set our course for a just society.
I am delighted to contribute to the debate and to support the motion in the name of my friend Mark Griffin.
The cost of living crisis is the biggest challenge that families across Scotland and the wider UK face. Inflationary pressures, stagnating wages and geopolitical upheaval have resulted in a perfect storm. Food prices, energy prices and fuel prices are all up. In the past year, the cost of an average family’s food shopping has increased by almost £400. Energy prices have jumped by more than £700 per household and they look set to increase by the same again in October. Fuel prices have increased by almost £1 a litre, which means that the average family car now costs £100 to fill up. In addition, our housing costs are among the highest in Europe, with that rent-seeking behaviour sapping our real productive potential across the economy.
While all of that is happening, wages have stagnated for more than a decade. Even people who are offered a wage rise this year are not likely to be offered a rise that will be high enough to keep up with rising inflation.
We should be in no doubt that that combination of price increases and compressed wages is really biting hard. Citizens Advice Scotland estimates that one in every five people in Scotland now runs out of money before pay day. The stress that that causes to families every month is frightening.
The Poverty and Inequality Commission estimates that one in four children in Scotland lives in poverty, that one in five working-age people in Scotland lives in poverty and that 61 per cent of working-age adults who live in poverty are living in a household in which someone is in employment. Are we going to accept that that is the norm or pretend that the situation will not get significantly worse by the end of the year?
It is essential that we understand the underlying factors that are driving inflation. Brexit, labour market shortages and the post-pandemic clamour are undoubtedly playing their part, but there is also an egregious economic power grab at play here. This week, IPPR Scotland and Common Wealth published research highlighting that net profits for companies are up by a staggering 33 per cent compared with before the pandemic and that 90 per cent of those profits have been made by just 25 companies. At a time when workers have been told by the Tories and some in the SNP that their demands for better wages are increasing and exacerbating inflationary pressures, we should understand that excess profits are a much greater driver of inflation. We should be considering profit restraint measures and the redistribution of profits to ensure greater equality of income. Taxing investments at the same rates at which we tax income is an underutilised and underappreciated tool that we have at our disposal.
The demands for pay restraint come at a time when railway workers are taking strike action for better pay, terms and conditions. I put on record my unequivocal and complete solidarity with them, because workers have been ripped off for too long. Having been blamed for the failings of successive Governments to address the structural fragilities at the heart of our economy, they have decided to stand up and be counted by using their power to collectively bargain. I pay tribute to the National Union of Rail, Maritime and Transport Workers for its work. Rather than criticise unions for democratically representing the views and wishes of their members, we should encourage other sectors to unionise and collectively bargain for better working conditions. If workers are not able to use their power to collectively bargain, they are left begging from the owners of capital.
We need to tackle the current crisis with a clear understanding of the underlying structural problem. Frankly, neither the UK Government nor the Scottish Government is doing much in that regard. Contrary to what the Bank of England’s governor tells us—
Over the past two years, the pandemic required financial interventions that were previously unheard of. Unprecedented times resulted in unprecedented measures. In total, the UK Government spent £410 billion to mitigate the effects of the pandemic and Scotland’s Government received an extra £14.7 billion in consequentials.
Although Scotland is finally on the road to recovery from the pandemic, we still face difficult and uncertain times. I therefore welcome the package of measures that has been put in place to tackle the cost of living crisis. Following two years of Covid spending, it can be hard to put into context just how extensive those measures are, but a package of support that totals more than £37 billion is significant by any measure.
Labour has chosen to focus, in its motion, on a specific aspect of that financial support. The truth is that the package of support comes from all directions and includes cost of living payments, increases in the minimum wage, fuel duty cuts and, of course, the energy bills support scheme. Although the scheme will deliver financial support to every household in Great Britain, the fact is that three quarters of the total financial support will go to the most vulnerable households in our communities. That is welcome. As my party’s spokesperson for older people, I welcome the fact that pensioners who are in receipt of pension credit will be more than £1,600 better off as a result of that support.
Although that support is welcome, the onus now lies with the Scottish Government to do more in the area. That includes ensuring that the tax burden here matches that in the rest of the UK, with income tax cuts and an increase in the single-person council tax discount to 35 per cent. We have called for that and will continue to do so.
I am afraid that my time is too limited.
It also includes helping local authorities to be flexible in responding to the needs of individual households in every area of the country. Councils are best placed to respond to local needs, but their job has been made significantly harder by the legacy of the cuts that they have faced over the past decade.
That is not to suggest that the Government should look to Labour’s solutions to support the Scottish public through the crisis. The tax proposal that Labour and the SNP support would raise half the amount that the energy profits levy is expected to deliver.
Over the past two years, unprecedented packages of financial support have been delivered by Governments the world over, with huge amounts of funding. We saw that with initiatives such as the furlough scheme, which protected more than a million Scottish jobs during the pandemic. We see the approach again with the energy bills support scheme.
I have spoken before in Parliament about the United Kingdom having broad financial shoulders. This is an opportunity to ensure once again that that is the case.
In conclusion, I say that only by working together with the UK Government to deliver on the potential that those broad shoulders provide can the Scottish Government deliver the recovery from Covid that the Scottish public expect.
I support the amendment in Miles Briggs’s name, which shows the amount of time, effort and resource that has been put into tackling the issue. The cost of living crisis will continue to be an issue, but we are moving forward and tackling it as best we can.
Thank you, Presiding Officer.
I thank the Labour Party for bringing the debate to Parliament. The cost of living crisis is impacting all our constituencies, in all parts of Scotland. I support the amendment that the Scottish Government has lodged and I hope that the Labour Party can also support it.
The motion from the Labour Party has merit; I agree that the UK Government’s £400 energy rebate has not been thought through as it will apply to second homes. As the minister indicated, the Scottish Government has been working on issues to do with second homes and has changed legislation to ensure that council tax discounts are in the hands of local authorities. The Scottish Government will work with the new Convention of Scottish Local Authorities leadership to examine all options to recover the money through a council tax that is levied on second homes. As the minister said, the Government is considering expanding the measure to cover long-term empty homes. I am glad that the minister has today written to COSLA, and I am sure that COSLA will reply quickly. I think that COSLA will welcome the consensus approach and ensure that it is sustainable and fair.
In this short speech, I will cover what got us into this situation and what we need to do to support the most vulnerable people in our society. This morning, East Lothian Foodbank reported a year-on-year increase in food bank usage of 86 per cent, and reported its busiest-ever month.
The cost of living is increasing all over the world due to inflationary pressures, fuel costs, food costs and the war in Ukraine. However, let us make no mistake—that has been exacerbated by the shambolic management of the economy by the UK Tory Party. This morning, inflation reached a 40-year high—[
.]—and remember, the growth rate here is projected to be the lowest in the G20, apart from Russia’s.
The Institute for Fiscal Studies estimates that inflation is hitting the poorest households harder, because they spend more of their money on gas and electricity. I echo what other members have said: the UK Government needs to do more on the cost of energy.
On Brexit, the Resolution Foundation, in a report last week, said that leaving the EU has reduced the competitiveness of Britain’s economy, which in turn is reducing productivity and workers’ real wages. The report, which was done in collaboration with the London School of Economics and Political Science, said that
“the ... impact of Brexit has been clear, with a depreciation-driven inflation spike increasing the cost of living for households, and business investment falling.”
“Brexit” is a word that we never hear from the Tory party; we have heard nothing about it in the debate, and there has been no acknowledgement of its impact on Scotland and on the poorest people in society. Research has estimated that labour productivity will reduce by 1.3 per cent, which is contributing to weaker wage growth, and real pay is set to fall by, on average, £470 per worker each year. Citizens Advice Scotland found that one in three Scots finds energy bills to be unaffordable and that, shamefully, almost half a million people in Scotland have had to choose between heating and eating.
In conclusion, I say that the UK Government must go further in providing targeted direct support for those who are most in need. Doubling the discount on household energy bills to £400 is welcome, but it does not do enough to mitigate the impacts of price increases on the people who are least able to pay.
The Scottish Government is investing almost £770m this year in cost of living support, including in a range of family benefits that are not available elsewhere in the UK to mitigate the bedroom tax and the benefit cap. It is increasing Scottish benefits by 6 per cent, and £1.8 billion has been committed to the Scottish child payment over the next four years—combined with the three best start grant payments and best start foods.
Westminster holds most of the powers that are needed to tackle the cost of living crisis in the immediate and longer terms, including levers in energy, the minimum wage, national insurance and 85 per cent of social security powers. The Scottish Government is supporting the most vulnerable people in our society in many ways—but with the powers of independence we could do much more.
I, too, thank Mark Griffin for bringing this important issue to the foreground. It is incumbent on the Scottish Government to do everything that it can to mitigate the harsh impacts of the cost of living crisis. That is undeniable; I doubt, from what we have heard in the debate, that anyone disagrees.
The cost of living crisis is plunging countless households into fuel and food poverty, and it is making the comings and goings of everyday life extremely challenging for people across Scotland. Projections emanating from the Bank of England do not offer reassurance; on the contrary, its governor expects a peak in the rate of inflation of an astounding 11 per cent, which is a worrying figure, to put it mildly.
Scrutiny of energy and finance policy is essential, but such scrutiny must be focused on the decisions that are made on energy and finance policy. It is not surprising that the measures that have been taken by a Tory Government that is led by ultrawealthy and law-breaking individuals disproportionately benefit the rich in times of crisis.
Let us contrast the UK Government’s actions with our Government’s actions, because the Scottish Government is not exempt from scrutiny, and should not shy away from sound proposals for improvement. The Scottish Government is rightly extending itself to support individuals and families during this unprecedented and challenging time. Under the defective devolution settlement, that must be done within the bounds of severe resource constraints, but it is necessary in order to limit the damage that is being inflicted by the UK Government’s inaction and ineptitude.
For example, as the minister stated, the Scottish Government is investing £770 million in cost of living measures, including uprating eight Scottish social security payments by 6 per cent to support people who face rising costs.
Thanks to the progressive alliance between the Greens and the SNP in government, almost £1.8 billion is being committed to the Scottish child payment over the next four years. The amount per child per week doubled in April to £20, and will increase further to £25 by the end of the year, when it will also be extended to all under-16s.
On the other hand, the UK Government is providing a “grand package” of £37 billion, including the energy bills support scheme. However, the devil is in the detail. All households will receive £400, including second homes and households on high and superhigh incomes. The Tory Government has made the completely inadequate suggestion that people who do not need the £400 should simply donate it to a charity of their choice. That is not good enough. It is not because of their voluntary care and generosity that the wealthy and ultra-wealthy enjoy their status.
The Scottish Government must consider all its options to mitigate the regressive impact of UK Government policy. That is nothing new.
In principle, the motion that we are debating today is welcome. However, we need to be careful when the Opposition here demands a top-down intervention that would, in effect, prescribe to local authorities how they should govern their finances. It is essential that proposed measures that would directly affect local government are designed, in the first instance, in consultation with COSLA and other relevant stakeholders. I support, in principle, the empowerment of local authorities, which will enable them to design and implement targeted fiscal policies, such as increased council tax for second homes.
More generally, the reactive proposals from Labour would not solve the problem. I agree that, depending on the appetite of COSLA and stakeholders for the proposal, local authorities need to be indefinitely empowered in that way.
I welcome the opportunity to participate in the debate. I support the proposals that have been set out by Labour, as amended by the Scottish Government. The addition of the wording on empty homes and the importance of equitable distribution will add value to the Labour motion.
Although the cost of living crisis brings bad news for almost everyone, it is the people who are on low to middle incomes for whom it potentially poses an unmanageable challenge. It is predicted that the situation will get worse.
Inflation is now at a 40-year high, and the Office for National Statistics blames higher food prices—particularly the price of everyday staples including bread, cereal and meat—for the increase. Although higher earners might be able to absorb that cost, years of austerity and low income growth under Tory Governments have left the people who are on the lowest earnings with little to no room for manoeuvre.
The Resolution Foundation reported that disposable incomes of the people who have the lowest earnings increased by £3,456 between 2000 and 2020. However, income for the richest grew by £12,393.
The supermarket Asda commented today that some shoppers are setting £30 limits at checkouts and at petrol pumps. Customers are putting less in their baskets and are switching to budget ranges.
Although the doubling of the energy discount to £400 is not unwelcome, it falls short of mitigating price increases for those who are least able to afford their energy bills. Although owners of second homes will receive double payments, others are not eligible for any payments. I have been contacted by constituents who live on a park home estate. Due to their having no direct utility accounts, they will not receive any help with their energy bills. That concern has not been addressed, but the UK Chancellor of the Exchequer has chosen to spend only half of the £30 billion that he has at his disposal.
Over the past two years, the Scottish budget has fallen by 5.2 per cent, with another 1 per cent sustained until 2026. Despite that, the Scottish Government has made an investment of £770 million in cost of living support. The Scottish child payment doubled in April and will rise again by the end of the year. Together with the three best start grants and best start food, that will provide Scottish families with more than £10,000 by the time their first child turns six.
The Child Poverty Action Group has reported that the combined value of Scottish Government policies along with lower childcare costs reduces the net cost of bringing up a child by up to 31 per cent for low-income families, and provides much-needed relief.
Furthermore, to help to address the current cost of living pressures and to recognise the needs of families with pre-school-age children, SNP-run North Ayrshire Council has agreed to increase from £130 to £230 the scheduled summer child bridging payment. That is an additional one-off payment of £100 for families in my constituency and throughout North Ayrshire who are already entitled to free school meals and the child bridging payment.
There is no respite from the relentless rise in prices, with some people facing the terrifying reality of not being able to afford the basics. Increasing numbers of people are facing stark choices. Westminster holds most of the powers over what is needed to tackle the cost of living crisis. It is time that it flexed its fiscal powers and realised that lower-income households do not have the flexibility that higher-income households use in managing price increases.
We are experiencing some of the most extraordinary global events in my lifetime; we have the war in Ukraine, broken supply chains and rising energy prices, all while the world is struggling to get off its knees post-pandemic. Across the world, people are looking at their bank balances, worrying that they are worth less than they were the day before. It is incumbent on Governments to support those they serve by any means that is available to them. That includes direct support to those who are in need, but it is also about ensuring that Governments get a handle on inflation so as to slow the depreciation of people’s hard-earned savings.
Scotland is fortunate to have a Government in Westminster that is committed to providing that support. Throughout the pandemic, the UK Government provided an unprecedented level of support to the people of Scotland, spending over £400 billion in total. The furlough scheme, which was underwritten by the broad shoulders of the Exchequer, allowed millions of families to remain safe at home without having to worry about risking their health for a pay cheque.
The fast and efficient roll-out of a united vaccine scheme allowed our economy to remain resilient. We managed to get shots in arms faster than any other European country, leading to our economy bouncing back above pre-pandemic levels. Not only does the UK Government have a track record of backing up that commitment to supporting the people of Scotland but, as my colleagues on these benches have pointed out, continues to back it up as it provides aid to those who are in need at this difficult time.
A number of measures have been implemented. The £400 energy grant promises to make a real difference to those who will struggle with the global rise in energy prices. The cut in fuel duty by 5p per litre lowers the proportion of a commuter’s wage that they have to spend on travel, again putting money directly into the pockets of hard-working Scottish people. It represents an amazing £5 billion in savings for commuters.
The universal credit taper has been adjusted to make sure that people who are receiving support can take home more of their hard-earned pay without the fear of losing their benefits. A £150 cost of living payment for disabled people will help to cover the extra costs that fall on those who are disabled, ensuring that some of the most vulnerable people in Scotland do not suffer excessively because of an accident of birth or later in life. Pensioners who are in receipt of the winter fuel payment will receive an extra £300 to help with the cost of utilities.
Presiding Officer, I hope that you can see a theme here. The UK Government has, time after time, supported the people of Scotland, especially those who are most in need. Finally, on that theme, I put on the record my full support for the amendment in the name of my colleague Miles Briggs.
I wonder whether, in summing up, the Labour Party speaker can answer two questions that Labour members have not been able to take as interventions. First, how much will it cost to recoup the £10 million in administration costs? Secondly, how quickly and with what scheme will it be possible to get that money back?
We have heard from the minister that he has written to COSLA. I suspect that the reason why he has done so is that he knows that it is not possible to get the money back. If that is not the case, perhaps that can be covered in his summing-up speech.
I am afraid that my time is almost gone.
We on these benches fundamentally believe that people know better what to do with their money than the Government does. Raising the single-person discount on council tax to 35 per cent would provide a huge boost to people who live alone and, again, it would keep hard-earned wages in the pockets of people who need them. That is a measure that the Parliament can, and should, implement now, with the powers that we have. If we were serious—
I am sorry. My time is almost up.
The UK Government is taking that commitment seriously; sadly, others are not. I hope that we support the Conservative amendment, because it would do something practical that would affect people today, rather than just giving words of warmth that would do nothing to help people’s circumstances.
Like many others, I welcome the debate. To be honest, with the exception of the last contribution, I think that the debate has shown the Scottish Parliament at its best—MSPs working together to help the people we serve as much as we can at a time of real need. I particularly welcome the fact that members on the left and in the centre of the political spectrum are constructively collaborating to make a meaningful difference and to build a more just society, which is to be welcomed going forward.
That is why we welcome and support Labour’s proposal, but we will be doing more by also considering how to effectively ensure that long-term empty homes, which are a blight on many communities, do not benefit from the £400 energy rebate. We will do so in conjunction with local authorities through COSLA. There will be a range of detailed considerations to work through, and we want to do that in a constructive way with local government in order to find the most effective method of ensuring that the £400 energy rebate for second homes and empty homes can be used to tackle the cost of living crisis in local communities.
We will work with COSLA to examine all options to recover that money through a council tax that will be levied on second homes and empty homes. We will also work with it to ensure that that is done in a fair and equitable way, and in a way that considers the demographics in Scotland. It is possible that any action to provide powers to councils to address those problems through council tax will require legislation, and we look forward to working with the Labour Party and others and having their full support for any necessary legislation that is required.
We are aware of the impact that second homes and short-term lets have in many communities, which is often raised as an issue when it comes to local residents being able to find homes to live in—a point that Willie Rennie made well. That is why we took action on short-term lets with planning and in creating a licensing scheme. Our long-term housing strategy, “Housing to 2040”, outlines our intention to give local authorities the power to manage the number of second homes where they see that as a problem in their localities.
Since 2013, councils have been able to vary the discount against council tax for second homes and, in 2017, we changed legislation to ensure that council tax discounts for second homes either are no longer available or are in the hands of local authorities. We are taking action through the additional dwelling supplement of land and buildings transaction tax, and we will be reviewing that, as we committed in the budget to do.
Members have rightly asked that the Government must respond to the cost of living crisis—and the Scottish Government is absolutely doing that. We have put in place a considerable package of support of almost £3 billion, which will contribute to mitigating the impact of the increased cost of living in households, as the Minister for Public Finance, Planning and Community Wealth set out at the start of the debate. Of course, we will continue to look to do more where we can with the limited powers and the constrained budget that we have.
To address the suggestion that was put forward by the Conservative Party, I think that it is important to state that increasing the single-person discount to 35 per cent would need to be financed by a budgetary cut elsewhere, because it would cost more than £100 million and it would not be means tested. Unfortunately, as is too often the case, the Conservative Party has brought an idea to the chamber of spending more, but it has not considered where that resource would come from in other parts of the budget. If it is interested in making a meaningful difference in debates such as this one, as the Labour Party has done, we need to see some more seriousness from the Conservative Party.
As others have said, we need to remember that the Westminster Government holds most of the powers that are needed to tackle the cost of living crisis. We have welcomed the initiative that it has taken, but it needs to do more in both the immediate and longer term by using its fiscal headroom and powers, including in relation to Alex Rowley’s idea about the £20 universal credit uplift, and by taking action on investments, as Paul Sweeney mentioned, which matters are reserved.
The cost of living crisis is causing fear and alarm to many people, including those who were not managing previously and those who were just managing. Therefore, any assistance is very welcome. However, it is galling that this help, which is designed to help the worst off, is going to people who are affluent enough to afford a second home or, in some cases, multiple homes. That means that they receive double what those who are in need receive—nearly £10 million is going to those who do not need any help at all. Imagine what that money could do in the right hands to help those who so desperately need it.
We agree that the UK Government must go further, which point was made by Alex Rowley, Willie Rennie and many others. However, we must also use every intervention that is available to us here to help people who are struggling with the cost of living crisis.
We welcome the change of heart and the commitment from the Scottish Government to examine options with COSLA and to go further and look at the issue of empty homes. However, we ask—
I will turn to Mr Balfour’s questions in a moment.
We ask that the Government moves very quickly, because it needs to let people know by this autumn what they will be facing for the winter ahead. I know that local authorities will be desperate for further income to help the most vulnerable in their communities, and they are best placed to do that.
There are points in the Conservative amendment that we would like to examine and debate further. However, as Willie Rennie pointed out, the amendment would delete the crux of our motion about clawing back some of the funding and diverting it to where it is most needed. Therefore, we cannot possibly support that amendment.
On Jeremy Balfour’s direct questions, councils know the people who are living in second homes, so they can deal with that quickly and easily. They already have the powers to do it, it would not cost any more than the interventions that the Conservatives are proposing and, most important, local authorities know where to divert the money so that it goes to those who are most in need.
We have to act now because, as Mark Griffin talked about, this winter, people are facing the stark choice between eating and heating—or, as he said, between starving and freezing. Food banks are struggling to get supplies as people who would normally donate are struggling to feed themselves. We need to look again at how we ensure that people have enough food to feed themselves and their families.
Heating costs are also increasing, more so for people who are off the gas grid. It is no surprise that those who are off the gas grid are more likely to be in fuel poverty. Therefore, we must unite and ask the UK Government to ensure that assistance goes to people who need to fill a gas or oil tank.
I do not have time to take an intervention, sorry.
Those who are off the gas grid face higher costs all round. I saw someone on Facebook today saying that a pack of Lurpak butter—hardly a luxury—costs £7.25. That is £7.25 for a pack of butter.
Private renters pay higher costs. They can live in homes that are not insulated properly and would need the landlord’s permission to do anything about that, and we are seeing rental costs increase rapidly. We need to create a rent freeze.
Alex Rowley talked about older people and disabled people, who are at home longer and therefore face higher fuel costs. That also goes for people who may require equipment at home such as dialysis machines. Their bills are increasing.
Paul Sweeney called for restraint on profits that energy companies are making from this horrendous situation. Rather than demonising workers, who are trying to protect their standard of living and feed their families, we must look at the profits that are being made from this situation.
We urge the Scottish Government to act quickly. It is simply wrong that those who are affluent enough to own a second home get a greater share of the help that is available than those who really need it. The money must be diverted to where it can make the greatest difference: to those who are struggling with the cost of living crisis.