Before we begin, I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with current Government guidance and that of the House of Commons Commission. Please also give one another and members of staff space when seated and when entering and leaving the room.
I beg to move,
That this House
has considered the cost of living in the UK.
I am delighted to have secured this debate today. It is very timely, and I honestly do not think that anything occupies the minds of constituents in North Ayrshire and Arran or indeed any other constituency more than this issue. It affects everyone. Everyone has noticed that their monthly outgoings are rising. Energy costs are up. Food prices are up. Fuel prices are up. Clothes prices are up. In that context, it is no surprise that consumer borrowing is also up, which will throw many into unsustainable debt as they struggle to keep up with essential bills. There can be no doubt that we are caught up in a genuine, biting cost of living crisis. It is simply not good enough that while our families, our communities and our pensioners are suffering, the Government are eating themselves alive over whether the Prime Minister knew he was actually at a party when he attended a party at the address where he lives.
I want to begin by saying a few words about the cost of energy. Gas and electricity bills are expected to rise significantly in April, when the energy price cap is predicted to reach £2,000 a year or £165 a month. That represents a 45% increase, although there are reports of even steeper rises. It is no wonder that National Energy Action believes that 6 million households will be in fuel poverty by April. That is a 50% increase from last year and it will hit hardest the poorest families, who spend most on energy as a proportion of their income. The reality is that wages are simply not keeping pace with the rise in the cost of living, as the Office for National Statistics has highlighted, with the Office for Budget Responsibility indicating that average real wages will be lower in 2026 than they were in 2008. Instead of a rising price cap, an emergency financial package must be introduced to support the most vulnerable and help families to cope during this crisis. The cost of living crisis is real and will only worsen as energy bills rise, alongside regressive tax hikes and inflation, pushing more and more people into poverty.
In addition the ending of the uplift to universal credit and working tax credit is imposing the biggest overnight cut to welfare in 70 years. The situation for too many of our constituents is critical. The changes to the universal credit taper rate are welcome, but they are not enough to help those who are struggling with this perfect storm of financial pressures. Let us not forget that apart from the suffering that the cut in universal credit will cause for those on low incomes, it will take £460 million out of Scotland’s economy. That money would be spent in local shops, stimulating local economies in communities in each and every town and city.
I thank the hon. Member for securing this vital debate. Behind those headline figures is a 30-year high in inflation. As she rightly stated, that disproportionately affects the poorest in our communities. Jack Monroe, known on Twitter as BootstrapCook, has written for The Guardian and referred to those real-life experiences. For example, a 500-gram bag of pasta that was 29p is 70p today. That is a 141% price increase. And it goes on and on and on. The hon. Member is right to point out that people on universal credit have had that massive cut of £1,000 a year or £20 a week. That money must be restored.
I absolutely agree with the hon. Gentleman that the cut to universal credit is beyond words in its cruelty and its insensitivity to the struggles that real people face every day. It is a cruel irony that, just as the Scottish Government introduced the Scottish child payment, the UK Government chose to remove the £20 universal credit uplift across the UK—pulling the rug away from struggling households in Scotland. That example really crystallises a tale of two Governments.
Yesterday, I heard hon. Members in the main Chamber say, “If the SNP is so concerned about the cost of living crisis, it should do more in Scotland to support people who are suffering.” I say to the Minister that in Scotland the hated Tory bedroom tax—a tax, incidentally, that hits the disabled hardest—has been fully mitigated by the Scottish Government. I do not have time to mention all the support that the Scottish Government have brought in, using their own fixed budget, to support those who are suffering. It is deeply ironic that Members in this House talk about how the Scottish Government could do more when they are the very people who imposed the constraints that limit the Scottish Government’s powers to do just that. Give us the powers; if we have the powers, we will do more. The irony of calling for the Scottish Government to do more while tying their hands behind their back is well noted in Scotland.
However, the UK Government have a rich array of powers with which they could help to tackle this cost of living crisis—if the political will existed. They could introduce a real living wage. A real living wage would, as it says on the tin, relate to the cost of living—unlike the current, pretendy living wage. They could increase statutory sick pay, which is among the lowest in Europe. Unless the real living wage replaces the pretendy living wage, more and more people will find that they have less to live on as their pay is eroded by the rising cost of living.
The sad fact is that, shamefully, the UK has the highest poverty rate and the worst levels of inequality in all of north-west Europe, with 11.7% living in relative poverty. Around two thirds—68%—of working-age adults in poverty in the UK live in households with at least one adult working. That figure is at an all-time high. Poverty is driving unsustainable debt, with around 3.8 million households carrying an estimated £5.2 billion of arrears in household bills—a figure that has tripled since the start of the pandemic. People are borrowing more to pay for basics and essential bills.
Further, the Chancellor could cut VAT on energy bills and provide emergency loans to energy companies that are teetering on the brink. He could rule out a rise in the energy price cap and reintroduce the £20 per week uplift in universal credit. If the political will existed—and I fear that it does not—the UK Government could replicate the Scottish Government’s child payment across the UK.
As household energy bills soar, fuel costs are rising too. That does not just hit motorists hard; it also has a wider impact on industry because it pushes up the price of food, goods and services. Amid all the pain being suffered by our constituents and communities, we are approaching the highest tax burden since the early 1950s because of the national insurance hike. The consequences for our poorest could not be more stark; they could barely be more harsh. The national insurance hike means that workers earning as little as £10,000 will soon pay a national insurance rate of 14.25%, regardless of income. If student loan repayments are included, graduates earning just over £27,000 will pay a marginal tax rate of 42.25%—and the Tories call themselves the party of low taxation! All of that will act as a drag on recovery. UK consumer confidence is at its lowest level for 11 months, as people understandably worry about surging inflation, which is expected to rise to a staggering 7% by the spring.
It looks much bleaker when we factor in the Brexit effect, which I know the Government do not like to talk about, but let us do so for a minute. The Office for Budget Responsibility—the UK Government’s own forecaster—suggests that the worst is yet to come. Make UK is an organisation representing 20,000 manufacturers, and it has said that Brexit will undoubtedly add to soaring consumer costs this year. Squeezed supply chains are under pressure, with customs delays, border red tape and labour shortages, and additional costs ultimately borne by consumers.
Last month, as Mike Amesbury indicated in his intervention, we saw £15 added to the average price of groceries. The rate of food price increases is set to increase further this year, just as the national insurance hike is set to bite into pay packets in April.
Let us not forget the promises that were made—the pictures that were painted of the sunny uplands—as we approached Brexit. We were told that VAT on energy bills would be scrapped. Now we are told we cannot do that because it would be a “blunt instrument”. We were told that the price of food would go down. In the wake of Brexit, this message slightly changed to there will be “adequate food”, but we see the price of food rising fast.
It seems that there is one rule for one and one rule for another. As the Minister will stand up and tell us, there are lots of reasons why he cannot do more, there are lots of reasons why the Government cannot do more and hard choices have to be made. In that context, I cannot help but remember the words of Lord Agnew yesterday when he talked about the £4.3 billion of covid loans conveniently written off by the Treasury. He said “arrogance, indolence and ignorance” were at the heart of Government and were freezing “the Government machine”. He said:
“Schoolboy errors…allowing more than 1,000 companies” that were
“not even trading when Covid struck”—[Official Report, House of Lords,
to have loans could not be justified. I wonder how much pain people like the ordinary man in the street would have been saved by a cash injection from the Treasury of £4.3 billion.
We cannot forget the poor deal for pensioners in this crisis. The WASPI women—the Women Against State Pension Inequality Campaign—have already been left high and dry as their pension age was increased with little or no notice, throwing their retirement plans into chaos. I want to head off once again the allegation that if the SNP Government are so concerned, they can help the WASPI women. I simply quote that section 28 of the Scotland Act 2016 prevents the Scottish Government from providing support on reserved areas, including pensions assistance or assistance by reason of old age. Once again, we need to burst the myth that the Scottish Government can solve the WASPI problem. It is a problem of the Government’s own making and it is down to them to fix it. If the Scottish Government had the powers, we would be happy to do so with all the levers of an independent country.
Those who have finally reached state pension age now find they are being clobbered again as the triple lock has been abandoned—right in the middle of a cost of living crisis. State pensions have to keep pace with the cost of living, otherwise, we will see older people languishing in poverty as the threat of a rise in morbidity from the cold looms large this winter. I will say that again, because it is outrageous: there is an expectation this winter that the death from the cold among older people will rise. I do not even know what to say about that, it is so appalling.
Pensioner poverty has risen to a 15-year high under this Government’s watch as 985,065 pensioners have been directly impacted by the breaking of the triple lock, despite the fact that UK pensions are the least generous in north-west Europe. Not only are they the least generous but they have been clobbered by this Government in the middle of a cost of living crisis. It is simply not good enough for the Government to fiddle while households, pensioners and one in four children in the UK suffer poverty as a result of the choices the Government are making—and it is a result of the choices they are making. The cost of living crisis is not inevitable, although of course there are factors at play such as global energy challenges and the all-too-predictable consequences of Brexit driving up prices due to supply issues.
I am grateful that my hon. Friend mentioned energy prices. Does she agree that the UK Government’s penchant for reducing investment in onshore wind farms, as well as removing subsidies for offshore specifically in Scotland, undermines not only renewable energy but the production of the cheapest energy that this United Kingdom of Great Britain and Northern Ireland can provide, which would otherwise lower energy costs for our constituents?
Absolutely. That is yet another example of this Government’s skewed priorities—no joined-up thinking, no strategic thinking. Of course, at the moment, they are a Government who are not focused on governing, but are tearing themselves apart with their own internal struggles.
However, there is action that the Government can, and should, take to see people through this perfect storm of rising costs. To stand by and do nothing to alleviate this very real crisis while so many of our constituents across the UK suffer—including the Minister’s constituents—is not acceptable and, as I said, shows skewed priorities. It punishes those on low pay. It punishes those seeking work and pushes them further away from the job market, because poverty creates barriers to work that need not be there. Perhaps worst of all, it punishes those whose health prevents them from working. Among all that, it punishes the children in all the households that are struggling during these difficult times, because it blights their childhood with poverty. I can tell the Minister that the scars of childhood poverty do not easily heal and are never forgotten. If this Government wanted to, they could do more. They could use their powers for good, to protect and support those they are supposed to serve. I urge the Minister to make the case to his Government to do so.
I am grateful for the opportunity to take part in this worthwhile and timely debate. I apologise for not being able to take part in yesterday’s debate, but it is really important that we talk about how we can help households and families in our constituencies that are facing the real pressure of increased house prices, and all the anxiety and difficulties that go with that. I agree that the Government must do what they can to mitigate increasing living costs, particularly for low and fixed-income families.
I regularly host drop-ins across west Cornwall, where people can come along and raise whatever issue they like. I try to do so in every part of my constituency: like many Members present, I represent a large rural area, and it is important that I get to where people are. Many people, pensioners in particular, have come to me in recent months. Those households have worked hard to plan for their retirement, but find that their pension has become less able to meet their basic living costs—a position that they never expected to be in. These are not just pensioners on the state pension who might be getting pension credit: there are those who have a small pension in addition, but are finding that costs are outrunning their income.
I have also come across several families whose rent costs have rocketed over the past couple of years—an issue that I raised in this Chamber last month. It is really important that the Government look at how we can manage and protect housing supply, particularly in places such as Cornwall, which is a very attractive place to visit and possibly an attractive place to buy a second home or bolthole. That forces up the price of homes for the people living there, and that is true for lots of other constituencies, particularly coastal ones. The Government must look more earnestly at increasing the availability of rental properties and homes to buy by protecting them for permanent residents. When we build new homes, it is important that they meet a local need, as is the case in St Ives, which is part of my constituency. This is about the cost of housing and rent.
Would not part of the solution be to build homes for social rent, allocated to local residents? Fewer than 6,000 of those homes were built last year. Would the hon. Member agree that homes for social rent must certainly be a big part of the solution?
I completely would, and I welcome that intervention. However, in parts of the country, including my constituency, families with fairly decent incomes who would never qualify for that list are also seeing their rents rocketing. We are talking about the nurses, teachers and police officers we need to come to take jobs in Cornwall, or stay in the county, and who cannot afford the rents they are expected to pay.
I absolutely agree with the hon. Gentleman’s point. Cornwall County Council, now under a Conservative administration, is ramping up the provision of social rental properties. That meets the needs of a particular group of constituents, but does not reach or solve the whole problem.
In view of the rising costs of housing, Cornish MPs are arguing in favour of protecting new buildings for permanent residents only, which will help to protect those homes for local need. I agree that we need to look at every tool available to ensure that people have secure homes for life that they can feel safe in. Those homes should be built efficiently, so that rising energy costs, which I will address in a minute, can be managed, so that we are not just heating up the planet when we are trying to heat our homes.
I want to touch briefly on energy costs. My understanding at the moment is that the cost of production of energy has not risen. Companies that are producing it, not all of them based in the UK, are making colossal sums of money due to demand. I am interested to hear from the Minister what the Government are looking to do to bring the cost that suppliers pay for energy closer to the cost of production.
Another area to look at is the feed-in tariff. For example, customers are seeing energy prices increase and that is expected to carry on this year, but those who are feeding into the energy supply, through solar panels or wind turbines they have invested in, are not seeing any change in the money they receive for that energy. It seems sensible for the Minister to look at whether the feed-in tariff should be tracked against the energy costs people pay.
There is no doubt that the energy market needs reform, but right now urgent help is needed for households most hit by energy prices. I heard the calls for a cut in VAT, but householders concerned about energy costs have already worked extremely hard to reduce the amount of energy they use, sometimes choosing not to heat their homes in order to feed their families. The VAT element of the bill for those families will be tiny: they might save £20 or £30, perhaps a little more, a year in VAT. If I owned several electric cars, a couple of hot tubs, maybe a swimming pool, and a massive house with lights on all the time, the savings I would make from the VAT cut would be significant. We are not helping the households that most need it with the headline-grabbing promise to cut VAT on energy.
There must be targeted and effective help for the families I have referred to, the pensioners, people on fixed incomes and low-income households. There should be cash to help with energy bills and, at the same time, an effective way to improve people’s homes. We have had lots of schemes recently where large amounts of money have been made available for people to retrofit their homes. In Cornwall, builders—people involved in construction—were already run off their feet with building homes and looking after Cornwall’s homes and did not choose to take up those offers. People came in from different parts of the country to retrofit homes, not doing it properly or effectively, and often going bust before they got found out.
Lots of Government money was wasted while the homes were not actually improved. The Government need to look carefully at how we retrofit homes, probably through local authorities, where that can be targeted and effective. Ultimately, not now but in the near future, the Government with their sizeable majority could properly reform the energy market so that the poorest families paid hardly anything—if anything—for energy, and those more demanding homes paid more.
Does the hon. Gentleman agree that energy market reform also requires a reform of transmission charges? While in most parts of England a subsidy will be given to provide energy, north of a certain line north of London people have to charge to produce energy to put it on to the national grid, and that reduces the ability of renewables to lower energy costs.
I agree that there is a need for a time out to properly look at the energy market and how it works. The price cap we introduced a few years back was helpful and certainly it is helping right now; my understanding is that the variable tariff is the best to be on. However, I met policy advisers some years ago to discuss some sort of block tier energy price, where the first units paid are extremely cheap or free and the more units someone uses, the more they have to pay. We have to retrofit the poorer homes to make sure that does not penalise them, but there is a need in the energy market to make those who can afford it contribute to the cost of energy for those who cannot. It is not a luxury; it is something that we need to care about. We do care about it, and we need to do something.
Order. I remind hon. Members that I will be starting speeches from Front-Bench spokespersons at 10.28 am and no later than that. Can hon. Members adjust their times accordingly?
Thank you, Mrs Cummins. It is a pleasure to serve under your chairship. I congratulate my hon. Friend Patricia Gibson on facilitating the debate. It is such an important one at this time and I am pleased to contribute.
The cost of living crisis being experienced around the UK has been created and compounded by a series of UK Government failures, all reaching an awful crescendo, it seems, at the same time—a decade of austerity, savage cuts to welfare, chaos and shortages brought by Brexit, inept handling of the pandemic and Ministers’ shameful failure to mitigate and anticipate against rising energy prices. As is so often the case under the Government, it is those with the least who will suffer the most from the price cap increase.
The Joseph Rowntree Foundation finds that households on low incomes will spend a staggering average 18% of their income, after housing costs, on their energy bills from April. For single adult households on low incomes that rises to an extraordinary 54%: an increase of 21 percentage points since 2019-20. The climate deniers among the Tories—one in 15 of them according to a recent survey by The Independent, although I will point out that Derek Thomas is not among their number—like to peddle a narrative that environmental levies are to blame for high energy costs. However, analysis by Carbon Brief has found that energy bills in the UK are nearly £2.5 billion higher than they would have been if climate policies had not been scrapped over the past decade.
Those cuts included gutting energy-efficiency subsidies, effectively banning onshore wind in England, as my hon. Friend Martin Docherty-Hughes mentioned, and scrapping the zero carbon homes standard. The latter move, as Lord Deben, the Chair of the Committee on Climate Change has pointed out, has resulted in hundreds of thousands of insufficiently insulated homes continuing to be built in the years since, effectively pushing the costs for bringing their insulation and energy systems up to scratch on to homeowners and off housing developers’ balance sheets. Those cuts were made after a front page by The Sun in November 2013 reported that the then Prime Minister David Cameron’s answer to rising energy bills was to get rid of “all the green crap”.
The hikes in energy prices, along with the cuts to universal credit and increasing national insurance contributions, are forcing local and national Governments to take even more action to protect our citizens. In the past eight years, the Scottish Government have spent £1 billion tackling fuel poverty and improving energy efficiency in homes and created a £10 million fuel and security fund, which gives direct help to those who might otherwise have been forced to ration or disconnect altogether from their energy supply. The Scottish Parliament also passed the Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019, which commits to drastically reducing the number of households living in fuel poverty in Scotland by 2040. Even before the expected energy price cap rise in April, one in three Scots is struggling to cover their energy bills—a Citizens Advice Scotland survey found that 36% of people in Scotland say their energy bills are unaffordable.
I know how hard this is hitting many people in my constituency of Edinburgh North and Leith. For example, my constituent Imogen lives with her husband, two teenage children and very elderly parents, who live above her in a self-contained flat. Over the past two years, their heating bills have increased because Imogen’s husband is now working at home full time due to covid, she works part time at home, and her parents need the heating on a lot as they are in their late 80s to 90s and are now not very mobile.
After the family’s energy supplier went bust, they were shunted on to another one. The first direct debit was not taken, leaving the family in a state of uncertainty about how much they were paying. Eventually, Imogen was able to set up another direct debit, but only after numerous stressful attempts to contact the new energy provider, as the company did not attempt to contact them. The family’s current energy bills are approximately £3,000 a year, and that looks likely to increase to £4,500 after the rise in the energy price cap. As you can imagine, Mrs Cummins, she and her husband are extremely concerned about how they will cover such a hike. Many more of my constituents will be facing anxieties similar to those that Imogen and her family are dealing with, with many further facing that dreadful choice to heat or eat in coming months.
Citizens Advice Scotland says that of those struggling to cover their energy bills, 40% cite low incomes as a reason, while 12% say that inconsistent incomes make it difficult to afford to pay for their utilities. That is why the Scottish Government’s promotion of the real living wage across all sectors is so important, helping to ensure that Scotland has the lowest percentage of earners earning below that living wage in the UK.
Our Scottish Government public sector pay policy underlines our commitment to tackle poverty by introducing a public sector wage floor of £10.50 per hour from April 2022, with additional funding for local government to ensure that that applies to adult social care workers in commissioned services. The UK Government must act to make work pay by increasing minimum wage rates and the totally inadequate statutory sick pay, in line with the real living wage.
The Conservative Government’s contemptuous treatment of those on low pay is also reflected, of course, in their latest attack on lifeline welfare payments, with the enormous cuts in the incomes of families on universal credit and working tax credit. In Edinburgh North and Leith, 13% of working age households were impacted, with 34% of that number being working-age families with children.
It all comes on top of more than a decade of Tory Government austerity, which the SNP Scottish Government are having to work very hard to mitigate. The fixed Scottish budget funds the Scottish Government’s priorities of tackling child poverty and inequality by targeting over £4 billion in social security payments. That includes the doubling of the game-changing Scottish child payment to £20 a week from April 2022. The Child Poverty Action Group welcomed that, calling it a
“lifeline for…families across Scotland”.
Consumer prices were 5.4% higher in December 2021 than a year before. That is the highest inflation rate recorded in 30 years. However, as we have heard already, food campaigner Jack Monroe’s excellent Twitter thread, which highlights huge price hikes for basics such as pasta, baked beans and rice, shows how that figure grossly underestimates the real cost of inflation for families on minimum wages, zero-hours contracts, and those forced to food banks. She also highlighted the manufacturers’ sneaky practice of making products smaller while keeping the same price—known as “shrinkflation”.
This Tory Government might be able to ignore Brexit chaos and the rampant cronyism, dark money and corruption in British politics, but they cannot keep ignoring poverty and people on low incomes any longer. As we have heard from my hon. Friend the Member for North Ayrshire and Arran, the UK has the highest poverty rate of any country in north-west Europe, and the worst inequality for every year of this century.
We call on the UK Government to urgently tackle the cost of living crisis by cutting VAT on energy bills and categorically ruling out a rise in the energy price cap. We must also see an emergency financial package to help families by reversing cuts to universal credit, delivering a low-income energy payment, matching the Scottish child payment UK-wide, introducing a real living wage, and increasing statutory sick pay in line with that real living wage. The UK Government could also choose to act now by providing everyone eligible for cold weather payment with a one-off payment to help those on lowest incomes with fuel bills. That would mirror what the Scottish Government will do when they take on responsibility for cold weather payments from next winter.
We must never forget that Governments, particularly those with all the economic levers of a normal country at their command, have choices. They can choose either to support, and treat with respect and dignity, those among us who need a helping hand, or to scorn their vulnerability and do everything possible to put obstacles in their way while sneering that they do not deserve our help. I know which Government I prefer.
The question must be asked: why is Scotland having to protect its citizens from the right-wing policies and vicious ideologies of successive Tory Governments when Scotland did not vote for those Governments? It is time for our independence and a fairer Scotland that does everything in its power to protect and support its citizens.
It is a pleasure to serve under your chairship, Mrs Cummins. I congratulate Patricia Gibson on securing today’s important debate, which keeps a spotlight on an issue that impacts every person across the UK—including in my constituency. The current rate of inflation is 5.4%, which is the highest it has been in three decades. The Bank of England expects the consumer prices index to peak at around 6% in April, but others have a grimmer forecast—Goldman Sachs expects it to hit around 6.9%.
The cost of living crisis must not be underestimated; every essential will cost more and every penny must stretch ever further. In-work poverty has become more common, which is ironic under the leadership of a Government who claim to incentivise work. In April, benefits will be uplifted in line with inflation, but as inflation stood in September; inflation was only at 3.1% then, so this will represent around a 3% real-terms cut in 2022. In October, the Government chose to remove the £20 universal credit uplift, which is needed now more than ever. That was before inflation hit its current high.
There are some obvious areas that we can immediately recognise as stressors, such as energy prices and the cost of food, but there are other problems that we might not see so suddenly. Social housing, one of the UK’s greatest supports for low-income families, is in short supply; demand simply cannot be met, so we see people forced towards an unaffordable rental market. In the year until September 2021, rent across the UK had already risen an average of 8.6%. If Greater London is excluded, that figure lessens, but only to 6.6%. Private properties, for the vast majority, require a hefty deposit, which is a huge upfront cost. We know that it is often cheaper in the long run to spend more in the short term, but that is not an option for those on lower incomes. Homeowners face anxieties too, as the interest rates on mortgages increase; they may struggle to keep up and there is a possibility that some may lose their homes—the roof over their families’ heads.
Another worry is car insurance. It is cheaper to pay it annually in a lump sum than monthly, the cost of which has just hit a 12-month high. A car might seem like a luxury, but for so many it is a necessity; it is how people commute in rural areas or in areas where there are poor transport links, and how people undertake caring responsibilities for family members. Those on low incomes are also more likely to have a poor credit rating and less likely to recover from debt—they may need to access short-term, high-interest payday loans. Previously, these loans may have been used to cover unexpected large expenses, such as a car breaking down or to replace white goods. However, there is a real risk that these loans are now going to be taken, out of necessity, to cover basic living expenses.
Credit cards pose the same risk; what happens when next month rolls around and people have the same expenses to cover but a couple of hundred pounds less in the bank to cover last month’s lending? It is a dangerous cycle and one that the Government must do everything in their power to prevent—these are not options that people should have to consider.
What if someone becomes sick? Statutory sick pay in the UK is the worst in Europe, at £96.35 per week. From April, a full-time job earning the national living wage is over £230 per week. I had a constituent contact me last week because she had missed the deadline for the warm home discount. She has no frequent internet access, a pay-as-you-go SIM card and she did not have the money to top up and call her supplier in time, so she lost out.
The Government cannot rest on their laurels any longer. Their own Back Benchers are calling for the national insurance hike to be scrapped; even the Chancellor is seeking to distance himself from it. It is clear that there is a need for action. I plead with the Minister and his colleagues: please, do not leave it until it is too late. Let us help our constituents through this difficult time.
It is an absolute pleasure to speak with you in the Chair, Mrs Cummins. I congratulate Patricia Gibson on leading the debate and on her important contribution; she knows about this subject, and speaks with real passion and belief. I am always encouraged whenever I hear her speak and, like other hon. Members present, I wholeheartedly support her on this issue. I could not attend a debate on this subject in the Chamber yesterday, because I was speaking here in a different debate—much as I may try, I cannot be in two places at once—so it is great to be present to endorse what the hon. Lady has said and support her fully.
This is a topic that applies to the whole United Kingdom. Although some housing matters are devolved, the issue remains the same across all of this United Kingdom of Great Britain and Northern Ireland. The cost of living has been rising since early 2021, but in December 2021—just a few weeks ago—inflation reached its highest recorded level in decades, affecting the ability of households to afford goods and services. That is what this debate is about: affording the basics of life. Mike Amesbury gave a couple of examples that illustrate the issue of food prices. Consumer prices were 5.4% higher in December 2021 than the year before—just 12 months earlier—making it the highest inflation rate recorded since 1992.
The cost of living combines the prices of housing, fuel, electricity, food and domestic services. First, I will speak about the issue of house prices. Derek Thomas referred to house prices in his area. Prices in Northern Ireland, including in my constituency and the constituency of my hon. Friend Mr Campbell, are the highest they have been for ages. It is putting people in real debt. I want to explain that, if I can, in the short time I have.
House prices increased by 10% in November 2021. The average property has risen by £20,000 in the last year—the fastest pace of increase in 15 years. That gives us an idea of how quickly this is galloping forward. Wages are not keeping track. I have been contacted by multiple constituents—young people, in particular—who simply cannot get on the property ladder because of those prices.
There has been a 25% drop in those aged 25 to 29 who have a mortgage because they feel that rent is a better option financially. The thing is, it is not a better option, because their rental prices are going through the roof as well. Houses that could previously have been rented for perhaps £375 to £400 a month now cost £550 to £600 a month. That is an extra £150 that they have to find, which they just do not have. The press has described the housing situation in Northern Ireland as a survival of the richest, as the majority of people simply cannot afford the rising price of houses. That is not the society I want; I want a society where we all have an equal opportunity to acquire a house.
Does my hon. Friend agree that the picture that he is outlining—of escalating house prices, the inflation rate going through the roof and energy prices rocketing—sends a message to the Government that there need to be urgent solutions? We all understand that it is difficult because of the times that we are living in, but those solutions are needed now, not in six months’ or two years’ time. A crisis is emerging that all families, and particularly working families, are going to be hit with.
I absolutely agree and I thank my hon. Friend for his intervention. We look to the Minister to give us some encouragement. It is about now, not in six months’ time; it is about getting over this mountain that our constituents are dealing with because of the rise in prices. My hon. Friend is right.
We can argue that a wage increase could assist with those payments, but in reality the added finance that people are earning is going straight to paying for the cost of living. Two hon. Members who have spoken today, including Margaret Ferrier, have referred to the issue of national insurance contributions. Today, it is being reported in the press that national insurance contributions may not actually be going up in April. I am not sure if that is true, but we cannot ignore the fact that there is no smoke without fire. Whether that is down to the Chancellor or the Prime Minister, I am not sure, but if that is the case, at least it would be something that we could take as help for our constituents—things we can do now, not later, as everyone is referring to.
Last week, I spoke about the rising prices of fuel. The fact that the Government and, back home, the Northern Ireland Assembly are having to provide additional schemes for people to avail themselves of shows that people are struggling to cope. The Communities Minister brought a scheme to the Northern Ireland Executive and Assembly to be endorsed: a £200 payment right away for those who are financially squeezed at this moment, and for those on benefits. We are doing it in Northern Ireland and I am sure that others are doing it elsewhere. Energy bills have already risen by a considerable amount and are set to rise to £2,000 per year from this April.
On my way to work each morning, I pass one of the oil companies in Newtownards, and they have prices up on the wall. Only about three months ago, the price of 900 litres of oil was £370—I remember, because I bought it at the time—but now it is £510. That is in a matter of months—my goodness! Those figures cannot be ignored. That is the reality right now. Such price rises will be detrimental to those already in fuel poverty. Recent statistics from National Energy Action estimate that between 1.2 million and 1.5 million households across the United Kingdom of Great Britain and Northern Ireland will struggle to pay their electricity or gas bills, adding to the cost of living in the UK.
On pension increases, a wee lady came to me to say, “Jim, tell me this: how will I spend the extra 25p I have in my pension?” What can I say to that honourable lady, who is a very good supporter of our party and of me individually? Twenty-five pence, my goodness! I have mentioned the price of oil and the price of food—as the hon. Member for Weaver Vale did, and as we all have. Twenty-five pence would not buy a loaf, a pint of milk—not even half a pint of milk—or a bar of chocolate. Twenty-five pence is a drop in the ocean, a ping on the ground; it is really nothing. I plead with the Minister for our pensioners. He is not ultimately responsible for this, but we need to have the discussions about what we need to do going forward.
The rising cost of food prices are contributing to the added cost of living. Food and non-alcoholic drink prices went up by 4.2% in the year to December 2021, on the official consumer price index measure of inflation. They may—they will—rise further in the coming months, and that contributes massively to the increase in families availing themselves of food banks. The Trussell Trust, which is in my constituency, delivered 2.5 million three-day packages over 2021. That was one of the highest figures in recent years.
In my constituency, the Trussell Trust in Newtownards indicated that it has done a third more food bank referrals. I know that we did it through our office by massive amounts on a year ago. That tells a story. People’s generosity to the food banks, with churches and individuals coming together, is massive, and we thank everyone who made contributions. However, we need to address the issues now.
At a time when many are struggling, I urge the Government to step in—because that is what we do. We do not always have the begging bowl out; it is about helping our people right now. I wish I had more time, but I do not, to go into detail about how badly the rise in the cost of living is impacting people. All too often, families struggle to make ends meet and the rise in prices for the most basic of daily needs is disheartening for so many. It depresses us no end.
To look towards the future, I also urge the Government and the Minister to remember that there will be a rise in national insurance, although I hope that today we will get an indication that that may not happen. We need such steps taken to help our people. The great thing about today is that all of us—all parties—are here together, but now we look to the Minister. His fellow Conservative, the hon. Member for St Ives, spoke convincingly about the issue. I think we have consensus across the Chamber on it, and we look to the Minister for encouragement to our constituents, and to ensure that the help that comes will come now and not later.
It is a pleasure to serve under your chairship, Mrs Cummins. I thank Patricia Gibson for securing this important debate. She made an excellent contribution, setting the scene. I also refer to my entry in the Register of Members’ Financial Interests.
I will talk first about just one of my thousands of constituents who are suffering so terribly as a result of the Tory cost-of-living crisis. In 1944, he fought to defeat fascism on the beaches of Normandy. At the end of the war, he returned home to the promise of a land fit for heroes. But now, in his late 90s and living alone, he is terrified by the prospect that one day very soon his modest pension will not stretch to cover the costs of soaring energy bills and food prices. He is not alone: all across the country, millions of people are living in freezing houses, too afraid to turn the heating on, while others are going hungry so that their kids get a half decent meal.
Meanwhile, with energy prices set to soar by a further 45% by spring, and households bracing themselves for a national insurance tax bombshell, this Government seem far more concerned with their own internal turmoil than with finally getting to grips with this crisis. I put one very simple question to the Minister today: how on earth can he justify letting a man who risked his life to defend our freedoms worry about the cost of turning his heating on in the middle of winter?
Last autumn, I warned Ministers that the impact of rising energy costs and the cut to universal credit risked plunging thousands of people on the Wirral into poverty. At the time, Ministers lazily dismissed my concerns out of hand, and the Prime Minister himself called fears about inflation “unfounded”. My God! Even now, when confronted with the reality of the situation, this Government refuse to act.
My party has set out a credible plan to address the scourge of rising energy costs. I urge Ministers to finally put the interests of our country above those of the Conservative party, and to set about removing VAT from domestic energy bills and implementing a windfall tax on North sea gas and oil to support those most in need. But we must go further still. We must bring the energy sector back into public hands, so we can begin to slash bills for UK consumers and build a greener energy sector that is less dependent on foreign energy supplies. We must also acknowledge that energy is only one part of a much wider problem. For more than a decade, UK workers have seen their wages stagnate as prices have soared. Even our healthcare heroes, who have done so much to save lives and stop the spread of the terrible virus over the last two years, have not been spared, with last year’s measly 3% pay rise amounting to a pay cut in real terms.
The Government must act now. That means abandoning their plan for a national insurance hike, which threatens to hit low-income workers and small businesses hardest of all, and committing themselves to a £15 minimum wage, as called for by my hon. Friend Andy McDonald.
It is a pleasure to serve under your chairmanship for the very first time, Mrs Cummins. I congratulate my hon. Friend Patricia Gibson on securing this timely and important debate, and thank all Members who have taken part. We have had a wide range of contributions, highlighting various factors concerning the cost of living these days.
This Tory Government are proud of their success in getting people into work—it is trumpeted at every turn. However, what is the point of getting people into work if doing so does not help them to support their families to get the basics in life? A pretendy living wage just does not do that; it does not help them when they become sick and have to rely on an absolutely ludicrous statutory sick pay, and it does not help if they are a pensioner on the most meagre pension in the western world, or a WAPSI woman waiting and waiting for her pension to arrive.
The UK is one of the richest countries in the world, but the gap between the richest and poorest in our society continues to grow. Many of my constituents in Motherwell and Wishaw suffer under this Government. Energy bills will rise by 45% from April. “That is a worldwide issue,” say this Government. That is true, but what makes the difference is what a Government do to mitigate poverty. What do this Tory Government do? Very, very little. As my hon. Friend the Member for North Ayrshire and Arran said, National Energy Action estimates that 6 million UK households will be living in fuel poverty by April—a 50% increase from April last year. I ask the Minister: what will be done about that? Inflation is rising, but the headline figures of predicted rises do not give the full picture. The think-tank Reform has said that inflation is hitting poorest families hardest.
Lorna Cooper from Paisley, the author of “Feed Your Family For £20 A Week”, prepared a shopping list and meal plan for January 2021 and then made a comparison this month. In 2021, the shopping list for the meal plan cost £20.21. This year, the cost is £25.88, which is a 23% increase. As we all know, many supermarket basic ranges no longer exist, and there cannot be many of us who have not already heard of the 141% rise in the cost of basic pasta.
This UK Tory Government have failed to address a cost of living crisis that will disproportionately affect disabled people. The Joseph Rowntree Foundation found that 49% of those living in poverty in the UK are either disabled people, or live in a household containing a disabled person. The Disability Benefits Consortium estimated that 2 million eligible claimants have missed out on support due to the decision to exclude legacy benefits claimants from the £20 uplift—a decision that now faces legal challenges. It also found that even if disabled people had received the £20 uplift that they were denied, it would still not be enough to meet the real needs of disabled people who rely on benefits.
Research by Scope says that life already costs those who are disabled £583 more a month on average, and that families of disabled children
“On average, face extra costs of £581 a month”.
It adds that
“For…24%...of families with disabled children, extra costs amount to over £1,000 a month.”
Disabled people have been disproportionately impacted by the pandemic and the covid restrictions, from rising food and energy prices to the emotional toll of shielding, but disabled people have been forgotten about in this Tory covid recovery plan.
Providing unpaid care is pushing thousands of families into poverty, and will have a lasting impact on their finances and quality of life. That was the case before covid-19, but the situation has now been exacerbated by the pandemic. Now such families face a cost of living crisis.
The Family Fund found that in 2021, 75% of families with disabled children reported that the overall support available to them had decreased since the beginning of the pandemic, and 76% reported that their overall financial situation had become worse as a result of the pandemic—and now the cost of living is increasing daily.
Carers UK has found that carers are using their own income or savings to cover the cost of care, equipment or products for the person they care for. On average, carers spend an estimated £1,370 a year on services or equipment for the person they care for. It also found that 35% of carers who provide 35 or more hours of care a week have been or are in debt. These are the words of a carer:
“I don’t have luxuries, can’t afford life insurance, car insurance or house insurance. At 60 I shouldn’t be using food banks and made to feel inadequate because I can’t afford petrol.”
Another carer has said:
“Crippled further by heating/electric going up even further to £177 a month. We have managed without heating in the past, I suspect we will again now”
Think about that—it is 2022. This situation is appalling.
What can be done about all this? The UK Government must introduce an emergency financial package to support the most vulnerable and to help families to cope with the Tory cost of living crisis. Here are some suggestions, based on what the SNP Scottish Government are doing, using their devolved powers to support disabled people—and, as my hon. Friend the Member for North Ayrshire and Arran has said, they are doing so on their fixed budget.
The Scottish Government have extended child winter heating assistance to include young people aged 16 to 18. In total, they will support severely disabled children, and young people and their families, through a £202 payment to help with heating bills. This benefit is unique in the UK.
The Scottish Government’s child disability payment opened for new applications in November last year. It is the first of three complex disability benefits to be introduced nationwide by the Scottish Government; the adult disability payment will be introduced at the end of this year. This new payment replaces the UK Government’s disability living allowance for children and provides money to help with the extra care and mobility costs that children and young people with a disability may have. The Scottish Government will provide disabled people with a fundamentally different experience, based on dignity and respect. They will also ensure that individuals who face the greatest inequalities and risk of long-term unemployment are at the forefront of those benefiting from support.
What will this UK Tory Government do to help those most in need? Will they roll back the benefits cap, the two-child limit and the cut to universal credit of £20 per week—removed as the cost of living rises and never given to those on legacy benefits? Will they cut back on the rise in national insurance contributions from April, which will affect the lowest paid, but not those living off dividends and property rentals? Will they provide real help with energy costs and housing costs, which have been mentioned a lot in this debate? I should like to think that they will, but I doubt it.
As a bonny lass from Ayr, it would be remiss of me to let today go without a bit of Burns, so here is the “Selkirk Grace”:
“Some hae meat an canna eat,
And some wad eat that want it;
But we hae meat, and we can eat,
And sae the Lord be thankit.”
It was true in Burns’ day that there were haves and have-nots; it is a disgrace that this state of affairs still exists in the UK in 2022. People and organisations across Motherwell and Wishaw, and the whole UK, are fighting the effects of poverty day and daily. It is time for this UK Government to step up and do the same.
It is a pleasure to serve under your chairship in this important debate, Mrs Cummins, and I congratulate Patricia Gibson on having secured it. It is a fairly obvious truth that there are things that really matter to our country, and the subject of today’s debate is one of them. There are also things that are embarrassing and we wish we did not have to talk about, and frankly the sorry state of Downing Street is one of those, so I am glad to be here in this debate, talking about something that really matters.
The cost of living crisis that we are facing is going to come to a crunch this year, but let us be honest: it has been a problem for the past decade. When a country has had slow or no growth for a decade, and when wages are held down while prices rise, that will cause a problem for the vast majority of families in that country. Those who are in the worst financial situations face the indignity of having a food bank parcel where their shopping should be, unlike every other normal family in this country. It is outrageous that 2.5 million of our fellow citizens, including half a million children, are in that position. That is not the product of events that have happened in the global markets in recent times; it is the product of 10 years of lost economic growth, and 10 years of lost progress on tackling poverty in this country. That is why we are here today.
As we look at the rise of referrals to food banks, it is important to note that a different category is increasing: those in the middle class are also squeezed now. We are finding that more and more people are under the cosh of prices. We all know how important the role of food banks is, but the Government have to recognise that this crisis is greater than it ever was before.
I thank the hon. Member for his intervention, and to a degree, I agree with him: any of us could end up needing to go to a food bank. This can happen to any of us, but important though food banks have become, I want a Government that seek to end the need for them. Is that too much to ask? Do we just have to accept food banks as a permanent feature of our country now, or might we one day have a Government that set out to end the need for them?
As much as I agree with some of the points made by colleagues from the SNP, I have to challenge them. How are they going to meet their own goal set in 2017 of child poverty reduction? It was made without qualification. We all want to see an end to child poverty and therefore it is important that that goal is met. I feel strongly that the Tories in Westminster made the wrong choice in getting rid of Labour’s national goal to end child poverty and wiping the Child Poverty Act 2010 from the statute book. It is equally important that those who have made commitments to the people of Scotland stick to them.
The way the Scottish Government will do this is through independence and the control of our own economic levers—it is as simple as that. We make commitments and we hope to be able to achieve them, because then we can do things the way they should be done and in the way that is best for people in Scotland.
I look forward to hearing how that is going to work. I think the way to tackle poverty everywhere in the United Kingdom is through co-operation and the use of the redistributive force of the United Kingdom Treasury. Members rightly mention the bad impact of the botched Brexit deal on our country’s economic fortunes. I would hate to see any part of our country go through the same thing with the loss of access to the United Kingdom single market, so I look forward to hearing more in future debates about how that will work.
I turn to the UK Government and the issue of inflation. Members have mentioned that the headline inflation rate in no way represents the specific forces of inflation that are faced by those with the least. I think people who suffer poverty must be some of the finest economists in the country, because they are able to monitor prices and make every penny they have stretch further when they need to. The Government should take some responsibility here. What has the Minister asked of the Office for National Statistics, in respect of its measuring and reporting, so that we can know exactly what situation is faced by the people who have the least in this country?
I point the Minister to the comments of the chief executive of Iceland, who says that he is losing customers not to his competitors but to food banks. That should tell the Minister that we really do have a problem with prices in this country that cannot simply be understood from the headline rate of inflation.
Secondly, on work, does the Minister accept that whatever the intention of a jobs plan that set aside £9 billion for a job retention grant that was then cancelled; whatever the intention of a jobs plan that had a kickstart programme that was supposed to get jobs for 250,000 of our young people but failed to do so; and whatever the intention of a jobs plan that was supposed to bring older people back to the workforce, given the level of vacancies in our country now, that jobs plan was a failure?
Does he further accept that when it comes to people’s wages—the other side of the cost of living crisis—a crucial part of the problem is that people have too little choice about the job they do? The OBR says that one in five people is working below their skill level. They could get a better job, but they have not. The Government have much more to do to improve people’s prospects at work. I would bet the Minister agrees that the best route out of poverty is work. Why do we have a Tory Government that are failing to get people jobs that can pay for their bills and shopping? It is an outrageous situation.
Finally, I turn to some of the other ways in which people need help. If we think about people’s ability to earn more, some of the things that are holding them back are those facts about our economy that we have known about for far too long. The childcare system in this country is expensive and complicated. What steps has the Minister taken to simplify it? People trying to make ends meet on a lone parent’s income, for example, are limited by the cost of childcare and whether it is available at all. I think again of the one in five people who work below their skill level. A lot of them have caring responsibilities for children or older relatives and cannot work longer hours in their jobs because they do not have care support. What conversations has the Minister had about solving that?
I also want to mention the simple fact that in too many parts of our country it is hard to get around on public transport. The price of buses has gone through the roof in recent years, and in some parts of the country people cannot travel to a job because there is no public transport. Yes, the price of motoring has gone up, but it is hard to get a better job if someone relies on public transport in areas that have too little.
It would be remiss of me not to mention the fact that too few people are members of trade unions in this country, and that limits their ability to bargain for better wages.
The Labour party has put forward some simple, compelling and obvious ways in which the Government could take steps today to tackle the cost of living crisis. Whether it is cutting VAT on fuel or extending the warm home grant through a windfall tax on oil and gas, we know there are steps that we can take now. However, I want to hear from the Minister about the bigger structural changes that we need to fundamentally shift our economy so that every family in this country can truly make ends meet.
It is a pleasure to serve under your chairmanship today, Mrs Cummins, and to see your wonderful smiling face. I congratulate Patricia Gibson on securing the debate. It has been a lively one on important issues, but it was brightened up by the wonderful tie of my hon. Friend Derek Thomas.
The Government are taking the present challenges of those on low incomes very seriously. The pandemic has been challenging for many people. We acted quickly to put in place unprecedented levels of support during this period, as has been highlighted by some Members today. After yesterday’s debate, it feels a little like groundhog day discussing these issues today, but they are important. As was highlighted yesterday, given the current cost-of-living challenges, we in the Government are actively working on the best way to build on the existing support that is available. I hope that will reassure the hon. Members for Strangford (Jim Shannon) and for East Londonderry (Mr Campbell), who raised points on this, as well as my hon. Friend the Member for St Ives.
Since the pandemic started, we have spent more than £400 billion on protecting people’s jobs and livelihoods and supporting businesses and public services. There has been unprecedented welfare support. Universal credit has stood up to the challenge of covid-19, providing a vital safety net for 6 million people. We must thank the hard-working staff at the Department for Work and Pensions, including the thousands of work coaches across all our constituencies, who worked tirelessly to ensure that the benefits system did its job. Many of them are the pandemic’s unsung heroes. I hope that we make an extra effort to thank them when we perform our constituency duties over the weeks ahead, if we have not done so already.
I just want to add that whatever the policy disagreements between our parties, I agree wholeheartedly that those who work for the DWP, particularly on the frontline, deserve all our thanks.
I am grateful for that comment. The hon. Lady did not have to say that; I know her well enough to know that she feels that way. We have differences over policy, but we know we have very dedicated public servants in the UK and Scottish Governments who are committed to addressing the issues, and we are grateful for their work.
It is also important to highlight the fact that our successful vaccine programme is providing us with the protection to fight the virus in all its forms. Although we need to remain cautious, the latest labour market statistics show that time and again we have made positive decisions during the pandemic. As we have shown throughout the pandemic, the Government will do what it takes to support people who are struggling financially. Supporting vulnerable people in our society is of paramount importance to me, our Secretary of State and the Government.
The proportion of Government spending that goes on welfare reflects a strong commitment to the poorest in society. This year, we will invest more than £250 billion through the welfare system, including £110 billion on people of working age. That rightly provides an important safety net. We also take notice of the clear evidence that work, particularly where it is full time, plays an essential role in reducing the risk of poverty. With our economic recovery continuing, it is right to focus our attention on getting people back into work.
The latest job figures tell a positive story. A record number of people are now in payroll employment in the UK, with 23,000 people added to the payroll in Scotland in December alone. The UK has a buoyant labour market, with 1.25 million vacancies. That figure is has increased by 33,000, or 2.7%, on the month, and by 462,000, or 58.9%, since the start of the pandemic, offering people opportunities to secure a job, progress in work and increase their earnings. Current estimates show that the number of online job adverts in Scotland alone has risen by 13.3% since the start of the pandemic. To help people take advantage of those vacancies, our extended multibillion-pound plan for jobs will help people across the UK find work and boost their wages and prospects.
Alison McGovern will probably shake her head at this point, but we are making real progress. We have opened 150 temporary job centres; I had the honour of opening the most recent one in Macclesfield last Friday. We have recruited 13,500 work coaches. They make a difference because they care about individuals, often meeting them face-to-face—increasingly so as we come out of the pandemic. There are 1,200 extra work coaches in Scotland, helping with this vital task.
We are also investing in our young people through the kickstart scheme: 112,000 young people have started a life-changing six-month work placement, and 10,000 of those starts were in Scotland.[This section has been corrected on
There are more vacancies available, and we are encouraging people to take them up across the country, in Scotland as well. The scheme has seen real success in turning people’s lives around. There are further opportunities in the months ahead for people to get involved with that important programme.
It does not stop there, because we want to ensure that we help address some of the gaps in the workforce that were highlighted yesterday: in hospitality, health and social care, and technology. Sector-based work academies help people to get new skills and a guaranteed job interview at the end of their placement.
I also recognise, along with many others here, the immense value that older workers bring to the workforce. That is why the DWP is providing specific funding for that cohort. There is funding available for the over-50s to get tailored Jobcentre Plus support, to help them find work and build on skills to get into the workforce.
In addition, to support those jobseekers who are out of work for 12 months or more, our Restart scheme provides intensive support to help claimants in England and Wales find jobs in their local area, which I am sure will be welcomed across the Chamber today. Through regular contact with all participants, providers will develop a strong understanding of the individual’s employment history, skills, aspirations and support needs to help each one succeed. That will break down the employment barriers holding claimants back from finding work.
I remind hon. Members that the DWP is focused on helping people to increase their income by progressing in work. We often talk about the importance of getting people into work, but we are equally committed to helping people progress in work and move ahead with their career aspirations. We will shortly respond to Baroness McGregor-Smith’s report on in-work progression and set out our approach. I hope that will be welcomed by Marion Fellows, who was concerned about that issue.
Universal credit incentivises work as part of its design. With that in mind, we have gone further to make work pay, as has been referred to, by cutting universal credit taper rates from 63% to 55%, and increasing universal credit work allowances by £500 a year. That is essentially a tax cut for the lowest paid in society, worth around £2.2 billion in 2022-23. That means that 1.9 million households will keep, on average, around an extra £1,000 a year. In addition, from April 2022, we will boost the national living wage by 6.6% to £9.50, which is ahead of inflation and worth another £1,000 each year to workers on the lowest pay.
A number of Members have asked for confirmation that the national insurance contributions planned for April will be deferred, adjusted or done away with. I know the Minister cannot answer that question, because it is not his responsibility, but can he take it to the Chancellor for his consideration? That would be an excellent step in the right direction to help those who are under financial pressure.
The hon. Gentleman makes his point with characteristic commitment and compassion. We on the Treasury Bench note that and will make sure that it gets through. The particular levy he talks about is to tackle the impact of the pandemic on the NHS and to face a challenge that has not been faced adequately across many decades—to tackle social care—but the points he makes have been noted.
Coming back to the national living wage, Deidre Brock made some points about how we can move forward. Let me reassure her that the Low Pay Commission forecasts that the national living wage will reach £10 next year. That is consistent with the target for the national living wage to reach two thirds of median earnings by 2024. We will not stop at the 6.6% increase.
I note the interesting comments from the Minister about the national living wage and the planned increases, which I am sure will be welcome, so far as they go. Do his Government have any plans to deal with the age discrimination that is baked into the national living wage, which is not really a living wage?
I know where the hon. Lady is coming from. The issue is that younger people typically and often do not face the same cost challenges as other older people, because they are able to share accommodation costs with others. I do not regard it as discrimination, but I acknowledge the different costs that people face.
Further support for working parents has been put in place, doubling free childcare for working parents to 30 hours and increasing the value of healthy start vouchers by over a third, to boost the long-term health of young children. We are investing over £200 million a year from this year to continue the holiday activities and food programme, which provides enriching activities and healthy meals to children in all English local authorities.
I have noted discussion, not just today but yesterday, on concerns about the cost of living. We recognise that those exist, particularly in the case of energy costs. However, let me remind hon. Members of the measures we have in place to combat the adverse effects of the increase in worldwide oil and gas prices, which is a reaction to demand surging after the pandemic and the effect that has had on the global economy and our own economy. The energy price cap will remain in place at least until the end of 2022, to protect millions of customers and ensure they pay a fair price for their energy. Despite the rising costs for said energy, Ofgem has confirmed that the cap will stay at the current level this winter.
Secondly, winter fuel payments will be made to over 11 million pensioners this winter, ensuring that older people have the security and dignity they deserve. Households with someone of state pension age will receive £200, and households with someone over 80 will receive £300. Thirdly, cold weather payments help vulnerable people in receipt of certain income-related benefits to meet the additional costs of heating during periods of unseasonably severe cold weather. That includes older people receiving pension credit and those receiving an income-based benefit with a disability component or where the household includes a child under five. In 2020-21, just over 4 million payments were made, at a cost of just over £100 million.[This section has been corrected on
Finally, this Government are supporting 2.2 million low-income households by issuing a £140 rebate on their energy bills through the warm home discount, which is worth £354 million. From this year, proposed changes will increase the scheme by £121 million, to be worth £475 million a year, with nearly 3 million households receiving a £150 rebate. As I said at the start, we are working across Government—I reiterated this yesterday, as did my right hon. Friend the Chief Secretary to the Treasury—to determine the appropriate response to assist vulnerable people facing rising energy costs. We recognise that people will be facing unexpected challenges with essential household costs. That is why in October we introduced a £500 million support fund to assist vulnerable households across the country this winter. The £421 million household support fund in England has enabled local authorities to provide targeted support to households in need of help with the cost of food, utilities and wider essentials; and the devolved Administrations received a total of almost £80 million through the Barnett formula, with Scotland receiving £41 million of that. I am pleased to see that they have all used the money to help households this winter.
Beyond this package of support, some people are struggling with debt pressures. The Government work closely with the Money and Pensions Service, and the wider free-to-client debt advice sector, to provide access to high-quality debt advice. The service remains the biggest funder of free debt advice in England. The DWP also uses appropriate touchpoints to ensure that those in receipt of benefits are signposted quickly and directly to expert financial help. To help those people, the debt respite scheme, also known as Breathing Space, came into effect in England and Wales on
It is important to place the cost of living challenges in context. Prices are rising in countries around the world. As the global economy recovers from the pandemic, consumer demand is surging at the same time as global supply chains are being disrupted. We recognise and understand the pressures that this is exerting on people’s wallets, and their worries as they see the cost of food, energy and other essentials increase. My right hon. Friends the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Work and Pensions—indeed, all of us in government—are listening to those concerns and watching what is happening in the markets. As has been shown during the pandemic, this Government will do what it takes to support those most in need. I can assure hon. Members that we are continuing to actively work across Government to build on the existing support, already available, and to determine the appropriate response to assist vulnerable people facing rising energy costs.
The hon. Gentleman got in quickly there; I was about to end my remarks. This is a complex challenge. We know that there has been a real surge, and the Department for Business, Energy and Industrial Strategy is working actively to address these challenges. As I have said here, we are not concerned only about what has happened at the customer-facing end of the supply chain and the challenges that that has given to customers. The issue is the rising prices as well, and that is what we are focusing on.
I did not expect a dramatic policy announcement from the Minister today, but I was hoping, and I think we were all hoping, for a change of tone to signify that more would be done. I was hoping that, even if the Minister could not be specific, he would make a commitment that more would be done; that this Government would look more carefully at what could be done for those at the sharp end of the cost of living crisis. We in Scotland understand that, to truly tackle the cost of living crisis, we need all the powers over tax and welfare. That is what is needed to properly address those challenges in order to build a fairer and more just society. For Scotland, it is clear from the Minister’s answer and from yesterday that we must take our future into our own hands and build the just, fairer and more equal society that people in Scotland actually want.
Question put and agreed to.
That this House
has considered the cost of living in the UK.