Cost of Living Crisis: Wales — Caroline Nokes in the Chair

Part of the debate – in Westminster Hall at 2:41 pm on 19th July 2022.

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Photo of Nia Griffith Nia Griffith Shadow Minister (International Trade) 2:41 pm, 19th July 2022

I will focus today on the structural issues that face Wales, and ask what the UK Government do for Wales in policy terms. I very much believe in being part of the United Kingdom—I believe that together we are stronger—but we can use that power in ways that can be influential and really benefit every single person.

In the last 12 years, we have seen a massive growth in inequality in this country. We have seen the rich get richer and the poor get poorer; we see that in the millionaire lists and in the people turning up at food banks. So what do we need? We need a tax policy that is redistributive, whereby those with the broadest shoulders bear the greatest burden. What have the Government done? Well, they have put in some immediate support for the time being, but it is a stop-gap; it is not changing the system or the way we redistribute our money. They did that because Labour said, “Look, come on, you need to have a windfall tax. You need to get that money and redistribute it from the oil and gas companies, and make sure it goes into the pockets of people who are facing those enormous bills.”

Let us look at some of the taxation policies that we have had from this Government. There has been the raising of the threshold at which people pay income tax. In principle, that sounds a very good thing, but it is not the most effective way of using that money, because everybody benefits, up the whole scale; it wastes quite a lot of money on people at the top of the scale. By contrast, if we put in targeted support at the bottom, as tax credits were designed to do, we can get a lot more value for our money through redistribution and achieving equality.

What about VAT? One of the things we suggested could have been done this year was taking VAT off energy bills. Back in 2008, Labour reduced VAT from 17.5% to 15%, but now it is obviously up at 20%. VAT is also a very regressive tax, because everyone pays it; it is not a way to redistribute wealth.

Let me turn to the national income insurance hike, which hit people who are working, but did not tax unearned income . Again, that is not a helpful way of taxing people. That is not to say that we do not need money; of course we need money for the health service and the care service, but the way we raise it matters. Our cost of living crisis goes back to some of those fundamentals.

I will move on now to the Department for Work and Pensions. We all know that the transition to universal credit has produced all sorts of anomalies and difficulties. The five-week wait has put families into debt. We are not against the idea of reform or of trying to simplify the benefits system, but I wish this Government would get away from demonising people who have to claim benefits.

Who benefits from the DWP? Well, pensioners take the bulk of the money from the DWP. Then, of course, there are people who are working—lots of people have to rely on top-ups, even though they are working—so they are not in any way to be demonised. Then there are genuinely disabled people, and then there are people who have to claim money to help with their housing costs. Why are we in that situation? It is because we have got rid of so much social housing at low rents, so we now find that lots of public money goes straight into the pockets of landlords. Those eyewatering figures do not go to the people who have to make the claims; they go to the landlords. Until the Government get a grip and have a massive housebuilding programme, we are obviously going to be wasting money in that way and leaving families in often unsuitable accommodation. We need to sort out what is being done with benefits and the tax system.

Let me move on to what has gone on over the last 12 years with public sector pay. If we squeeze and squeeze, is it any wonder that we now have a crisis when inflation suddenly picks up but wages have been on hold for years? We have an incoherent policy; the former Health Secretary, Nadhim Zahawi threw out a figure of 7%, but the minute he became Chancellor he changed his mind. We cannot have a half-baked system. We have to talk in the round about having a proper public sector pay policy. The problems have been stacking up; they have not suddenly arisen. This Government have not handled the economy or the redistribution of wealth well.

I turn to my favourite topic: energy policy. If we had invested in all the renewables that we should have done over the last 12 years, we would not be so dependent on imported oil and gas. What is this nonsense where, yet again, in the energy security strategy for 2022, the Government are pussyfooting around when it comes to wind farms in England? Luckily, we have a sensible policy in Wales.

It was disappointing to hear the Minster, at the Welsh Affairs Committee, not fully understand the implications of the National Grid situation. I hope he now understands the need for massive investment right across Wales, and between Wales and England, so that we can benefit from being the United Kingdom and all share our energy pools. We really need a strategy for energy and investment, on a wholescale basis, and not leave it to a private company to see whether they fancy it or not. We need a strategy that supports innovation, such as we have seen in the tidal lagoon, which is now being supported by Labour-run Swansea City Council, rather than having had help from the UK Government.

I will finish with a point about dealing with rural areas. As we know, rural areas have particular difficulties in that they have a limited choice of fuel that they can use to heat their homes. Many are dependent on oil, for example, and have seen prices rocket, with no help available. Then there are the massive mileage costs that people in rural areas clock up when they have to go to the shops or to work, or to take the children somewhere; and Ben Lake asked whether there could be some support to help people in those areas through sensible, centrally thought-through policies that could redistribute and help areas with massive inequalities.

On that note, I will leave other colleagues to tell the terrible and heartbreaking stories that we have all heard recently. I ask the Minister: when he is thinking about which candidate he supports in the Conservative leadership contest, will he put to them the questions of how we change the structure to have an equal and fairer society?