I have regular discussions with my right hon. Friend the Chancellor of the Exchequer on a wide range of issues, including the state of the economy. Inflation is being pushed higher by rising global commodity prices. This is a global problem that requires global solutions.
I thank the Minister for his answer. It is now clear that the Government’s VAT hike in January helped to drive up inflation, which is squeezing family incomes, hitting consumer spending and holding back strong growth. Will the Minister now speak up for families and businesses in Scotland and urge the Chancellor to reverse the VAT rise to help to boost consumer confidence and bring down inflation?
As the hon. Gentleman knows, the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that he would have done exactly the same in relation to VAT, and a cut in VAT would do nothing to reverse global commodity price rises. It would, however, do a lot to reverse the Government’s hard-won credibility for getting the deficit down. Of course, credibility on economic matters does not seem to be important to the Opposition.
In answer to my written parliamentary question, the Office for National Statistics confirms that, in four of the past five years, the rise in domestic gas prices far outstripped the rate of inflation—this is before the latest rise—while family incomes are at best static. What steps can the Government take to protect already hard-pressed families from these escalating costs in the coming winter?
I am sure that the Minister will welcome the inquiry Ofgem announced today into Scottish Power’s price rise and the way in which it announced the change to consumers. Does he agree that it is completely inappropriate for energy companies to add to the increased cost of living in Scotland by deciding to hike domestic bills? What personally is he doing about this?
There is widespread concern in Scotland about these actions, especially about the recent fuel cost rises announced by Scottish Power. As the hon. Lady knows from previous questions, the Secretary of State and I have raised these issues with the energy companies.
Although it is very nice to meet up, I think that Scottish consumers are looking for action as they face a rise of an average of £198 a year in their bills while wages are being frozen, prices are rising at well above the target inflation rate and borrowing is now £46 billion higher than expected because of the decrease in economic activity. Does the Minister agree that it is now time for a plan B, and for the temporary cut in VAT that Labour has called for?
It will not surprise the hon. Lady when I say most certainly not. In setting out those woes, she has not acknowledged her part as a Minister, and that of her party, in bringing this country to the verge of bankruptcy, or the need to take the tough action that this Government have taken. She also knows that the shadow Chancellor is in a majority of one in setting out his proposals—