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Living Standards

Volume 700: debated on Tuesday 7 September 2021

Her Majesty’s Treasury analysis published alongside Budget ’21 has shown that policy interventions in response to covid-19 have, on average, supported the poorest working households most as a proportion of pre-pandemic income.

The Government’s plan to increase national insurance will clearly unfairly impact the living standards of young people and the low paid. That is in stark contrast to the Scottish Government’s free education, bus travel for under-25s and the Scottish child payment. Will the right hon. Gentleman confirm how many Ministers spoke against this move at Cabinet today and whether this included the Scottish Secretary?

I would have thought that, having sought additional powers, the hon. Gentleman would be more interested in reminding the House how his own Government are using the powers that they have. The key issue is that in many areas they are choosing not to use their tax powers—for example, to top up universal credit. He should focus on the alliance that his party has formed with the Greens, which is bad for business, bad for the economy, bad for the oil and gas industry, and counterproductive to growth.

In 2016, the Tories promised that fuel bills would be lower for everyone on leaving the EU. The reality is that fuel bills are increasing while they make the heartless cut to universal credit. In order to tackle fuel poverty, will the Minister use the net zero review to cut VAT on energy efficiency products, keep new nuclear off electricity bills, provide direct funding for heat decarbonisation and sort out the unfair grid charges on Scottish renewables?

Well, I think we should look at what my right hon. Friend the Chancellor has done. I touched a moment ago on how the covid measures have protected the poorest working households the most. Alongside that, the Budget measures on tax, welfare and spending decisions made since 2019 have, on average, benefited all households this year, with the poorest gaining the most as a percentage of net income. That is the approach that my right hon. Friend the Chancellor has taken and it is one that the Scottish Government should follow.

According to Save the Children, more than 3 million children living in low-income households across the United Kingdom are likely to be affected by the £20 universal credit cut, with half of claimants saying that they will face significant financial impacts as a result and one in seven worrying about affording food. The Joseph Rowntree Foundation says that the cut will push 500,000 people below the poverty line. Will the Minister explain how this squares with the Government’s so-called levelling-up agenda?

A key way to tackle poverty is to get people into work and then skill them up in their jobs. That is what we have set out through the plan for jobs, and that plan is working. Ultimately, if that is the priority of the Scottish Government, why are they not using the powers they have to prioritise it?

Does my right hon. Friend agree that it is difficult to justify raising national insurance to fund social care for the predominantly elderly, when the impact of that tax rise would fall mainly on young people and those who are earning little in the workforce? Does he also recognise that those two groups are the very groups that have been most impacted by the economic consequences of the pandemic?

As my right hon. Friend knows, the Prime Minister will make a statement on this matter shortly, but what he and I would agree on is that the best way is to grow the economy, drive productivity, get people into work and skill them up through work. That is what the plan for jobs is doing, alongside the £600 billion investment in infrastructure over the course of this Parliament as part of levelling up and our commitment to net zero. We need to grow the economy, skill up the workforce and get those who have been impacted by the pandemic back into work as quickly as possible.

I wonder if the Chief Secretary has had the opportunity to read a recent report by the Institute for Fiscal Studies that says:

“Material living standards held up surprisingly well through the pandemic…This is an astonishing outcome given the scale of economic disruption”.

My hon. Friend is absolutely right. The package of measures that my right hon. Friend the Chancellor took improved on the economic scoring that was forecast for the pandemic, including the figure for unemployment, which will now be 2 million lower at its peak than was estimated. That package of measures has helped to prevent many of the worst outcomes that were forecast by the Office for Budget Responsibility as we went into the pandemic.

One group whose living standards have been impacted during the pandemic has been low-income individuals who have used buy now, pay later credit products to buy online. I very much welcome the Government’s announcement in the spring of regulation of this sector. Will the Minister update me on the progress being made in regulating the sector given that it is become of increasing importance, as Citizens Advice reported just last week?

I understand that by the end of October there will be reassurance on that, and I am happy to take that up with my hon. Friend following this session.

When the Chancellor increased universal credit eighteen months ago, he said that he wanted

“to look back…and remember how we thought first of others and acted with decency.”

Does the Minister consider that taking £20 a week from millions of families across our country is really an act of decency?

I think that £400 billion of support in response to the covid pandemic across our public services and individual businesses shows the scale of measures that the Chancellor has put in place. On the specific issue of universal credit, we were always clear that the uplift was going to be temporary. As it was, my right hon. Friend the Chancellor extended it for a further six months. But ultimately what divides the two sides of the House is that we believe the best approach is to have a plan for jobs, to get people into work, and to upskill them in those jobs. The Opposition simply do not have a plan at all.

Let us think about what £20 a week really means. Twenty pounds a week means being able to afford to buy a coat for your children this winter. It means not having to worry about turning on the heating when the weather turns cold. Can the Minister offer any advice to families who work hard and play by the rules about how they should manage with £100 less each and every month?

As the hon. Lady knows, alongside the universal credit uplift other measures of support were given. Those are not only my words; I quote the Resolution Foundation, which has said:

“Since the crisis hit, the support schemes introduced by the Government have prevented an unprecedented collapse in GDP from turning into a living standards disaster.”

That is the package of measures put forward by the Government. That is how we have protected people’s living standards. The key is to have a plan and to get that plan working; it is, and that is helping people back into work.

Can my right hon. Friend comment on the living standards of those thousands of public sector employees to whom the Government have given exit payments in excess of £100,000 a year and continue so to do?

My hon. Friend is right to highlight this issue, which he and I have discussed on many occasions. In July I chaired a roundtable on it across Government, and it is prioritised across Departments. We have a manifesto commitment that the Chancellor and I are committed to delivering on. As my hon. Friend knows, we have a £200 million cost to this that we need to tackle. But at the same time we also need to be true to the manifesto, which was not about tackling those on low incomes who had high pay-offs because of the way their pension benefits were structured and those proprietary claims. We need to differentiate between that and the real ill that he is concerned about, which is those on six-figure salaries who are receiving pay-offs. That is something we are prioritising.

I am not quite sure if that related to the original question, so we are going to have to watch out for that in future.

Scottish hospitality and generosity is world-renowned, but could the Minister explain to us why he thinks that Scottish taxpayers should pay for England’s social care crisis?

It is a slightly odd question, because through the broad shoulders of the United Kingdom, it is Scottish jobs that have been protected through the furlough, it is Scottish businesses that have been supported through the self-employment income support scheme and it is the block grant that has provided additional funding to the Scottish Government. The oddity is that they are choosing not to use those uplifts in the Scottish grant to prioritise the things that they come down to Westminster and say they care about.

It would be good if the Minister answered the question, as well. The Prime Minister’s hike in national insurance has been roundly panned, not least by his own Back Benchers and the Chair of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride). People in Scotland are already feeling the pain of a decade of Tory austerity cuts and the harms caused by Brexit, with the devastation of the £20 a week cut to universal credit still to come, none of which they voted for. Why should my constituents pay for the Prime Minister to break his manifesto pledge with a new poll tax on the poorest who can least afford it?

It may be helpful for me to remind the House of the uplift in funding that the Scottish Government have received as a result of the ability of the UK Government to act across the UK. Baseline funding of £28 billion last year with an additional £8.6 billion of funding—that is £36.6 billion in total—has increased to £40.9 billion this year, so the Scottish Government are getting additional funding. As a result of covid, they have received an additional £14.5 billion, but they are choosing not to prioritise that extra money or to use the additional powers they have on tax or welfare to target the issues they say they care about.

At the beginning of this pandemic, like most people I was really worried that unemployment would rise by millions, and I am delighted that it has peaked 2 million below what most people forecast. Unemployment, at 4.7%, is now at historic lows. Does my right hon. Friend agree that the best way to raise living standards is to get those without jobs into jobs and, for those who already have jobs, to give them the training and skills they need so that they can get higher-paid jobs? That is exactly what the Government are doing.

I very much agree with my hon. Friend. It is as a result of those measures that unemployment has now fallen for six months in a row and that the OBR is forecasting a peak of 5% to 6%, compared with the previous forecast of 12%. As he rightly says, the peak will be 2 million fewer. It is not just about those who are being helped back into work, however; it is also about the programme of apprenticeships, traineeships, jobs support and the doubling of work coaches that will then help people in work to get into the better jobs that they deserve.