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Economic Update

Volume 708: debated on Thursday 3 February 2022

The UK’s economic recovery has been quicker and stronger than forecast. In the depths of the pandemic, our economy was expected to return to its pre-crisis level at the end of 2022; instead, it got there in November 2021, a full year earlier. Unemployment was expected to peak at nearly 12%; instead, it peaked at 5.2% and has now fallen to just over 4%, saving more than 2 million jobs. With the fastest-growing economy in the G7 this year, with over 400,000 more people on payrolls than before the pandemic, and with business investment rising, it is no wonder that borrowing is set to fall from £320 billion last year—the highest ever peacetime level—to just £46 billion by the end of this Parliament. As we emerge from the depths of the worst recession in 300 years, we should be proud of our economic record. The economy is stronger because of the plan we put in place, because of the actions we took to protect families and businesses, and that plan is working.

However, for all the progress we are making, the job is not yet done. I know that right now, the No. 1 issue on people’s minds is the rising cost of living. It is the independent Bank of England’s role to deliver low and stable inflation, and the Governor will set out its judgments at midday today. Just as the Government stood behind the British people through the pandemic, so we will help people deal with one of the biggest costs they now face: energy. The energy regulator Ofgem announced this morning that the energy price cap will rise in April to £1,971, an increase of £693 for the average household. Without Government action, this would be incredibly tough for millions of hard-working families, so the Government are going to step in to directly help people manage those extra costs.

Before I set out the steps we are taking, let me explain what is happening to energy prices and why. People’s energy bills are rising because it is more expensive for the companies that supply our energy to buy oil, coal and gas. Of the £693 increase in the April price cap, around 80% comes from wholesale energy prices. Over the past year, the price of gas alone has quadrupled, and because over 85% of homes in Britain are heated with a gas boiler and around 40% of our electricity comes from gas, this is hitting households hard. The reasons gas prices are soaring are global: across Europe and Asia, a long, cold winter last year depleted gas stores. Disruption to other energy sources, such as nuclear and wind, left us relying more than usual on gas during the summer months. Surging demand in the world’s manufacturing centres in Asia, at the same time that countries such as China are moving away from coal, is further increasing demand for gas, and concerns about a possible Russian incursion into Ukraine are putting further pressure on wholesale gas markets. So prices are rising.

The price cap has meant that the impact of soaring gas prices has so far fallen predominantly on energy companies—so much so that some suppliers that could not afford to meet those extra costs have gone out of business as a result. It is not sustainable to keep holding the price of energy artificially low. For me to stand here and pretend we do not have to adjust to paying higher prices would be wrong and dishonest, but what we can do is take the sting out of a significant price shock for millions of families by making sure that the increase in prices is smaller initially and is spread over a longer period.

Without Government intervention, the increase in the price cap would leave the average household having to find an extra £693. The actions I am announcing today will provide, to the vast majority of households, just over half of that amount—£350. In total, the Government are going to help about 28 million households this year. Taken together, this is a plan to help with the cost of living worth about £9 billion.

We are delivering that support in three different ways. First, we will spread the worst of the extra costs of this year’s energy price shock over time. This year, all domestic electricity customers will receive an up-front discount on their bills worth £200. Energy suppliers will apply the discount on people’s bills from October, with the Government meeting the cost in full. That discount will automatically be repaid from people’s bills in equal £40 instalments over the next five years. This is the right way to support people while staying on track with our plans to repair the public finances.

Because we are taking a fiscally responsible approach, we can also provide more help faster to those who need it most—the second part of our plan. We are going to give people a £150 council tax rebate to help with the cost of energy in April, and this discount will not need to be repaid. I do want to be clear with the House that we are deliberately not just giving support to people on benefits. Lots of people on middle incomes are struggling right now too, so we have decided to provide the council tax rebate to households in bands A to D. This means that about 80% of all homes in England will benefit.

The third part of our plan will provide local authorities with a discretionary fund of nearly £150 million to help those lower-income households who happen to live in higher council tax properties, and households in bands A to D who are exempt from council at all.

We are also confirming today that we will go ahead with existing plans to expand eligibility for the warm home discount by almost a third, so that 3 million vulnerable households will now benefit from that scheme. That is not all we are doing to help vulnerable households. We are providing £3 billion over this Parliament to help more than half a million lower-income homes become more energy efficient, saving them on average £290 a year; increasing the national living wage to £9.50 an hour in April—a rise of over £1,000 for 2 million low-paid workers; and providing an effective tax cut for those on universal credit, allowing almost 2 million households to keep an average of £1,000 per year.

The payment through energy suppliers will apply across England, Wales and Scotland. Energy policy is devolved in Northern Ireland, with a different regulator, and the Government do not have the legal powers to intervene, but we will make sure that the Executive are funded to do something similar, with about £150 million for Northern Ireland through the Barnett formula next year. Because the council tax system is England-only, total Barnett consequentials of about £565 million will be provided to the devolved Administrations in the usual way.

I know that some in this House have argued for a cut in VAT on energy. However, that policy would disproportionately benefit wealthier households. There would be no guarantee that suppliers would pass on the discounts to all customers, and we should be honest with ourselves: this would become a permanent Government subsidy on everyone’s bills, a permanent subsidy worth £2.5 billion every year, at a time when we are trying to rebuild the public finances. Instead, our plan allows us to provide more generous support, faster, for those who need it most, providing 28 million households with at least £200, and the vast majority receiving £350. It is fair, it is targeted, it is proportionate: it is the right way to help people with a spike in energy costs.

Today’s announcements are just one part of the Government’s plan to tackle the country’s most pressing economic challenges. It is a plan for growth, with record investment in infrastructure, innovation and skills; a plan to restore the public finances, with debt falling by the end of this Parliament; a plan to cut waiting lists and back the NHS with £29 billion over three years, and with a permanent new source of funding; and, with the measures that I have announced today, a plan to help with the rising cost of energy, with £350 more in the pockets of tens of millions of hard-working families. That is our plan to build a stronger economy, not just today but for the long term, and I commend it to the House.

I thank the Chancellor for his statement.

We have known that this price rise was coming for months, and today we learn that the energy price cap will increase to £1,971 in April. In October, I called on the Government to provide immediate support for support for households, cutting VAT on their energy bills and saving £200, with £400 in extra targeted support for those who need it most, which would mean, for some of the poorest families in our country, almost no increase in energy bills from April. The Government have not done that today.

We all remember when the Prime Minister said that cutting VAT on energy bills was one of the benefits of Brexit. He said:

“When we Vote Leave, we will be able to scrap this unfair and damaging tax.”

Could there ever be a time when that policy is needed more than it is today? I should have thought that the Prime Minister, with his unblemished record of integrity, would defend the commitments he had made, but instead, that is another pledge thrown on to the bonfire of broken Tory promises.

The uncomfortable truth for the Chancellor is that even after what he has announced today, families in Britain—including some of the poorest—will still be paying hundreds of pounds more for their energy from April as a result of the breathtaking rise in energy prices just announced by Ofgem. Millions of people will be cutting back to pay the bills. Citizens Advice says that it saw a record number of people in January struggling with fuel debts, before the energy price increase. But what do the Government offer? A buy now, pay later scheme that loads up costs for tomorrow; high prices as far as the eye can see, this year, next year, and the year after that. It is a case of give with one hand now, and take it all back later with the other.

The Conservative party used to talk about the nation’s credit card. Today, we have seen the Chancellor force British households to load up their credit cards. By lending billions of pounds to energy companies, he is gambling that prices are going to fall, but they could go up further in October. What then? Billions more loaded on to people’s bills? The best way of targeting support to those who need it most would be an increase to £400 and an extension to 9 million households of the warm home discount, as Labour has proposed. The Government’s scheme is a pale imitation of Labour’s, especially for the households and pensioners on the most modest incomes, but the Chancellor is using council tax to target extra help. That will mean that many of the poorest households receive no extra support, while some of the richest do, and it is people living in the north and the midlands who will lose out most. The hypocrisy, the day after the publication of the Government’s levelling-up White Paper, is obvious. [Interruption.]

Order. Mr Holden, I think we need to be a little calmer. I am sure you will want to catch my eye, and that is not the way to do so.

Can the Chancellor confirm how many people who are fuel-poor will miss out on council tax support compared with the warm home discount support that Labour has announced?

The Government had a choice. Only today, Shell announced that its profits have quadrupled to $20 billion. It described its results as “momentous”—dividends up, profits up, and people’s energy bills up too. Labour’s plan would impose a one-off windfall tax on those excess profits, but this Chancellor would rather shield the oil and gas producers while at the same time loading the cost on to working people and pensioners. Cabinet Ministers have described the oil and gas producers as “struggling”. Tell that to the one in five people who are already skipping meals so they can pay their energy bills.

This energy crisis has not happened overnight. A decade of dither and delay from the Conservative party has brought us to this point: a decade of failure to regulate our energy markets; a decade in which they have slashed our gas storage capacity, leaving us more reliant than ever on Russia for our gas imports; a decade of failure to make the most of solar, tidal and wind energy; and a decade of stalled progress on insulating our homes to keep bills low, not just for one year but into the future. It has been the Tory decade that has led to this announcement of the biggest increase in the price of domestic energy since records began. That is what the Chancellor should acknowledge and apologise for today. The Conservatives are not solving the cost of living crisis, because the Conservatives are the cost of living crisis.

The Opposition may have some soundbites but they certainly do not have a policy. [Interruption.] In contrast, this Government have announced measures—[Interruption.]

Order. Mr Seely, is there something wrong with that wood you keep knocking, because I think it is in good order? You do not need to test for woodworm.

In contrast, this Government have announced measures to share the burden with consumers and help manage the global price rise. Despite the faux outrage from the Opposition Benches, I am sure that even they would admit privately that the support just announced is both generous and comprehensive.

Let me take some of the hon. Lady’s points in turn. First, on VAT, may I say how very welcome it is that the Opposition are recognising the benefits of Brexit? I hope they will join me in celebrating the fact that we have been able to change mass migration to this country after decades, that we can create new freeports in places such as Teesside, that we can sign new free trade deals, and that we can deregulate our economy to drive faster growth. She talked about VAT. VAT will, on average, be worth £90 to every household. We are providing £150 to those households that really need it and delivering that support quicker.

Secondly, the hon. Lady tried to claim that it was the Government’s responsibility to manage global gas prices. I outlined in my statement that it is very clear, as any person looking at this sensibly will acknowledge, that global factors are causing the increase in gas prices. No British Government or Chancellor can change what is happening in Asia or, indeed, stop a nuclear power plant going offline in Germany, and the hon. Lady should acknowledge that. Even in places such as Norway, electricity bills are rising because global factors are in play. She would do well to acknowledge that—and the right hon. Member for Doncaster North (Edward Miliband), sitting next to her, will know that, having spent a lot of time on this.

Thirdly, I want to address the point about our support for the most vulnerable, because I am proud of this Government’s record in supporting those who need our help. The policies we have announced today are progressive in their nature. A flat rate will, of course, mean far more to those on lower incomes or with lower energy bills. It is worth five times as much as a percentage of income for those in the lowest incomes as for those on the highest incomes. The hon. Lady talked about insulation. Over this Parliament, we are spending £3 billion to improve energy efficiency and insulation for over half a million households in fuel poverty. That is the right thing to do and it will save those vulnerable families, on average, £300 a year, not just this year but every year going forward. We have already announced those plans.

Lastly, to address the hon. Lady’s point on a windfall tax, of course that sounds superficially appealing, but we on the Government Benches deal with complex problems in a responsible way. The obvious impact of a windfall tax would be to deter investment—it is as simple as that. At this moment I want to see more investment in the North sea, not less. Last year we saw the lowest amount of investment on record in the North sea, as my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy pointed out just the other day. There are £11 billion of projects lined up to go. I want to unlock that investment because that is good for this country, good for British jobs and good for our energy security.

We will pursue policies that are good for the interests of this country not just today but in the future. My right hon. Friend the Energy Secretary is working very hard to make sure we have an energy market that is fit for the future. We have made investments in nuclear, which, as he rightly pointed out, were ignored by the Labour party when it was in power, but which we are now fixing.

In conclusion, I am not blind to the challenges we face. I have to say to the hon. Lady and her colleagues, however, that we on this side of the House did not have the luxury of sitting on the sidelines and throwing stones. Faced with the gravest of crises, this Government chose to protect millions of jobs. We chose to support millions of businesses, we chose to invest in a world-leading vaccination programme, and we chose a balanced approach to covid so we could open up faster than anywhere else in Europe. We did those things at record speed and at a time of great uncertainty, and we will always strive to learn from mistakes. Nothing is ever perfect when responding to a crisis, but I say to the Labour party that there is a fine line between reasonable criticism and political opportunism, and in my experience the British people can always tell the difference.

I welcome my right hon. Friend’s announcement today. Does he agree that a cut in VAT to solve this crisis is a completely flawed policy, as evidenced by the three economists who spoke to the Treasury Committee this week, including Torsten Bell from the Resolution Foundation, who wanted something far more targeted, such as what my right hon. Friend has announced today? It is clear that one factor in this crisis is Russia’s willingness to weaponise its gas supplies. Will he confirm that if there is any incursion into Ukraine, this country, with our international allies, will look at weaponising our banking system, which would be economically catastrophic for Russia?

I thank my hon. Friend for his question. On VAT, I have nothing further to add. He is right; what we are doing is more targeted, faster and more generous to those who need our help. With regard to sanctions on Russia, I can assure him that absolutely nothing is off the table. We are working closely with our international partners, as the Foreign Secretary has outlined, to prepare a very robust package of sanctions.

The Chancellor brags about having the fastest recovery, but that is actually wrong because Italy, for a start, has a higher growth rate. If the economy is doing so well, why is he still introducing a £12 billion tax on workers this financial year? Why has it taken to the last minute to try to do something about the cost of living crisis? Why is so much of this measure actually a loan that bill payers will have to pay back? He talks about not doing a VAT cut because he wants a more targeted approach. How is giving everybody a rebate a targeted approach? It is illogical.

The reality is that the Treasury is currently raking it in compared to where it thought it would be in the March 2021 Budget: an extra £3 billion this financial year and next year from oil and gas revenues; and VAT receipt predictions in October last year were nearly £40 billion higher than what they were in March 2021. That is a lot of money that the Treasury could be freeing up. Meanwhile, average energy bills increased this year to nearly £1,200, up from £700 the year before, bringing in an extra £0.6 billion in VAT. The VAT increase due to the cap rise will bring the Treasury another £0.8 billion a year, so there is much more money it could free up.

The Scottish Government are bringing in a £20-a-week child payment and uprating the child winter assistance payment. Could the Chancellor not look at doing something similar? Will he confirm that the council tax rebate proposal he is bringing in will have Barnett consequentials, how much they will be and that they will go to the Scottish Government? Will he look at devolving further budgets and powers so that Scotland can take a more targeted approach?

National Energy Action estimated that increasing the cap would put 6 million people into fuel poverty. With the Chancellor’s measures, what impact assessment have the Government done of how many households will be in fuel poverty? How many more premature deaths will there be because people are in fuel poverty? Lastly, the highlands of Scotland generate electricity and send it to the rest of the UK, yet electricity users in the highlands on the restricted meters pay 4p a unit more for electricity, or £400 more on their bills. When will the Treasury and the Department for Business, Energy and Industrial Strategy work with Ofgem to remove that ridiculous surcharge for ageing people in the highlands?

I am happy to confirm to the hon. Gentleman that the Barnett consequentials for Scotland will be around £290 million, which I hope he will welcome. My right hon. Friend the Chief Secretary to the Treasury will be speaking to Kate Forbes later today to go over the details, and I very much hope that the Scottish Government will choose to do something very similar to what we are doing, to the benefit of Scottish citizens. Of course, Scottish citizens will benefit from the rebate scheme on bills, because that is a Great Britain-wide policy, as I outlined.

With regard to the hon. Gentleman’s broader points on the North sea, there is a clear point of difference between us on the Government side of the House and the SNP. We believe in the future of the North sea, in the oil and gas industry, and in the 200,000 jobs it supports, and we want to ensure it plays an important part in our transition to net zero. I hope he can see that that is the right thing for Scotland and will join us in supporting that very important industry.

I thank my right hon. Friend for his excellent statement, and particularly for the thoughtful and progressive nature of the actions he plans to take. Does he agree that it is right to help not only the poorest, but those on middle incomes who are struggling with their household budgets?

My hon. Friend is absolutely right; I know that is something she is perhaps bringing up on behalf of her constituents. A price increase of this magnitude impacts almost everybody, and it is right that our response therefore helps almost everybody. That is what we are doing: ensuring that those families who are working hard on household incomes of £40,000 or so will still get £150-worth of support. Four out of every five households will benefit. We are on the side of hardworking families like those, and I make no apology for it.

I see we now have the Klarna Chancellor—“Get it now, pay later.” There is an important issue with council tax: in areas such as mine and other parts of London, there are not many people in those bands, and certainly not in bands A to C. Who will fund the council tax rebate? Will it be fully funded by the Exchequer, and will there be a weighting of the £150 million fund to areas such as mine, where there are poor households in high-value properties?

Just to confirm for the hon. Lady, it is council tax bands A to D, so it is four out of every five households across England. Obviously, that will vary by region. I can confirm that it will be fully Exchequer-funded and, on top of that, there will be a discretionary fund of around £150 million, for which the Department for Levelling Up, Housing and Communities will decide the best allocation formula. Local authorities will be able to use that to help those low-income households that happen to live in higher council tax band properties and those people, such as students, who are exempt from paying council tax at all, but whom we would want to get that support to.

Conservatives believe in holding taxes down and putting more money in people’s pockets so that they can decide how to spend it. Socialists believe in raising taxes and then choosing to give it back, in the form of discounts and rebates, to selected people who the Government think need them. Could the Chancellor explain his approach in increasing national insurance contributions and then handing money back to different people through rebates and discounts? Is that a Conservative approach, or is it a socialist approach?

With the greatest respect to my hon. Friend, I also believe that it is a Conservative approach to be responsible with this nation’s public finances. I believe that, after recovering from the worst economic shock in 300 years, where borrowing spiralled to levels that we have not seen since world war two, it is right and responsible to tackle that and get our borrowing and debt down to sustainable levels. That is why I have had to make difficult decisions, but also fund the country’s No. 1 priority: the NHS and the unacceptably high and growing number of people waiting for operations. That is what that funding will do. It is right that we provide a secure, long-term, sustainable funding stream for the country’s No. 1 priority, and people should be reassured that every penny of that levy is going to go to the thing that they care most about.

There is an obvious unfairness in the massive profits being made by the oil and gas companies at a time when families are facing such great hardship. Surely the Chancellor must make an intervention to address that. He has announced a discretionary fund for local councils. Worried families will have no idea how much that will benefit them, if at all. Will he instead introduce an uplift in universal credit, having cut it so unfairly just four months ago?

It is worth pointing out that the energy companies that the right hon. Gentleman talks about are already subject to a far higher rate of corporation tax. In fact, at 40% versus 19%, it is double the rate of corporation tax that other companies pay. I will not repeat my earlier arguments about the windfall tax.

We believe that the right way is to make sure that people can keep more of what they earn, which is why we cut the universal credit taper rate by 8 percentage points. That is a £2.2 billion tax cut that will benefit 2 million of the lowest paid people in our society. It is making working pay, it is strengthening incentives to work, it is the right policy and it is a Conservative policy.

Many families across the country will struggle with their energy bills this year, so I am grateful that we have a Chancellor who is in touch with that. Will he commit to continuing to ensure that those in middle Britain, as well as those on the very lowest incomes, are supported by this Government?

My right hon. Friend is absolutely right and I can give her that reassurance. I hope that today’s announcements will provide her with the confidence she needs that both I and this Government are committed to being on the side of those hard-working families, whom she does an enormous amount to represent and champion in this House.

The Chancellor said that energy suppliers will apply the discount on people’s bills from October. Vauxhall constituents contact me almost daily, including residents who live in properties that are too cold to heat and residents pleading for help to get repairs done. Current data suggests that more than 8,000 households in Vauxhall already live in fuel poverty. What does the Chancellor have to say to my constituents who are already unable to make ends meet and who face a hike of over £700 in their energy bills?

What I can tell them is that they will not have to wait until October, as the Labour party’s proposals would have had them do. They will receive £150 in April, and then in October they will receive the rebate on their bills at a time when the energy price cap will be looked at again. So it is appropriate that there is further action to provide support then. That is why this policy is the right policy. By using the council tax system, we can get money to people faster—£150 in April for the hon. Lady’s constituents.

I welcome this smart set of measures. We must retain fiscal discipline; otherwise the problem will get worse rather than better. On monetary policy, the Chancellor mentioned the independence of the Bank of England decision, which has just been announced, but there is some chatter about working in tandem with the Bank. Will he confirm that, on monetary policy—not just interest-rate setting but the withdrawal of quantitative easing—Bank independence will be respected?

I can give my right hon. Friend that assurance. It is absolutely right and proper that the Bank is independent of Government on matters of monetary policy. That is exactly what has always been the case over the past two years and it will continue to be the case. I can wholeheartedly give him that assurance.

The Chancellor will be pleased that his campaign team are behind him today. Does he really think that the super-profits of $20 billion made by Shell are untouchable? His hands-off approach will not persuade many people across our country.

What millions of people across this country will see today is a Government who are on their side and a Government taking action to help them with the anxiety they feel about rising energy bills. We are doing it in a proportionate, fair, targeted and responsible way to protect people not just today, but for years.

Thousands of families in Swindon and millions of households across the country will welcome the immediate help on council tax that the Chancellor has announced today in his welcome statement. Does he agree that the cod analysis we heard from the hon. Member for Leeds West (Rachel Reeves) about the energy market in Europe is demonstrable evidence of the paucity of the Labour party’s approach to energy? Is not our approach to a zero-carbon economy—one based upon energy security—going to be the way we deliver our country out of these short-term problems?

As ever, my right hon. and learned Friend makes an excellent point; he is absolutely right and I agree wholeheartedly with him. He will know that my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is working very hard to undo some of the mistakes that the Labour party made in the past.

I know that the Chancellor is all pumped up, but this is pretty puny stuff, to be honest; £350 is not going to touch the sides of the problem for my constituents. Gas and electricity are up for the average family in my constituency by £686; fuel is up by £314; the average weekly shop is up by £385; universal credit has been cut by £1,040; national insurance is up by £150; and frozen tax allowances—frozen by him—will cost another £300. That makes £2,875, in a constituency where the average wage is £27,000. That is really going to cause hardship and £350 does not even touch it.

The Labour party has proposals that would give considerably less to many people, so it is a bit rich to hear that. The hon. Member had a long list of numbers. I also have one: 400,000 more people on the payroll than there were before the crisis; 2 million jobs saved because of the actions of this Government; the national living wage going up by £1,000 a year in April; and a £1,000 tax cut for millions of people on universal credit. Those things are what we are doing to put more money into people’s pockets when they need it, and they can rely on us to continue supporting them not just now, but for days and years into the future.

First, I thank the Chancellor for coming to the House to make his statement before he does a press conference. That is the right order of priorities. I also thank him for engaging with Conservative colleagues, listening to their concerns and responding to them in his statement. Finally, may I highlight the realism and honesty with which he has grappled with global gas prices? We cannot pretend that they have not gone up and what he has done is set out a package to smooth the impact for everybody and to help those on the lowest incomes. That is the right approach and it demonstrates why we have got it right and the Labour party is not fit for office.

My right hon. Friend is absolutely right. Those of us in government make responsible decisions and we are honest with people. I think people respect that honesty and it is the right thing for us to do. He is right that there is a global surge in gas prices and it would be wrong to pretend that we do not have to adjust to that, but what we can do is take the sting out of that adjustment, spread its impact over time and limit its immediate impact. That is the right and responsible approach and I am grateful for his support on that plan.

The Chancellor comes here and says he is proud of his record. Let me tell him what my constituents think of his record. The Conservative party cut £20 a week from universal credit and was dragged here kicking and screaming for U-turn after U-turn just to feed poor and hungry children. This £350 does not cut it when the Chancellor has wasted billions. More than £6 billion went on wasted personal protective equipment and more than £4.7 billion has been lost to fraud in respect of covid funds. The Chancellor brings £9 billion here when he has lost £12 billion. It does not quite cut it for my constituents, who do not trust this Government because they are not helping my constituents. Those at the bottom end are the ones being hit the most. This does not even come near the £700, let alone the cost of living.

The hon. Lady talks about universal credit; this Government provided the extra support for people when they needed it during the crisis. All the data and evidence show that throughout the worst of the depths of this pandemic the Government’s actions helped those on the lowest incomes the most. That is a record of which I am enormously proud.

I realise that to the champagne socialists on the Opposition Benches £350 is not a lot of money, but my right hon. Friend knows that I care deeply about this issue. My constituents are just about managing but this is a cost of living package for white van men and women throughout the country, including in my Harlow constituency. Will he continue to do everything he can to focus on the just-about-managing group of people who make up my constituents, and make sure that the Government continue to cut the cost of living for hard-working families?

I am grateful for my right hon. Friend’s support. He rightly champions those people who are just about managing and who work incredibly hard to build a better life for themselves and their families. They should know that this Government are on their side. I thank him very much for his support and we will continue to champion those people.

The Chancellor’s plans play Russian roulette with taxpayers’ money, gambling that prices will go down, rather than providing a real solution to help families to avoid skyrocketing bills. It is just delaying the pain while he increases taxes by £600 a year for the average household. Why will he not listen to the Liberal Democrats’ suggestion of a package that would help families to reduce their bills by £1,000 a year? Surely it is time to admit that he has got it wrong. It is time to scrap the Conservative tax hikes.

We have not heard from the hon. Lady’s party any plan to provide the funding that the NHS needs. We all know that the NHS is grappling with the recovery from covid. There is an unprecedented scale of backlogs to work through and the social care system needs urgent reform. The only way to grapple with those challenges is to provide the NHS and social care with a sustainable source of funding. That is what we are doing, it is the responsible and right approach, it is the progressive approach, it will benefit people in Scotland, Wales and Northern Ireland as well as England, and in the long run it will be the right thing for this country.

I congratulate my right hon. Friend on the comprehensive package of support that he has provided, which is fiscally responsible in the face of global energy-price volatility. My constituents will have the benefit and reassurance of the rebate on energy bills that the Chancellor has announced, but they will not have the reassurance of the council tax support he is making available in England. Will he at least encourage the Welsh Government to follow suit, so that my constituents have the same benefit as those in England, or even go a step further and insist that the benefit is passed on?

I can confirm that the Welsh Administration will receive £175 million or so in Barnett consequentials, which will enable them to provide a similar discount. The Chief Secretary to the Treasury will speak to the Welsh Government later and will very much make the point that we would like to see that happen, to the benefit of all my right hon. Friend’s constituents and people throughout Wales.

On the council tax rebate, some of the poorest families do not pay significant amounts of council tax because they are on council tax support schemes. Even if their council tax bills are less than £150 a year, will they still get the full £150? Will their local authority pay that to them in cash in April? On the £150 million discretionary fund, will it truly be at the discretion of councils to decide how they spend it, or will the Government direct how it is spent?

The hon. Gentleman is, of course, well informed on these issues. Our intention is that those people will benefit from the £150, which is why we are providing the discretionary fund. It has been sized with a sense of who those people are and how many they are. We will of course provide some guidance to local authorities on whom we would expect the support to go to, but ultimately they will be able to make those decisions for themselves.

I thank the Chancellor for an extremely welcome package, which is the latest step in a series of strong reactions to different crises throughout the pandemic and today. He also mentioned improving investment in North sea gas fields, which is very welcome. It is only a temporary set of solutions, however, that will dull the initial economic pain without solving the long-term problem of sky-high energy prices. What conversations has he had with the Energy Secretary, who is sitting next to him, about solutions to deal with those longer-term problems? When we can we expect to hear answers on such things as reforming the price cap and the wholesale energy market?

My hon. Friend is very thoughtful on such matters and has, rightly, long made the point that we must also ensure that the long-term energy market is working in all our benefit. The Energy Secretary, the Prime Minister and I have been involved in such conversations for some time. The Energy Secretary is working on a set of measures that will address many of my hon. Friend’s concerns and he should expect to hear from the Government soon.

May I say how nice it is to finally see the Chancellor in his place? Some of us had been considering filing a missing persons report given his absence in recent weeks. Although I appreciate his update, for families across Pontypridd and Taff Ely, it is another case of too little, too late. The Welsh Labour Government have doubled the warm home discount scheme and Labour’s proposal would have taken £600 off the bills for the poorest in our country, but his plan gives them £350 off. Why does it fall so far short of what is needed and what is proposed?

I am sorry that the hon. Lady did not welcome the £175 million in Barnett consequentials for the Welsh Administration. The Government are providing significant support for those on middle incomes, because they are also struggling, and we believe that is the right approach.

I welcome the Chancellor’s recognition, as my hon. Friend the Member for Weston-super-Mare (John Penrose) said, of the importance of a long-term energy policy. I thank him very much for the help for council tax payers. Bands A to D cover most folks on the Island. Can he confirm that he is talking about people with primary residences on the Island and nationally?

My hon. Friend makes an excellent point. I confirm that the £150 is not for those with second homes or empty homes. We will make that crystal clear in how the policy is executed.

I thank the Chancellor for his contribution. I do not want to be churlish—a fair bit of money has been set aside and we appreciate that—but with the further rise in energy prices and the uplifted cost of living in general, working families will have to choose what to cut out of their lives to make ends meet. I put on record that I welcome the £150 million for Northern Ireland and the other Barnett consequentials, but will he consider and commit to reviewing the child benefit threshold for families whose wages are the same but are simply not worth the same in real money terms as when the threshold was introduced in 2013?

I am glad that the hon. Gentleman recognises that there are two sets of Barnett consequentials for Northern Ireland stemming from each of the policies, which sum total £250 million. He will appreciate that I cannot comment on future tax and welfare policy but, as always, I will take what his says and reflect on it.

I warmly welcome the Chancellor’s statement because 94% of properties in Stoke-on-Trent are in council tax bands A to C, so the £150 rebate will do wonders across Stoke-on-Trent North, Kidsgrove and Talke. From his recent visit to the city, he knows that the ceramics sector is an energy-intensive industry and will be looking for more creative solutions in the short term to help with rising energy costs. Can he confirm that he will meet me and other Stoke-on-Trent MPs to discuss those ideas further?

I am always happy to meet my hon. Friends from Stoke, which benefited from not just one, not just two, but three successful levelling-up fund bids, and which I was pleased to visit recently. My hon. Friend is right and he is, rightly, a proper champion for the ceramics sector in this House. I enjoyed meeting representatives from that sector on my recent visit and I would be happy to meet him and them to discuss the situation further.

We all know that the Chancellor is a fast-talking, slick operator who knows how to keep his head down when it is useful, but as someone who has been in the House since 1979, he is the most incompetent Chancellor that I have ever seen. When children go to bed—[Interruption.] He does not like it, but when children in my constituency go to bed with no food in their tummies and no heat in their homes, what does he think is the honourable position of a Chancellor who has just allowed £4.3 billion to be taken in fraud from one of his direct policies under his watch? Any other Chancellor that I have known would have come to the House today to resign.

I will let this Government’s record on economic policy speak for itself. It is a record of which I am proud. I can provide the hon. Gentleman with the reassurance that I and the Government remain committed to tackling fraud wherever we see it. He mentioned the figure of £4.9 billion. As I said to the House in oral questions on Tuesday, that estimate has already been reduced by a third—by £1.6 billion—because of the actions that we are taking. I will not go into them all now, but he should know that we will go after everyone wherever we can to recover that money for the taxpayer, and I am confident that we will do a very good job.

This is a targeted package that helps those just about managing, which is entirely right. The last Labour Government closed six nuclear power stations and had a policy of no new nuclear. Does my right hon. Friend agree that, alongside these measures to help people in the short term, it is imperative that we invest in our long-term energy security—in domestic gas production, in renewables, and, crucially, in new nuclear?

My hon. Friend is absolutely right about some of the failures of policy that the Labour party propagated in power. That is being fixed by my right hon. Friend the Secretary of State of Business, Energy and Industrial Strategy. We are investing not just in new nuclear, as he said, with billions of pounds at the spending review, but in offshore wind, and—as he knows in his part of the world—carbon capture and storage and hydrogen, where Teesside is playing a starring role in that green energy revolution.

The Chancellor will be aware that nearly 20% of households in Wales are not connected to the mains gas grid. In rural areas such as Ceredigion, that figure actually rises to more than 80%. Research by the Office for National Statistics notes that Ceredigion suffered the highest increase in fuel bills over any area in mainland UK in the past year, increasing by £863 on average. Will the Chancellor confirm whether the rebate announced today will also apply to households that are not connected to the main power grids?

The hon. Gentleman makes an excellent point and one that colleagues not just in Wales, but in England and Scotland will also be asking, not least my own constituents. I can tell him that the rebate will be delivered through electricity bills to solve the exact problem that he mentions, which is much more universal. Separately, obviously, the council tax discount in England is through the council tax system, so it is agnostic to the heating source, and I would expect the Welsh Government, should they choose to do the same thing, to be able to solve that problem in that way.

Quite simply, this is a superb plan—very well done. My right hon. Friend is right to question the Opposition’s idea of a windfall tax, given that Gordon Brown completely stifled the telecoms market in the late ‘90s by doing exactly the same. Speaking as the chair of the all-party group for district councils, I wonder whether my right hon. Friend will join me in thanking councils for once again being able to offer swift and agile responses to local communities and families in helping us to deliver this today.

As a former local government Minister, it gives me great pleasure to pay tribute to district councils and to the work of the District Councils’ Network. I do not know whether John Fuller is still running it, but it does an excellent job. Once again, when we need it to help us to deliver policies, it steps up. I can confirm also that it will have received new burdens funding for doing that, but I thank it for all its work, and my hon. Friend is right to champion it.

Even before covid, a third of children in Hull North, many in working families, were living in poverty. With the cost of living crisis and energy prices soaring, will the measures that the Chancellor is introducing today see an increase, or a decrease, in the number of children living in poverty by Christmas?

Thanks to the actions of this and previous Governments, since 2010, there are 200,000 fewer children living in poverty. We also know that children growing up in workless households are five times more likely to be in poverty than those who have working parents, which is why it is very good news that the number of children in workless households has fallen by 700,000 over the past decade. That is the best way to get children out of poverty: find jobs for their parents, and that is what this Government are committed to doing.

I thank my right hon. Friend the Chancellor for his honesty in stating that we cannot completely remove inflationary global pressures, and for his focus on supporting hard-working middle-income and low-income families. I want to ask about the discretionary £150 million fund. In particular, will he ensure that that funding is directed so that all those living in military family accommodation who are not eligible to pay council tax are eligible for the £150 discount?

My hon. Friend is right to highlight one of the categories of those who are exempt that we want to get support to and ensure that they are included in the discretionary fund. I know from our conversations that she has also highlighted those living in rural constituencies such as hers who are off the gas grid, and I hope she is reassured by the answer I gave to the hon. Member for Ceredigion (Ben Lake).

The Chancellor’s proposal to “buy now, pay back later” while ignoring the eye-watering profits from oil and gas companies, as he did with the fraudsters, tells us all we need to know about whose side he is on. Prepayment meter customers face a much higher rate—£708 on average—so can he tell us how these plans will help the people who pop down to the corner shop to top up their prepayment cards?

Around 4 million households have prepayment meters, and about 40% of those will be able to receive the rebate on bills automatically because of the nature of their prepayment meter. For the remaining 60%, we will have to do something more manual and there are various ways we can do that, whether by sending barcodes or QR codes through the post or by email—[Interruption.] Before the Opposition say anything, that is exactly how we already deliver the warm home discount to those people, and we did exactly the same thing in a similar measure in 2012 under the coalition. This affects less than 9% of all households, but we have a plan for them. We will work with the energy companies to ensure that all those on prepayment meters benefit in exactly the same way.

Residents in the Kettering constituency will warmly welcome the assistance that the Chancellor has announced to help them with their rising energy bills. As well as the measures he has announced today, there is an additional £1.8 billion of support out there in unclaimed pension credit. One million pensioners are eligible and not claiming, including 4,500 in north Northamptonshire. Just as we reached out to pensioners to come forward to get their vaccination, please can we reach out to those people who are not claiming, because some of them have the highest energy bills?

My hon. Friend makes an excellent point, which he also made the other day in Treasury questions, when we committed to looking at how best we could take up his suggestions. I think I am right in saying—the Secretary of State for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng) will correct me if I am wrong—that the warm home discount is already moving to a more automatic system for that rebate for those on pension credit, but we will of course take his suggestions on board and figure out how best to improve what we do.

Each week, the Prime Minister tells us that there are 420,000 more people in work than there were before the pandemic, yet the Office for National Statistics tells us that there are 506,000 fewer people in work than before the pandemic. The reason for that, as the Chancellor knows, is that the Prime Minister excludes the self-employed. Will the Chancellor correct the record to show that there are in fact half a million fewer people in work, and explain why, in the circumstances, he is imposing a massive national insurance tax on jobs?

If the hon. Gentleman looks at the remarks I made earlier, he will see that I was clear that there are 400,000 more people on payroll, and that is the right use of that statistic. It is obviously harder to track those in self-employment because we have real-time information numbers from HMRC for those on payroll. We are proud of our track record on jobs. Unemployment in this country was forecast to reach 12%, with millions of people unemployed, but unemployment has now fallen for almost 10 straight months. It is almost back to the record lows we saw pre-pandemic, and we have record job vacancies and record low redundancies. That is all evidence that our plan for jobs is working.

As somebody who supported a VAT cut, may I invite my right hon. Friend to confirm that people in Wycombe will receive more help faster under his plan?

I can give my hon. Friend the reassurance that the vast majority of people in his constituency will receive £350. Those in council tax bands A to D will get £150 in April. That is more than a VAT cut would have given them, and it will come faster. I am grateful to have his continued support.

Older people, sick people at home and many disabled people will need to put on their heating for longer, and therefore will be paying more. What additional steps will the Chancellor take to ensure that they are not pushed further into poverty, and not least as he has tangled with the pensions triple lock this year, what has he got against older people?

This Government and previous Conservative Governments have a proud track record of supporting those who are retired and are pensioners. Because of the triple lock, which has been in place because of a Conservative Government, pensions are now at their highest level relative to earnings in 30-odd years, and we are protecting pensioners with a double lock this forthcoming year. Of course, the winter fuel payment, with up to £300 of support for those over the state pension age, will address exactly the hon. Member’s concerns.

Thank you, Mr Deputy Speaker. It must have been the mask.

As the Chancellor did at the time of the pandemic, he has put together a very comprehensive protective shield around people in my constituency, and that is very welcome. Many well-paid jobs are being created, particularly in the energy sector, thanks to Government policies, but there are many, particularly in food processing or the security sector, who are on very modest incomes and fixed incomes. Can my right hon. Friend give them an assurance that he will keep this policy under review so that if the energy price rise continues, as is likely, they can be reassured that support will be available?

My hon. Friend is always a champion for those who are working hard and doing the right thing, and that is why he has rightly championed the freeport in his constituency to provide jobs and opportunity for those families. I can give him that reassurance. It is because it is likely that energy prices will remain high and may even increase when the October price cap is set that the rebate of £200 will come in in October—in that month. I hope that will help at that time if energy bills continue to rise then, and of course the £150 will come much sooner, which gives him the reassurance he needs. As I said earlier, we do have to be honest and recognise that we are all going to have to adjust to higher energy prices, but what we can do is slow the pace and scale of that adjustment for families across the country.

Is the Chancellor comfortable about the fact that he has given more support to fraudsters, writing off billions of pounds of debts, than he is giving to hard-pressed families for whom this just prolongs the pain? This 54% price rise will be paid over four years, won’t it, Chancellor?

As I outlined earlier this week, nothing has been written off. We are committed to going after everybody who has defrauded the taxpayer. It is important to remember the context. These schemes were delivered at enormous scale: 9 million people benefited from the furlough scheme and 1.5 million small businesses benefited from bounce back loans. At the time—we can remember the context—I was here almost every other day being rightly held to account by Members on both sides about the speed of support that we were getting to businesses in all of our constituencies that needed cash as quickly as possible. In those circumstances, I had to make balanced trade-offs and judgments about the best way to support those people. I am confident in the judgments we made, but it is also right, now that we are through the pandemic, that we go after anyone who has defrauded the Government and the taxpayer with the full force of the law.

I join my colleagues on these Government Benches, and I am sure many secretly on the Opposition Benches, in thanking my right hon. Friend for his measures today. As he is aware, we have some real deprivation in my beautiful constituency of Hastings and Rye. Can he confirm that the measures announced by him today target support to the most vulnerable and disadvantaged in my constituency, are more generous as well as more financially sensible than Labour’s uncosted plans, and will reach the families who most need help now?

My hon. Friend is absolutely right. Getting cash to people who need it quickly is paramount in this circumstance. That is why the £150 will go to those in her constituency in council tax bands A to D in April, which will provide immediate relief. As she said, this is a financially responsible approach to this problem, because we do have to continue getting our borrowing and debt down so that the plan we have put in place maintains us on our path. It is actually important to recognise—I have made this point before—that one of the reasons why I care about getting our borrowing and debt to better levels is so that we have the resilience to respond to shocks exactly like this, and that is why it is important that we do rebuild such resilience.

The Chancellor’s package offers £350 off to the poorest households. Labour’s proposals offer £600 off to the poorest households. The cap has gone up by £693. Why is the Chancellor offering the poorest households so much less than they would get under Labour?

Those of us on the Government Benches believe that it is also right that we support those on middle incomes; those families are also working hard and they deserve our support. It is important that they know that the Government are on their side at times like this, and that is why we have taken the approach that we have. But of course we are cognisant of those on lower incomes. As I said, this is a progressive package. Flat-rate payments are a greater percentage of income for people on lower incomes, and indeed with smaller energy bills. As I have outlined, we have a range of other interventions specifically targeted at those people.

I welcome this generous plan, especially the inclusion of families on middle incomes, which will do a lot to help many of my constituents in Rushcliffe. Does my right hon. Friend the Chancellor agree that now is the time for us to be investing in our domestic energy industry and energy security—in turbo charging our move to clean energy, as we are doing in the east midlands freeport, rather than risk driving investment from the UK with a counterproductive windfall tax as the Labour party would?

I agree with my hon. Friend. She puts the point excellently. Government Members are in favour of more investment in domestic energy, more jobs for the British economy and greater energy security for our nation.

With families facing an extra £2,800 of expenses, this package does not really touch the sides at all, does it? With regard to electricity, the Chancellor said:

“with the Government meeting the cost in full.”

But he is not is he? He is spreading it over five years, which means that next year, when electricity prices continue to rise, the poorest families will face increased bills and have to find £40 to pay back to the Chancellor. You have not put a lid on it, Chancellor, you have just kicked the can further down the road.

As my right hon. Friend the Member for Harlow (Robert Halfon) said earlier, £350 is a significant amount of money for families up and down the country, and I think it will make a real difference and lessen their anxiety. What I was talking about was the council tax rebate, which will be fully Exchequer funded with no cash due back.

I thank my right hon. Friend the Chancellor for meeting me and colleagues and responding so positively on this issue. He may remember that I asked him to ensure that any support extended to cover those just above benefit thresholds because they are often most in need of help. How does the support that he has announced today for those constituents compare with the suggestions made by Labour?

My hon. Friend, as ever, makes a thoughtful contribution, and I enjoyed our conversations. He was right to champion those who are on middle incomes. As a result of those conversations with him and others, we have designed a package that does exactly as I think he would like to have seen. By targeting support at those in council tax bands A to D, four out of five households—those up to middle income, those just about managing—will receive £150 extra support, and they will get that support in April.

A poll by Survation today reveals that 63% of the public support a windfall tax on oil and gas producers’ profits. It is not like this Government to ignore the polls so may I suggest that, rather than misnaming, as he did in his statement, a renewable loan as a discount, why not go for the windfall tax and give that money to our hard-pressed constituents?

We have had this debate. Conservatives believe in more investment in our domestic energy sector. We want to support British jobs and British energy security and we believe in doing the right, responsible thing. That is what a responsible Conservative Government do.

I thank my right hon. Friend for these packages, which will help my constituents across my constituency. On the issue of a windfall tax, will my right hon. Friend confirm that the Labour party’s call for a windfall tax would undermine competition in the market, reduce investment and kill off jobs? Ultimately it would mean that energy prices were likely to be higher for longer and hit the poorest the hardest.

My hon. Friend is exactly right. Some 200,000 jobs are supported in that industry, and as I pointed out earlier, there are £11 billion-worth of projects waiting to get going. I would like to see those projects go ahead, which will be good for the country’s energy security, good for our economy and good for jobs. I know that the Energy Minister and I share that ambition.

I thank the Chancellor for his statement. My constituents in Bassetlaw will be breathing a sigh of relief at his announcements today, which blow the Opposition’s VAT cut out of the water. The Chancellor mentioned wholesale prices; as we become more self-sufficient and move to renewables and new nuclear, is he able to outline what the Government and the Treasury are doing to tackle this problem at source? May I suggest the excellent step fusion project in Bassetlaw that we are bidding for?

I am grateful for my hon. Friend’s support, and I am glad that this announcement will provide some reassurance to his constituents, who I know would be worried about the cost of living. I have heard warm noises about his fusion project from my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy. We announced, I think, £120 million for advanced nuclear technologies in the spending review, and there is no doubt that there is a productive conversation to be had about how we allocate that money to projects such as his.

I thank my right hon. Friend for today’s statement, and for confirming that this significant £9 billion package is going to be targeted at those who need help most. He also highlighted that 80% of cost increases are coming from the global wholesale price increase, so is he going to continue his focus on trying to insulate the UK as much as possible from those global price fluctuations, increasing our energy security, boosting domestic production and ensuring that our energy supply is diverse in nature, sustainable for the future and significant in scale?

My hon. Friend is absolutely right. It is important that we have diversity of supply: that is what we are doing, whether through offshore wind, nuclear, carbon capture and storage, or exploiting domestic gas. We are doing all those things to build diversity of supply for our security. My hon. Friend is right to highlight that, in the long term, that is the right policy for British customers.

I welcome these targeted and fair measures that will help those who need help most. While Labour’s VAT plans would help by just £89, I welcome the fact that this council tax rebate will help 89% of households in Yorkshire and Humber—I have just had the figures through—with a £150 rebate. Will the Chancellor also confirm that those who fall outside the A to D bandings and who still need help will be able to get that help through the extra discretionary funding for local councils?

I am grateful to my hon. Friend, because I know that this is an issue that was on his mind, and he wanted to make sure his constituents got the support they needed at a time of anxiety for them. I can confirm that the £144 million discretionary fund is there to take care of those people—we estimate around 300,000 people—who are on means-tested benefits and happen to live in council tax bands above A to D. That is why that discretionary fund is there, to get support to the people he mentioned.

I thank the Chancellor for the £350 help that will really benefit everyone in Rother Valley. Does he agree that it is right that this Government are helping not just those on means-tested benefits, but those not on benefits—the lower and middle-income families—because they also need a helping hand? It is great that this Government reward hard work and those who are doing the right thing.

My hon. Friend is absolutely right. He has championed his constituents who are working hard and doing the right thing, and today’s announcement will give them reassurance that this Government and their Member of Parliament are on their side.

Thank you very much, Mr Deputy Speaker; it is always a pleasure to see you in the Chair. Could my right hon. Friend confirm that all UK households will benefit from the £200 smoothing rebate, and that almost 95% of County Durham residents will benefit from the £150 council tax rebate, including those who are off-grid—a similar proportion to the constituency of the right hon. Member for Doncaster North (Edward Miliband), who I see has now scuttled away? That £150 is over 50% more than Labour’s VAT plan, which would have benefited the richest people most. Will the Chancellor continue to pursue a one-nation Conservative approach, not an inner London two-kitchen one?

There were so many excellent points in my hon. Friend’s question. The only thing on which I will correct him is that the energy rebate is Great Britain-wide, because the Northern Ireland energy market is devolved and we do not have the legal powers or the regulator to do it there. Everything else he said is spot on, and I can confirm that this Government will continue to be on the side of his hard-working constituents, whom he does a great job of championing. Today’s announcement will give them the reassurance they need that, at a time of rising prices, this Conservative Government are stepping in to help, as we have and always will.