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Cost of Living

Volume 717: debated on Tuesday 28 June 2022

11. What fiscal steps he is taking to help reduce the impact of inflation on households’ cost of living. (900767)

13. What recent assessment he has made of the potential impact of his Department’s fiscal policies on the cost of living. (900769)

17. What fiscal steps he is taking to help reduce the impact of inflation on households' cost of living. (900774)

19. What fiscal steps he is taking to help reduce the impact of inflation on households' cost of living. (900776)

The Government understand that many families are struggling with rising prices. That is why we have announced £37 billion-worth of support, with the bulk of that targeted on the most vulnerable in our society, and those families receiving around £1,200 of help this year.

The Government’s failure to increase social security benefits in line with the current rate of inflation has resulted in a real-terms cut. Many of my constituents who are in receipt of social security now face a shortfall of around 6%, based on today’s inflation rates. The Chancellor could take action now, for example by reviewing the rate of social security every six months, rather than annually in September, while we are in this cost of living emergency. Will he commit to an emergency in-year uprating in line with the rates of inflation?

I gently point out to the hon. Lady that just a few weeks ago we announced £15 billion-worth of additional help, particularly for those on means-tested benefits, who are receiving a one-off payment of £650. The aggregate amount spent on that proposal is in fact more generous than simply uprating with inflation as she suggested, so those families will get more help under our plan than with her proposal, and that money will arrive first in July, with the second payment later in the autumn.

The cost of living is affecting individuals and business, particularly small business, across our society. Many small cafe owners, who are important for the service sector in Edinburgh South West, are struggling. One small cafe owner wrote to me recently to say that over the past few months, every single one of her suppliers has put their prices up—from bread, to cakes, to bacon, to coffee, to waste collection and energy. My question for the Chancellor is this: is it not time that he looked at his options for further cuts to VAT to help small businesses, especially small cafes in Edinburgh South West?

We have provided significant support to the hospitality sector over the past two years, and I am glad that the sector at least emerges from the crisis in a much stronger shape—in terms of employment, cash balances and insolvencies—than anyone had anticipated, which is something to celebrate. With regard to support at the moment, we have of course put in place a £1.7-billion business rates holiday—the 50% discount—for cafés and restaurants in England, and that money is being Barnett-ed to Scotland to provide similar support to restaurants there.

Public sector workers and care workers in North Tyneside say that the Chancellor’s package on the cost of living crisis does not address their daily financial struggles, because under his Government, their pay has not kept pace with inflation. What practical steps will he take to address that overriding problem for my constituents?

As I said, we are providing an enormous amount of support—around £1,200—which is targeted at those who most need help. Of course, no Government can make the challenges go away completely, given the scale of the problem that we are facing, but I am confident that the support we have put in place is significant and will make a meaningful difference to those who most need it. The hon. Lady talks of the practical steps that we can all take to help with the cost of living. Perhaps her party could start by opposing the crippling rail strikes of the past week or two, which are doing nothing to ease the burdens of the cost of living on public sector workers.

My constituents in Bury South have had inflicted on them tax and national insurance rises—the inadequate 5p cut to fuel duty barely touched the sides—by a Chancellor who has clearly run out of ideas, as we have just heard. With energy costs at record highs, and an expected further rise of up to 50% in the autumn that will mean the cap has almost trebled in under a year, what further assistance can be given to my constituents to ensure that nobody is cut off?

I gently say to the hon. Gentleman that £37 billion of support is being targeted at the most vulnerable and will come over the next few months, from the summer through the autumn and winter, to help with the price cap. As we said, we do expect the cap to increase significantly in the autumn, which is why we have put the support in place. He talked about taxes, so he will be pleased to tell his constituents that in just a couple of weeks’ time, they will have their taxes cut when the national insurance threshold rises to £12,500, which will deliver a £330 tax cut to around 30 million people in work. That will start to put more money in people’s pay packets in July.

The tax rises that the Chancellor has introduced are making the cost of living worse for everyone. How can he defend raising taxes on working people and urging against pay rises for most people, while his colleagues recommend scrapping the cap on pay rises for FTSE 100 bosses who earn millions?

Again, 70% of workers in this country will have a net tax cut. That is what the Government are delivering. In just a couple of weeks’ time, the first £12,500 that anyone in work earns will be free of any tax or national insurance. That will deliver a £6 billion tax cut for 30 million people. As I said, for 70% of all workers, excluding the most wealthy, it represents a net tax cut, because we are on the side of hard-working people.

The Chancellor knows that a significant part of inflation is not within this Government’s control, and indeed not within the country’s control; it is a result of international energy costs, particularly oil and gas. That is happening globally because there is an imbalance between supply and demand across the world. What is the Treasury’s approach, working with other countries and major energy companies, to try to bring down those prices overall in the coming years? Unless we do that, increasing energy costs will be inimical to the economic growth that everybody in this House wants to see.

My hon. Friend makes a thoughtful point, and he is right. As the Bank of England recently pointed out, the bulk of the excess inflation that we are seeing is being driven by global inflationary forces. He is also right that in the long term, the best way to combat that is to increase the supply of energy. In particular, the Prime Minister’s energy security strategy sets out a plan to do exactly that, which will have an impact on bills next year and beyond. Between now and then, we have the support in place to help people.

We all know that energy prices, such as oil and gas prices, are being driven by Russia’s illegal invasion of Ukraine. I welcome the extra £37 billion of support for households and the cut in fuel duty. One thing that affects my constituents, particularly district nurses, is the differential between the terms and conditions for NHS workers and the normal mileage allowance, which means that an NHS district nurse in my patch doing 12,000 miles a year gets about £1,400 less than if they were on a normal mileage allowance. Will the Chancellor make representations to the Health and Social Care Secretary to try to improve that position for my district nurses?

My hon. Friend, as always, is right on the point, and he makes a good observation. He knows from his discussions with me that the mileage allowance rates are advisory, and organisers and employers can provide whatever support they think is appropriate and justified under the circumstances. I would be happy to talk to the Health Secretary. As my hon. Friend knows, the NHS has received a record funding settlement. Where we can find efficiencies to support people, we should do so.

Further to the question from my right hon. Friend the Member for Tatton (Esther McVey), may I urge the Chancellor to think again about the cut in fuel duty? Although the one he introduced was welcome, it has not really been noticed by many people, so will he consider a much more substantial temporary cut in fuel duty, as has been done in Germany?

I am glad that my hon. Friend is supporting my right hon. Friend the Member for Tatton (Esther McVey). I will take all his recommendations under advisement. As my hon. Friend the Exchequer Secretary pointed out, a cut of £5 billion, together with the freezing of fuel duty, is significant, but we appreciate that that is not being felt at the pumps because of the rise in wholesale prices. I assure him that the Secretary of State for Business, Energy and Industrial Strategy is in dialogue with the Competition and Markets Authority to ensure that the fuel duty cut is being passed on.