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Corporate Profit and Inflation

Volume 732: debated on Tuesday 16 May 2023

I beg to move,

That this House has considered levels of corporate profit and inflation.

It is a pleasure to serve under your chairship, Sir Mark. I secured this debate because the discourse on inflation in Parliament, in Government and in the Bank of England has been dominated by the need to curb workers’ wages. Government policy has focused on driving down workers’ real wages. In the words of the Bank of England’s chief economist, people should just

“accept that they’re worse off”.

That approach has ignored the elephant in the room—the role that corporations are now playing in driving up inflation through price hikes designed to boost their profits. There is mounting evidence that such corporate profiteering is playing a very significant role in the latest wave of inflation. It has been called many things: price gouging, profiteering and, most commonly, greedflation. The US Senate Committee on the Budget has held a special hearing on this subject, but there has been very little focus on it in Parliament so far. Today, that situation changes. I believe that this is the first specific debate on greedflation in this House. It should not be the last one. Indeed, I hope that this debate kicks off a serious discussion in this House about how we tackle greedflation.

Of course, higher inflation since late 2021 has been affected by big problems in supply chains, as a result of post-covid trade disruption and the war in Ukraine. However, two excellent studies have highlighted how soaring profits are now having a big impact. The Institute for Public Policy Research and Common Wealth think-tanks have shown that profits were up 34% at the end of 2021 compared with pre-pandemic levels and that nearly all of that increase in profits was due to just 25 companies. As the IPPR has recently said:

“It’s time for policymakers to look at ‘greedflation’ and prioritise reining in corporate profits, instead of blaming workers’ wages for driving up inflation.”

Using the latest available figures for the largest 350 companies on the London stock exchange, Unite the union has shown how profit margins for the first half of 2022 were nearly double—89% higher—than for the same period in 2019, before the pandemic. Unite’s report finds that in the last six months company profits are responsible for almost 60% of inflation. As its general secretary, Sharon Graham, correctly states:

“Make no mistake, profiteering has resulted in the high prices we’ve all had to pay”.

I pay tribute to those organisations for bringing attention to this issue. For example, Unite the union has secured press coverage for its recent study. However, I fear that the Government, in their reply, will simply dismiss these studies as coming from left-of-centre organisations and will plough on regardless. Therefore, I want to use the next part of my speech to focus on how this issue goes well beyond the centre-left and is now a mainstream debate. The financial press, investor bodies and central bank officials are openly discussing how corporate profits are, in fact, driving inflation. It seems that it is just the Government who are ignoring this issue.

Let us look at some of the recent headlines in the financial press. One Financial Times headline said:

“‘Greedflation’: profit-boosting mark-ups attract an inevitable backlash.”

A Wall Street Journal headline said:

“Why Is Inflation So Sticky? It Could Be Corporate Profits.”

That article went on to explain:

“Businesses are using a rare opportunity to boost their profit margins.”

MoneyWeek, the UK’s best-selling financial magazine, had a piece entitled:

“What should we do about greedflation?”,

which noted:

“Companies’ price hikes have been driving inflation.”

Fortune said:

“‘Greedflation’ is the European Central Bank’s latest headache amid fears it’s the key culprit for price hikes”.

Meanwhile, an Investors Chronicle headline said:

“‘Greedflation’ is only making things worse”,


“Business using inflation as cover for unjustifiable price hikes are on borrowed time”.

Likewise, economists and investment strategists are openly saying that corporate profits are driving price hikes.

I thank my hon. Friend for raising the issue of corporate greed. The spotlight has been shone today on the crisis of unaffordable baby formula, with parents forced to steal or settle for black market alternatives, putting the health of their babies at risk. Given that the revenue in the baby food segment of the UK food market is set to increase by £265 million, or nearly 15%, over the next four years, will my hon. Friend join me in calling on the Minister to put an end to the scandalous profiteering that takes money directly out of desperate parents’ pockets and into shareholder profits, fostering a public health crisis whose repercussions we will suffer for decades to come?

As ever, my hon. Friend makes the point about what is really happening out there. She gives a powerful example about baby food. I will come on to food and a policy suggestion for price caps later.

The chief economist of UBS global wealth management, Paul Donovan, has stated that

“much of the current inflation is driven by profit expansion. Typically one would expect about 15% of inflation to come from margin expansion, but the number today is probably around 50%.”

Albert Edwards, the global strategist at Société Générale, one of the largest financial services groups in Europe, tweeted:

“More Greedflation? When are government going to force a halt to this price gouging?”

Elsewhere, he explained how companies have

“under the cover of recent crises, pushed margins higher”.

In more technical language, but saying the same thing, Goldman Sachs economists said of the eurozone:

“Unit profit growth now accounts for more than half of GDP deflator growth, with compensation per employee growth explaining a little over a third.”

Central bankers are also raising concerns. In fact, the European Central Bank’s Fabio Panetta said that

“there could be an increase in inflation due to increasing profits.”

He has also said that

“unit profits contributed to more than half of domestic price pressures in the last quarter of 2022”.

Meanwhile, Lael Brainard, formerly of the Federal Reserve and now a White House official, said:

“Reductions in markups could also make an important contribution to reduced pricing pressures.”

I congratulate my hon. Friend on securing this debate and his excellent speech. He is reframing the whole debate, which is incredibly important.

According to the Office for National Statistics, during the 12 months to March the price of food and non-alcoholic drinks rose at its fastest rate in more than 45 years. Cheese was up 44% and the average price of bread and cereals increased by 19.4%. My hon. Friend is discussing what the economists are talking about now: greedonomics. Does he agree that that will chime with people out there in the shops, trying to feed their families? We all have casework involving people who simply cannot afford to put the food that their children need on the table.

As always, my hon. Friend makes an important point. I will come on to that in the remaining passages of my speech, because people out there are really feeling in their day-to-day lives the consequences of this greedflation and the opportunistic pushing up of prices by so many companies.

In the United States, an Economic Policy Institute study found:

“Corporate profits have contributed disproportionately to inflation”,

and that

“over half of this increase…can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase. This is not normal.”

Let us take a moment to note that a broad range of officials at UBS, Unite the union, Goldman Sachs, the ECB and the US Economic Policy Institute are all suggesting that over half of the current price mark-up is to do with profiteering.

My hon. Friend is making some excellent points. Is he aware of comments made last month by the International Monetary Fund’s chief economist, Pierre-Olivier Gourinchas? He said that he remains “unconvinced” that we should be worried about the risk of a wage-price spiral, highlighting that wage inflation continues to lag far behind price inflation, while profit margins have “surged”. Does my hon. Friend agree that the Government should be exploring all avenues to boost wages, including a £15 an hour minimum wage, above inflation public sector pay rises and, of course, scrapping anti-union laws?

I have to say—and this will come as no surprise—that I agree with my hon. Friend’s three policy demands. A £15 an hour minimum wage is more necessary now than ever before. When people first started talking about it, we of course supported it then. Fewer and fewer people can argue against that policy now. Of course, the anti-trade union laws need scrapping. It is wrong to suggest that it is workers’ wages that have been driving inflation. I hope this debate gets people in this place talking about what a lot of economists, who are certainly not on the left, have been talking about—namely, greedflation.

I will move on to some solutions. While workers’ real wages continue to fall, the Financial Times recently noted that across western economies, profit margins reached record highs during 2022 and remain historically high. It is increasingly clear that some corporations are hiking prices to gain those profits, and it is that, not wages, that is a major cause of the inflation crisis. What should be done about that? In the words of Robert Reich, the prominent economist and former US Secretary of Labor under Bill Clinton:

“To control inflation, we must take aim at corporate profits, not working people.”

I have three proposals. First, there should be an excess profits tax. The kind of tax we have seen on the super-profits of oil and gas firms should now be extended to all the other sectors of the economy making excess profits from this crisis at the expense of ordinary people. That would send a clear message to those companies that their profiteering must stop. There has rightly been a huge focus on the eye-watering profits of energy firms, though the Government’s windfall tax has failed to deal with that properly and should be amended to close all the loopholes.

Excess profits are in evidence in other sectors, too. The five big banks have reported soaring profits, as they take advantage of high interest rates. Supermarkets, food manufacturers and agribusinesses have benefited from profit spikes recently. The Treasury should set up a special unit for this excess profits tax that could go after all those companies that are blatantly profiteering, ripping off customers, fuelling inflation and deepening the cost of living crisis.

My hon. Friend is being very generous in giving way. Does he agree that it adds insult to injury that so many of these companies are not paying decent wages to their staff? On the one hand, they are making massive profits, essentially ripping off consumers, and on the other they are not paying the rates they should to the people who actually do the work.

That is absolutely right. It is scandalous when workers are not fairly paid, the public are being ripped off, and all this profiteering is causing the price crisis that we see. It is not for nothing that people call it greedflation.

On price caps, for all its obvious flaws in not being set low enough, the Government’s energy price guarantee, which was introduced last year, was an important break with the idea that the Government cannot interfere in market pricing to protect people. Surely such price caps should be extended to other sectors. It is very welcome that London Mayor Sadiq Khan has called for powers to allow him to impose private rent controls in London. Other countries do this, so why can we not do so here? On soaring food prices, the French Government have secured a deal with some of the country’s major retailers to place a price cap on staple foods to ease the pressure of inflation on consumers. Why not here?

Is it not absolutely perverse that in the fifth richest economy in the world we are seeing, on the one hand, supermarkets and retailers making billions and billions of pounds and, on the other, parents criminalising themselves by stealing baby formula because they cannot afford to feed their newborns? What on earth has gone wrong in this country?

That is exactly right. That state of affairs is completely perverse in one of the richest countries on earth.

I mentioned that the French Government have secured a deal to place a price cap on staple foods to ease the pressure of inflation on consumers. Why can we not do that here? The public backs it. A poll last year showed that 71% of voters support price caps that place limits on what companies can charge for certain goods and services such as energy, housing and other essentials, including food. That 71% even included the overwhelming majority of Conservative party voters.

My final point is about the need for public ownership. Returning energy, rail, water and other key utilities to public ownership, to be run for people and not profit, is the best way of ensuring a permanent end to the profiteering that so many of these privatised companies are gratuitously engaged in. I hope the Minister will respond by admitting what all the leading economists and financial institutions say about greedflation, and I hope that today’s debate is the start of the Government listening and Parliament talking more about the fact it is greedflation, not workers’ wages, that drives inflation. Corporate giants are taking advantage in the most heartless way, using this crisis as an excuse to hike up the prices of essentials. As ever, it is ordinary people who pay the price.

Order. I remind Members that they should bob if they wish to be called in the debate. I can see at least four people bobbing.

It is a pleasure to serve under your chairmanship, Sir Mark. I congratulate my hon. Friend the Member for Leeds East (Richard Burgon) on securing this important debate. In the short time available, I will echo many of the excellent points set out in my hon. Friend’s opening remarks.

The false narrative being perpetuated by the Government that wages are driving up inflation is misrepresentative of the reality facing many of my constituents in Blackburn. The Government have argued that workers should accept pay restraints to manage inflation, but substantial research suggests that corporate profiteering and so-called greedflation, not wage levels, are fuelling the inflation crisis. There is a clear disparity between the Government’s narrative and reality. Only today we learned that shareholders of the failed TransPennine Express received a £15 million bonanza last year, while people in the north-west could not get a train.

A report into profiteering by Unite the union in March revealed that the 2021 profit margins of the FTSE 350 jumped 73%. For the first half of 2022, they were 89% higher than the same period in 2019. Meanwhile, working people cannot afford to heat their homes or feed their families.

The huge recent profits of major oil and gas companies are well known. Leaked Treasury forecasts—they should not be leaked; they should be public knowledge—stated that producers and electricity generators could make excess profits of up to £170 billion over two years, yet time and again we hear the Government say we cannot afford many basic services. Meanwhile, 16.6% of households in Blackburn are living in fuel poverty. That is higher than the national average of 13.2% and the regional average of 14.4%. A proper windfall tax, which Labour would introduce, is urgently needed to address this. The Government’s actions do not go far enough, and it is disappointing that no Conservative Members are present to hear the shocking statistics that have been repeated today.

We have talked about food poverty. Only today, when faced with a question about the fact that the cost of making a cheese sandwich at home has risen by 37%, we heard an ex-Conservative MP respond by saying, “If you cannot afford a cheese sandwich, don’t make one.” That is so out of touch with the reality of how families are struggling to feed their children. It is disgraceful.

The Trussell Trust’s annual statistics paint a dark picture. In 2022-23, almost 350,000 food parcels were delivered in the north-west. That is up significantly from approximately 200,000 in 2017-18. The most recent survey carried out by the Bakers, Food and Allied Workers Union found a shocking increase in food insecurity among members. It reported an increase in food bank usage from 7% to 17%, while those who reported relying on friends and family went from 20% to 34%. Some 55% said they have skipped meals to feed their children. The survey points to a clear disparity between supermarket profits and the experience of those working and shopping at supermarkets.

Profits have clearly not been reflected in workers’ wages. While for many the pandemic was a time of extreme anxiety and, in some cases, tragic loss, the Resolution Foundation estimates that the top 10% each gained £50,000 during the pandemic. Similarly, new analyses by economists at the Institute for Public Policy Research and the Common Wealth think-tank show that the profits of the largest non-financial companies were up 34% at the end of 2021 compared with pre-pandemic levels, rising significantly faster than inflation and wage growth, so companies are getting richer and people are getting poorer. The problem is systemic and must be addressed at a policy level, with windfall and wealth taxes to ensure that those with the broadest shoulders pay their fair share.

It is a pleasure to serve under your chairmanship, Sir Mark. I congratulate my hon. Friend the Member for Leeds East (Richard Burgon) on securing this important debate and giving us an opportunity to shine a light on the lie that it is workers’ wages that are driving inflation, rather than the profiteering of big business. The truth is this is not just a cost of living crisis. There is no doubt that it is a crisis for the working class and for millions of people struggling to make ends meet across the country, but it is not a crisis for big businesses and the super-rich. For them, it is record profits, a record number of billionaires and record wealth for the top 1%. It is a cost of living crisis for the many, but a bonanza for the few.

An investigation by Unite the union found that the profit margins for FTSE 350 companies rocketed by 73% between 2019 and 2021 and were up an even more staggering 89% in the first half of 2022. From the well-known, obscenely high windfall profits of the oil and gas giants BP and Shell to the supermarket chains Tesco, Sainsbury’s and Asda, which saw a 97% increase in profits between 2019 and 2021, big businesses have seen their profits soar, but that is just one side of the coin.

On the other side are soaring prices for our constituents: energy bills through the roof, roughly doubling in 12 months; food prices up nearly 20%; rent inflation at eye-watering record levels; and mortgage payments continuing to rise. It is no wonder that living standards are set for the biggest fall since the 1950s, with the real value of wages falling at the fastest rate on record.

Let me be clear: wages have been lagging well below price rises, so they cannot be their fundamental cause. This is not wage-price inflation. It is something else, and that something else is greed inflation—inflation driven not by workers’ wages but by corporate greed. Big businesses are exploiting droughts and wars, post-pandemic demand and supply-side shocks from climate breakdown. That is, in effect, what even the likes of the International Monetary Fund and the European Central Bank have said. They both asked whether wages were driving higher prices, and both found that explanation wanting. Instead, the ECB found that profits contributed to two thirds of the rise in inflation in 2022 alone, having been responsible for just one third in the previous two decades.

The next time we hear policymakers call for pay restraint or see Tory Ministers hit out at greedy workers for fighting for pay restoration, let us ask: why do they not call for profit restraint? Why do they not condemn chief executive officers for taking record pay packages, or complain about companies handing out hundreds of millions in dividend deals? With the Tories, why is it always workers who make the sacrifices while the rich reap the rewards?

It is an honour to serve under your chairship, Sir Mark. I thank my hon. Friend the Member for Leeds East (Richard Burgon) for securing this incredibly important debate.

Two thirds of my constituents in West Derby are having to cut back on hot water, heating and electricity. One in three in my city are in some kind of food poverty, and 3.7 million children across the UK—one in five—have eaten less, skipped meals or gone without meals for an entire day. Meanwhile, Unite the union’s analysis of the industries that together have the biggest impact on inflation has found industry profit increases of over 20,000% for the big eight shipping firms, 366% for oil refineries, 255% for giant agribusiness food corporations and 84% for the big four energy companies. While many of my constituents have been forced into fuel poverty, oil and gas company BP has made a record $28 billion profit and doubled the salary of its CEO to £10 million. The immorality of this position—leaving the most vulnerable hungry while corporations are awash with profits—shames this place.

Let me touch on corporate profits and food poverty specifically. In the past 12 months, there have been extreme rises in the cost of staple foods: cheese is up 50%, two pints of milk is up 40%, eggs are up 28% and white sliced bread is up 21%—and there are locks on baby formula milk. Tragically, the rises affect the poorest households most of all, because they spend a larger percentage of their household income on food. The poorest fifth of the population would need to spend 43% of their disposable income on food to afford the recommended healthy diet in the Government’s “Eatwell Guide”. With so many other pressures, that is simply not achievable.

Unite the union highlights:

“Despite the rise in wholesale prices, Tesco, Sainsbury’s and Asda still managed to increase their profits by an astonishing 97% in 2021…Profiteering is happening right along the food supply chain”.

Eight of the UK’s top food manufacturers made a combined profit of £22.9 billion—up 21% since before the pandemic. The four giant agribusiness corporations ADM, Bunge, Cargill and Louis Dreyfus made $10.4 billion, which is up 255%—absolutely staggering profits.

In the food industry, the workers who grow, distribute and supply our food are left unable to purchase the very food that they produce. The latest survey from the Bakers Food and Allied Workers Union found that four in 10 food workers are forced to skip meals, and over 60% of respondents said that their wages are not high enough to meet their basic needs. One worker wrote:

“I don’t have running hot water, so I can’t wash my hands thoroughly. Either trying to keep warm in bed or running on the spot. Staying at work longer to keep warm.”

In a letter I received this week, the Minister for Food, Farming and Fisheries told me:

“It is not for the UK Government to set retail food prices nor to comment on day-to-day commercial decisions by the companies.”

That is a cowardly response.

However, at a recent Environment, Food and Rural Affairs Committee session, we heard evidence from the United Nations special rapporteur on the right to food, who told us that corporations have a significant amount of power in markets, and there is not much being done to hold them accountable. Food prices are at the mercy of speculation, but Governments have the tools to stabilise prices. The inequality and levels of profiteering we are seeing are not inevitable. They are a result of a political decision by this Government—a Government that could intervene if they had the political will to do so.

It is one of the gravest and most frightening crises seen in our lifetimes, and yet many of my constituents tell me that they feel abandoned and ignored by a Government who are supposed to protect them. The situation cannot go on. I urge the Minister to heed the advice of the United Nations special rapporteur and use the tools to tackle this injustice. Do not leave the most vulnerable at the mercy of the greed and morality of those corporations.

It is a pleasure to serve under your chairship, Sir Mark. I congratulate the hon. Member for Leeds East (Richard Burgon) on securing this important debate.

The UK economy was already facing a crisis of high inflation driven by corporate greed, which was squeezing living standards and forcing millions deeper into poverty, but while large corporations have exploited the crisis and the Government’s inaction to make record profits and pay hefty dividends to shareholders, the Bank of England has again increased rates, which punish ordinary people who are not the cause of inflation the Bank supposedly wants to bring down. Worse than that, the Bank knows that people and wages are not driving inflation. Even the Governor of the Bank of England, Andrew Bailey, admitted at the press conference to announce the latest crippling interest rate hike that he knows that wages and renumeration are not causing high inflation. Instead, he said that the main drivers are the high prices being charged for food and clothes—two essentials that people have no choice but to spend money on.

Anyone would think that the workers of Leicester would be wealthy, such is the scale of the food and garment factories in the area, clothing and feeding the nation. However, 42% of children in my constituency of Leicester East are living in poverty. According to the ONS data from 2022, the median annual wage of workers in Leicester East is £19,960, compared with averages of £25,837 in the east midlands and £27,756 in the rest of the UK. There is no union recognition in those factories to protect workers from the profiteering supermarkets and billionaire garment-brand owners.

What is the interest rate hike meant to do? Is it meant to force people to eat less and wear rags or cheap, unsustainable garments? When all they have is an interest rate hammer, ordinary people—even the poorest—look like a nail. The Government need to force the Bank of England to work with them to bring about an effective approach to controlling inflation by capping prices. That would hit companies in their profits when they stoke so-called greed inflation, not hammer innocent ordinary people over and over.

Last week, former Monetary Policy Committee member, Danny Blanchflower, said that the Bank of England was guilty of terrible group-think and incompetence, and should just quit, because its decision to raise interest rates was so appalling. Corporations, brands and retailers are abusing the people of this country for the sake of profit. The Bank of England is attacking the wrong people, and this Government are failing in their primary duty of protecting the people. When are the Government going to step in and end this greed-driven, greedflation madness?

I want to try to take the argument on from the discussions that have taken place so far. My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) spoke about food, which is such a basic need. If we cannot control the supply and price of food, to be frank, we lose control of our overall economy and our society itself. The food increases that my hon. Friends have spoken about relate partly to short-term issues such as the breakdown of the supply chain post covid and the Ukraine war, and partly to two seemingly more permanent issues. The first is the impact of climate change, which is undoubtedly impacting the supply of food, and the second is the almost permanent installation into our economy of profiteering. That is why the Unite report, which introduced the concept of greedflation, is so important.

My hon. Friend cited several instances of greedflation, but food is a good example. There has been a 97% increase in supermarket profits, and a 255% increase in the profits of agribusinesses themselves. Unless we can develop policies to tackle climate change, including by accommodating to it in some areas, and get greedflation under control, these rises will be a permanent factor that will undermine the quality of life of all our constituents in the long term.

This debate is not just an exposition of the problems; it has to be a way for the Government and Opposition parties to talk about solutions to address the immediate problems and look at the long term. My hon. Friend the Member for Leeds East (Richard Burgon)—I congratulate him on securing this debate—mentioned some. The first is the need for immediate action, which must mean price controls. Price controls on basic foodstuffs have been introduced in this country in the past, particularly to deal with short-term problems. I do not think that permanent price controls are effective, but on a temporary basis—12 months, for example—they can be. Other countries, including Switzerland and Hungary, are already developing price controls, and France has introduced its own mechanisms for negotiating prices down on the basis of the expectation of price levels.

My view is that price controls are needed because of the urgent situation our constituents are facing. I think the Unite report said that there has been a 57% increase in the number of households that are restricting their food intake, and in which parents are choosing not to eat so their children can. Unless we can do something urgently to assist them, we will be inflicting human suffering on our society. To be frank, my generation has not seen that before; it is almost reminiscent of the ’30s.

Secondly, let us just talk about excess profits. I want to quote a senior Conservative Minister, who introduced excessive profit taxes across the whole of the economy. He said:

“At a time like this sacrifices should be equally borne. We are not prepared to see excessive profits”.—[Official Report, 11 March 1952; Vol. 497, c. 1289.]

He introduced a new levy, which was charged on the amount by which current profits exceed standard profits. That was Rab Butler in the 1950s, who introduced a model that we could draw upon now. It would extend across the whole economy and would expose and properly tax those who are exploiting the current economic situation.

The other issue is something I have raised in previous debates. During the banking crash—some of us were here at the time—we witnessed a shift in investment from the crashing mortgage economy. The crash at one point brought our banking system to a halt, and almost did something more fundamental, in terms of destroying confidence in the financial system. Money moved out of property, where prices were crashing, and into food speculation, and we saw rapid increases in food prices. In fact, in some areas of the globe, we even saw famine as a result.

Then, on a global basis, an agreement was reached and we inserted into the regulatory regime after the banking crash certain controls on food speculation—for example, how much food wealth could be owned by a particular speculator. The Government at the moment, in their Financial Services and Markets Bill, are removing those protections. Already food speculation is taking place and causing some of the profiteering that is happening, but we are inviting even further speculation, which I think in the short and medium term will result, in the same way it did after the banking crash of 2007-08, in people going hungry and famines occurring in parts of the world.

My final point is that if the Government are not willing to act so decisively with price controls, regulation of speculation or an excess profits tax, the minimum that we should ask for is an inquiry into the anti-competitive market practices taking place in certain sectors. I would like to start with the food sector. We are seeing this demand being met in the US now; an investigation is taking place into the anti-competitive market practices that are happening. The US is at the moment looking at the fertiliser and agricultural business sector. In this country, we need an investigation into the profiteering and greedflation in particular—that is the No. 1 issue—that is taking place in the food and agricultural sector.

We cannot stand by and watch people line their pockets and corporations make excessive profits while our people, in some of our constituencies, are actually starving—they are actually going hungry. That is why, in this period, special measures are needed. They are measures that we have used in the past, that people are using in other countries and that have proved to be effective. If nothing else, if they were even temporary measures, they would alleviate the situation that our constituents face. This is a matter of urgency. That is why I keep repeating time and again, in as many debates as I possibly can, the need for action.

I will just say this to my own party: this crisis of greed inflation, combined with the climate crisis, means that when we take over and go into government next year—as soon as possible, I hope—we will have to address this issue. We will have to have the radical solutions that need to be put forward; otherwise, we will not be fulfilling our historic mission of looking after working-class people in this country.

I congratulate the hon. Member for Leeds East (Richard Burgon) on securing the debate. Profits can be good if they are used wisely—if people reinvest them in their workforce and to pay their employees proper salaries. The question is: how big do profits have to be, and how were they created? Were they created on poor wages and poor working conditions? Were they created on inflated prices in the first place?

It was Thatcher who told us that greed was good. She saw it as a driver—something to push people hard to make them generate bigger profits. People would be “fulfilled” by their ability to gather more—more money, more houses, more cars, more wealth. We see this in our society today; it did not end with Thatcher, unfortunately. We have kings and queens in gold coaches, wearing diamond-encrusted crowns, flashing orbs and swords dripping in jewels, and being dragged through the streets as exemplars of what our society should be looking up to. Currently, money makes the world go round. A few people possess the most, and the message to those without is, “Money makes you happy.” It is an insecurity that these people have—how much is enough? If someone is a millionaire, do they need two million? Do they need five million? Do they need a billion? How big is their insecurity if they think money and wealth is going to fill that hole for them? Corporations push for more and more, while many are being left behind by this greed attitude. It is not new, but years of Tory austerity have increased the number of people living in a precarious fashion.

We need to reset the goals. Rather than measuring success in money and incentivising profits over people, we need to prioritise wellbeing, and promote a four-day working week and a universal basic income. As artificial intelligence advances and the gig economy takes hold, tinkering around the edges will not solve the problems. The land belongs to the people; the water and the trees belong to the people. We need a return to community. We need government closer to the people.

The Beveridge report in 1942 was a clarion call to create a fairer society, and it is as true today as it was 80 years ago. While this Government curtail the powers of the trade unions, and suppress the right to strike and the ability to vote, they are propping up the greed in society. That is unsustainable; history has taught us that. If we are to create a fairer society, we need to reprioritise the aims of this Government. We must be prepared to put people before profit.

It is a pleasure to serve under your chairmanship, Sir Mark. I congratulate my hon. Friend the Member for Leeds East (Richard Burgon) on securing this important debate.

As I think everyone in this House will know, working people are facing the biggest hit to living standards since records began. Real wages are lower than they were 15 years ago, with families in the UK going into the cost of living crisis significantly poorer than those in comparable European countries. The price of everyday essentials has risen by an eye-watering £3,500 since 2020 and there have been 24 tax rises since 2019 alone, with working people facing the highest tax burden in 70 years.

After the former Prime Minister crushed the economy last year, the resulting rise in interest rates and economic instability has added hundreds of pounds a month to first-time buyers’ bills. Whether it is stagnant wages, rocketing prices and bills or sky-high taxes, at every turn it is hard-working people in our constituencies who are paying the price of economic instability. The Opposition have been calling for policies to support people with the cost of living crisis and rampant inflation. For example, since last August we were calling for a fairer deal for those paying a premium on energy prepayment meters. The Chancellor finally gave in in his 15 March Budget—after months and months of lobbying from the Labour Benches.

Since this crisis began, Labour has been calling for a windfall tax on energy giants to support working people with their energy bills. After months of the Prime Minister dismissing our proposals as “disastrous”, he was forced into a U-turn in May last year. But even after his party supported our idea of a windfall tax, the Government still did not adopt a comprehensive windfall tax as we have been suggesting. By refusing to backdate the tax to January 2022, end the investment allowance tax loophole and raise the rate in line with other countries, the Government has left £10.4 billion on the table, leaving working people to foot the bill.

The Labour party will always put ordinary families first, which is why we would: reverse the expensive cash giveaway to the wealthiest pension savers and introduce specific measures to keep doctors in work; scrap the unfair non-dom tax status, which cost the UK over £3 billion a year, in order to pay for free breakfast clubs and the biggest ever expansion in the NHS workforce; and slash business rates for small shops—paid for by properly taxing online giants—to cut the eye-watering cost of everyday items.

With the ONS figures confirming that 2022 was a record year for North sea oil and gas profits, Labour would prioritise the needs of working people by introducing a proper windfall tax to raise an additional £10.4 billion. We would use the additional funds to cut energy bills for domestic food manufacturers and processors to bring down food prices for people across the country.

Fundamentally, we understand that the UK needs a long-term economic plan to boost living standards for working people and bring down the prices of everyday essentials. The crisis has exposed structural problems in the British economy, and our constituents have been trapped in a cycle of stagnant growth, low wages and high tax. If our growth rate stays where it has been over the past 13 years, families in the UK will be poorer than those in Hungary and Romania by 2040.

That is why a Labour Government’s first mission will be to secure the highest sustained growth in the G7 and to create well-paid jobs in every part of the country. We want to achieve that through an active partnership with business and our modern industrial strategy, while our green prosperity plan will drive bills down and let British businesses and workers compete in the global race for the jobs and industries of the future. The US has passed the Inflation Reduction Act, and the EU has its own Net Zero Industry Act. The UK has fallen behind. In contrast, the Labour party’s economic plan will get the UK growing again. Our new deal for working people will ensure that they benefit from that growth by boosting living standards and wages across the country.

That is why I hope the Minister will listen to all the comments made in this debate and, in his closing remarks, finally commit to putting working people before the energy giants and lend his Government’s support to Labour’s windfall tax to help tackle inflation and the cost of living. More than that, I hope he will reflect on everything he has heard today from colleagues across the Chamber and get behind Labour’s mission to secure the highest sustained growth in the G7.

It is a great pleasure to see you again in the Chair, Sir Mark. I congratulate the hon. Member for Leeds East (Richard Burgon) on securing this well-attended debate, and for his valiant attempt to leave his mark on the lexicon on this topic. I thank all Members for their contributions. Clearly, the issue of high prices and inflation is affecting everybody across the country—all our constituents, who send us here—and I welcome the opportunity to respond on the Government’s behalf.

The reality is that costs in the UK have primarily risen because of Putin’s illegal invasion of Ukraine and global supply pressures post covid. The right hon. Member for Hayes and Harlington (John McDonnell) was the only one of the eight contributors we heard from, including both Front-Bench spokesmen, to even go so far as to mention those two unprecedented facts.

I stand corrected. I was being diligent and attentive, but I was clearly so taken by the force of the arguments made by the hon. Members that I missed that.

Will the Minister explain the role that Putin played in ensuring that Tesco, Sainsbury’s and Asda increased their prices to such an extent that they have increased their profits by 97%?

If the right hon. Member lets me make some progress, I will address precisely his point. Domestic inflation pressures have risen. The UK labour market has remained very tight, reflecting a real cost headwind to employers. There have been real challenges, as we saw in the labour figures today, in getting people off welfare and into work. That has pushed up the cost to firms, including Tesco and others, of producing goods, which has resulted in inflation. The UK is not alone, and I hope Members will reflect on and understand that. We are seeing high inflation in all major global economies. Food inflation in Germany is above 20%.

Will the Minister come back to the question from my right hon. Friend for Hayes and Harlington? Why have profits increased so much?

With respect, I have not heard an awful lot of analysis in the debate. I have heard many mentions of Unite the union, and I am familiar with its work, but I did not hear any analysis from Members. Let us talk about food prices for just a moment.

I will give way because it is the hon. Member’s debate, but I will talk about food prices, if that is what I am being asked to do.

The Minister said he heard very little analysis from Opposition Members other than reference to research by Unite the union. Does he accept, however, that as well as Unite the union, officials at UBS, Goldman Sachs, the European Central Bank and the US Economic Policy Institute all suggest that more than half of the current price mark-up is to do with profiteering? If so, what are his Government going to do about it?

I listened to the citations and I will go away and inform myself about them, but one can find a million citations in support of any argument, however spurious.

Let us get to the heart of food inflation. After reading the report from Unite the union earlier today, I went and did some research. I am keen to understand the level of alleged profiteering that we see, so I looked into costs at the Co-op, a mutual organisation that I believe supports many Opposition Members. I compared the alleged profiteering by our major supermarkets with what is happening in an organisation that I hope we can all agree—and join hands across the House—is not indulging in profiteering. The cost of four pints of milk at the Co-op is 20p more expensive than at Tesco. I have a wonderful chain of Co-operatives in my constituency and it serves our rural community magnificently, so I pay great tribute to the Co-op, but six eggs in the Co-op cost 35p more than at Tesco. The Co-op was retailing the same loaf of white bread for 56p more, and chicken breasts for £1.70 more, than Tesco. The Co-op is retailing butter, tea and Heinz baked beans for 40p more than Tesco—I would be very happy to give Hansard the details of this. I will stop at the emotive category of baby milk: an 800g pack of Cow & Gate baby powder retails for £10.50 at Tesco, but the same product retails for £11.50 at the Co-op.

I put it to you, Sir Mark, that we are seeing either a vibrant and competitive market in food retail—which includes the Co-operative mutual organisation, although its prices seem a little higher—or a level of anti-competitive practices. But if it is the latter—right hon. and hon. Members should be enormously careful about this—those anti-competitive practices and that profiteering extend to no less an organisation than the Co-operative mutual society, which supports Opposition Members. If any of them want to intervene on me, I would be very interested to hear their view of the Co-operative’s business practices.

Let me explain this to the Minister. There is such a thing as the Co-op party, of which some people on this side of the House will be members, and there is such a thing as the Co-op store. The Co-op store is not related to the Labour party; it is a completely separate commercial entity. The Co-op party is separate completely, so there is no relationship between the Members here and the Co-op store, although some of them might shop at it.

I do declare an interest. What you call “profits” for the Co-op actually get reinvested in it; they are not given out to shareholders in dividends. That is the difference.

As I said, the Co-operative, as a food retailer, is a marvellous organisation. My point is that we should be very cautious about simply making the assumption that an increase in the prices that consumers are paying, which is spread across very different parts of the producer sector, automatically leads to the sorts of outcomes that we heard from Opposition Members.

We have strayed quite a long way away from the topic of debate. I would dearly love to be a fly on the wall, or a passenger on the train as it returns to both Leeds East and Leeds West, because there is some dissonance in my mind about the position of the Opposition today. We have had a very refreshing debate that has been honest and open in its candour. We have heard about the need for the minimum wage to increase to £15 an hour, the need to scrap all anti-trade union laws and to give an above-inflation pay rise to workers, the need for an excess profits tax and for wealth taxes, the need for private rent controls, the need to impose price controls on food staples—there is lots of nodding, so please intervene on me—and the need to return to public ownership every water, rail and energy company. These points were all raised in the debate—

Motion lapsed, and sitting adjourned with Question put (Standing Order No. 10(14)).