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Inflation: Living Standards

Volume 705: debated on Tuesday 7 December 2021

The Government recognise that inflation is rising, and are closely monitoring the situation. The Bank of England is responsible for keeping inflation at its 2% target. As my colleagues mentioned earlier, we are working with international partners to tackle global supply chain disruption, and are taking targeted action worth more than £10 billion over the next five years to help people with the cost of living.

As food and energy bills are skyrocketing this winter, far too many of my constituents face the appalling choice between heating their homes and putting food on the table. Will the Minister therefore confirm how much more my constituents on average earnings will be paying in income tax and national insurance from next April, as a result of the Government’s decision to freeze the income tax personal allowance and to increase national insurance contributions?

The Government very much recognise the challenge that people are facing, which is why we have introduced a range of interventions, including: the warm home discount; the household support fund, giving £500 million to local authorities to distribute; changes to the taper rate; and an increase in the national living wage. That range of interventions will help with the cost of living challenges, and will help many of the hon. Lady’s constituents.

Is it not the case that the dreadful seeds sown by years of ultra-cheap credit and quantitative easing are now bearing their awful fruit through inflation, the ultimate stealth tax?

I do not agree with my hon. Friend’s characterisation of the causal relationship, but I recognise that the Bank of England continues to be responsible for monetary policy. My hon. Friend has always held distinct views that represent a particular school of economists, and I will continue to listen carefully to what he has to say to the House.

There is a cost of living crisis, temperatures are falling and Ministers are ignoring average households, who are struggling to pay enormous bills. Household energy bills have increased by more than £230 since last winter and are set to increase even more early next year, and we have recently seen higher tax receipts from energy bills. Will the Minister back Labour’s policy of using this money to cut VAT on people’s energy bills to zero over the next six months?

I welcome the hon. Lady to the Front Bench. I draw her attention to the answer that I just gave concerning the number of interventions that the Government have made, including the warm home discount and additional support through local authorities. Households in the lowest income decile receive on average more than £4 in public spending for every £1 that they pay in tax. The Government are acutely sensitised to the challenges that we face this winter.