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Cost of living

Volume 731: debated on Thursday 20 April 2023

The petition of residents of Birmingham, Edgbaston, including Harborne, Quinton and Bartley Green.

Declares that the cost of living has reached crisis point, with the consequence being an increase in homelessness and fellow constituents being left to go cold and hungry.

The petitioners therefore request the House of Commons to urge the Government to take urgent action that will see:

1. An extension of the windfall tax to cover the costs of capping energy rates to stop bills going up this winter.

2.Insulate homes to help families save money on their energy bills now and in the long-term.

3. Support homeowners to protect their homes by bringing interest rates down on mortgages.

4. Protect those who pay rent to ensure a sudden spike in rent prices does not lead to an increase in homelessness.

And the petitioners remain etc.

—[Presented by Preet Kaur Gill, Official Report, 14 March 2023; Vol. 729, c. 802 .]

[P002806]

Observations from The Chief Secretary to the Treasury (John Glen):

The Government thank the hon. Member for Birmingham Edgbaston Preet Kaur Gill MP, for submitting the petition alongside the corresponding online petition.

The Government understand that people across the UK are worried about the cost of living and recognise the challenges facing households. That is why decisive action has been taken to support households across the UK, while remaining fiscally responsible.

The spring Budget 2023 goes further to protect struggling families and help with high energy bills. The Government are extending energy support by keeping the energy price guarantee at £2,500 for the next three months from April, saving households an additional £160, bringing total Government support for energy bills to £1,500 for a typical household since October 2022. Alongside this, further steps are being taken to support households with energy bills by ending the premium paid by over 4 million households using prepayment meters across the UK and cancelling the planned increase in fuel duty and keeping rates at current levels for the next 12 months. The Government are also developing a new approach to energy consumer protection from April 2024, including consideration of a social tariff.

This is in addition to the support the Government announced at autumn statement including new cost of living payments in 2023-24, helping more than 8 million UK households on eligible means tested benefits, 8 million pensioner households and 6 million people across the UK on eligible disability benefits. The Government are also protecting the most vulnerable in society, many of whom face the biggest challenge in making their incomes stretch, by increasing benefits in line with inflation. We are also allocating an additional £1 billion for the household support fund to help with the cost of household essentials including food, energy, and water bills, bringing total funding for this support to £2.5 billion since October 2021.

Taking all these actions together, Government support to households to help with higher bills is worth £94 billion across 2022-23 and 2023-24.

The petitioners have called for an extension of the windfall tax to cover the costs of capping energy rates. At autumn statement 2022, the Chancellor increased the energy profits levy from 25% to 35%, bringing the headline tax rate for the oil and gas sector to 75%, one of the highest rates globally. The levy was also extended until March 2028.

The Office for Budget Responsibility expect the EPL to raise just under £26 billion between 2022-23 and 2027-28. This significant source of tax revenue has already helped fund vital cost of living support, including the energy price guarantee on household energy bills and additional support for those most in need. Revenues from the levy are on top of around £25 billion in tax receipts from the oil and gas sector over the same period through the permanent tax regime. This reform alongside the new tax on electricity generators also announced at autumn statement ensures that energy companies contribute to the UK’s collective efforts to strengthen public finances, and fund cost of living support and public services.

The petitioners have called for a nationwide programme to insulate homes. The Government recently announced a new long-term commitment to drive improvements in energy efficiency to bring down bills for households, businesses and the public sector with an ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels. Some £6 billion of new Government funding will be made available from 2025 to 2028, in addition to £6.6 billion allocated this Parliament.

This provides long-term funding certainty, supporting the growth of the supply chain and ensuring delivery is scaled up over time. All households in council tax bands A to D in England in poorly insulated homes are currently eligible for Government funded energy efficiency measures via the great British insulation scheme. By contacting energy suppliers, hundreds of thousands of households will the opportunity to receive this support, which will save an average of £300 to £400. The Government are also acting in other areas to support energy efficiency. As announced in the 2022 spring statement, the Government are removing the 5% VAT charge on the installation of energy efficiency materials in Great Britain over the next five years and permanently reversing restrictions imposed by the Court of Justice of the European Union, removing complex eligibility conditions and reinstating wind and water turbines as qualifying materials. This represents a £280 million tax cut to support investment in energy efficiency over the next five years.

The petitioners have called for support to homeowners by bringing interest rates down on mortgages. The pricing of mortgages is a commercial decision for lenders in which the Government do not intervene. However, as the Chancellor has said, sound money and a stable economy are the best ways to deliver lower mortgage rates, more jobs and long-term growth. One of the PM’s priorities for this year is to halve inflation. In order to do this the Government are remaining steadfast in their support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target and takes difficult but responsible fiscal decisions to avoid adding fuel to the fire. The spring Budget focused on getting the economy growing by boosting labour supply, as labour market conditions are a key problem affecting UK businesses’ growth, as well as a significant driver of domestic inflation. Measures we have taken at Budget 2023 will reduce headline inflation this year. If mortgage holders do fall into financial difficulty, Financial Conduct Authority guidance requires firms to offer tailored support. This could include a range of measures depending on individual circumstances.

The Government have also taken a number of measures aimed at helping people to avoid repossession, including support for mortgage interest loans for those in receipt of an income-related benefit, and protection in the courts through the pre-action protocol, which makes it clear that repossession must always be the last resort for lenders. As of 3 April, those on universal credit can apply for an SMI loan after three months, instead of nine. The Government have also abolished the zero earnings rule to allow claimants to continue receiving support while in work and on universal credit. HM Treasury is regularly in contact with mortgage lenders on all aspects of their mortgage business to understand their position and current lending conditions, including most recently at a roundtable hosted by the Chancellor in December. At this meeting, the Chancellor made clear his expectation that lenders should live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.

The petitioners have called for further support to renters. The Government understand the pressures people are facing with the cost of living and that paying rent can often be a tenant’s biggest monthly expense. It is for landlords and tenants to agree the amount of rent that should be charged, according to individual circumstances. We strongly encourage early communication about what adjustments to rent are sustainable for both landlords and tenants.

The White Paper, “A Fairer Private Rented Sector”, published on 16 June 2022, outlined our proposed reforms to make the private rented sector fairer and more secure. This includes allowing increases to rent only once per year, ending the use of rent review clauses, and improving tenants’ ability to challenge excessive rent increases through the first tier tribunal. These measures will help to prevent unfair rent increases for tenants, while ensuring landlords can continue to make necessary changes to rent. We will also rebalance the law to deliver a fairer deal for tenants through ending section 21 “no fault” evictions. Ending section 21 and introducing periodic tenancies will reduce unwanted and costly house moves for tenants, will aid tenants’ negotiating ability and will enable tenants to leave properties easily without remaining liable for the rent. Removing section 21 will empower tenants to challenge an unfair rent increase without the threat of a revenge eviction hanging over them.

We recognise however, that some vulnerable households may find themselves at risk of homelessness and may need additional support. The Government want to make sure councils can respond effectively to support households and homelessness. We are therefore providing over £650 million over the next two years through the homelessness prevention grant, for local authorities to help tackle homelessness before it occurs. The grant supports local authorities to deliver their statutory duties to prevent homelessness and it can be used flexibly to work with landlords to prevent evictions or offer financial support for people to find a new home.

The Government are continuing to keep the situation under review, and focus support on the most vulnerable whilst ensuring we act in a fiscally responsible way.

Thank you for taking the trouble to make us aware of these concerns.