House of Commons
Tuesday 20 June 2023
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Chancellor of the Exchequer was asked—
Financial Ombudsman Service Decisions: Cost of Implementation
The Financial Ombudsman Service offers a proportionate and informal resolution of disputes that is cost-free for consumers. Where it upholds a complaint against a firm, it can award redress for that concern to that consumer. I work very closely with my officials and with the Financial Ombudsman Service to make sure consumers have the justice they require.
I thank the Minister for that that response. This has been an ongoing issue in the House for some time, and I spoke to some of the Minister’s colleagues beforehand. The Chancellor and the Minister will know that the parliamentary ombudsman found that 1 million Equitable Life savers lost money as a direct result of Government decisions. Why, then, are the Government holding themselves to a different standard and ignoring the wishes of the parliamentary ombudsman, having paid victims of the Equitable Life scandal only 22% of the money they lost from their pension funds? I say that with great respect, but I do think we need an answer.
Cost of Living
We know the pain that households up and down the country are going through as a result of the cost of living pressures at the moment, and have announced one of the largest support packages in Europe, worth around £3,300 per household this year and last.
The latest report from Which? highlights that even supermarkets’ own budget brands of food have increased in price by 26.6%. There are security locks on baby formula milk, at the same time as corporations are making vast profits. The Government have signed up to the United Nations’ sustainable development goal of eradicating poverty by 2030. Surely, in the light of those commitments, now is the time for the Chancellor to act. Will he cap essential food prices and tackle the grotesque profiteering in the food industry that is driving many of my constituents in Liverpool, West Derby into poverty?
I totally respect the hon. Gentleman for raising the concerns of his constituents in the way that he has done. I do not believe that capping prices is the right long-term solution, but we are doing a lot, including payments of £900 per household for people on means-tested benefits, £150 for households with someone disabled living in them and £300 for households with pensioners living in them, precisely because we want to help the people that the hon. Gentleman is talking about. I will be meeting the regulators next week to talk further about what needs to be done with respect to supermarkets.
Over the weekend, the former Governor of the Bank of England, Mark Carney, spoke about how before the Brexit referendum, the Bank of England had set out that the likely consequences of Brexit were
“a weaker pound, higher inflation and weaker growth”.
Does the Chancellor think it is fair that the UK Government’s decision to ignore the stark warnings from the Bank of England are now being paid for by the households who can least afford it?
I am afraid that I do not buy this Brexit narrative from the SNP. Food price inflation has been around 20% in Germany, Sweden, Portugal and Poland in recent times, so this is not a UK-specific issue. We are all dealing with the consequences of Putin’s invasion of Ukraine and the aftermath of the pandemic, and we are all tackling it with one central focus, which is to bring down inflation as our overriding priority.
The former US Treasury chief said earlier this month that Brexit was a “historic economic error”, and described the UK Government’s economic policy as having been
“substantially flawed for some years”.
Will the Chancellor finally face up to what the rest of the world can see, and admit that leaving the world’s largest single market has not only had a significant impact on inflation, but a deleterious impact on household finances across the country?
I thank my right hon. Friend for all he has done for people in Rossendale and Darwen to help them through this cost of living crisis, but people are very concerned about what is being described as the mortgage bomb about to go off. Is now the time for him to look at reintroducing the bold Conservative idea of mortgage interest relief at source? If we do not help families now, all the other money that we spent to help them will have been wasted if they lose their home.
No one in Rossendale and Darwen could have a more doughty champion than my right hon. Friend, and I listen to what he says carefully, but I think he will understand that those schemes that involve injecting large amounts of cash into the economy right now would be inflationary. So much as we sympathise with the difficulties and will do everything we can to help people seeing their mortgage costs go up, we will not do anything that would mean we prolonged inflation.
The cost of a two-year fixed mortgage in March 2021 was 2.57%; this week, it reached 6%. The Chancellor and the Economic Secretary have said there are no plans to change the Bank of England inflation target, meaning that the base rate that drives the mortgage rate will continue to rise as inflation stays stubbornly high, and mortgages will go up. In the absence of such a change, what do the Government plan to do to actually tackle the mortgage pain people are suffering?
First, I would say to the right hon. Member that he is talking about something that is being experienced across the world. In fact, interest rates have risen faster in the United States and Canada than they have here. The answer is that we will look at doing everything we can to help people under pressure, but we will not do things that would prolong the inflationary agony that people are going through. We have to be very careful, because a lot of the schemes that are being proposed would actually make inflation worse, not better.
On the issue of inflation, the Office for Budget Responsibility said in March that inflation was due to peak at 2.9% at the end of this year. By May, the Bank of England had forecast that it would be 5% at the end of this year, so it had almost doubled in the space of two months. Given that headline inflation is still 8.7% and food inflation is 16.5%, will the Chancellor guarantee today that inflation will be halved to 5%, as promised by the Prime Minister in January of this year?
Growth Plan of 23 September 2022 and Cost of Mortgages
We recognise that this is a concerning time for homeowners and mortgage holders, but we cannot ignore the fact, much as some may wish to, that interest rates have risen across western economies as a result of the covid pandemic and the impact of the war in Ukraine. The Bank of England sets the base rate, which can have an effect on mortgage pricing, and the Bank has been independent since the decision of the then Labour Government in 1997. We remain committed to responsible management to bring inflation under control, which is the only sustainable way to lower interest rates and lower mortgage rates.
The former Prime Minister has apologised for the mistakes in her so-called growth plan and the damage it caused. Families across the UK will soon start paying thousands more in mortgage interest payments. Given the Prime Minister’s comments yesterday, it appears that there is little or no further support coming. Will the Minister join the former Prime Minister and apologise to the nation for the impact of the Conservative party’s misguided economic experiment?
Much as the Opposition would prefer this not to be the case, it is a fact that this is impacting across western economies. Although market-to-market comparisons are not always easy, in the United States of America the average 30-year mortgage has now increased to above 6%. As I have said, this Government will do what we can sustainably to lower interest rates, and thereby ease the burden on mortgage holders.
This is the second time I am putting it to the Government that the Conservatives are no longer the party of home ownership, and I do not think it will be the last time either. I say this because the average interest rate on a new two-year fixed mortgage is now above 6%. The Chancellor has already said that they will do everything they can, but what does that actually mean, because the public would like to know?
I thank the hon. Lady for her question. Not only are we taking action and taking the tough decisions to sustainably improve the nation’s finances, but we are working with lenders—the Chancellor and I regularly meet the mortgage industry—on the support they can provide to mortgage holders if they do get into financial difficulties. There is a range of measures, which includes term extensions and switches to interest-only payment holidays. The Financial Conduct Authority guidance is very clear that any repossessions—and they are currently running at a historical low—should be an absolute last resort.
As a result of the 6% rate that we have heard about, more than 1 million households on flexible-rate mortgages have already faced increases this year, and 1.8 million more will see their fixed-rate deals come to an end and face increases in this year. It is not just homeowners. The knock-on effect has meant that in my constituency in Edinburgh, we have had the highest rental inflation anywhere in the country at 13.7% in the last financial year, because landlords are facing increases in their mortgages. The Government have said that they are willing to support people, so would they be willing to consider the Liberal Democrat idea of a mortgage protection fund to protect those on the lowest incomes, and support those who are struggling?
I thank the hon. Member for her question, but regrettably the proposal that she and her party put forward would not only delay the point at which we are able to bear down on inflation and deliver the nation’s mortgage holders the lower interest they need but, as I understand, it would do nothing for the plight of private renters.
The growth plan in September obviously had an impact on the mortgage market, but is the Economic Secretary to the Treasury aware that by November, the Governor of the Bank of England said, when he gave evidence to our Committee, that the increases in mortgages henceforth were down to the Bank of England’s own increases, because that temporary effect from the growth plan had dissipated? Increases since then have been largely due to the fact that inflation has been worse than the Bank was forecasting. Did the Economic Secretary note that this week I received a letter from the Chair of the Court of the Bank of England, saying that they are going to undertake the request that I sent for them to look at their inflation modelling and at why it has been incorrect?
Not for the first time, the Chair of the Treasury Committee is on the money in her understanding of what is driving the markets, and in her advocacy and championing of the fact that our lending banks need to do a good job not just for mortgage holders, but also for savers. I am happy to meet her to talk about how we can ensure that they do the best job they can.
In his earlier reply the Minister talked about mortgages in the United States. He will know that in the United States it is common to fix a mortgage for 15 or 30 years, which gives certainty about monthly repayments and can of course be refinanced if mortgage rates go down over the term of the mortgage. I understand that the UK Treasury looked at the UK mortgage markets and at introducing long-term fixed rates, and found that at that time there was not much potential. Will he consider looking at that again?
As ever, my hon. Friend’s question is apposite when it comes to Treasury matters. There are indeed long-term fixed-rate mortgages on the market, and I have taken advice from officials on that. The constraining factor is consumer demand, and that is not a pattern of behaviour we have seen. Clearly for some mortgage holders such mortgages do offer long-term certainty, and it is certainly my objective for us to see the broadest range of choices for householders and for their own individual patterns in the market.
Mortgage payers in Stoke-on-Trent North, Kidsgrove and Talke are rightly worried at this moment in time, with the impending re-brokering that they are facing. To support what my right hon. Friend the Member for Rossendale and Darwen (Sir Jake Berry) said earlier, is it time to return to a Conservative principle of introducing a mortgage interest relief at source-type scheme, which allows borrowers tax relief for interest payments on their mortgages?
I always listen enormously carefully to my hon. Friend’s powerful advocacy for Stoke-on-Trent, and his constituents put their trust in this Government. One thing they put their trust in, is that this Government would not come forward with the sort of unfunded spending commitments that we see on the Labour Benches. That would be disastrous for my hon. Friend’s constituents because it would see inflation remain higher for longer.
The only thing that grew as a result of what the Government did last September was people’s mortgage payments. Two-year fixed rates are now more than 6%, and payments for householders are up £2,900 over the next year. Have the Government learned the lesson from the previous Prime Minister’s decision—I stress that word; it is nothing to do with international events—to use the country as a giant economic experiment that hurt homeowners, pushed up interest rates and shook international confidence in the United Kingdom? If they have, will the Minister now apologise to the householders who are paying the price for that mistake?
As ever, I listened carefully to the right hon. Gentleman’s rhetoric. I ask him whether he has learned the lesson from what we saw with the last Labour Government, who spent their way through the nation’s finances and whose most lasting contribution to the economy was a note that we inherited from the then Chief Secretary to the Treasury saying there was no money left.
Back to 2023. This is a real crisis, affecting real people as a result of the real decisions of the Minister’s Government. Figures out today show that the average UK tenant is spending more than 28% of their income on rent, and rents have gone up by more than 10% in the past year. Rents are being forced up because the landlords who people rent from are seeing their mortgages go up, too, and sometimes even faster than mortgages in general. The Chancellor and the Prime Minister were supposed to be the team that would come in and sort everything out. Can the Minister tell us what went wrong?
What went right is the fact that we on the Government Benches not only always focus on the stability of the nation’s finances to get inflation and interest rates falling further and faster than the Opposition would, but even within that envelope, we found £3,300 on average to support households over last winter and the upcoming winter. That will have a significant impact on the difficulties that mortgage holders and renters are facing because of the higher interest rates that are a feature across the western world.
Financial Sanctions Regime
The Government undertake extensive assessment of the effectiveness of the sanction regimes, which are eroding Russia’s financial base. We have sanctioned 28 Russian banks, covering 80% of Russia’s banking sector, and frozen more than £18 billion of Russian assets, and we have implemented unprecedented trade sanctions in addition.
Constituents in Luton South have raised concerns about the financial sanctions regime with me. Can the Government confirm whether it is still the case that Russian account holders in the UK can hold £50,000 or more in their accounts? What is to prevent individuals of concern simply parcelling up assets through proxies into a large network of accounts below the permitted level?
The Office of Financial Sanctions Implementation works closely with our allies across the G7 to ensure that we have co-ordinated action among our international partners on this unprecedented package of sanctions. We have frozen the assets of 1,600 individuals and entities. We have implemented 35 different sanction regimes across government. I would be happy to take away the specific question that she has asked, because it is technical, and respond.
A multimillion-pound start-up project that could be transformational in my constituency is now at risk because the Office of Financial Sanctions Implementation is yet to process an asset freeze licence application in respect of just 0.002% of the company’s capital, which was submitted in April. What steps is the Minister taking to ensure that such applications are dealt with swiftly? If I provide him with details of the company, will he ensure that the application’s progress is expedited?
I am happy to take up my right hon. Friend’s case. We have expanded the OFSI resources. We have a monthly monitoring and efficiency dashboard. I accept how frustrating it can be for constituents’ businesses when such situations arise, and I am happy to take the matter away and get back to him swiftly.
As the war in Ukraine continues, we must not let up for a second on efforts to tighten the net on the accomplices and beneficiaries of Putin’s regime. We welcome the direction of the measures announced yesterday. Can the Minister confirm whether those measures will close all the loopholes and specifically the ownership thresholds, which Russian oligarchs and their enablers have been able to exploit to evade the bite of sanctions?
The Government will be relentless in their pursuit of illicit assets. As I said, we have sanctioned 24 banks with global assets of over £940 billion and 120 elites with a combined worth of £140 billion. Working closely with our allies, we have incrementally and sequentially tightened that net and immobilised more than 60% of Putin’s war chest of foreign reserves worth £275 billion. We continue to work closely with our allies to intensify those measures as opportunities arise.
I have one or two constituents in Poole who lost their jobs because they were in companies owned by Russians who were sanctioned, and they have found it difficult to have an orderly wind-up because banks run a mile from loaning those businesses a reasonable amount of money to sort them out. I know of one situation where people have not been able to get P60s as the business cannot get money from any of the banks—they do not want to be involved in anything to do with sanctions—so it cannot pay the accountants who would produce them. May I have a word with the Minister about that? In some cases, we are going over the top, and it is affecting our constituents.
To pursue the issue of proxies raised by my hon. Friend the Member for Luton South (Rachel Hopkins), am I right in thinking that the Minister said a few minutes ago that he was prepared to examine the possibility of taking action against proxies and those persons of interest who use proxies?
What I would say is that the Government are committed to an ever-tighter grip on illicit finance and those individuals close to Putin who make a material contribution to his regime. Obviously, I will not commit on the Floor of the House to individual extensions to what we have already done, but I have set out the range of sanctions regimes that exist across multiple Departments of Government and I am happy to receive representations on whatever case the hon. Member wishes to bring to me.
Consumers of Financial Services: Compensation
My hon. Friend is a strong champion of consumers who have suffered financial loss, particularly through his chairmanship of the all-party parliamentary group on personal banking and fairer financial services. He understands that the UK does not operate a zero-loss regime where consumers of financial services are automatically compensated, but it is important that regulators make very clear where the scope of protection lies and who is eligible for compensation.
I thank my hon. Friend for that answer. It is clearly important that where the ombudsman recommends that compensation be paid, banks pay it. Equally, the Government should pay compensation, such as when the parliamentary ombudsman found against them on Equitable Life policyholders, as was mentioned by the hon. Member for Strangford (Jim Shannon). I understand that the budget to pay compensation to those policyholders has been underspent by some £300 million, so rather than return the money to the Treasury, will my hon. Friend use it to compensate the Equitable Life policyholders who have suffered in the long term?
For over five years, I have campaigned on behalf of steelworkers who were part of the British Steel pension scheme. Many were ripped off by sharks posing as financial advisers. While a redress scheme is now in place, legal advisers for steelworkers report claim processing delays of six months at the Financial Conduct Authority, 12 months at the Financial Services Compensation Scheme and two years at the Financial Ombudsman Service, which suggests that all is not right. Delays to cases can have a big impact on possible payouts, so will the Minister please look into the performance of those organisations? Steelworkers and other financial consumers deserve much better than this.
Ultimate Battery in Thurcroft in Rother Valley is developing groundbreaking battery technologies and is on track to create 500 new jobs by 2025. What help can the Department give me and my constituents to help burgeoning businesses such as Ultimate Battery, to make Rother Valley and other places across the north technology hubs?
I thank my hon. Friend for his support for this really important sector in Rother Valley. We have a number of schemes, including £541 million of funding available in the Faraday battery challenge. We also have the £1 billion automotive transformation fund. As a result of the efforts that he and many others have made, we now get 40% of our electricity from renewable sources—the second highest in Europe—and much more progress is to come.
I recently convened a roundtable in my constituency with the Minister for Science, Research and Innovation, my hon. Friend the Member for Mid Norfolk (George Freeman) and a number of science and tech businesses. Their No. 1 question was what fiscal support was available for their sector. I am aware that there are numerous schemes, grants and tax relief, but it was notable that they were not well understood by the businesses, and I could not find them published anywhere on the new Department’s website. Could my right hon. Friend put together and publish a package of all the support available to investors and innovators, and how it can be applied for, to maximise the potential of this vital new frontier in west Berkshire and beyond?
That is a fair point. I thank my hon. Friend for the fact that Newbury is a hotbed of technology businesses, with Roc Technologies, Stryker, Edwards Lifesciences and a range of other businesses that she gives a lot of support to. I will write to her listing all those things and I will make sure that it is available on the website of the Department for Science, Innovation and Technology.
The tech sector in rural Cumbria depends on reliable broadband. Communities in Warcop, Sandford, Coupland Beck, Blea Tarn and Ormside in Westmorland have signed up to the community interest company and volunteer group B4RN to provide a gigabit connection for just £33 a month, but the communities have been suddenly designated a low priority area, which means that their vouchers have been removed, putting the whole project at risk. Will the Chancellor commit to supporting those communities, residents and businesses to ensure that they get the vouchers that they were initially promised?
I will happily look into what has happened. We strongly support all rural areas having access to gigabyte broadband, as an important part of our policy. We have made a lot of progress on that. I will look into detail of what is happening in the hon. Gentleman’s area and get back to him.
Hospitality businesses play an important role in local communities and the UK economy. They will benefit from business rates support worth £13.6 billion over the next five years, which includes increased generosity from the retail, hospitality and leisure relief scheme from 50% to 75% in 2023-24. There is also our Brexit pub guarantee, which means that the duty on a draught pint in a pub will always be lower than its equivalent in the supermarket.
The Minister will be aware of long-standing calls from the sector to reduce VAT to bring it into line with European equivalents. Will the Treasury undertake an assessment of the economic benefits of doing so? Will it consider that as part of a package, alongside increasing the threshold for VAT registration from £85,000 to £100,000 to support smaller businesses?
The hon. Gentleman poses many questions for me, some of which are very complicated. VAT relief for the hospitality sector was important in the aftermath of the pandemic, but it cost us a great deal of money and we have had to raise it back up to 20%. We keep the other VAT matters under review, and I would be delighted to meet him to discuss the complexities behind them.
A great many of the new job opportunities and career paths being created in Pembrokeshire are in the tourism and hospitality sector. Does my hon. Friend agree that the very last thing that business people who are creating those growth opportunities need right now is a tourism tax of the kind being brought forward by the Welsh Labour Government in Cardiff, which will hit businesses with new burdens and raise the cost of going on holiday in Wales?
The sun always shines in my right hon. Friend’s corner of Pembrokeshire when he speaks up for it. He is quite right to identify how the Conservatives in Government are trying to help businesses through our business rates relief in England, through our energy support scheme over recent months and, of course, through the Brexit pub guarantee. Welsh Labour, on the other hand, wants to call last orders and have higher taxes for the businesses he is so keen to support.
The 2019 Conservative manifesto, some three Prime Ministers and four Chancellors ago, promised a fundamental reform of business rates. This is another broken Tory promise. Will the Minister admit that only a Labour Government will end the chaos, scrap business rates and replace them with a fairer system, so that our amazing hospitality sector can thrive and grow faster?
I have a great deal of respect for the hon. Lady, but I must point out to her gently that we have, in fact, conducted that review. In the autumn statement, we were able to announce a £13.6 billion package of help over the next five years, including a multiplier freeze for all ratepayers, large and small; a transitional relief cap funded by the Exchequer; retail, hospitality and leisure relief; and a small business support scheme, which will help to cap bill increases at £600 per year for any business losing eligibility for some or all small business rate relief or rural rate relief at the 2023 revaluation. We have done that review and are supporting businesses that need help.
Cost of Living: Energy Prices
Advanced economies around the world share the challenge of high inflation from the energy shock, and the UK has been affected by those global factors. The Government have taken significant action to help households with rising energy prices and the cost of living by providing a significant support package totalling £94 billion. That includes supporting households with energy bills by extending the energy price guarantee and removing the premium paid by 4 million households using prepayment meters. Overall, the Government have paid about half of a typical household bill since October 2022.
Many people in the highlands and islands of Scotland will have had their taxes used to help pay for the construction of the gas grid, despite the fact that they are off the gas grid themselves and do not get the benefits of being connected to it. Their area supplies the oil and gas, and now the cheap renewable energy, that is facilitating lower energy bills across Great Britain, yet they are more likely to be fuel poor. To rub salt in the wounds, many pay a surcharge on their electricity bills. When will the UK Government address those inequities?
When the energy profits levy was introduced to help the Government’s support of household energy bills, I welcomed the investment tax allowance that was introduced along with it on new oil and gas for energy security. In recent weeks, I also welcomed the Exchequer Secretary’s announcement in Aberdeen of a price floor in the form of an energy security investment mechanism, at which the EPL will be removed. The devil, of course, will be in the detail. I welcome the Treasury’s ongoing engagement and dialogue with the oil and gas industry, but will the Minister commit to a regular, perhaps quarterly, fiscal forum with the industry, as used to happen prior to covid? Does he agree that Labour’s plans to ban all new oil and gas is based on ideology and not a pragmatic approach to this country’s energy security and net zero?
I can think of few better advocates for the oil and gas industry than my hon. Friend. I was very pleased to meet industry leaders and the chair of the oil and gas forum in Aberdeen recently. We had a very good discussion and I am grateful to the industry for its ongoing engagement with Ministers and officials. I can assure him that the Government are very committed to engaging with the oil and gas sector, as we have been doing for a long time.
Leaving the EU: Economic Impact
As per my previous response to the same question by the hon. Gentleman in the last Treasury oral questions, I note that the UK has grown at a similar rate to comparable European economies since 2016, and that it still remains challenging to separate out the effects of Brexit and wider global trends on the UK economy. We remain absolutely committed to seizing the opportunities we now have, free from the EU.
That is very convenient. Only the UK has to deal with Brexit. Everyone has had to deal with covid and everyone has had to deal with Ukraine, but only the UK has had to deal with Brexit. That is why, according to the London School of Economics, customers have collectively paid nearly £7 billion extra in their food bills as a direct result of all the checks and frustrations that have come with Brexit. Is the Minister honestly saying that it was a good idea, and that it has not hurt the UK economy?
Let me again gently remind the hon. Gentleman to look at what is happening in the rest of the EU. For example, the eurozone is suffering from the effects of mild recession. All this is due to the global headwinds that we are all facing. However, I know that the hon. Gentleman will be delighted by the recent growth upgrades from the Office for Budget Responsibility, the Bank of England and the OECD. We do face challenges, and of course we have to work with our global counterparts to try to deal with those global headwinds, but we are focusing very much on the Prime Minister’s priority of halving inflation, because that is what will make a real difference to our constituents.
Does the Minister agree that, despite “Project Fear” forecasts, we have record employment, very low unemployment, good inward investment and trade deals in abundance? Perhaps the Scottish National party should focus on its poor record on the economy and, indeed, on financial transparency, and get over the fact that we have left the EU.
May I take this opportunity to congratulate my hon. Friend on his recent honour, which is extremely well deserved? He has made his point very succinctly. We have an exciting future ahead of us—we are already signing trade deals with non-EU countries, and we have a fantastic deal with the EU—and it is now up to us to make a real success of it.
People on Lower Incomes: Financial Support
The Government recognise the challenges facing households as a result of the elevated cost of living, and we took further action in this year’s spring Budget to provide targeted support to protect the most vulnerable. That included the new cost of living payments this year, help with the cost of essentials through a further extension of the household support fund in England, and the uprating of benefits in line with inflation in April this year.
One of the best ways of supporting those on lower incomes is to remove the barriers that prevent them from acquiring the new skills that are necessary for better-paid jobs. Will my hon. Friend confirm that the Treasury is working closely with the Department for Education and the Department for Work and Pensions to ensure that the Lifelong Learning (Higher Education Fee Limits) Bill gets rid of those obstacles, and can she provide an update on the progress of the Barber review?
I know that you like Ministers to answer briefly, Mr Speaker, so, if I may, I will answer my hon. Friend’s first question now and respond in writing to his question about the Barber review.
My right hon. Friend the Chancellor made employment one of the four Es in his drive for growth in the spring Budget, and we are working closely with the Department for Education to invest in exactly the way that my hon. Friend describes. That includes investment in free courses for jobs, which enable people to study high-value level 3 subjects and gain free qualifications, and employer-led skills bootcamps in high-growth areas—a phrase that I never thought I would find myself uttering—which, apparently, involve sectors such as digital, and are available to those who are either unemployed or in work and wanting to retrain.
Food banks, playgroups and warm spaces are among the services provided by mosques, temples, synagogues and churches for all our constituents to help them cope with the cost of living crisis, but many of the buildings are creaking and falling apart. Will Ministers consider extending Gordon Brown’s policy of VAT relief on building works for listed places of worship to all such places, to recognise their role in providing social good and to alleviate the pressure on multiple systems?
I thank the hon. Lady for raising an important point. There has been an incredible outpouring of support across communities—not just in religious communities, but at village and town halls around the United Kingdom—in an effort to help people with the cost of living pressures that we face in the winter. The picture is quite complicated, but perhaps I can write to the hon. Lady with a fuller response to her question, because I want to do it justice and I know I will get in trouble with you, Mr Speaker, if I do so now.
The Government are doing three things to reduce inflation. First, we remain steadfast in our support for the independent Monetary Policy Committee of the Bank of England as it takes action to return inflation to its 2% target. Secondly, we are making difficult but responsible decisions on tax and spending so that we do not add fuel to the fire. Thirdly, we are tackling high energy prices by holding down energy bills for households and businesses, alongside investing in long-term energy security.
The rich and powerful have repeatedly sought to blame workers for high inflation, even though workers’ real wages have been falling as inflation soars. Many leading economists now say that profiteering by certain corporations, not wages, is driving price rises. The French Government have taken action to limit food prices, and Spain has introduced rent controls. When will this Government start targeting the profiteering that is helping to drive inflation?
We continue to have constructive dialogue with industry and different sectors. I met supermarket representatives a few weeks ago, and the Chancellor and others in the Treasury will continue to have these conversations. I think most people recognise that we face common global challenges and that different economies will respond in different ways.
We will not hesitate in our resolve to support the Bank of England as it seeks to strangle inflation in the economy, and the best policy is to stick to our plan to halve inflation. I also want to make sure that we do everything possible to help families paying higher mortgage rates in ways that do not themselves feed inflation, so later this week I will be meeting the principal mortgage lenders to ask what help they can give to people who are struggling to pay more expensive mortgages and what flexibilities might be possible for families in arrears.
Despite being the gateway to most financial services in the City, I suggest that the London stock exchange is ailing, with CRH and Arm being the latest canaries in the coalmine. While welcoming the Edinburgh reforms, what further consideration has the Chancellor given to my suggestion that tax incentives be introduced to encourage our British pension funds—the big beasts—to invest more in UK equities, given that, since the financial crisis of 2008-09, they have reduced their exposure to equities by 90%, unlike in most other developed economies?
My hon. Friend always speaks extremely wisely on financial matters, and he is absolutely on the money when he talks about the opportunity that would present itself by unlocking £3 trillion of pension fund assets, many of which would get a better return for pensioners if they were invested more in our high-growth businesses, as well as that being a good outcome for the London stock market. All I will say is: watch this space.
While the Government squabble over parties and peerages, mortgage products are being withdrawn and replaced by mortgages with much higher interest rates. This is a consequence of last year’s Conservative mini-Budget and 13 years of economic failure, with inflation higher here than in similar countries. Average mortgage payments will be going up by a crippling £2,900 this year, so where does the Chancellor think families will get the money to pay the Tory mortgage penalty?
At the autumn statement, we announced £94 billion of support to help families going through very difficult times. That is more support than was ever proposed by Labour. The answer to these pressures is not borrowing an extra £28 billion a year, as people like Paul Johnson are saying that more borrowing means higher inflation, higher interest rates and higher mortgage rates.
Is the Chancellor for real? These are the real-life consequences of what is happening under the Conservative Government today, so do not try to pass the buck.
Let me bring this home. In Selby and Ainsty, 12,000 households will be paying, on average, £2,700 more on their mortgage. In Uxbridge and South Ruislip, 10,000 households will be paying, on average, £5,200 more. Each and every family know who is responsible for trashing the economy: the Conservative party. Will the Chancellor apologise for the harm that his Government have caused with the Tory mortgage penalty?
I am proud of our economic record, which has seen our economy grow faster than those of France and Japan since 2010, and at the same rate as Germany. Those mortgage holders in Selby, Uxbridge or Mid Bedfordshire will be paying even more for their mortgages if a Labour Government borrow £100 billion more in the next Parliament, and we will not let that happen.
I can give my hon. Friend the assurance he seeks. He will know from his significant contribution to the Financial Services and Markets Bill as it has gone through this House that it introduces a new duty on our financial regulators to promote the growth and international competitiveness of the United Kingdom. Thanks to him, the Bill also contains specific reporting measures as to how they are going to achieve that important objective.
We understand the pressures that families are going through up and down the country, but we have responded with generous support this year and last of more than £3,000 for the average household. Not only that, but since 2010 the number of children in absolute poverty has fallen by 400,000.
Controlling public spending and ensuring that the interventions we are making prioritise growth enablement is a relentless activity. The household support fund of £2.5 billion continues to be an additional source of support for households, but there are no quick fixes; there is a relentless pursuit of the goals that we have set out at the start of this year.
In-person banking facilities are vital to everyone in Southend West, yet in recent years we have lost all but one of our bank branches. A new community-based post office banking hub model is being rolled out, so will the Minister support my efforts to get one of those into Leigh-on-Sea?
I thank my hon. Friend for her question. She will be aware of what is in our Financial Services and Markets Bill, and I can update the House by saying that the Government have tabled an amendment to protect free access to cash withdrawal and deposit facilities. I would be happy to meet her to discuss her constituency’s needs.
As the right hon. Gentleman knows, the farming support payment is ported to Scotland and operates on a different basis because it is devolved. We have committed to the sum of £2.4 billion for the duration of this Parliament and there are a number of schemes where the uptake is now increasing. I will continue to engage with my colleagues at DEFRA as those schemes develop further.
The last bank in the entire constituency of Cheadle is about to close, so I was delighted when, following my interventions and direct conversations with LINK and appeals from the community, Bramhall was chosen to be LINK’s 100th banking hub recommendation. It will be invaluable for residents, but they will be left without banking services until it is open. Will the Minister look into bridging options in the interim, between the bank closing and the hub opening, or consider imposing requirements on banks to remain open until a hub is implemented?
I would be happy to meet my hon. Friend to talk about the range of options. I am delighted about the solution proposed for Bramhall, in her constituency. Last week, I visited the new banking hub in the constituency of the hon. Member for Ealing Central and Acton (Dr Huq). I hope the whole House will wish the operator, Vip Varsani, well in that new endeavour.
For the first time in my 20 years as an MP we have a real housing crisis in the Rhondda. Two thirds of people own their own homes, but lots of people who have relied on the commercial rented sector are finding that landlords are selling their properties because of decisions made about taxation and, because there is a cap on housing benefit, they do not want to continue in that market. Dozens of people are being evicted week in, week out. Will the Government look closely at what is happening to protect people in constituencies such as mine, so that they can keep their own homes?
I am happy to meet the hon. Gentleman to discuss what is happening in his constituency. Obviously, there have been a series of changes since the section 24 change in the Finance Act 2015 and there are particular pressures in the housing economy at the moment, but I am happy to meet him to discuss that further.
I welcome the work that the Chancellor and the Prime Minister have done to promote work on artificial intelligence done here, and in developing an ecosystem for that. It is clear that the UK has an opportunity to lead on this, especially on regulation, if we get it right, but only if we seize that opportunity now. What is the Chancellor doing to make that happen?
My right hon. Friend is right to say this is a big opportunity. We are home to a third of Europe’s AI start-ups, but we are very aware of the risks of AI. The Government are hosting a global AI summit, with the support of President Biden, this autumn, to ensure we get that regulation absolutely right.
Quite rightly, this Question Time has been dominated by questions about inflation and the cost of living. One policy that has not been mentioned is the Government’s net zero policy and the inflationary costs included in it, from green levies of £12 billion to the cost of strengthening the infrastructure and the favourable treatment given to renewable energy firms. While the Minister may condemn the Labour party for its £29 billion green policy spending plan, what is the cost of the Government’s net zero policies to consumers? Are they not picking their pockets dry?
We have a world-leading track record on net zero, but we must balance that correctly with who bears the cost. Critical to the nature of the right hon. Gentleman’s question is mobilising more private capital, and we are making great strides on that front.
My hon. Friend is a great champion of Darlington, and Darlington’s economic campus is a critical part of levelling up. The Government Property Agency has been working hard to finalise commercial negotiations. I would be happy to write to my hon. Friend when I have a more substantive update.
Ever-increasing food prices mean that some families are having to cut down on the amount they eat. Will the Minister support Labour’s plan to negotiate a new veterinary agreement for agriculture products to reduce the cost for food producers and bring down those crippling food prices?
Clear policy direction and a strong regulatory framework have led to the UK being the world’s leading centre in financial technology. Does my hon. Friend agree that the crypto industry offers the same opportunity for the UK to exploit?
My right hon. Friend is absolutely right. I was pleased to join him in a Westminster Hall debate about the regulation of the cryptoassets sector. I commend the work done in this House by the crypto and digital assets all-party parliamentary group. He might join me in welcoming the decision by Andreessen Horowitz, one of the world’s largest technology companies, to locate its only international office outside of San Francisco here in the UK and to run its 2024 cryptoassets school here.
I am looking forward to answering questions about that tomorrow afternoon at the covid inquiry. We did what was recommended following Exercise Cygnus. Certainly, Ministers did what they were advised to do, but the operation was focused on pandemic flu. The question that we must ask ourselves is why we did not have a broader focus on the different types of pandemic that could have happened, such as covid.
The Government’s business rates review last autumn was anything but fundamental, because it did not even look at the calculations for fair and maintainable trade, which are hammering the viability of pubs in St Albans. If the Chancellor has in fact abandoned his commitment for a fundamental review of business rates, which he himself called for last summer, will he at least look at the calculations for fair and maintainable trade before any more of our valuable pubs have to close?
We conducted a review and put in place the £13.6 billion package of support to help businesses on our high streets. If the hon. Lady is able to look at, for example, the multiplier freeze, she will see that that has had a significant impact on those rates, as has the retail, hospitality and leisure business rates relief, which will help raise the rate of relief from 50% to 75%. We have targeted this very carefully at exactly the businesses that she mentions.
The Chancellor was shaking his head during my question earlier on, so will he say whether he accepts the findings from the Centre for Economic Performance at the London School of Economics that shows that Brexit is responsible for a third of UK price inflation since 2019? Regulatory sanitary checks and other border checks added almost £7 billion to total domestic grocery bills over the period from December 2019 to March 2023. Does he accept that?
Ugandan School Attack
At the outset, I thank my friend the hon. Member for Strangford (Jim Shannon) for raising this important matter and for his courtesy in taking the trouble to inform my office.
On Thursday 16 June, there was an horrific and cowardly attack on Lhubiriha secondary school in Mpondwe in western Uganda, which borders the Democratic Republic of Congo. The Government of Uganda have confirmed that 42 people were killed, of whom 37 were students from the school. Six people were injured. There are also reports that a further five to seven people, which may include children from the school, were abducted. The Ugandan authorities believe that the perpetrators are from the Islamic State-affiliated armed group the Allied Democratic Forces, or ADF, which operates in the DRC. The Ugandan military is pursuing the attackers. Those responsible for the attack must be brought to justice.
I issued a tweet on 17 June expressing my horror at the attack, which took the lives of so many innocent schoolchildren. My condolences go out to all the victims and to their families. The British Government strongly condemn this attack. We have confirmed that no British nationals were caught up in the attack. In response to the attack, the Foreign Office updated its travel advice for Uganda on 17 June with a factual update. The British high commissioner in Kampala issued a tweet sending her condolences to all those affected and the British high commission in Kampala remains in close touch with the Ugandan authorities.
First of all, I thank the Minister very much for his response. He encapsulates our horror and our concerns. I also thank him for his obvious interest, which we know he has anyway, but which he has proven today. I am sure the whole House will join me in expressing our deepest sorrow and sympathies for the victims of Friday’s abhorrent attack.
I want to put on record the full magnitude of what occurred. On Friday 42 people, including 37 students, were killed when militants from the ADF, affiliated with IS Central Africa Province, attacked the Lhubiriha secondary school. Some victims were murdered with machetes, while others were killed in their dormitories when terrorists threw bombs and set the building alight after students had barricaded the doors to try to protect themselves. Six additional students were kidnapped to carry loot stolen from the school and it is estimated that some of those may be some young girls and ladies.
The effect of this act of terror is clear: many of the town’s residents have fled since the attack, and yesterday schools across the region were empty, as teachers and students feared turning up. While IS Central Africa Province has yet to claim the attack, that is not unusual, and the attack carries all the hallmarks of ISCAP. Moreover, it is part of a trend of escalating attacks by the group, targeting Christian villages in the DRC since March, resulting in some 400 deaths. This attack in Uganda spells an alarming development.
The attack is part of a wider trend of violence against Christian and religious minority communities stretching across central Africa, including attacks from Daesh, Boko Haram and Fulani militants in Nigeria and intentional targeting of places of worship by al-Shabaab in Somalia, Kenya and Ethiopia.
I want to ask the Minister four questions. First, what steps can the Foreign, Commonwealth and Development Office take to help recover those who were kidnapped? Secondly, what scope is there in the current UK aid budget to provide emergency relief to displaced communities and help to create a safe environment for schools to reopen? Thirdly, when was the latest joint analysis of conflict and stability assessment carried out for the region by the FCDO, and does it reflect the current threat from IS Central Africa Province to Christians and minority communities? Fourthly, what can we do to prevent future attacks?
The hon. Gentleman sets out the position extremely well. He asks me a number of questions. First, in respect of the aid budget, Britain has a significant partnership with Uganda, which last year was in the order of £30 million. That is spent principally on humanitarian and reproductive health-related issues, but we always keep the humanitarian situation under review and we will continue to do so in this specific case. He asks me about the latest JACS report; it is not recent, but I can tell him that before these horrific events we were looking at commissioning another one and we will pursue that. In respect of what more Britain can do, we are in very close touch with the Ugandan authorities and will do everything we can to help them.
I congratulate my very good friend the hon. Member for Strangford (Jim Shannon) on securing the urgent question. My condolences go to all those parents who are suffering unimaginable horror and fear. The abduction of children is cowardly in the extreme, and I am sure that the Minister is doing all he can to exert pressure to bring those six children home to their families.
The Foreign Affairs Committee is gravely concerned about the current situation. We have launched an inquiry into counter-terrorism so that we can look at the position in countries such as Uganda. We are aware of links between the Allied Democratic Forces and Daesh. Will the Minister please explain what we are doing to discourage any engagement with the Wagner Group? Increasingly, too many African countries are turning to the Wagner Group in a misplaced effort to counter the rise of organisations such as Daesh. Will the Minister also explain what we are doing to tackle border insecurity between Congo and Uganda? The situation is grave.
I thank my hon. Friend the Chair of the Foreign Affairs Committee for what she has said. On her third point, I make it clear that we work closely together on counter-terrorism and regional security, which is a shared priority.
On my hon. Friend’s first point, she is right: this was a horrendous attack on young people and students. A fire bomb was thrown into the male student dormitory, and six and possibly as many as 12 mostly female students appear to have been abducted. Two others, who were taken to a nearby health centre, died owing to a lack of blood supplies. My hon. Friend was right to emphasise the cohort that has suffered so much.
On the disorder at the border, we give strong support to the Luanda and the Nairobi peace processes, which are designed to try to do something about the disorder in the eastern DRC, of which I know my hon. Friend is well aware.
I am grateful, Mr Speaker. I thank the hon. Member for Strangford (Jim Shannon) for securing the urgent question.
Forty-two people are dead, including 37 children, and students remain in terrible danger after being abducted. I struggle to understand the mentality of anyone who deliberately seeks to murder children. The Opposition, and I know the whole House, stand in solidarity with the people of Uganda in their grief.
Last month, the shadow Foreign Secretary and I discussed these issues with His Excellency the Ugandan Minister of Foreign Affairs. Insecurity in the region is a serious threat to many lives. It is also a threat to sustainable development, and to UK interests. Sadly, it lacks the international attention that it deserves.
The ADF is responsible for frequent massacres and brutality in DRC. It seems most likely that it is responsible for this atrocity too. The security situation could grow still more complex as elections in DRC approach this December. May I press the Minister on what plans the Government have to update our sanctions on the ADF? Is he confident that he has the right resources to map illicit financial flows? Do we understand where we have leverage over those who support the ADF and other armed groups in the area?
How are we engaging with the African Union, the East African Community and the Southern African Development Community to support consensus against insecurity among regional states? The ADF and hundreds of other armed groups that terrorise the region must be held to account. Surely the Government must update our offer of support, in solidarity with the people of Uganda.
The hon. Lady makes several important points, and I thank her for the tone and content of her comments. She asked a number of questions. We are in very close touch with the African Union and the SADC. I should emphasise that Uganda has designated the ADF a terrorist organisation, and the Ugandan defence forces are tracking the perpetrators, as the President has made clear.
The hon. Lady asked about illicit financial flows. She will know from the “Integrated Review Refresh” that tackling those flows of stolen and dirty money is a high priority for the Prime Minister. We are actively engaged in working out how we can do more on that front.
Finally, on the processes that Britain is engaged in supporting, the Nairobi process, to which we have provided funding, is a very important aspect of how we bring some sort of order to the eastern DRC, which, as the hon. Lady implied and knows well, is a source of enormous worry to all the surrounding countries, as well as to us and many others.
I thank my good friend, the hon. Member for Strangford (Jim Shannon), for securing this urgent question. I have visited schools in Uganda. They should be happy and safe places. This is yet another tragedy. I am concerned about rising violence throughout the region. Since the war started in Sudan, there have been ominous reports of waves of ethnic violence in El Geneina in Darfur. It may be that the Rapid Support Forces are rekindling genocide in Darfur. Genocide has happened there before, and it may be happening again.
It is incredibly important that the international community keeps shining a spotlight on this and that we break this culture of impunity, because when one violent organisation thinks it can get away with it in one part of Africa, another violent organisation thinks it will get away with another atrocity in another part of Africa. Will my right hon. Friend agree to meet members of the UK’s Darfur community who are desperate to tell people what is going on there so that they can whistleblow on what might be genocide again?
My right hon. Friend will know that I have met recently with the Darfur community, but things have changed since that meeting, so I take on board her final point. She also made a point about the war in Sudan, which means there is the possibility—perhaps the likelihood—that this area of disorder, conflict and humanitarian disaster could stretch from the middle east right the way down to southern Africa. She is completely right about that.
My right hon. Friend is also right to say that impunity must not be allowed to stand on this or any other violent acts. The Ugandans are pursuing the perpetrators. The Ugandan commander-in-chief of land forces has been to the area and was joined by the commander of Operation Shuja, which is the Ugandan deployment in the eastern DRC specifically to combat the ADF. I hope that that, in part, answers her question.
This is a shocking terrorist crime, and I put on record my party’s condolences to the families of those murdered in this horrific attack. I congratulate the hon. Member for Strangford (Jim Shannon) on bringing attention to this crime, which has had too little of that.
The people who carried out this atrocity are not an unknown group. They have already been proscribed as a terrorist organisation by Uganda and the United States of America. When will the UK Government finally join those countries in proscribing them too? What will the UK Government do to support Uganda in response to this attack and to the ongoing threats that clearly exist there?
Lasting solutions can only be achieved by Governments in this region with outside support investing in peacebuilding and civic society building. Military cannot be the only option, so does the Minister agree that it would be a mistake to continue cutting aid in the sub-Saharan area and, indeed, worldwide?
On the hon. Gentleman’s final point, we are deploying very large amounts of British taxpayers’ money in the area, as he suggests, and we are ensuring that we are light on our feet and using that to good humanitarian effect. If he looks at some of the programmes I have announced recently, he will see that they directly affect the humanitarian position, particularly for girls and women.
In respect of what Britain is doing to try to ensure greater security in the eastern DRC and on the border to which the hon. Gentleman refers, although we never discuss proscription and other security measures in advance, he may rest assured that the British Government are fully engaged, not least through the Nairobi peace process, in doing anything that we can to bring back stability to this very troubled part of the world.
I thank the hon. Member for Strangford (Jim Shannon) for bringing this really important question before the House. It is a dastardly and awful attack—it is desperate—and the people living along that border will be fearful for their lives and living with a heightened sense of fear and danger. Could my right hon. Friend set out what measures we are taking across that border between Congo and Uganda to help those people who are living in fear every day?
I also congratulate my hon. Friend the Member for Strangford (Jim Shannon) on securing this urgent question. I know that he has been diligent in highlighting these issues, as have so many organisations—such as Open Doors—that have also highlighted the persecution of Christians and other minority religious groups across the world. I chide him in just one way: do not fall into BBC-speak. These people are not militants, but terrorists. They are terrorists who have blood on their hands and engage in the cruellest activities to promote their cause.
May I ask the Minister two questions? First, we have a foreign aid budget, and this is not just about Uganda, but Nigeria and other parts of central Africa where these occurrences are happening almost daily. How can our aid budget be targeted in such a way as to help those who are victims or potential victims? Secondly, it seems that some Governments—either because they do not have the resources or do not have the willpower—are not pursuing these terrorists in the way they should. What discussions has the Minister had to ensure that those Governments take action where possible, and get help from our own Government in doing so?
On the right hon. Gentleman’s last point, as I said, the Ugandan commander-in-chief of land forces has been there, and the Ugandan army is pursuing the perpetrators. The right hon. Gentleman added very eloquently to the statement and comments of our hon. Friend the Member for Strangford, and I very much agree with what he says. On how the British development budget is spent, we spend a great deal of time and taxpayers’ money on trying to stop conflicts from starting, stopping them once they have started, and reconciling people once they are over. That is the aspect of the budget to which he was referring, and I think it is very effective and gives very good value to the British taxpayer.
I congratulate the hon. Member for Strangford (Jim Shannon) on tabling this urgent question on a topic that I know he is passionate about. We learned from Michela Wrong’s excellent article in a recent issue of Foreign Affairs how the M23 paramilitary organisation, which is actively destabilising areas of both the DRC and Uganda, has been given direct economic and military aid supported by the Rwandan Government in a deliberate strategy of President Paul Kagame, similar to that which they abandoned under pressure in 2012. Given the leverage that this Government now have with that regime, what assurances has the Minister—who I believe is an admirer of President Kagame—sought from the Rwandan Government that they will respect the sovereignty of their neighbours in the region, lest we provoke a wider humanitarian crisis in the great lakes?
I expect to see the Foreign Minister of Rwanda within the next 24 hours, and I will say to him what we say to all of those who are engaged in fighting, profiteering or causing human misery in the eastern DRC: that we urge everyone to be part of the Nairobi and, indeed, the Luanda peace processes. We urge everyone to lay down their weapons and allow a peace process, which can also ensure that humanitarian aid reaches people who desperately need it.
Cost of Living Support
With permission, Mr Speaker, I will make a statement on the progress of delivery of cost of living support.
The Government understand the pressures that households face in the current climate. We are all familiar with the global factors that are the root causes of costs being higher, including President Putin’s illegal war in Ukraine and the aftermath of the pandemic. We are committed to delivering on our priority to halve inflation, which will help ease those pressures for everyone and raise living standards.
Alongside that important work, we continue to implement our wide-ranging and significant package of cost of living measures to support the most vulnerable during 2023 and 2024. We have increased benefits and state pensions by 10.1%, and increased the benefit cap by the same amount so that more people are helped by the uprating. For low-paid workers, we have increased the national living wage by 9.7% to £10.42 an hour. That represents an increase of more than £1,600 to the gross annual earnings of a full-time worker on the national living wage. That increase, and the increases we made to the national minimum wage in April, have given a pay rise to about 2.9 million workers.
To help parents, we are undertaking a significant expansion of childcare, including a rise, later this month, of nearly 50% in the maximum amount of childcare payments for people on universal credit. For the most vulnerable, the £842 million extension of our household support fund into 2023-24 means that councils across England can continue to help families with the cost of groceries, bills and other essentials. Taking into account the extra money that we have provided through Barnett funding for Scotland, Wales and Northern Ireland, who can decide how they allocate that money, we have committed an extra £1 billion. That is on top of what we have provided since October 2021, and brings total funding to £2.5 billion.
With energy bills being one of families’ biggest worries, the energy price guarantee will also remain in place as a safety net until the end of March 2024, should energy prices increase significantly during that period. Since that energy bills support began in October 2022, the Government have covered about half of a typical household energy bill this past winter, and by the end of June will have saved a typical household around £1,500. We are also building on and extending the one-off cash payments we provided during 2022-23 that saw us make more than 30 million cost of living payments, including a £150 disability cost of living payment to 6 million people, up to £650 for more than 8 million households on means-tested benefits, and an additional £300 on top of the winter fuel payment for more than 8 million pensioner households. Those payments put hundreds of pounds directly, and at pace, into the pockets of millions of people.
However, we recognise that cost of living pressures continue, particularly for the most vulnerable households. That is why we continue to provide targeted support to help those most impacted by rising prices throughout this financial year, including more support for people on means-tested benefits such as universal credit, with up to three cost of living payments totalling up to £900. The Government have already delivered the first £301 payment to 8.3 million households—support worth £2.5 billion. The two further payments of £300 and £299 will be made in the autumn and the spring, and pensioner households will get an additional £300 on top of their annual winter fuel payment this winter, as they did last year.
I am pleased to be able to confirm to the House that from today, to help with the additional costs that disabled people face, more than 6 million people across the UK on eligible extra-costs disability benefits will start to receive a £150 disability cost of living payment. Those cash payments, which we estimate will be worth around £1 billion, will be automatically transferred into people’s bank accounts, with those eligible for the support not needing to take any action. By the end of Monday 26 June, we plan to have made 99% of payments to those already eligible—that is millions of payments being made in just seven days. Most remaining already eligible people will receive their payment by 4 July. We estimate that nearly 60% of individuals who receive an extra-costs disability benefit will also receive the means-tested benefit cost of living payment, and more than 85% will receive either of, or both, the means-tested pensioner payments.
This Government will always protect the most vulnerable, but we are also helping to improve living standards for everyone by getting more people into, and progressing in, better-paid jobs. That is the surest and most sustainable way to raise incomes and grow the economy. The number of people in employment has increased to a record high, but by removing the barriers that stop people from working, we are reducing the number of people who are economically inactive—those who are neither working nor actively looking for work. It is encouraging that last week’s labour market statistics show a further fall in inactivity of 140,000, or 0.4%, on the quarter.
We are tackling inflation to help to manage the cost of living for all households and providing extra targeted support for those that need it. The disability cost of living payments, landing in millions of bank accounts from today as part of our wider support package, underline our commitment to supporting disabled people. That is reflected in how we are stepping up our employment support for disabled people and people with health conditions; ensuring people can access the right support at the right time and have a better overall experience when applying for and receiving health and disability benefits; and transforming the health and disability benefits system so that it focuses on what people can do, rather than on what they cannot. It is also reflected in the fact that we expect to spend over £78 billion in 2023-24 on benefits to support disabled people and those with health conditions, which is 3.1% of GDP.
With the Government’s significant package of cost of living support, worth over £94 billion in 2022-23 and 2023-24, we are ensuring that those most in need are protected from the worst impacts of rising prices, putting more pounds in people’s pockets and providing some peace of mind to the most vulnerable in society.
I thank the Minister for advance sight of his statement, but let us be clear: he has come to the House today and is asking us to congratulate him on this payment when, after 13 years, the number of disabled people living in poverty is up by over 1 million. He is asking us to congratulate him on this payment when, almost every day now, we hear stories of disabled people cutting back on hot meals, showers and washing their clothes, because otherwise they would not be able to afford to use the equipment that helps them get by in life. He is asking us to congratulate him when, after 13 years of Conservative Government, child poverty is up by 600,000 and pensioner poverty is up by 400,000. He is asking us to congratulate him when we have a cost of living crisis now so severe that the Joseph Rowntree Foundation today reports that nearly 6 million of the poorest households are forced to skip meals and 7 million of the poorest families are going without food, heating or even basic toiletries.
The Minister talks about employment, but there are 2.5 million people out of work for reasons of sickness or disability. The working-age disability benefit bill is going to go up to around £25 billion, but many people out of work want to work. That is why we proposed an “into work guarantee” welfare reform to help people to move off sickness benefits and into work. Instead of offering help now to people out of work, the Government are actually cutting disability employment advisers by 10%. Because the Government are failing to do their part in helping to tame inflation, disabled people in work and families are seeing the value of their wages ravaged by inflation. In fact, the value of this disability payment is worth £5 less in real terms than when the Chancellor announced it in the autumn statement because of inflation.
The Government are failing to play their part in helping to tame inflation. When combined with them running the economy off the cliff last autumn, policies that led to turmoil on the markets and a run on pension funds, that means that thousands of disabled people, thousands of working families and even pensioners are living in fear of the letter they will soon be getting this year telling them it is time to remortgage. Disabled people and families are facing hundreds or indeed thousands of pounds more on their refinanced mortgage over the coming years, with 1.3 million homes this year collectively paying £10 billion extra on mortgages—a Tory mortgage premium. Disabled homeowners and families are paying the price—literally paying the price—for 13 years of Tory economic failure. So my question is very simple: when so many disabled people and so many families are facing more on their mortgage because of decisions taken by this Government, how on earth does the Minister expect them to cope?
I obviously appreciate the shadow Secretary of State taking the time to come to respond to this statement today. On the fundamental point of supporting people properly, I do not think that there is disagreement between us. We disagree on the detail of this and I think it is substantial and significant that, as I set out earlier, we are providing £94 billion of comprehensive cost of living support to people over 2022-23 and into 2023-24. That is structured support that is hitting people’s bank accounts in the way I have described, including the latest tranche of support through the disability cost of living payment, but there is also the discretionary support that can be provided through local authorities to meet the needs that exist, where they do not necessarily neatly fit into those structured support packages. That is significant support and he should welcome it.
I was very interested to hear what the shadow Secretary of State had to say about our employment-related measures. I would be absolutely delighted if he were to come forward and welcome the structural reform that this Government are determined to make to help to support more disabled people and people with health conditions into work, removing the jeopardy they feel around the benefit system to smooth that journey.
There is also the tailored support that we want to provide alongside that to improve the journey through the system and to unlock people’s aspirations—namely, universal support, that tried and tested supported employment model through individual placement and support in primary care in the first year, but growing beyond that. That is welcome support that will identify people’s needs and support them on a case-by-case basis to meet those objectives, with of course all the benefits that that brings, as well as keeping people well in work.
The Work Well partnerships are building capacity alongside NHS services. They are meaningful interventions on the supply side that this Government are making, and I think they are to be welcomed. It would have been nice for him to welcome the structured and more permanent support that we want to provide to help people to live more fulfilling lives, with employment at the heart of that.
The shadow Secretary of State also said, effectively, that the United Kingdom stands alone in these challenges. That is absolutely not the case. I was at the United Nations last week representing our country and it is fair to say, from many of the conversations I had with others, that the challenges we are facing are repeated in their countries—not just in Europe, but much further afield. For example, in the US, the Federal Reserve has increased rates at the fastest pace since the 1980s and in Europe interest rates are at their highest level in more than two decades. What we will do is take a responsible approach. The Chancellor of the Exchequer set that out in questions just now. What we will not be doing is making unaffordable spending pledges that will simply lead to higher rates in the long term. That is not the way to address these issues effectively.
On the specific issue of mortgages, again, we must not do anything that only fuels the challenges that households face. We have made a number of changes, including through support for mortgage interest and the scheme around that. For example, from April this year, claimants can be eligible for SMI from three months instead of nine. We have also abolished the zero earnings rule to allow claimants to continue receiving support while in work and on UC. The interest rate we pay is based on the Bank of England-published average mortgage rate, which increased from 2.09% to 2.65% on 10 May 2023. We of course continue to have important and receptive engagement with lenders about that support.
What is clear is that the Opposition have either no plan or an uncosted plan. The latter would simply fuel inflation and make matters worse. In contrast, what we will get on and do is provide the support that we have outlined, which is comprehensive and is meeting people’s needs, but of course we keep that package under constant review. We are also focused on our fundamental mission, which is to bring inflation down in the way we have described.
I congratulate the Minister on what is a meaningful package, which particularly will be of help to disabled constituents of mine in Rossendale and Darwen, but will he accept that the measures that put money back in people’s pocket when they rely on benefits will not dent the challenges people are facing when it comes to their mortgage going up by hundreds of pounds a week or a month? Will he talk to his friends at the Treasury about reintroducing mortgage interest relief at source, which is a true Conservative way of tackling the cost of living crisis by cutting taxes and putting money back in the pockets of the squeezed middle?
My right hon. Friend is trying to tempt me to make commitments on behalf of the Treasury today that of course I am not able to do, but what I am able to do is ensure that the point he has made in this debate is relayed to Treasury colleagues. Again, there are ongoing conversations being had involving the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies), who leads on housing within the Department for Work and Pensions, and colleagues in the Department for Levelling Up, Housing and Communities, for example, around some of the challenges that people are facing with housing. She is working proactively on this, along with colleagues elsewhere.
I too thank the Minister for advance sight of his statement, although in reality it is a nine-page press release rehash of previous Government announcements. The only new thing today is the £150 disability payment. Will the Minister reflect on the excellent report from Scope, “Disability Price Tag 2023: the extra cost of disability”, which shows that, on average, disabled households have expenditure that is £975 higher per month? We know that, for example, as a result of specialised diets, higher transport costs, higher energy costs and higher insurance premiums, there is a cost to disabled people.
Unfortunately, the Government do not have a good record when it comes to disabled people, particularly the 2.5 million legacy benefit claimants who were so cruelly overlooked during the pandemic and did not get the equivalent of the £20 uplift. I welcome the £150, but I ask the Minister to reflect on the wise words of Scope, which says that that will not touch the sides. To that end, as the Government are not quite getting this, may I invite the Minister to come to Glasgow to meet me and the Glasgow Disability Alliance, where he will hear the message, loud and clear, that this simply does not go far enough and that far too many people are going to struggle unless the Government up their game?
The key point I would make, which I set out in my introductory statement, is that there is a significant alignment; people receiving the disability cost of living payment are also receiving various other parts of the support package. Eight-five per cent of those who qualify for the disability cost of living payment are also receiving a mean-tested or the pensioner cost of living payment. They are receiving various parts of the package of support. We continue to keep those matters under constant review, as Members would expect. I have a meeting later today with a Minister in the Scottish Government and no doubt matters relating to the cost of living will come up. As a Minister in the Department for Work and Pensions, I am committed and determined to visit all parts of the United Kingdom and I will take away the hon. Gentleman’s suggestion about where I might go.
Can I re-emphasise the point made by my right hon. Friend the Member for Rossendale and Darwen (Sir Jake Berry)? Huge numbers of constituents are coming to me about the mortgage changes. They are absolutely terrified. I know that the Government are doing all they can, but can I ask them to redouble their efforts because this is going to have a huge impact on the cost of living?
I thank my right hon. and gallant Friend for his question. This is a significant issue in his constituency and a challenge in constituencies across the country. Ministers across the Government are mindful of it. It draws focus back to the key, overarching mission of this Government and the economic plan that the Chancellor and Prime Minister are advancing. That is why it is so critical that we tackle the inflationary pressures. We must not add to those inflationary pressures. If we can deal with that root cause, that is the best way to help people in that situation.
The cost of living payments have made a vital contribution to millions of families in supporting people through the current crisis and I welcome the contribution they have made. However, the need for them does reflect, particularly following the removal of the £20 a week uplift from universal credit, the historically low headline level of benefits—at the moment, in real terms, the lowest for 40 years. What consideration are the Minister and his colleagues in the Department giving to consolidating those occasional one-off payments into the mainstream benefits— universal credit and the rest—so that people can budget with confidence, week by week?
The right hon. Gentleman will recognise that my right hon. Friend the Secretary of State has his annual review of benefits and pension levels, where all matters are properly considered in the usual way. Decisions are made and announced through those formal processes. It is worth saying in relation to disability spending more generally that in 2027-28 total disability spending is forecast to be over £41.6 billion higher in real terms compared with 2010. We are spending very significant sums of money on support for disabled people. We also have those cost of living packages of support in place for them. We will continue to be on the side of helping people through this difficult time, supporting where we can and cushioning the impacts of those challenges. Again, I invite Opposition Members to join the support for the overarching mission of this Government, which is to get inflation down and to relieve those pressures.
I welcome my hon. Friend’s statement and the £150 that is going into the bank accounts of 6 million people, including many of my constituents in Newcastle-under-Lyme. I welcome all the support that he outlined, including on energy bills for the entire country, households and businesses, over the winter. I welcome that energy bills are about to start falling at last, which I know will be welcome to everybody across the House. However, does he agree that the best way for us to help the most vulnerable is to help them into well-paid, sustainable jobs, whether part-time or full-time? We should look for support from employers for adaptations and managing conditions in doing that.
I totally agree with my hon. Friend. Work is such an important part of relieving some of those pressures, but it is also important for people in the longer term. We want more people to unlock their potential and access all the benefits and opportunity that work brings. We see that as a partnership, and we want to continue to deepen that commitment as a Government, working collaboratively with employers to unlock those opportunities. Schemes such as Access to Work Plus, which we have piloted, evaluated, and are now rolling out, are all about crafting roles, working with an individual and an employer, where there is a determination to employ a disabled person. We see massive benefit to that approach, not just for the business and our economy, but also for the disabled person in question.
I rise to support what my right hon. Friend the Member for East Ham (Sir Stephen Timms) has just said. We cannot underestimate the impact of the last 12 years of cuts to the baseline in support and social security, with £33 billion taken out of working-age budgets. The temporary one-off payments do not even touch the sides, and that is resulting in one in three disabled people living in poverty, which is twice the number of non-disabled people. Let me again ask the question that my right hon. Friend the Member for East Ham put to the Minister: when will he be increasing the uplift?
I repeat what I said in response to the Chair of the Work and Pensions Committee. We are determined to try to get to grips with the longer-term pressures that people face. The hon. Member for Glasgow East (David Linden) mentioned the “Disability Price Tag” report by Scope. One of those pressure is energy costs, and one thing that colleagues in the Department for Energy Security and Net Zero are currently looking at is the wholescale market reform of our energy market. As part of that, they are considering the issue of social tariffs and support, to see how we best support those costs in the longer term. The best way to tackle those issues in the round and get those pressures down, is by addressing the inflationary challenge that we are currently experiencing. That is what the Government are focused on at the moment, and that is the right approach. On the wider matter in response to the question from the Chair of the Committee, we will take that away and it will be considered in the usual way as part of the annual process.
Scope’s “Disability Price Tag” report has already been mentioned, but the £975 a month means that the extra payment of £150 does not cover even a week of additional costs, and it points to the lack of sufficiency for social security that the Chair of the Work and Pensions Committee referred to. My private Member’s Bill recently became the Carer’s Leave Act 2023, and when I met constituents they had either had to give up work because of their caring responsibilities, or they had lost carer’s allowance because of the hours they were working. The Minister talks about a transformation of the system. Does he agree that carer’s allowance is ripe for reform?
The hon. Lady and I have previously had exchanges on carer’s allowance, and the approach we take is to consider that when we have our deliberations on annual uprating. We will make modification to that when it is affordable and appropriate, but I hear her representation. I also congratulate her on the Carer’s Leave Act 2023, which introduces an important change. I know that a lot of effort went into that behind the scenes, and I congratulate her on it.
I cannot recall a time when so many families and individuals have contacted my office because they cannot afford to live, whether that is being able to buy food, heat the house, or do other things as a family. We have seen the start of a fall in energy prices, but the fact remains that for the foreseeable future they will be much higher than they were before the start of this crisis. We are also seeing problems with interest rates and various other pressures on families. In particular, rents are outstripping local housing allowance by a considerable amount in my local area, and people are being evicted. On the housing front, pressures from interest rates are starting to bite, and people cannot afford the rents that are now being charged in the private sector. What is the Minister going to do about that?
On that specific point, I draw the hon. Gentleman’s attention to the points I made earlier about some of the ongoing work, but I will also ask my hon. Friend the Member for Mid Sussex (Mims Davies) to provide him with a response to that question, because I know she is engaging with colleagues elsewhere in the Government around those challenges.
The Minister has already acknowledged the additional costs of nearly £1,000 a month that disabled households have over able-bodied households, but those costs are disproportionately higher in rural areas such as the highlands, which I represent with my constituency. People there have extra costs for transport, energy and so on. Is it not time that the Government did more to compensate people with those extreme costs? Would a start not be to make up for what they lost with the universal credit mismatch during the pandemic and, indeed, to restore the £20 a week on universal credit immediately?
There is no plan to restore that £20 uplift in the way that the hon. Gentleman describes, but in relation to disability benefits, I draw his attention to the statistics and figures I set out earlier. There will also be, as I have announced, an evaluation of the cost of living payments in the autumn, which will no doubt take into account a whole host of factors and be thoroughgoing in that. I am also working with the disability unit to take a close look at the costs that people are experiencing during this cost of living challenge, because we want to learn from those challenges for the future.
When visiting schools, I am told by young children that it is not their turn to eat tonight. Schools tell me that pupils take leftovers from school friends so that they can eat a lunch. Rents are rocketing and households are paying almost £1,000 a year more on food than they did in 2021. Does the Minister honestly think that the support that the Government are offering is enough to stop rising hunger in constituencies such as mine?
I of course recognise that food prices are a challenge not just here in the UK, but abroad, too. For example, I am aware that food inflation here is 19%, but within the EU it is 19% and in the euro area it is 18%. People are experiencing these significant challenges not just here, but abroad.[Official Report, 16 October 2023, Vol. 738, c. 2MC.] I have seen reports just today of retailers discounting products to try to help with some of these pressures, which goes beyond the package of support that the Government are providing. That £94 billion figure is not insignificant. We also continue to support families on a case-by-case basis through the household support fund, and I encourage the hon. Lady to signpost her constituents to that support, because where people have particular needs and challenges, they can be supported through that help.
In his statement, the Minister mentioned support with energy bills. Earlier this week I received an email from a constituent in the village of Capel Hendre in my constituency, which is on the mains gas network, but a large proportion of households use alternative fuels such as heating oil. The payment on alternative fuels was not made directly through electricity bills, but people had to apply for it. She has missed the deadline for the alternative fuels payment scheme. I know this is not the Minister’s direct responsibility, but will he raise with the responsible Minister the fact that a cohort of people have missed out? Is there a possibility of reopening the scheme so that constituents can get the support to which they are entitled?
I commend the hon. Gentleman for his nifty way of getting that important question into the proceedings this afternoon. If he could share those details with me, I will gladly make sure that that reaches the Minister responsible at the Department for Energy Security and Net Zero.
It is worth noting that the UK Government were the first Government to be investigated by the UN Committee on the Rights of Persons with Disabilities for their treatment of disabled people. We all know the additional costs that disabled people face—they are a fact—with higher energy bills and so forth. The disability price tag is around £975 extra a month. The woeful support of the cost of living payments will not go anywhere near meeting those additional needs, so why on earth does the Minister think it is enough? We do not need any more analysis—the evidence is there, so why can he not take action now?
I reiterate the point that people often receive multiple parts of the comprehensive cost of living support that we are providing. The hon. Lady also made a point about the UN, but my experience from speaking to counterparts from across the world at the UN last week and being involved in the discussions there was that people often look to the United Kingdom as being a world leader on these matters. It is important to make that point in the context of the comment she just made. The fact is that we are continuing to keep under review the package of support that is provided, but it is worth recognising that people often receive multiple parts of the package alongside the disability cost of living payment.
It was a real pleasure to listen to the hon. Member for Battersea (Marsha De Cordova), who is always eloquent when it comes to disabled people. We have heard already about the support with the £150 extra. I thank the Minister for that; it is literally better than nothing. Many disabled people are trying to get into work, because they have to work to be able to afford the basics in life. There is a disability income gap, as the Minister will be aware. Will he look back on his White Paper, because he missed out the delays that people are now facing to get support from Access to Work? It is impossible, almost. Disabled people are losing jobs daily, because they cannot get the support they need when they need it. Will the Minister review that and try to help disabled people be able to afford more?
The hon. Lady knows, because we meet regularly to talk about these issues, my absolute determination to deliver on greater employment opportunities for disabled people. In fact, as I said earlier, I am meeting the Scottish Minister later today, where this issue is on the agenda. I hope that we can move forward with our reforms in a constructive, collaborative manner, so that they benefit people across the United Kingdom to their fullest extent. We are putting additional resource into Access to Work to get through applications quicker, and a number of process changes have also been made. Those are in the early stages, but the anecdotal commentary I am receiving from officials is that with some of these changes, we are seeing cases processed much more quickly.
The Resolution Foundation estimates that mortgage payers will pay an average of £2,900 more in the next year due to increases in interest rates. Some 13% of retirees are still paying mortgages at the time of retirement, and 770,000 households are not claiming pension credit, so do not qualify for pension credit payments. This Government have been a disaster for pensioners, particularly those with mortgages. If the Minister has done his research, can he tell us how many people on pension credit applied for mortgage interest support? How many pensioners are facing interest rates rising faster than their pensions?
There is no room for complacency. Our constituents are absolutely desperate. On Saturday night, I got another email from a constituent who literally had no money left. She was spiralling into debt, and she could not afford her rent, food or energy. Today’s announcement will do nothing to help her, and it will do nothing to help so many of my constituents who are in such desperation. What steps has the Minister taken to look at the essentials guarantee that the Joseph Rowntree Foundation is putting forward, which would see a consistent uplift in all benefits to help people such as my constituent?
I am obviously not familiar with the circumstances of the individual in question, so it is impossible for me to comment on the support that he or she may or may not be eligible to receive. I always encourage people to apply for any support to which they might be entitled. Benefit calculators are available on the gov.uk website to help people to do that. The household support fund is being delivered in the hon. Lady’s community, but if she wishes to share some details with me about that specific case, I will gladly take that away to look at. As I said earlier, there is also the opportunity, with the annual decisions taken within the Department, for all these issues to be considered.
The Minister said rather dismissively to my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) that the Government have no plans to reinstate the universal credit uplift. Has he done any analysis of the really positive impact that that uplift had on people and the negative impact of taking it away? At the very least, will he look at replicating across the whole of the UK the Scottish child payment of £25 a week, which is made to the people who need it most?
The cost of living crisis has had an impact on businesses in my constituency such as Lomas News, whose energy bills went up by 400%. In April, it got relief of £4.93. With food inflation up, rents up, mortgages up and bills still high, the support is not enough, is it?