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Have the Government shown leadership on such issues? Have they recognised the urgent need to do everything they can to help struggling families in Britain? The answer is no. Instead, it is abundantly clear that the Governments attitude to the problem is, Dont blame us, its not our fault. We see that in the tone of their amendment. Inflation, food prices, fuel prices: these are global issues to the Government. They are telling us, What can we do about them? That is their attitude.
There is nothing in the Governments amendment to give people facing challenges caused by the cost of living any hope whatever. It talks about global leadership, but frankly, people up and down this country would settle for some national leadership.
Jane Kennedy: It is kind of the hon. Lady to give way so early in her speech. I sought to set out why we were taking the course of action that we are, based on our confidence in the reforms that we made to fiscal policy arrangements early in government. I would be very interested to hear whether she believes that there are any alternative measures that we could take, perhaps at a macro-economic level. Would she intervene over interest rates, for example? I am interested to know what exactly she would do in this situation that she believes would bring about a better outcome for the British economy.
Justine Greening: I will come to that shortly. On interest rates, my understanding is that it is the Prime Minister and the Chancellor, not our side, who are chuntering behind the scenes about what the Bank of England should do. The Government talk about leadership, but the reality is that there is a complete lack of leadership. Unfortunately, however, the Governments involvement in the cost of living goes beyond that.
Let us set aside the Governments claim about rising global costs. We can see that global trends are pushing up the cost of commodities such as corn and energy, but the Government have choices that they can make. The Financial Secretary has challenged me on what the Conservatives would do, and I will come to that. However, rather than trying to come up with solutions, the Government are, for many millions of people up and down the country, now part of the problem, because they are adding to the economic burden that people face. Despite all their warm words, and what they claim is their understanding of peoples predicament as they try to keep up with rising fuel, energy and food costs, the Government have nevertheless decided to add to their economic misery.
Ministers must understand that their actions have serious and damaging consequences for peoples cost of living. We talked earlier about dithering over the fuel duty rise. What families need from the Government is certainty. They need to be able to plan ahead. I will tell the Financial Secretary what she could do right now: she could tell us when the Government are going to make an announcement on their planned fuel duty rise. [ Interruption. ] She says that they may make an announcement at the Budget.
Justine Greening: If the Financial Secretary wants to intervene, she can do so, but the reality is that, like the rest of the British people, we are left wondering, looking for nudges and winksperhaps they will have a think about policies in this or that area. That is simply not good enough for families who need to plan financially, as they head into the second half of the year.
The hon. Gentleman points out that there is uncertainty, but why are the Government nevertheless ploughing ahead with the policies that they
introduced in the Budget? They include, for example, taking away the 10p tax rate, which they would never have backed down on if they had not been caught with their fingers in the pockets of people on such low incomes. Indeed, they have not backed down yet.
On vehicle excise duty, the Government were again caught with their fingers in the pockets of people who can least afford it. Although over recent months Labour MPs have made a great play of their angst about what their Government are doing to their constituents who cannot afford to pay more tax, when it came to road tax, which will affect twice as many peoplein some cases by up to twice as muchthey passed up an opportunity last week to help keep the cost of living down, and were quite happy to put politics ahead of their constituents.
Even with the 10p tax rate fiasco, there are still well over 1 million people who will be worse off as a result of the Governments Budget, which they introduced when they knew that we were entering uncertain times. That is the reality of the Governments involvement in all this. Such policies will be the final straw for hundreds of thousandsprobably millionsof households that are on the brink of going under financially. The Financial Secretary talked about the winter fuel allowance. Yesa one-year winter fuel allowance paid for by permanent tax rises. Even this week, we have seen the complete and, dare I say, utter hypocrisy of the Prime Minister, in terms of the lack of assistance on offer.
Justine Greening: I will withdraw that remark. The Prime Minister was ill advised to make comments to British families about economising on wasting food on the same day that he sat down to an eight-course meal at the G8 summit that, as I understand from the menu, included white asparagus and truffle soup and what is called in French an amuse boucheI understand that it is called corn-stuffed caviar in Englishwhich was all washed down with champagne. People must wonder what planet the Prime Minister is living on when he can have that meal in the evening and then in the morning tell people that they are wasting their food.
As ever with this Government, it is one rule for them and another rule for the rest of us. The Prime Minister tells us that households can save £240 a year by not wasting food, but how about if they did not have to save it? How about if the Government were not bringing forward road tax rises that will cost some families £245 a year? The Government could be playing their role in helping people to cope with the rising cost of living, but they are not. The Prime Minister is in no position to lecture the British people about waste when he has presided over a Government who most people feel have wasted billions of pounds more than any Government in living memoryindeed, they have wasted £1.4 billion on tax credits alone.
The last thing that people who are just managing to stay afloat need right now is a Government who want to take more money out of their pockets, while at the same time telling them that they should try to economise. The reason why the Government are in this positionthe
reason why they cannot stop themselves from going ahead with their swingeing tax rises on low-income peopleis that they have run out of money. As we have said, they could have fixed the economic roof when the sun was shining and the global economy was in a better shape. They chose not to, and now they are left with no alternative but to impose tax rises on the people who can least afford them, at a time when their financial situation is getting worse and worse.
I am sure that the Financial Secretary has told us that her hands are tied and that there is no room for Government to manoeuvre, but the situation is down to the Governments economic mismanagement, and there are things that can be done to help people. As we discussed earlier, only last week the House had a choice to avoid going ahead with swingeing, punitive increases in road tax, but Government MPs decided not to take that road. They decided to press ahead with increases on road taxand for what? To tackle motor vehicle emissions, which, by their own admission, the policy will reduce by a fraction of 1 per cent. by 2020. That measure was all about raising money, and Government MPs were quite happy to go through the Lobby and vote for it.
Last weekend, we proposed a fair fuel stabiliser, which would mitigate the burden on families of rising fuel prices by lowering fuel duty and vice versa, precisely in order to remove the uncertainty that people face in their household budgets to the extent that we can.
The Economic Secretary to the Treasury (Kitty Ussher): I am glad that the hon. Lady has mentioned her proposals for a fuel duty stabiliser. My question is this: if the oil price rose so much that the public purse could not afford automatically to compensate families for the increase in the price of petrol, would a future Conservative Government do that?
Justine Greening: What the Economic Secretary has fundamentally missed is the other beneficial aspect of our measure. It would provide not only stability for household financesalthough that is the most important part of what we are doingbut stability, as she ought to know, for the public finances. Our proposal would ensure that at times of rising oil prices, the Government would receive an unexpected windfall. Ministers have questioned our proposal [ Interruption ]and indeed, they are shaking their heads right now. However, they should talk to the National Institute of Economic and Social Research, whose work clearly shows that there is a net benefit to the Exchequer of rising oil prices. The problem is
The other side of the argument is that when oil prices go down, the Government have an unexpected shortfall. Our proposals would therefore stabilise public finances as well. I do not need to take any lectures on our policy from a Government who cannot even tell us what they are going to do about fuel duty in the next six months. They do not have a policy, but they need to have one, for the sake of the British people. Instead, they are going to dither and do whatever is politically astute for them, instead of what is financially astute for the British people.
Kitty Ussher: Does the hon. Lady not agree with the Institute for Fiscal Studies, which has considerable experience in this respect, when it says that there is no clear evidence of any net windfall for the Government as a result of a rise in oil prices?
Justine Greening: The Minister and I can trade think-tanks, but the Conservatives are absolutely confident that the approach that we are taking will benefit the British people and provide them with some certainty, which is something that Ministers, living in their bubble in Whitehall, are rather dismissive of. People who are watching this debate, or who read about it in the papers tomorrow, will be dismayed to see the Government pooh-poohing an idea that could really help families throughout the country right now. If our proposal had been introduced in the Budget, families would now be paying 5p a litre less for their fuel, which would be very welcome.
Justine Greening: Labour Members, who have nothing to tell the British people about what they would do, apparently want to hear more from us. I am sure they do, because every time we announce a policy, they go through a process of rubbishing it, then rapidly adopt it in some less effective variant.
Sammy Wilson: The Minister argued earlier that VAT revenues from other areas fell when fuel duty went up. On that argument, if the fuel stabiliser that the hon. Member for Putney (Justine Greening) proposes were introduced, surely the compensatory element for public finance would be self-financing. If we give people more money in their pockets through lower fuel prices, they will spend more on goods and the Government will get more through VAT.
Justine Greening: The hon. Gentleman makes an interesting point, although I doubt that the Minister would have anything interesting to say in response to it. I see that she does not wish to intervene at this point.
In these difficult economic times, the thing that people need most is for the Government to be on their side. We have had 10 years of this Government telling us that everything was fine, but it is now clear that for people in Britain that is not the case and that the Government have economically mismanaged this countrys public finances. They did not fix the roof when the sun was shining. People will remember this Government for the hard times, not the good times, and the true test of the Governments leadership and competence comes when things are at their worst. People are looking to Ministers for a lifeline and for help to ease their financial burdens. Instead, they are seeing a worsening of those burdens.
A Conservative Government will help people, rather than hinder them. We want to assist people with their financial troubles and try to ease those troubles, rather than taking the route that this Government have taken in adding to them. We are going to tackle economic problems, rather than abrogate responsibility, as we have seen happening today. What are people getting at the moment? They are being met with nothing more than uncaring, indifferent leadership from Ministers
who, far from offering solutions to any of their financial troubles, are more concerned with addressing political priorities than tackling the nations economic priorities.
Mark Durkan (Foyle) (SDLP): I congratulate the hon. Member for East Londonderry (Mr. Campbell) and his colleagues on securing a debate on this important issue. The hon. Gentleman is my constituency neighbour and, indeed, my constituent
The hon. Member for East Londonderry, the Minister and others who have spoken have highlighted a number of ways in which the current situation is affecting people in their daily lives, and in their homes in regard to household bills and their daily consumption. The credit crunch that we have all been talking about is now a consumer crunch, and consumers are now experiencing a situation of crunch and grind as more and more bills are rising higher and higher.
Underlying energy costs are contributing to higher food costs and higher costs for all sorts of other services and amenities. They are also contributing to higher costs for the public purse, as fuel bills rise for hospitals, schools and other public service buildings. The situation is biting on all of us, either as individuals, in households, in businesses or as taxpayers funding public services.
The Minister talked about a global rise in oil prices and referred to the fact that the world was not producing enough oil. In the Northern Ireland Assembly, the Committee for Enterprise, Trade and Investment took evidence from people in the energy market who made the point that a barrel of oil is traded 11 times before it is consumed. Those trade transactions are driving up the cost to the end consumer. Similarly, it was pointed out that gas in the UK is traded six times before it is consumed, whereas the additional ratio of trade in the continental gas market is only 0.6. I know that there is a different structure in the gas market on the continent, including more state ownership, but the fact is that we need to take account of the market factors that are driving up the costs for consumers before they have to pay the end cost. It is clear that they are paying more than just the price of scarce production, and that they are having to take on price increases that are the result of up to 12 transactions for profiteering and speculating purposes.
When we search for evidence of who is doing this trading in oil, we see that banks and institutional investors are significant players in that regard. I accept that, in circumstances in which the property market has taken a hit, banks and other institutional investors are looking for commodities to deal and speculate in usefully and profitably, not least because they are trying to maintain the value of pensions on behalf of us all. However, we really need to see some action that says to institutional investors that the degree to which they trade in commodity indices and in futures is doing wider economic damage. We know from the warnings given to the US Senate Commerce Committee by George Soros, among others, that the degree of dealing that is going on in commodity indices is creating a dangerous bubble. That is creating the immediate price pressure that everyone is feeling, but it will also create a dangerous collapse at a later stage.
When we consider the key pressures affecting the cost of living, it is important to ask whether there are interventions that could be made or brakes that could be applied to ease the pressure from global oil price rises. I hope that the G8 and other international forums will consider such interventions and restraints, and examine whether we could incentivise responsibility among those who seem to be having a significant impact on the oil crisis.
What we are discussing today is the cost of living, but it is clear from the comments of hon. Members who have spoken that looming large within our consideration of the cost of living nowadays is the cost of warmth. I would like to see the Government move forward with a working cost-of-warmth index to show that they are tracking and measuring the cost of warmth for people in their homes, whatever the cost of domestic fuel. They need to gain a real sense of what people have to pay.
The Government should use a cost-of-warmth index to proof and improve their efforts to tackle fuel poverty. To their credit, they have made significant inroads into reducing fuel poverty over a number of years. Of course, the danger of the current crisis is the risk of all that good work being wiped out. Just as they are right not to throw away their drive towards creating a greener fiscal regime in the current economic climate, so they are right to keep their focus on trying to bear down on fuel poverty, curbing and restraining it as much as possible.
In the context of a cost-of-warmth index that tracks what different households have to pay and the changes in relative income bases, it is important for the Government to take into account the argument about windfall taxes to a more considered degree than they have so far. The Government tend to put forward the general surmise, Well, it is swings and roundabouts; and what we appear to gain here, we may lose somewhere else. It would be helpful if the Government were able to say more precisely what they are or are not gaining in respect of VAT on domestic fuel bills, added revenues from various other fuel duties and any other revenue receipts, which would allow people to judge the argument.
The Government have used reflex arguments before in respect of fiscal issues, including spending a long time saying that it was a figment of everyone elses imaginations to suppose that there would be problems from the abolition of the 10p tax band, only eventually to recognise that there were serious problems requiring fairly dramatic responses and interventions to ameliorate the resulting situation. I would appreciate it if the Government, as well as cautioning the rest of us about the argument, promised to show exactly what is or is not happening.
I particularly hope that the Government will promise to identify what additional VAT income they receive from household energy bills. They should separate out petrol, diesel and other fuels and find out what exactly is happening in respect of added revenue yield coming from ever-increasing domestic energy bills. The hon. Member for East Londonderry referred earlier to the sort of price increases that consumers in Northern Ireland have faced, with one gas companys consumers having to pay 28 per cent. extra and electricity customers facing an interim increase of 14 per cent.
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