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3.24 pm

Mr. Peter Bone (Wellingborough) (Con): It is a pleasure to follow the hon. Member for Upper Bann (David Simpson), who is always worth listening to. His experience in Northern Ireland is most helpful to this debate, but so are his comments about the rest of the United Kingdom. I also wish to congratulate the hon. Member for East Londonderry (Mr. Campbell) on his reasoned and thoughtful introduction to the debate.

I was amazed when the Minister said that the Government would oppose the motion. That is like opposing apple pie. How can they oppose a motion that proposes the consideration of ways to protect the poorest in our society?

When I was a new Member, I noticed early on how assiduous hon. Members from Northern Ireland—from all parties—are at attending debates in this House. They must be some of the hardest-working Members in the House, and they should be congratulated on their efforts on behalf of the United Kingdom.

Wherever people live in this country, the increasing cost of living is reducing their quality of life. This is not a “new Labour” Government: there is nothing new about them. They are like any old Labour Government: they tax and spend, tax and spend, and then destroy the economy. Then a Conservative Government come into power and have to spend many months fixing the mess that they have inherited.

I suppose that there is one difference. Former Prime Minister Blair tried to hide the tax increases so that people did not notice them, but now the stealth taxes are coming home to roost. The current Prime Minister does not bother. He does not even try to hide the tax increases. He scrapped the 10p rate of tax, harming millions of our most disadvantaged citizens, but at the same time the Government continue to waste millions and millions of pounds on useless projects. Before a Labour Member jumps up—oh, there is no one on the Labour Benches apart from the Minister and the Parliamentary Private Secretary—

Mr. David Evennett (Bexleyheath and Crayford) (Con): Typical!

Mr. Bone: I would not say that, because for important debates, such as regulatory reform tomorrow, the Labour Benches will be packed. My point was that Labour Members, if they were here, would probably challenge me on what we would scrap if we were in government. Why not scrap regional assemblies, saving £230 million a year? Why not scrap the Standards Board for England, saving £12 million a year? Why are we building new driving test centres across the country, costing £71 million? I know the answer to the last question: it is because the Government did not bother to get a derogation from
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the European Union like other countries did. Instead, the Government said, “Let’s spend £71 million. It’s only taxpayers’ money so it doesn’t matter.”

All that expenditure pushes up taxes and increases the cost of living. As we heard earlier, from both sides of the House, it is extraordinary that when our lorry drivers fill up with diesel they pay 50.35p per litre, whereas our continental cousins pay just 25p. Those additional costs work through and increase the cost of living. It does not stop there. I know that the hon. Member for Upper Bann mentioned some figures for the rate of tax paid on every litre of petrol by private motorists, but I have obtained the latest figures from the Library which show that 70p in every litre goes to VAT and duty. Every time the price of petrol increases, another 17.5 per cent. is added in VAT.

What is the latest wheeze? What will the Government waste our money on next? Of course, they never say “taxpayers’ money”. It is always “Government spending” or “Government investment”. They really mean that they are taking money from the taxpayers’ pockets, and spending it on their pet projects. The next wheeze is that tomorrow, in this House, they will try to get through the final stages of the Regulatory Enforcement and Sanctions Bill—the “Yes Minister” Bill, for short. The House is being asked to set up a department of administrators and bureaucrats to control other administrators and regulators at a cost of £73 million. The idea could have come straight out of “Yes Minister”. It is the department of administrative affairs in everything but name and Jim Hacker would have been proud of it.

At a time of economic crisis, with the Government in complete disarray, what is the Government’s solution? It is to set up a department of administrators to administer other administrators. Only this Government could come up with that solution: “Let’s create more administrators so that the Government can be more efficient.” That is a most courageous decision by the Prime Minister, who is in deep crisis.

It might be said that saving £71 million here and £73 million there is nothing—it is chickenfeed in relation to the Government’s overall spending. Of course, that is true, but if you look after the pennies the pounds look after themselves. In Government terms, if they look after the millions, the billions will look after themselves.

Let us look at the areas where the Government have really been wasteful at the cost of billions of pounds. Government spending on health care when Labour came into power was £42.7 billion, or under 14 per cent. of public expenditure. That rocketed last year to £107.2 billion, about 20 per cent. of public expenditure. That massive additional cost to the taxpayer has not brought an equivalent improvement in health care. Far from it.

Health care outcomes, as measured by finished consultant episodes, have risen from just under £12 million in 1998-99 to just under £15 million in 2006-07, an increase of 23.7 per cent. In the same period, Government health spending increased from £47.1 billion to £97.4 billion, an incredible increase of £50.3 billion and a cash increase of 107 per cent. When adjusted for inflation, that was an increase of 74 per cent. The taxpayer is paying, in real terms, 74 per cent. more and getting only a 23 per cent. increase in outcome. That is clearly a massively
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disproportionate increase. Vast sums of money have been poured into health care but the focus has not been on improving efficiency and outcomes. That money has been wasted at a time when we are in economic crisis.

Let us look at the cost of living in relation to health care. Unbelievably, that cost is £5,000 a year for each family and each household in the country. It will increase this year to at least £5,200 per household. The next Conservative Government would concentrate on outcomes, not artificial targets and would give power to the clinicians—the people who understand how to improve the quality of health care in this country. That would dramatically improve the outcomes for the public without increasing costs. The Conservatives want to move the operation of the health service out of the hands of politicians, into the hands of doctors and nurses.

Let me turn now to the real scandal, which is the complete and unjustified waste of taxpayers’ money that is our contribution to the European Union. Last year, the net contribution paid to the EU out of taxpayers’ pockets was an extraordinary £4.7 billion. It is beyond my comprehension how on earth there could be any justification for paying that sort of money so that we can be part of a free trade area. The truth is that we pay £10.3 billion to Europe and some bureaucrats in Europe decide to give us some back for their pet projects. Our net contribution is £4.7 billion. That would be bad enough, yet the Government have already forced through the House the budget until 2011 and in that year the net contribution that taxpayers will have to pay will be £6.8 billion. We pay £4.7 billion for very little in return, and we are due to increase that by 45 per cent. in 2011.

Figures from the Department for Environment, Food and Rural Affairs show that the common agricultural policy adds £10 per week to the average family’s cost of living. What do we expect to get from the huge increase in payments to the EU? We have no guarantee that the cost of the CAP will be reduced. My suggestion, which would save an enormous amount of money for the Government without harming us in any way, is to freeze our contribution to the EU at the current £4.7 billion until there is real reform of the CAP, which in turn would reduce the cost of living. Better still, why do we not take a lesson from the previous Conservative Government? When we left power, the contribution to the EU was £1.6 billion.

Kitty Ussher: The hon. Gentleman talks about when his party was last in power. Given the previous Conservative Government’s “empty chair” policy, how could they possibly negotiate anything from our European partners?

Mr. Bone: That intervention really takes the cake! The Minister jumps up and tries to claim that this wonderful Labour Government, who have been in power for 12 years, have had some influence over the EU. If that were true, why have they not done something about the CAP? Why are the world trade talks stalled? It is because the EU is so protectionist. The idea that this Government have been at the heart of Europe is a farce. If they have been at the heart of Europe, they have achieved nothing—and I notice that the Minister is not leaping to her feet to defend the Government’s appalling record in the EU—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman provokes me to leap to my feet. I ought to tell him that, although his remarks are occasionally
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linked to the words “cost of living”, they are well outside the terms of the motion. I therefore caution him that we do not want to do the European round too heavily this afternoon.

Mr. Bone: I apologise, Mr. Deputy Speaker, but I think that I was unfairly provoked. I hang my head in shame.

The serious point about the relationship between the cost of living and our contributions to the EU is that spending such huge sums of money has a real and dramatic effect on the cost of living. However, we could control and cut that expenditure in a way that would not affect a single taxpayer in this country other than to improve the standard of living.

In conclusion, I believe that the cost of living in this country will continue to rise and the quality of life will continue to go down until we have the next Conservative Government. I am afraid that, until my right hon. Friend the Member for Witney (Mr. Cameron) leads the Government, there will be no improvement to our standard of living. The next Conservative Government will control public expenditure, improve the quality of life, and lower taxes.

3.38 pm

Mr. Mark Oaten (Winchester) (LD): I am not sure that I can agree with the final comment made by the hon. Member for Wellingborough (Mr. Bone). In many ways, I do not believe that the cost of living should be such a party political issue because, as the Minister and others have said, there are many matters that are out of the control of Westminster politicians.

A lot has been said about the problems of poverty connected to the current change of economic pace, especially for the hardest-hit families. We have talked a lot about fuel poverty, but I want to say something about a group of people, the middle classes, who are often ignored these days. Quite rightly, they are not a political priority, and they are not usually affected by changes to the economy, but my judgment is that the current downturn—or beginning of recession, whatever one may wish to call it—is starting to impact on a new group of people. I am talking about those hard-working couples—they often have two children, and often both parents are working—who risk being ignored by politicians. Suddenly, and for the first time, they are finding that they are being hit very hard indeed by the cost of living. Of course, it is absolutely right that the Government, with their winter fuel allowance and various tax credit schemes, focus on the poorest in society, but let us not ignore those others—the many hard-working individuals—who fall outside the schemes and are suffering and finding things tough. I want to link that point to the groups in rural communities who, given their dependency on vehicles and on certain forms of energy, are finding things particularly tough.

To try to find out what was going on in my own constituency, I created a non-political survey that was advertised in the local newspaper and did not mention any political parties. I do not for a minute suggest that it is a scientific survey, and I hope that the questions were not leading. I can see that the Minister is cynical about the prospect of any politician being able to put in a newspaper anything without a political word in it, but the survey is totally non-political. I am genuinely interested
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in finding out some information, and to be perfectly honest, I am not standing at the next election, so there is no political gain from my doing so.

The responses so far have been quite alarming. They show that the groups being hit by the changing economic climate are not those who are usually hit. The figures suggest that 90 per cent. of people who filled in the survey believe that they are going to be worse off this time next year, and in line with the some of the more respected surveys from various think tanks and groups, there is certainly doom and pessimism about where the situation is heading.

In the survey, we looked at four indicators: people’s attitudes towards food prices, fuel, energy and housing. On each, there was pessimism and concern about what might happen. Petrol is a particular concern for Members who represent large rural constituencies. Often, families are dependent not on one car but on two, and people said to me in the survey that it now costs them about £20 a week more to fill up their cars. I suspect that, anecdotally, we could all say the same. I can remember when it cost me £50 to fill my car up about a year and a half ago; it certainly costs me £70 now. It is the same for my wife, which means that it costs £40 a week extra to fill our car up, and although I was off the day we did maths at school, that to me is a lot of money each month—about £160 a month extra just to fill up the car for many couples living in rural communities.

That is an awful lot of extra income to find and to absorb, and when the Government and others say, “Yes, but there could be a hidden benefit, in that it might persuade people to use alternative transport,” I must say that I would be laughed at in the 56 villages in my constituency if I told people to try to take a bus, a train or another form of transport. For couples with children, trying to do school runs or having to take complicated routes, there is just no rural transport network that can act as a realistic alternative. Some respondents to the survey said that where there had been the opportunity to walk to a post office or to a shop as an alternative, those rural post offices have now disappeared—even more requirement, therefore, to get into the car and absorb those increased petrol costs.

The second indicator was energy prices, and the survey shows that individuals’ electricity, gas and fuel costs have been increased by about 20 per cent. However, owing to the focus on rural areas, I want to talk about those individuals who are not able to obtain gas but are dependent on oil to heat their homes and to provide their fuel. They have faced an enormous increase in costs. I declare an interest, because my monthly direct debit for oil is £225 and has gone up enormously over the past two or three years. If one gathers together any group of individuals in villages or communities that cannot obtain gas, they first talk about trying to find a different oil provider in their area. The figures are enormous, and they are hitting rural communities very hard, because there is just no alternative for them. They cannot switch suppliers as one might do with gas; they are dependent on oil.

The regulation of gas and electricity would help enormously; I hope that the Minister will pick up on that point in her response. Ofgem and Energywatch are legally required to act as the consumers’ champion, to make sure that something at least is done on prices. However, oil for heating one’s house and liquefied petroleum
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gas fall outside the regulatory system. The Minister may or may not be aware that changes to the regulation of energy are due to be made in October and November. It would be enormously helpful to the millions of people who are dependent on oil if that form of fuel were also regulated, and if Ofgem looked at the matter, just as it does in relation to gas and electricity. My fear is that because that form of fuel has not been regulated, companies were able to get away with prices that would not have been acceptable in the gas and electricity markets.

Democratic Unionist party Members touched on energy prices and on the fact that individuals who pay by pre-pay meters lose out enormously. I am lucky enough to be on the Business, Enterprise and Regulatory Reform Committee, which has just concluded a study of energy prices. When the big six suppliers came to give evidence, I asked them to justify the fact that customers who use pre-pay meters pay 17 per cent. more than those who pay by direct debit. They struggled to do so. They claimed that a meter scheme was more expensive to administer. Of course there will be more administration costs for people who have meters than for people who pay by direct debit, but the increased costs are not equal to the increase in prices. It would help enormously if the Government could speed things up and look at ways of changing the market. The Government could do something about introducing smart meters, as opposed to pre-pay meters; they could help in that respect. Finally on energy, I asked one of the big six to try to give me an indication of how people were coping with increased bills. One of the representatives said that their company’s bad debt had doubled in the past 12 months. That graphic statistic shows how difficult individuals are finding it to pay those bills.

The Minister did not really answer the question that I put to her in an intervention about the comparison between our energy prices and those in mainland Europe. It is my understanding, from the evidence that the Select Committee received, that owing to the way in which our market is constructed, we as consumers pay more for gas and electricity than our colleagues in mainland Europe. They, of course, face the same global economic problems that we do. We need to look at how the market is constructed in this country, because it is adding to our problems.

Mr. Bone: I entirely agree with what the hon. Gentleman says, but the reason for that situation is that we have a liberalised energy market, whereas our continental cousins have refused to implement the European Union rules on liberalisation.

Mr. Oaten: The Committee has looked into the issue, but I shall not bore hon. Members with that. Anyway, the report is coming out soon, so I probably should not talk about it. However, there are several, complex issues behind the difference between the markets. What disappointed me as a member of the Select Committee was not being able to find two or three simple solutions to the problem. It is incredibly complex, but it certainly needs looking into, because we have a very complicated market. We need to consider restructuring it, but I shall not bore the House with the ways in which that should be done now.


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The third indicator that I wanted to touch on is housing. Let us be honest: in areas such as Winchester, most people’s house price has rocketed in the past 10 to 15 years, and they felt very comfortable indeed about the way in which house prices had risen. It is interesting that 50 per cent. of those who filled in my survey said that there had been a fall in their house price. One would imagine Winchester to be one of the last areas in the country that would experience that kind of change. Interestingly, when one asks individuals whether the amount that they pay out each month for their mortgage has increased, the response is split. About half of respondents say that they have experienced an increase, and half say that they have not. I suspect that many of those individuals are still on fixed-term rates, which they have had for some time, and that those fixed-term rates are due to come to an end. In fact, the estimate is that a big change is due this summer, with about £30 billion-worth of mortgages due to come off fixed rates.

The figures suggest that when the individuals involved try to come off their fixed rates, their average monthly outgoings on their mortgages will increase by about £158 a month. Of course, that is if they can get a satisfactory new rate. It is not just individuals trying to get into the housing market who are struggling to get mortgages but those who are coming off fixed rates. For some, the hike in their rate can have an enormous impact on their monthly bills and the cost of living. It is of concern that in some cases, companies such as Bradford and Bingley, First Direct, the Co-op and the Royal Bank of Scotland—in fact, nearly all of them—have not set lower rates for fixed-rate deals. Many have increased them.

I wish to mention two consequences of individuals struggling to pay their increased mortgages, or to get a mortgage in the first place. The first is the power of credit agencies to give people a bad rating, and the impact that that has on them. Many of my constituents have discovered that they cannot get a mortgage because three or four years ago, they missed a small payment on a utility or mobile phone bill. It is enormously difficult for people to track down what is affecting their credit rating. Given the credit crunch and the mortgage companies’ closer focus on whom they give money to, people need to be able to check more quickly and easily what is on their record that is causing them difficulties in getting credit.

The other consequence is that many people are now desperately taking out loans for inappropriate things. The hon. Member for Foyle (Mark Durkan) said that people are doing so to meet fuel bills, and there is a growing pattern of people borrowing money for all the wrong reasons to get themselves out of current financial difficulties. That, of course, perpetuates the problem.


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