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The fourth and final indicator on which we asked people to comment in our non-scientific survey was food and its cost. The figures suggest that there has been a 20 per cent. increase in weekly food costs. Anecdotal evidence suggests that people in my constituency are switching from Waitrose to Asda and desperately trying to find ways to get cheaper food. Perhaps one welcome consequence of what is happening in the economy will be the beginning of a price war between the big
supermarkets, which I hope will cut into their profits and make them recognise that they must deliver a better deal for their customers.
One downside could be that people will change purchasing habits that have had a welcome impact on food welfare. I have strongly supported animal welfare causes such as changing how we purchase chickens. We know that free range eggs and animal welfare food cost a little more, and I think that sadly, individuals will reconsider whether they can afford them or whether they need to cut their costs in the current climate.
I do not believe that we can ask the Government to do a great deal about those food issues, although if there had been much more encouragement over the years for local food production, and much more work with agriculture in vast parts of the country, we would not have had a food trade deficit. We could have been getting our food from local suppliers, which might just have made a difference.
I do not offer solutions, but I wanted to reflect on the concerns in my constituency about housing, food, energy and petrol. I have made a couple of suggestions to the Minister, particularly on smart meters and on the regulation of oil, which is causing such difficulty in rural areas. Although I totally understand the focus on the fuel-poor and those on benefits and in poverty, this recession/downturn is starting to hit another set of individuals whom we should perhaps talk about. Ordinary, hard-working families in areas such as Winchester are starting to feel the pinch.
3.54 pm
Dr. William McCrea (South Antrim) (DUP): I apologise for not having been here throughout the debate, Mr. Deputy Speaker. I was chairing a Committee and so was out of the Chamber for a time.
This is an important debate on a matter that has an impact on my constituents and people throughout the UK. It does not take a Bank of England economist to tell people that the cost of living is on the increase. That is the reality that everyone is experiencing at present. What the experts call inflation translates for householders and shoppers as higher prices. That is the reality that my constituents and the constituents of every right hon. and hon. Member are experiencing.
In Northern Ireland, because of the water between the mainland and ourselves, people in my constituency and in the Province have experienced increases that other parts of the United Kingdom may not have experienced. In the past year, Northern Ireland has seen price increases of 19 per cent. for electricity, 28 per cent. for natural gas and coal, and 75 per cent. for oil. Combined with other increases in household bills, that gives great urgency to the need to tackle fuel poverty and the problem of many families going into poverty. A recent debate on the subject showed that Members across the House acknowledged the fact that throughout the United Kingdom there are problems.
While it is true that the Government cannot be blamed for everything or for the problems that have arisen, they have a responsibility to steer the country through the economic difficulties. Whenever things go well, they are happy to claim that that is because of their policies, but if there is an economic downturn, they are happy to blame everybody else. We must therefore make it abundantly clear that there is nowhere for the Government to hide
when it comes to their responsibility to govern the United Kingdom. If they do not desire to do so, they should step aside, hold an election and allow another Government to come to power. That is the way in which democracy works, and they have the option to do so.
While the Government have that responsibility, they must carry it out, and take the United Kingdom through these difficult economic times and the problems that we face. For example, people are finding things hard in Northern Ireland. The Consumer Council for Northern Ireland looked at the problem, and found that we paid 47 per cent. more for energy. Fuel poverty is double the average in Great Britain, and it is three times the percentage in England. Incomes are lower; and half of people who work are on gross earnings of £330 or less a week. Benefit dependency is higher: one in six do not have a current account, compared with one in 10 in the rest of the United Kingdom. Those statistics simply mirror a greater problem, because we are talking about families, individuals, elderly people, disabled people, and normal individuals in society who face a credit crunch, which has impacted on their lives.
Christopher Fraser (South-West Norfolk) (Con): I am pleased to attend this debate, albeit that I arrived rather late, because I was chairing a meeting. Does my hon. Friend agree that people in rural areas in Northern Ireland, as in Norfolk, suffer the double dilemma of heating their home or buying food, added to which they face the problem that using a car in rural areas is a necessity, not a luxury, as local services have been shut down because of Government initiatives?
Dr. McCrea: I agree with my hon. Friend, and I am happy to acknowledge that point. I was coming on to speak about rural constituencies. Many people view a car, or even two cars for a family, as a luxury, but in reality, that is not so. For rural parts of Northern Ireland, Norfolk and any other rural region of the United Kingdom, the car is a necessity. Parents have to take their children to school—they cannot keep them at home. They have to travel to the shops, because the arrival of the supermarkets means that many local shops have closed. We must therefore face the reality: we are not talking about a luxury, and we are not even talking about alternative modes of transport. For example, for people in rural parts of my constituency and other rural areas of Northern Ireland, the only alternative transport would be a horse and cart. Do we want to go back to those days? There are no buses or trains in rural parts, but we are now going to say to the people there that they cannot even use their cars because of fuel costs.
Let us face the reality. We are talking about the realities for families, and that means fuel costs. The Government bear a responsibility for the situation. A few moments ago, my hon. Friend the Member for Upper Bann (David Simpson) and the hon. Member for Wellingborough (Mr. Bone) were talking about percentages; when we add VAT to the fuel costs, we are certainly into the 70 per cent. That is a disgraceful situation, and the vast majority of people do not realise that they are being taken to the cleaners by the Government on fuel taxation. The Government are gaining the benefit.
On home fuel costs, let us bear this in mind. Gas is not available in many parts of Northern Ireland, so people have no alternative means of heating their homes. Many of our elderly and disabled people are really
concerned. We and the Northern Ireland Assembly talk about renewables, but they are for the future, not the present. Unfortunately, we are behind the rest of Europe in taking renewable energy forward, but we are where we are and our people have to deal with the realities. The Northern Ireland fishing industry faces a bleak future; its fuel bills have soared at the very time when Europe demands that it should tie up its boats for most of the year. Fishing is allowed only a few days a year, so how will the fishermen keep their families and fuel their boats? Europe and the Government cannot have it both ways.
A few moments ago, the hon. Member for Winchester (Mr. Oaten) mentioned an important point. We have to look again at where the poverty trap is. Remember that in Northern Ireland wages are in many ways minimum wages. However, hard-working people, who go out every day to work, can be just beyond the boundary of getting any other help or benefit; they have to pay everything from their wages. In my opinion, those people are in a poverty trap today, and they need help.
The Government must carry a responsibility, because government should be all about seeking to help such people. I mentioned the statistics given by the Consumer Council for Northern Ireland: an extra £60 a week is required for essentials for an average family of four, as at June 2008, because of fuel, food, heating and mortgage rates. To maintain the same standard of living as they had this time last year, the average family’s income needs to have risen by 12.5 per cent. Furthermore, even as we speak in the House today, fuel costs are probably still going up.
We face a tremendous challenge. As my hon. Friend the Member for East Londonderry (Mr. Campbell) said, we acknowledge that the Government gift for the fuel payment was certainly a move in the right direction. However, as the elderly face this winter, the measure is far short of meeting the real need. I say that not only about Northern Ireland, but about the whole United Kingdom. That situation has to be seriously considered.
This is an important debate. Other hon. Members want to participate. I trust and pray that we have exercised the Government’s mind about the fact that there is a demand across the United Kingdom for us to tackle many of the severe issues affecting our constituents.
4.4 pm
Sammy Wilson (East Antrim) (DUP): Let me make it clear that as a party we do not take any pleasure in the current economic crisis that is affecting people not only in Northern Ireland but right across the United Kingdom. In the motion, we deliberately did not go out of our way to make a party political point against the Government. As my hon. Friend the Member for Upper Bann (David Simpson) pointed out, the vast majority of people who are watching this debate—if there are any—or who are interested in the issue do not want to know about the macro-economic explanations or the political excuses. They are concerned about how they pay for the uniform that their youngster needs for school in September, how they pay their fuel bill or how they keep their car running. The motion was not designed to be confrontational. Of course, there is no political point for the DUP to make anyhow, because the Government do not put up candidates in Northern Ireland.
One of the reasons why I am disappointed that the Government found it necessary to table an amendment is that we wanted this debate to explore the possible options for dealing with the issues that are affecting people across the United Kingdom. I sometimes joke with the Scottish National party Members who sit in front of me that since I came into this House, every time there has been a problem the Prime Minister has referred back to 1997, as if all the problems that the Government faced were due to the mismanagement of the Conservative party during its years in government. Nowadays, we never hear him or other Ministers mentioning 1997, because they have found a new way of deflecting the blame: the explanation is not historical but global; the problem is somebody else’s fault, or down to influences beyond our control. As my hon. Friend the Member for South Antrim (Dr. McCrea) said, while things may well happen on a global stage, Governments cannot run away from their responsibility for managing the economy and dealing with the issues that arise.
Although we have not made the motion specific to Northern Ireland, Members in all parts of the House have referred to how Northern Ireland specifically is damaged by the increases in the cost of living. Ninety-six per cent. of our energy sources are imported, and therefore volatile in terms of changes in the value of sterling, and oil and gas prices. The hon. Member for Winchester (Mr. Oaten) talked about the problems that affect his rural constituency. The same problems have a great impact in Northern Ireland; our communities, who live largely in rural areas, are affected by the kinds of costs that are going up. A higher proportion of people are already on low incomes, and measures such as the 10p tax change have a disproportionate impact on them.
The situation does have some global reasons behind it, but it has been made worse by actions taken by the Government. I mentioned the 10p tax rate and the impact on the lower-paid. Even after the £2.7 billion compensation package, there will still be people on incomes of less than £7,500 who find themselves worse off at the end of this financial year. The increase in vehicle excise duty will catch 2.3 million households across the United Kingdom, many of whom can afford only second-hand cars. People do not understand why they should face an increased bill of £250 per year in running their car so as to reduce global CO2 emissions. They do not see the connection between the well-being that is supposed to come from such a tax and the immediate problem that it causes them in running their much-needed car.
The increased tax burden that people across the United Kingdom have faced gives them less disposable income. Since this Government took office in 1997, the tax burden has increased by 6.6 per cent. By the end of 2012, it will have increased by 8 per cent. That means people have less disposable income, which adds to their economic misery at a time of rising costs.
The Government have slavishly followed EU directives, and I shall just give one example—the idea that we need to get 20 per cent. of our fuel from biofuels by 2020 to cut CO2 emissions. It has already been stated that 75 per cent. of the increase in food costs since 2002 is directly attributable to the fact that we now use grain and land to produce fuels that have no apparent impact on global warming anyway. But we slavishly follow those directives. I just wanted to illustrate some of the ways in which I believe the Government have made the situation worse.
I shall deal with some of the issues raised, and hon. Members have raised a wide range of them. The impact of the Government’s macro-economic policies on people’s well-being and on the cost of living in the UK cannot be ignored. In the Minister’s defence, I must explain that she referred to the International Monetary Fund. The IMF said—I love this phrase—that the fiscal tightening is appropriate. Let us get down to the bones of it: fiscal tightening means that people get more money taken out of their pockets. They have less disposable income. It is a lovely phrase, and the IMF has endorsed it.
The IMF has also endorsed the fiscal framework as correct. We start off from a position where Government borrowing has been rising. Since 2000, Government borrowing has risen by 20 per cent., and that borrowing started when we should have been putting money aside for the bad times. If we are talking about an economic situation that has been created by profligacy in the years when there should have been prudence, we may well reach the conclusion that the fiscal framework is correct. However, would that all have been necessary if proper economic policies had been pursued during the years when money should have been set aside?
Even taking into account the IMF’s arguments that fiscal tightening is appropriate and that the fiscal framework is correct, I note that when it comes to a crisis that affects the Government, such fiscal tightening is suddenly no longer quite so important or such a priority. If there is a by-election, or a revolt on the Back Benches against the impact of tax policies on the poor and the less well-off, the fiscal purse strings can be loosened, and £2.7 billion can be produced. The tightening does not seem to matter then.
The motion says that there is a crisis—one which affects a wide range of people. Those people now find it impossible to pay their fuel bills. They are people on low incomes, or old people who stay at home. It is fine for many of us here; I come to an office that is heated during the day, and I do not have to worry about heating my home. But I think of constituents who are confined to their house all day, who are living on a pension and who have to keep their heat on. When I visit them, I find that some of them have a coat on and a rug around them because they cannot afford to pay their fuel bills. To me, that warrants a little fiscal loosening, especially when money is available from additional fuel duty.
Let me deal with the Financial Secretary’s second point, which several hon. Members supported. The hon. Member for Twickenham (Dr. Cable) said that perhaps there was merit in her argument. The hon. Member for Foyle (Mark Durkan) said that there should be greater transparency about it. Her argument is that increasing fuel prices do not mean that the Government have more revenue, because as fuel prices increase, people’s disposable income decreases, so they spend less money on other things. I could take that if the Government’s figures, which they produced in the Budget in March, showed that that was the case, but they do not.
I assume that the Budget and the figures were drawn up at the last possible moment, when we already knew that fuel prices were increasing. They did not just start to go up in the past month—they have been increasing steadily. The increase has been a bit more rapid in the past couple of months, but prices have been rising for well over a year—well before the figures were produced.
Yet, when we consider the matter against that background, and ask whether the Government predicted that VAT receipts would decrease overall or would stay the same, the answer is no. They predicted that in 2006 VAT receipts would be £77.4 billion and that, even with rising fuel prices, they would increase to £83.8 billion in 2008-09. The Government’s figures do not bear out the Financial Secretary’s argument.
The same applies to fuel duty, which has increased from £23.6 billion to £25.7 billion. That provides additional money, which could be used—at least partly—to tackle fuel poverty. My hon. Friend the Member for Upper Bann and the hon. Member for Putney (Justine Greening) made that point. On the Government’s own admission, even at a time of rising fuel prices, money is available. If it can be found on other occasions, why cannot it be found now?
Of course, there are many ways in which spending can be diverted. Although the hon. Member for Wellingborough (Mr. Bone) was cut off in his prime, I was interested in his point about Government waste. It was probably just as well for the Financial Secretary that he was cut off for wandering off the subject, but his points were relevant. It is possible, even in the current financial framework, to consider how money might be better spent.
The motion was designed to start discussion and tease out from the Government how the windfall from rising oil prices could be spent and how to alleviate the difficult position in which many people find themselves. It was not meant to be confrontational, but the Government tabled an amendment that gives excuses rather than dealing with the problems that we wanted tackled.
Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): The hon. Gentleman mentioned rising oil prices. It was said earlier today in the Chamber that an extra dollar on the price of an oil barrel gives the Government an extra £200 million in revenue.
Sammy Wilson: The Government predicted that the oil price increases anticipated at the time of the Budget—which were much lower than what subsequently transpired—meant that they would have £5.4 billion more in the next financial year.
Perhaps the Economic Secretary to the Treasury has an answer to the problem, but, as several hon. Members pointed out—even those who were supportive, such as the hon. Member for Twickenham—if there is an economic model that shows no overall financial gain, it should at least be transparent. I know from teaching economics in school that the one cardinal rule when examining the way in which one variable affects another is that unless all other things are equal—the old ceteris paribus; even a GCSE economics student will know that—it is not possible to identify the cause and effect of a specific economic event. If the Economic Secretary intends to argue against the points that have been made, there should be transparency and an explanation of how the conclusion that the Financial Secretary outlined was reached.
The Government have made a lot of the right noises today. The Financial Secretary started by expressing sympathy. The Government very often make the right noises on such issues and sometimes they even do the right things. She made the point, which I accept, that
for many years the economy in Northern Ireland has been good. We have experienced the lowest rates of unemployment. I want to acknowledge that, because I do not want this debate to be seen as all negative. However, too often the Government have made the wrong decisions. Unfortunately, I believe—and I think that many of their own Back Benchers would accept this, too—that they appear to be out of touch. That will be fatal.
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