My Lords, I should first explain that my noble friends Lady Kramer and Lady Janke, who normally speak on these issues, are unable to attend today so your Lordships have me instead.
This is a small and, in a sense, relatively modest Bill that we do not oppose—indeed, we cannot oppose it due to its nature as a money Bill. We have heard some really knowledgeable input from the noble Baroness, Lady Lister, and the noble Earl, Lord Clancarty, who made important points on the subject of children and families with children and about the self-employed, particularly those working in the creative sector. I hope that the Minister will take those on board.
As we heard from the Minister, the Bill implements some of the cost of living support that was announced by the Chancellor in his emergency Statement—specifically, the £650 support for households in receipt of means-tested benefits, which comes in two instalments, as the Minister set out, and the £150 for recipients of non-means-tested disability benefits.
The Bill does not include the other support mentioned by the Minister, presumably because it is not needed from a legislative perspective. As I intend to suggest later, it also does not include many of the measures that the Chancellor should have announced in the light of the situation that the country finds itself in today. Even as we debate here today, the economy is the major concern on everyone’s radar, especially with the official rate of inflation predicted to reach double digits very soon. Then, as well as the worry of inflation, households are facing the highest tax burden in 70 years. The typical family will see a hit of £1,200 a year thanks to the Conservative Party’s tax rises. I hardly need to remind the Minister that the UK is in very difficult territory.
At the heart of all this is a much wider endemic issue that needs to be at the front of our minds when we debate an issue such as this. I am going to presume that the Minister would describe herself as a capitalist; I describe myself as a capitalist as well. However, for the UK to be a successful capitalist country, its citizens need either to have capital or to have a reasonable expectation that they will obtain it. Yet, in Conservative Britain today, it is quite clear that the gap between those with capital, and therefore a stake in the economy, and those who stand little or no chance of ever acquiring it is getting wider every day.
Worse than that—never mind savings and capital—while the top 10% of the country’s earners tighten their grasp on our economy, an increasing number of citizens are slipping below the subsistence line. It is not just global shocks that have caused that to happen, as the Minister put it. The slide was already happening, then Covid came and made it worse, and now inflation is rapidly increasing the number of people in economic peril and the pace with which, in some cases, they are traveling towards destitution. Proud families who never dreamed that they would find themselves in trouble are now struggling to pay the bills.
At the last election, the Conservative Party successfully campaigned on the idea that there are specific geographic areas that have been economically left behind. Although that is undeniably true, the party’s careful selection of particular towns and cities skirts over the underlying issue: the ever-widening income gap across the whole of our country. Although that gap is somewhat defined by geography, it is far more complex than that, being caused by demographics, educational opportunities and—let us face it—who your parents are.
That ever-widening gap is the real challenge at the heart of many issues that we are seeing in the UK today. So what is the modern Conservative take on it? While one part of the Government is signalling for the EU cap on already huge banker bonuses to be lifted, another department is seeking to limit public sector pay increases to one-third or one-quarter of the rate of inflation. Clearly this Government are not even trying to address the gulf between the richest and the rest of our country; in fact, it seems to look like the opposite.
When it comes to acknowledging the need to arrest the pain inflicted on the poorest in society, the Bill takes a few small steps in the right direction. However, as the noble Baroness, Lady Lister, eloquently expressed, it is a completely inadequate response to the cost of living crisis. It fails to reinstate the £20-per-week universal credit cut, which would have provided households on universal credit with an additional £1,000 a year. It fails to cut the main rate of VAT to 17.5% for one year, which would have put an average of £600 in the pocket of every UK household while lowering inflation and, importantly, helping our high streets, giving them a much-needed boost and increasing economic growth. A similar VAT cut in 2008 was found to increase retail sales by 1% and increase aggregate expenditure by nearly one-quarter of 1%.
The Bill also fails to consider repealing the national insurance rise and freezing the income tax thresholds. These are unfair tax rises that are making the cost of living crisis worse for millions of families across the UK. It fails to support rural communities concerned with rising fuel prices through the rural fuel duty relief scheme, which was promoted today by the newly elected MP for Tiverton and Honiton. It also fails to include those claiming the carer’s allowance from the list of benefit recipients qualifying for additional support.
Furthermore, provisions in the Bill allow for payments to be made in two instalments. By paying all the support on 14 July, the day of the first instalment, the Government could have supported people who need assistance more immediately. Perhaps the Minister would concede that, given the increase in the rate of inflation, the second payment should be accelerated as well.
It has been a pleasure to speak, briefly, in this short debate. I am looking forward to the Minister’s explanation of how the ever-widening income gap will be addressed in the second half of this Parliament. Most of all, I am looking forward to the Minister explaining how the Bill even scratches the surface when, across the country, thousands of honest, hard-working families are slipping ever deeper into poverty.
Following the by-election defeats inflicted on the government party last week, the current Prime Minister, Boris Johnson, said:
“We’re now facing pressures on the cost of living … spikes in fuel prices, energy costs, food costs—that’s hitting people. We’ve got to recognise there is more we’ve got to do.”
What is this “more” and when will it be done? Or, as is usually the case, is the Prime Minister’s statement merely empty words with no substance, no policy and no prospect of implementation?
5.40 pm