The cost of living — Parliament Notes
What Labour MPs are saying in Parliament to address the cost of living crisis.
Early day motion on the cost of living
Motion text (presented by John Trickett; supported by John Cruddas, Diane Abbott, Kim Johnson, Bell Ribeiro-Addy; also Tony Lloyd, plus one Independent and one Green MP) 24th May 2022
That this House expresses its deepest concerns about the explosion in the cost of living and its impact on millions of working people across the country, with inflation now at nine per cent, wages stagnating or declining and the cost of energy, food, transport, childcare and many other essentials rising at an alarmingly rapid rate; notes that the situation has become so desperate for millions of people that we are now facing a social emergency; acknowledges this has been compounded by global forces such as the war in Ukraine and the pandemic, but reminds the Government that failure to help people with the cost of living totally undermines any serious attempt to level up our country; and calls on the Government to take radical action in the form of a Marshall Plan style investment scheme to invest in decent jobs and pay, public services, research and development, infrastructure and energy, particularly in held back areas, which could be paid for by taxing wealth, levelling up taxes on capital gains, dividends and other forms of wealth so as to be in line with at least the basic rate of income tax, and taking action on offshore loopholes and clamping down on tax avoidance.
John Trickett had earlier proposed an early day motion on the same subject: 8th March 2022
That this House expresses its deepest concerns about the explosion in the cost of living and its impact on millions of working people across the country, with Ofgem announcing that the energy price cap will rise by £693 to £1,971 per year on 1 April 2022, a 54 per cent rise; further notes a rise of up to 13 per cent in the lowest paid workers’ National Insurance contributions from April 2022, together with increases in council tax and the highest levels of inflation for nearly 30 years; sadly notes wage growth has been stagnant for 15 years and looks set to stay that way, with the average person losing £1,000 in real terms in 2022 alone; particularly notes Resolution Foundation’s report showing people are facing the worst fall in living standards since the 1970s; highlights that food prices have increased, since 2010, by 27 per cent and childcare costs by 50 per cent, placing strain on millions of families; shares concerns that despite the decline in quality of privatised transport, bus and rail fares are up 50 per cent on average; also acknowledges the struggle faced by private renters, with average annual rents up £2,000 since 2010; notes with regret that this cost of living crisis will be compounded by the war in Ukraine and many families will be pushed deeper below the poverty line; and urges the Government to act immediately to tackle the cost of living crisis by ensuring that those with the broadest shoulders contribute more.
Ed Milliband on a windfall tax to remedy the cost of living crisis
I beg to move an amendment, at the end of the Question to add:
“but respectfully regret that the Gracious Speech fails to announce a windfall tax on the profits of oil and gas producers, in order to provide much-needed relief from energy price increases for households.”
The cost of living crisis is the biggest issue facing our country, which is why we have chosen it as the subject of today’s debate, and I welcome the Chancellor’s participation. We should start by being sober about the unprecedented social emergency our country faces. According to a report that has just been published by the Food Foundation, 2 million of our fellow citizens went without food for a whole day in the past month because they could not afford to eat; 7 million families had to skip a meal, and that was true of nearly half of those on universal credit. This is not just about families out of work; it is about families in work too. This is a social emergency and it is also a looming economic threat, depriving our economy of the spending power it needs. The question at the heart of this debate is whether this Gracious Speech, this Government and, yes, this Chancellor are up to the challenge this emergency represents.
The Chancellor wants us to believe that his measures in response are the best we can do, but they are not—not by a long shot. The cost of living crisis is driven most of all by what is happening to energy bills, so let us look at the three chances he has had in the past seven months to act on energy bills. Last August, nine months ago, the first energy price rise was announced—this was a £139 increase in the price cap. So way back then he knew what was happening. Then in October he delivered the Budget. Wholesale energy prices were rocketing and the warning signals were flashing, but the Chancellor did nothing. He should re-read that Budget speech, because I think it would make even him wince. It is a model of complacency. He had drunk his own Kool-Aid. He told the country back then that “wages are rising”, that we have “growth up” and that on inflation we have
“a Government…ready and willing to act”—[Official Report, 27 October 2021; Vol. 702, c. 275.]
He said that the “plan is working”.
Where are we now? On wages, the Office for Budget Responsibility is this year forecasting the biggest fall in living standards for 45 years. Growth turned negative in March, with the Bank of England suggesting that the economy is going to shrink through the winter. We are now set for the highest level of inflation for 40 years. The plan is not working; it is failing.
The Chancellor did not act when he could have done. In February he had another chance, as the largest energy price rise in our history, at 52%, was announced. He could have responded in a way commensurate with the crisis—[Interruption.] Members say that he did, but let us look at this. What was his grand offer to the country? It was a £150 council tax discount based on outdated property values, which missed out hundreds of thousands of the poorest families, and of course there was his £200 “buy now, pay later” loan scheme. This is a loan scheme that he risibly claims is not a loan, although it has to be paid back, and it does not even come in until October. What are families supposed to do in the meantime while they wait for his loan? It is almost as though the Chancellor is so out of touch that he does not realise that 10 million families in our country have no savings at all.
What are the Government’s excuses for not applying a windfall tax? First, they said in January that the oil and gas companies were, in the words of the Education Secretary, “struggling”. BP has its highest profits for a decade, Shell has its highest profits ever, and the boss of BP, Bernard Looney, describes the price hike as a “cash machine”—and these people say the companies are struggling. Perhaps we can have a show of hands: does anyone on the Government Benches still believe that those companies are struggling? What is the Government’s next excuse? They argue that a windfall tax will hurt investment—
The problem is that the companies themselves say that is nonsense. BP’s chief executive officer, Bernard Looney—whom I take as more of an authority than the hon. Gentleman—was asked two weeks ago which investments he would not proceed with if a windfall tax was levied. What was his answer?
“There are none that we wouldn’t do.”
Even BP does not buy the Tory arguments against a windfall tax on BP.
The final excuse—[Interruption.] I want to come to this because it is important, and I am perhaps anticipating the Chancellor. The final excuse is that it is somehow anti-business to levy a windfall tax. Let us dispose of that argument, too. I strongly recommend that Members who believe that argument read an article that I have with me—I am happy to put a copy in the Library of the House—by Mr Irwin Stelzer, a long-time confidant of Rupert Murdoch. This is the first time I have quoted him in the House. A few days ago, in an article entitled, “Now is the time for a windfall profits tax”, he wrote:
“People who believe in capitalism believe that private sector companies should be rewarded for taking risks…not be rewarded for happening to be around when some disruption drives up prices, producing windfalls.”
That is the point: these profits are unearned and unexpected, and the British people are paying for that windfall. These companies are profiting not from decisions they have made, risks they have taken or wealth they have created, but from a global spike in prices to which Britain is badly exposed—a spike exacerbated by Putin’s invasion of Ukraine.
What is the principle that the Government are defending here? What is their hill to die on? Is the principle that they really wish to defend that oil and gas companies should pocket any profits, however bad the geopolitical instability? Is that however large the crisis and however gigantic the windfall, taxation must not change? That proposition was rejected by Margaret Thatcher, Geoffrey Howe and George Osborne—remember him?—all of whom levied windfall taxes. Who else do we see supporting a windfall tax today? I have to say, it is a pretty big tent: John Allan, the guy who runs Tesco; Sharon White, the woman who runs John Lewis; Lord Browne, the guy who used to run BP; and Lord Hague, the guy who used to run the Conservative party—the usual leftie suspects.
The truth is that the Government have run out of excuses and, amid the chaos and confusion about their position, I think a massive U-turn is lumbering slowly over the hill. I say this to the Chancellor: “Swallow your pride and get on with it.” Every day he delays is another day when the British people are denied the help they need. Millions of families are having sleepless nights because the Chancellor will not act. What is he waiting for? As proposed by the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), the Chancellor should come to the House with an emergency Budget that has a windfall tax, gets rid of VAT on energy bills, increases the warm home discount to £400, includes an emergency plan to insulate 2 million homes this year, and cuts business rates.
The conservative Robert Halfon added his voice to the call for a windfall tax:
“There is no recognition from Labour Members of the £22 billion that the Government put in to help with the cost of living, particularly the 5p cut in fuel duty. However, I do have one ask of my right hon. Friend. The oil companies are not passing the cuts to the pumps. They take ages to reduce the prices when the international oil price falls, but oil bosses are earning multi-million pound salaries and getting multi-million pound bonuses. They are, in essence, the new oligarchs. I urge him to consider both a windfall tax on the oil companies, which we can then use to cut taxes for the lower paid or to cut energy bills, and a pump-watch monitor to make sure that there is fair competition and that consumers get a fair deal at the pumps. None the less, I genuinely recognise all the work that he has done thus far to cut the cost of living.”
This is Rishi Sunak’s answer to the windfall tax question:
“That brings me to the topic of a windfall tax. Unlike the Labour party, we Conservatives do not believe that windfall taxes are the simple and easy answer to every problem. However, we are pragmatic, and we want to see our energy companies, which have made extraordinary profits at a time of acutely elevated prices, investing those profits back into British jobs, growth and energy security. I have made it clear and said repeatedly that, if that does not happen soon and at significant scale, no option is off the table.”
However, Sunak on 26th May changed his mind and announced a £5bn windfall tax on energy companies.