1. What fiscal steps he plans to take to help reduce the impact on households of the rise in the cost of living.
5. What recent assessment he has made of the impact of inflation on trends in the levels of living standards.
8. What fiscal steps he plans to take to help reduce the impact on households of the rise in the cost of living.
17. What steps he is taking to help people with the increasing cost of living.
18. What fiscal steps he plans to take to help reduce the impact on households of the rise in the cost of living.
20. What recent assessment he has made of the effect of his fiscal policies on the cost of living.
21. If he will offer further support to people struggling with the rise in the cost of living.
To help people with the cost of living, the Government are providing support worth around £12 billion in this financial year and next. That includes: cutting the universal credit taper rate to make sure that work pays; freezing duties to keep costs down; and providing support to households with the cost of essentials. In addition, the Government’s plan for jobs is helping people into work and giving them the skills they need to succeed—the best approach to managing the cost of living in the long term.
The Chancellor will have plenty of opportunities to get the answer right this morning. Data from the Office for National Statistics show that on average people aged 65 or over spend twice as much on energy compared with those under 30, so they will be hit twice as hard by escalating bills. Meanwhile, Energy UK tells us that without Government action there will soon be 6 million people, many of them pensioners, living in fuel poverty. Will the Chancellor persuade himself to really get into this and take up our pledge to remove VAT from energy bills and extend the warm homes discount? If he will not, what will he do, particularly for our most vulnerable pensioners who are suffering from this cost of living crisis?
I am proud of this Government’s track record in supporting pensioners. Thanks to the triple lock, in place since 2010, pensions are, relative to earnings, the highest they have been in more than three decades. However, I recognise the anxiety that many pensioners will feel about rising energy bills, and we are always looking at the best way to support people. To help with exactly that phenomenon, the winter fuel payment provides up to £300 for everyone over the state pension age.
With the cost of living crisis upon us, millions across our country must choose between heating their home or putting a meal on the table. Hunger is a political choice made by this Government and the buck stops with the Chancellor. Last week, he wrote off £4.3 billion of covid fraud. If he has the will, he can end the crisis of food insecurity for millions across our nation. Will he use his spring statement to implement a right to food, including universal free school meals and setting social security payments and the living wage at rates calculated to take account of the rising cost of food?
On providing food for those who most need it, I am pleased that the recent spending review confirmed £200 million of extra funding for the holiday activity and food programme to provide support to families and children outside term time. The national living wage, which the hon. Gentleman mentioned, is going up by 6.6% to £9.50 in April, putting an extra £1,000 in the pockets of hard-working people up and down the country.
A constituent wrote to me recently; she is 57 and works four days a week on the minimum wage. Her energy bill is rising from £95 to £220 a month, eating up an extra 11% of her take-home pay. Weekend reports suggest that Treasury action on the cost of living crisis has stalled due to the paralysis engulfing No. 10. Those struggling to heat their homes should not pay the price for the Prime Minister’s conduct, so will the Chancellor agree to extend eligibility for the warm homes discount further and increase it beyond the pitiful £10 that is planned?
Although I do not know the specific circumstances of the hon. Gentleman’s constituent, it sounds like she will benefit from two measures that we have already announced: the significant increase in the national living wage by 6.6% in April; and the cut in the universal credit taper rate, which will mean that a single mother working full time on the national living wage will be an extra £1,200 better off. That will help significantly with energy and other bills, and of course the warm home discount provides a £140 rebate to those who need it.
I have met a number of pensioners in my constituency who are on the state pension, but who also worked hard and saved for a private pension; not a huge pension, but a pension that they believed would help them meet the cost of living. Unfortunately, years of low interest rates and now the rising cost of energy, food and other things have made them begin to worry and they are very concerned about the year ahead. Can the Chancellor provide more information on how he will monitor the situation, and support the families and pensioners whom we encouraged to get private pensions but now find that they cannot meet the cost of living?
My hon. Friend is absolutely right to highlight pensioners and their needs. As I said, I am proud of the Government’s track record in supporting them. I can also provide him with the reassurance that we continue to look at the best way to provide support to all those in need, as we have done over the last year of two. In the meantime, he will be reassured to know that we have protected pensioners this coming year with the double lock and, as I said, the winter fuel payments providing up to £300.
Energy prices are rocketing but the price of producing energy has not, meaning that energy companies are experiencing record bonanza profits this year if they are producers. The Chancellor is, of course, worth more than a billion pounds. Could he tell constituents struggling to pay their energy bills what should be taking the cut? Should it be the profits of the energy companies or the lifting of the energy cap that he proposes, costing constituents £1,800 on average a year?
The energy price cap has already protected millions of people against rising energy bills. On the taxation of companies, it is probably worth bearing in mind that one thing that the last few months have shown is that there is an opportunity to invest more in providing natural gas as a transition fuel as we make our way to net zero in a measured manner. To that end, we should be encouraging investment in exporting our natural resources, not disincentivising it.
While Ministers travel the globe in private jets, more and more families across the UK go hungry. Last year, the Trussell Trust delivered 2.5 million food packages through its food banks, which is 100 times more than in 2008-09. Now families face further cuts in benefits, increasing taxes and the cost of living crisis. Does the Chancellor not think that addressing that perfect storm of poverty drivers would be a better use of his time than plotting leadership bids as he waits for the downfall of his lame duck Prime Minister?
The hon. Lady talks about poverty, but the track record of this Government and the Governments since 2010 shows very clearly that more than 8 million fewer people are living in poverty as a result of the actions of those Conservative Governments. Income inequality today is lower than it was in 2010.
It is not good enough to simply say that work lifts people out of poverty when we know that millions of people up and down this country with one job, two jobs or three jobs are still not even making ends meet. The universal credit cut is having a devastating impact, combined with growing food prices and the rise in rents—not to mention the huge hike in national insurance contributions I know it is difficult, Chancellor, for someone with financial privilege to really understand what is facing people in communities like mine, but I must say that when I have got elderly people freezing in their homes and more people than ever before using food banks, we need some help from the Government. Poverty is a political choice.
Anyone who has questions about my values can just look at my track record over the last year or two. I am proud of this Government’s achievements in supporting those who most needed our help at a time of anxiety for our country. I respectfully disagree wholeheartedly with the hon. Gentleman: I do believe that work is a route out of poverty. All the evidence shows that children who grow up in workless households are five times more likely to be in poverty than those who do not, which is why I am proud that there are almost a million fewer workless households today as a result of the actions of this Conservative Government.
The most effective sanctions that we could impose on Russia would be to block Russian banks’ access to UK and international markets. Will my right hon. Friend consider that and consider cushioning the inevitable blow to our banks, businesses and households from the financial impacts, including to the cost of living?
My hon. Friend makes an excellent point. With regard to sanctions, absolutely nothing is off the table. We are working extremely closely with our international allies to make sure that we can send a robust signal to deter Russian aggression, and we continue to explore diplomatic solutions at the same time. He should rest assured that nothing is off the table.
I visited the citizens advice bureau in Malvern and people there were sharing with me the fact that they still have tens of thousands of pounds in household support grants that they can give away between now and the end of March. Will the Chancellor join me in encouraging families who are struggling with the cost of living to apply for the help available?
My hon. Friend, as always, makes an excellent point. I join her in encouraging all those local authorities and others to get those funds out to people who need them as quickly as possible. That is why we have created the household support fund: half a billion pounds to provide £100 or £150 to millions of our most vulnerable families. It is there to help, and I hope we can get the rest of the money out as quickly as possible.
The Chancellor of the Exchequer is exactly right in all the measures that he describes the Government taking to protect families’ incomes. He has always shown a powerful instinct for protecting those on the very lowest incomes, but may I say respectfully to him that we must do something about energy costs? On Friday, I met a couple in my constituency who showed me their fixed tariff agreement with their energy company, which is coming to an end, and the new one coming on stream, which is more than double. They will really struggle to pay their energy costs this year, so may I ask the Chancellor of the Exchequer to look at the issue? The warm home discount scheme is not perfect, but it is a useful vehicle for doing something to help those on the lowest incomes.
My right hon. Friend speaks with compassion and authority on these topics, and I join him in making sure that we are aware of the issue. I am, of course, aware of people’s anxiety about what is coming; he can rest assured that we continue to look at all the policies we have in place to make sure that we are supporting people in the best way possible through the months ahead.
With the risk of inflation becoming entrenched, we need fiscal discipline while the Bank of England undertakes the tricky task of monetary tightening. What does the Chancellor think of proposals that would break down that fiscal discipline and therefore risk increasing inflation and being completely counterproductive?
My right hon. Friend is absolutely right; given his career before he was in this place, he, too, speaks with authority on these matters. He is right to highlight that many of the proposals that people suggest would involve a significant fiscal loosening, which would be inflationary and counterproductive at this time. It is right that fiscal policy is supportive of people, but also mindful of the risks of rising inflation, not least because of the risks for the costs of servicing our debt.
The Chancellor will be aware that voters are being hit by a triple whammy on the cost of living: soaring energy bills, the Chancellor’s own tax rises and falling real wages. Next week, the energy price cap could rise by as much as £600. Labour has set out a fully costed plan to cut these bills, funded by a windfall levy on the oil and gas companies making the most money from the current spike in prices. Where is the Government’s plan for those energy costs? What has distracted them from producing one?
I would probably slightly disagree with the idea that Labour’s plans are fully costed, but it would not be the first time that its numbers do not add up. With regard to the responsible way forward, the right hon. Gentleman has talked about funding the NHS—a good example of something that is funded, because Government Members know that the NHS is the people’s No. 1 priority. It is right that we tackle the backlogs and reform social care, as the Prime Minister has set out, but it is also right that we fund that sustainably and responsibly, which is what this Government are committed to doing.
On Sunday, the Prime Minister and the Chancellor nailed themselves to the mast of the national insurance rise coming in this April—like Thelma and Louise, they have held hands and are going to drive off the cliff. The Chancellor says that it is all about public services, but we know that the real reason he is so desperate to stick to the timetable is so that he can implement planned tax cuts before the next election. Why should the cost of living crisis be made much worse for families this year just to fit in with the Tory party’s planning grid for the next election?
With regard to the cost of living, the Government have, as we have already discussed, put a range of measures in place to help people, not least the increase in the national living wage by £1,000 a year, the cut to the universal credit taper rate and the freezing of fuel duty. The Government will not shirk from funding the NHS sustainably and responsibly. It is the people’s No. 1 priority; the backlogs are rising at an unprecedented rate, and I think people would like to see them addressed, which can be done only with a sustainable funding stream. That is what we have created, and this is a progressive way to do it. Although these decisions are difficult, a responsible Government do not shirk from them.
Inflation is running at 5.4%, the highest level in nearly 30 years. It is already having a real and painful impact on people and businesses, with worrying reports today that increased bills are pushing businesses to lay off staff. The upcoming national insurance hike is a tax on jobs as well as on individuals. This is a cost of living crisis, yet today is the first time that the Chancellor has been to this House since the start of December, and we still do not hear a plan from him—he is too distracted by plotting for the Prime Minister’s job to help those affected by this crisis. People are struggling, so what additional practical financial support can they expect from this Chancellor, and when?
The hon. Lady talked about inflation; she is right and I am very cognisant of the anxiety that people are feeling about rising inflation. It is also right to put that in context. She said it is the highest tier since the early 1990s, and that is right. We are also seeing this as a global phenomenon—inflation in the US is running at its highest since the 1980s, and the highest since the eurozone was created—so we are not alone in facing those challenges. The Government have already set out a plan, but it is a plan that is working. In contrast to what she said about people losing their jobs, what we have seen is 11 months of falling unemployment, which is now back to the almost record pre-pandemic lows, and record numbers of people in work. That is the best way to tackle the cost of living—get people into work and make sure those jobs are well paid.
3. What steps his Department is taking to encourage businesses to invest.
13. What steps his Department is taking to encourage businesses to invest.
The Chancellor has brought forward a number of measures to encourage business investment, and I shall mention just two. Under the super deduction, from April 2021 until the end of March 2023, companies can claim a 130% capital allowance on qualifying plant and machinery investments. That is the biggest two-year business tax cut in modern British history. We have also extended the temporary £1 million annual investment allowance level until the end of March 2023.
That was an interesting answer. There is a business in my constituency, Cytronex, which has developed a green solution to increase cycling rates by converting existing bicycles into e-bikes—I recommend it. Last year, its product won the e-bike of the year award; as a result, international demand has far outstripped its ability to support it. Cytronex is passionate about manufacturing its product in Britain and even assembles its own lithium battery packs in Winchester. What more can we do to help small businesses such as Cytronex make the leap into mass production, and will one of the excellent Treasury Front-Bench team meet us to discuss how we can explore that?
Cytronex sounds like a fantastic company, and it is great to see it in Winchester. It is precisely the type of company that we want to support. As I mentioned, it could benefit from the super deduction that we have brought in. Under the super deduction, for every £1 a company invests, its taxes are cut by up to 25p. That type of investment will help manufacturing and the manufacturing sector.
Jobs and job security clearly depend on economic growth. The International Monetary Fund’s forecast putting the UK at the top of the G7 is an endorsement of this Chancellor’s and this Prime Minister’s approach to economic policy throughout covid. Will the Minister assure me and my Dudley constituents that we will increasingly return to revenue from growth as soon as possible, and continue investing in skills for jobs for the future, building on, for example, the successful delivery of Dudley’s institute of technology?
My hon. Friend is absolutely right to focus on skills, and that is exactly what the Chancellor did in the spending review, with an investment, over the Parliament, of £3.8 billion. My hon. Friend mentions the Marches institute of technology, and we are investing in a total of 21 of those innovative institutions across England. Employer-led training is key to growth, and that is why we are quadrupling the scale of skills boot camps in England, including digital skills boot camps, which are available in Dudley and funded by the Government.
Businesses in financial services are more likely to invest here as opposed to European markets if an agreement is reached with the EU on financial services regulation. Last March, the Economic Secretary to the Treasury, the hon. Member for Salisbury (John Glen), said that he expected such an agreement to be signed expeditiously. It still has not been. When does the Minister think the memorandum of understanding on financial services regulation will finally be signed?
The hon. Member makes an important point. Financial services are very important to the UK. We are ready to make a deal and we look forward to hearing from the EU.
A local businessman in my constituency would love to be able to invest, but he is facing business ruin because he made an order to China for some fireplace tiles worth £15,000 and, because of anti-dumping duty, customs duty and various other taxes, he is going to be charged £43,000 of costs for a £15,000 order. He is a sole business person and he is facing bankruptcy. I have contacted HMRC about this, but I seem to be hitting a dead end, so will the Minister please look into this matter and see if anything can be done to help him?
If the hon. Member wants to give me the details of her constituent’s case, I would be very happy to look into it.
4. What assessment he has made of the compatibility of his policies on the taxation of fossil fuels with the Glasgow climate pact.
I am pleased to have an opportunity to underline the Government’s commitment to reducing carbon emissions through taxation and the UK’s success in limiting global emissions at COP26. The Government have reduced carbon emissions through their carbon pricing policies, including through the UK emissions trading scheme. We are committed to delivering on our carbon targets, and our net zero strategy sets out a roadmap for reaching net zero by 2050.
I thank the Minister for her answer, but she will know that the UK has one of the most lax tax regimes in the world for the oil and gas sector. In 2019, companies got away with paying 12.5 times less tax for a barrel of oil produced here compared with in Norway, for example. In 2020, Shell paid absolutely no tax in the UK, the only country in the world where it operates where that was the case. For 2021, HMRC expects that the industry will pocket £910 million-worth of tax reliefs for decommissioning. Given our commitments under the Glasgow climate pact, and given the fact that the oil and gas industry is currently making near-record profits while UK households are struggling with a real cost of living crisis, will the Minister address the imbalance and commit to a review of the tax regime?
The hon. Member will know that the oil and gas sector does pay significant taxes. Indeed, it pays additional taxes, and to date it has paid more than £375 billion in production taxes.
6. What recent discussions he has had with the Financial Conduct Authority on the regulation of the insurance industry.
I hold regular discussions, usually on a six-weekly basis, with the chief executive of the Financial Conduct Authority on a range of issues regarding the regulation of financial markets, including the insurance market.
Insurance companies are exploiting the cladding scandal by charging leaseholders extortionate, punitive and unethical prices for their buildings insurance. The Treasury and the FCA have frankly done nothing while people are forced to find eye-watering sums of money because of a scandal that they did not cause, and there is no transparency as to how their premiums are being calculated. After many years, a Government Minister has finally written to the FCA, but will the Treasury now step up and ensure that the FCA not only looks into this matter but provides redress for my constituents and the thousands of people across this country who are experiencing severe financial distress?
The FCA has been looking at this matter, and last week my colleague the Secretary of State for Levelling Up, Housing and Communities wrote to the FCA to ask it to look at whether there is a market failure. Since then, it has written back, with the Competition and Markets Authority, to say that they are engaging with the industry and will produce a statement on the matter in due course. I recognise the concerns that the hon. Member has raised and the dysfunctionality that may exist in the market, and it is important that that is looked at carefully.
Reform of Solvency II could unlock billions to create jobs, enhance prosperity and help to raise living standards. May I ask the Government to make some progress on this?
We are making progress. We are in deep conversations with the Prudential Regulation Authority and its actuaries on the way that the risk margin and the matching adjustments should be altered to release that additional capital. We are confident that progress will be made and we are also working closely with the insurance industry to see that that comes to pass.
7. What recent estimate he has made of the value of infrastructure projects to be delivered through the national infrastructure and construction pipeline.
The 2021 national infrastructure and construction pipeline set out nearly £650 billion of planned and projected public and private investment in infrastructure over the next 10 years. Last year’s Budget and spending review set out how we will deliver on commitments in the national infrastructure strategy, and go further in providing more investment to every part of the UK.
The first great energy revolution of oil and gas saw Scottish communities largely miss out, other than in Shetland. The offshore renewables revolution is occurring off East Lothian’s coast and landing on its shores, largely then to be cabled south. Where are the jobs and benefits for the county, or the revenue that accrued to Shetland? Will the Minister agree to meet me and representatives of East Lothian Council to ensure that the offshore renewables revolution benefits the communities where it actually lands?
The Government are committed to ensuring that the whole of the United Kingdom benefits from our investment in renewables and our transition to net zero and the growth that that affords us, and I am happy to look into the matter that the hon. Gentleman raised.
9. What steps his Department is taking to increase wages and support the lowest-income households.
As my right hon. Friend the Chancellor has announced, we are increasing the national living wage to £9.50 an hour for workers aged 23 and over from this April. That means a pay increase of £1,000 a year for a full-time worker earning the national living wage, and keeps us on track to meet our target to end low pay by the financial year 2024-25. As we have heard, we have taken further decisive action by cutting the universal credit taper rate and increasing the universal credit work allowances.
When it comes to high-paid jobs in the Ipswich area, Freeport East has generated great interest. However, my constituents are keen to see meat on the bones, and for that exciting principle to become a reality. Currently, the plan is to put in the full business case this April. Clearly, that is a most exciting prospect, being near to Ipswich. Will my right hon. Friend give me a firm guarantee that rocket boosters will be put under the plans, to ensure that the benefits of Brexit and the benefits of the freeport can be realised for my constituents as soon as possible?
I thank my hon. Friend for his question. In the week that we announced the Brexit freedoms Bill, that is a really good example of why our decision on the Government Benches to honour the people’s decision to leave the European Union was the right one, and why the Labour party was so wrong to oppose it. The Prime Minister was at Tilbury only yesterday to identify the benefits of freeports, and I can reassure my hon. Friend that we are putting rocket boosters under this policy, for the benefit of places like Ipswich.
Does the Minister agree that some of the ways in which low-income families could be helped would be to drop the national insurance increase, which is wiping out part of the increase in the national living wage anyhow, and to drop many of the green levies, which have a massive impact on electricity bills—up to 20%?
I thank the right hon. Gentleman for his question. He knows the high regard that I have for him. I do, however, respectfully disagree with him on these points. There is no other responsible way for us to finance the 9 million more checks, scans and operations that the health and social care levy will unlock than through a broad-based tax increase, which is highly designed to ensure that we protect vulnerable families, so that the 6 million lowest-paid will pay no extra tax at all as a result of the levy. When it comes to the green levies, it is worth noting that we have reduced our reliance on natural gas, as a country, by 26% since 2010. That is saving taxpayers now, in an era of ultra-high gas prices. It is also worth noting that clean technologies are now the cheapest form of new energy to procure—cheaper than new gas.
Lower-paid, and especially young part-time workers, do not currently benefit from tax relief or employers’ contributions towards pensions under the auto-enrolment scheme. Will the Minister speak to colleagues across Government to look at extending auto-enrolment to lower-paid workers, to ensure that they get the long-term benefits?
My hon. Friend has campaigned consistently on this theme. I would certainly be very happy to have further discussions with him about it. It is worth noting, and celebrating, the fact that the proportion of people who are in low-paid work is actually at its lowest since records began in 1997.
The Trussell Trust finds that three out of four referrals are disabled people, and the Office for National Statistics finds that people who work online at home are more likely to work longer and not retire early, particularly if they are disabled. So will the Chancellor, the Treasury and the Minister look at the idea of promoting working from home after the pandemic, to help enable people with disabilities and other people to be more productive, and at the same time target more support for those in greatest need, as we have found from the Trussell Trust?
I thank the hon. Gentleman for his question, and for the spirit in which he asks it. Over the course of the spending review we are investing £1 billion in disability-related programmes, and that is an aspect that I am happy to look at further. More broadly, the Government as a whole spend £58 billion a year on wider disability support, so we certainly take that area very seriously.
Some of the lowest-income households are made up of pensioners, and important extra help for the most vulnerable is already available and budgeted for through pension credit, yet up to 1 million people—including, potentially, 4,500 pensioners in north Northamptonshire—are failing to claim up to £1.8 billion in pension credit. Please will the Government do more to promote the take-up of pension credit?
My hon. Friend raises an important point. The state pension and pension credit are rising by 3.1%, which is helping to protect more than 12 million pensioners from cost of living increases. It is vital that people get the help to which they are entitled. If any Member has any practical suggestions to bring to our attention, we will happily look at those, and I will task officials to make sure that we are doing all we can.
10. What discussions he has had with Cabinet colleagues on the potential merits of increasing council tax on second homes.
I am aware that the hon. Gentleman raised a similar question with the Chancellor when the Chancellor was a Local Government junior Minister. The hon. Gentleman will know that we announced in the middle of last month that we are closing a tax loophole that allowed owners of second homes who claimed that their often-empty properties were holiday lets to receive small business rates relief instead of paying council tax. We are also committed to ensuring that first-time buyers are able to get on and move up the housing ladder.
Rural Britain’s housing crisis has become a catastrophe over the last two years of the pandemic. The Chancellor will know all about that, given the kind of constituency he represents. Some 80% of all house sales in the lakes and dales in Cumbria have been to the second home market, and in some rural communities there has been a reduction in the private-rented affordable market of 70%. Local families are being forced out of our communities. The need for drastic and immediate action is obvious, well over and above what has been said. Will the Minister agree—or will she agree to persuade her right hon. Friend the Chancellor—to meet me, as the Chancellor’s constituency neighbour, to sit down and look at seven steps for saving our rural communities, so that we can prevent our towns and villages being emptied of their full-time populations? That will surely include giving councils the freedom to double council tax on second homes.
I am happy to meet the hon. Member to discuss the points he raises. We have taken a number of steps to ensure that people pay the full rate of council tax on second homes—96% of second home owners pay the full rate of council tax. He will know that the Government introduced the higher rate of stamp duty land tax for those purchasing additional properties, and only last year introduced a new SDLT surcharge of 2%, to ensure that houses are available for local people at reasonable prices. I am happy to discuss this further with him.
11. What assessment he has made of the progress of the kickstart scheme.
16. What assessment he has made of the progress of the kickstart scheme.
We know that young people have been disproportionately affected by the pandemic. I am delighted that, to date, more than 122,000 kickstart jobs have been started by young people across Great Britain, including in the constituency of my hon. Friend the Member for Gedling (Tom Randall). Youth unemployment fell by 11.1% in the three months to November 2021 and is lower than it was prior to the pandemic, and in December there were half a million more employees aged under 25 than in December 2020.[Official Report, 7 February 2022, Vol. 708, c. 7MC.]
I recently visited Severn Trent Water in Gedling, and staff told me how impressed they were with the kickstarters that the company had taken on. Can my right hon. Friend assure me that he is working hard to encourage more companies and organisations to get involved in the kickstart scheme, to get even more people back into work?
I completely agree with my hon. Friend. Kickstart is delivering valuable jobs and work experience to young jobseekers at risk of long-term unemployment. Although kickstart closed to new applications on 17 December, we are genuinely delighted at the response from employers. As I noted, more than 122,000 kickstart jobs have been started so far, and we expect more between now and the end of March. Employers should continue to engage with Department for Work and Pensions jobcentres and support the new way to work campaign to get more people into work.
In my constituency, 130 new jobs for young people have been created. A group of young people started this week at Ball Aerocan in my constituency. The company is very pleased with the scheme and the young people it found but said it took a little while to get through the system. What can the Government do to encourage businesses to make use of the scheme before it ends in March?
My hon. Friend is absolutely right that we want to encourage maximum uptake. Kickstart is only one part of the comprehensive package of support available to young people and, following the closure of this scheme, young jobseekers will still be able to benefit from the DWP’s wider youth offer, while work coaches across the country are working to support young people into jobs.
Young people who lost jobs during the pandemic have returned to less secure jobs, typically gig economy roles. The Resolution Foundation report published yesterday showed that one third of 18 to 34-year-olds who have returned to work have returned to atypical, insecure jobs. Almost 18 months ago, the Chancellor launched his kickstart programme, setting a target of 250,000. The Minister has said how many have found jobs, but, on the evidence of the Resolution Foundation report, those jobs just are not there and they are typically insecure.
I am afraid the hon. Gentleman confuses what he is talking about. The fact that we have not hit the target is precisely a reflection of the fact that the wider economic recovery has been so strong. It is a measure of the success of the wider recovery that we simply do not need to offer those opportunities and that the regular economy is generating them.
I have heard from so many on the Government Benches how good the kickstart scheme is. It has huge potential, but I keep telling the Treasury Bench to get their finger out and get on with it. It needs to be bigger and better; it must be linked to green skills and real opportunities for getting young people to roll up their sleeves and work in the community. It could be backed by a windfall profit tax on supermarkets and others, or on the gambling industry. Get on with it!
We are getting on with it. I remind the hon. Gentleman that when we compare the scheme to the last Labour Government’s future jobs fund, we see that we have already comfortably exceeded the number of young people it supported into work. Those are good, well-paying jobs in sectors that, he rightly highlights, are some of those of the future.
12. What recent steps he has taken to help ensure value for money in public spending.
I will comment specifically on some of the fraud relating to Government economic support schemes put in place during the pandemic. My colleagues and I share the anger and frustration of hon. Members across this House and of people across this country that schemes designed to help businesses to get through an unprecedented crisis were exploited by a minority. We rightly placed an emphasis on speed when introducing those schemes, but we will robustly pursue anyone who has taken advantage of the Exchequer.
I welcome the Minister’s response, but does he realise that people in Blackburn are really concerned about our cost-of-living crisis? They have a right to expect this Government to be prudent with the public purse, but what they find is that this Government simply do not operate under normal rules. They have hit working people and ordinary businesses with tax rises, yet wasted billions of pounds on contracts, fraud and outsourcing. Does the Minister accept that people should not have to pay for a Conservative tax rise when billions in taxpayers’ money has been leaked due to fraud and mistakes—or, as Lord Agnew said last week, “schoolboy errors”?
I thank the hon. Lady for her question, and I completely agree that we want to pursue fraud whenever it has occurred. That is why, at the March 2021 Budget, we established a £100 million taskforce with more than 1,000 employees, designed precisely to go after every penny that has been taken by people not entitled to it. Her Majesty’s Revenue and Customs has already recovered and prevented £743 million-worth of loss; the taskforce is expected to recover £800 million to £1 billion from fraudulent or incorrect payments over the two years of its existence, and HMRC reserves the right to carry on for as long as it takes.
I welcome the Chancellor’s clear confirmation last week that, far from writing off any of that money, the Government are going after everyone who has claimed it fraudulently. However, it is important to remember the context. The businesses in my constituency know the jobs that were saved by the rapid roll-out of bounce back loans and furlough and know that the Chancellor had to balance those constraints: while it is right to go after criminals, it was also right to make fast, smart decisions to protect thousands of jobs across our nation.
My right hon. Friend puts it extremely well. We must remember the context: the economy was going through a heart attack at that time, owing to the necessary steps we took to support wider public health. I would remind the Opposition Benches that the shadow Chancellor wrote to the Chancellor at the time, describing the loan scheme application process as “cumbersome” and calling for access to be made easier. We were operating in that context of needing to ensure that businesses could access the support to which they were legitimately entitled.
What does the Minister think would happen to an employee in the private sector who lost more than £4 billion of someone else’s money to fraud, having ignored numerous warnings? Would they really be eyeing up a possible promotion, or is it more likely that they would be sacked on the spot?
We are running the Government of the United Kingdom, and we needed to respond at speed to an unprecedented public health emergency. If we had failed to provide the £400 billion of support that we gave, we would have seen the worst fears, with millions of people unemployed and thousands of companies closing. We struck the right balance in getting that support out to firms and then building in the protections needed to protect the taxpayer interest, and we are, as I have said, going to go after anybody who has defrauded the Exchequer.
T1. If he will make a statement on his departmental responsibilities.
Thanks to our vaccine booster roll-out, we now have one of the most open economies in Europe, and thanks to our economic plan, we are set to have one of the highest growth rates in the G7 this year and last. We continue to deliver on our plan for jobs, doubling down with a new target to move half a million more people off welfare and into work by the end of June. Unemployment is falling and is now down to almost record lows. Youth unemployment is already at record lows. All of this shows that our plan for jobs is working.
People in Ukraine are living in dread at the prospect of Russian invasion. While the UK Government talk tough about sanctions, US think-tanks warn that the UK is such a haven for money laundering that such sanctions would not be meaningful. Will the Chancellor take heed of Lord Agnew’s powerful resignation speech and bring his powerful economic crime Bill before the House as soon as possible?
With regard to sanctions, as I said to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), nothing is off the table. It is right that we work with our international partners to develop the most robust sanctions package that we can. The hon. Lady can rest assured that I and my team are doing that. With regard to the economic crime Bill, which contains important measures to strengthen our ability to tackle money laundering, obviously it would not be right for me to pre-empt the Queen’s Speech, but the hon. Lady can be assured that I, the Home Secretary and others fully support the Bill.
T2.   Will my right hon. Friend urgently review the Government’s pothole fund and consider whether the level is sufficient to adequately maintain the road networks, given the current rising cost of materials and labour? Will he also consider setting the budgets for three or more years ahead, to allow councils to plan more effectively, rather than it being an annual allocation?
My hon. Friend makes an excellent point about giving local councils that certainty to plan budgets years at a time. That is why I am pleased that last year’s spending review was a multi-year spending review—the first we have had in some time—so there are now three-year budgets in place to enable that planning. In terms of the overall quantum, it is £2.7 billion, which represents a 10% increase on the amount we spent on local maintenance in the last Parliament. Hopefully that is reassuring to her and her local council.
Mr Speaker: “Schoolboy errors… a combination of arrogance, indolence and ignorance… nothing less than woeful.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20-21.] Those are not my words, but those of former Treasury Minister, Lord Agnew. Some £4.3 billion of taxpayers’ money has been written off as a result of the Chancellor’s fraud failures; a thousand loans were made to companies that were not even trading at the start of the pandemic; and £50,000 was awarded to a person with 48 criminal convictions, and £25,000 to a drugs gang. Is the Chancellor really saying that such examples strike the right balance between getting money to the businesses that need it and looking after the public finances? Will he inform the House of the total amount lost to fraud underwritten by the Treasury and the amount recovered to date?
First, I take this opportunity to pay tribute to Lord Agnew for all his work. I am very grateful to him for everything that he did, and of course we will listen to what he has to say. With regard to the hon. Lady’s questions, she talked about fraud estimates. It is important to be clear, as my right hon. Friend the Chief Secretary to the Treasury said, that nothing has been written off in that regard—we are going after each and every person we suspect of defrauding the taxpayer. I am pleased to tell her that the original estimate of £4.9 billion of fraud—it was an estimate, independently provided—has already been revised down by a third since it was first published, thanks to the actions that we are taking. She asked how much has been paid out already, and I can confirm that the sum total to date is £13 million.
It is in black and white on the Government’s own website still today, and in the Government accounts—£4.3 billion written off. Despite the Chancellor’s words, “written off” means giving up on that money. This is just the tip of the iceberg. [Interruption.] It is on the Government’s website and in the Government’s accounts. Can he tell us how many of the covid fraud cases have gone to court? Given his failure, will he ask the National Crime Agency to conduct a full investigation into all cases of covid fraud and ensure that those responsible are held to account? It is not the Chancellor’s money to write off; it is the public’s money, and the public want their money back.
It is great that the Labour party has realised that it is the taxpayer’s money and not the Government’s money. I am glad that it has joined us in recognising that. I can say categorically that no one has written this off; we are going after it, as the Chief Secretary said. We invested £100 million last March in creating a taxpayer protection taskforce staffed with over 1,200 people to recover hopefully up to £1 billion. That is just one of the many things we are doing, as well as taking more powers to go after rogue directors, enabling Companies House to do exactly that. The hon. Lady asked about the National Crime Agency. I am pleased to tell her that it has already helped in investigations that have led to 13 arrests with regard to bounce back fraud, so that work is already under way.
T4. Does the Chancellor agree that one of the key lessons from the pandemic was about helping people to improve their own financial resilience by saving? Will he now finally support measures to extend auto-enrolment down to the first pound of earnings and down to those aged 18, so that we can help everyone start saving for a pension for their retirement?
My hon. Friend, who has great expertise in this area, makes a reasonable point. The Government’s Help to Save scheme is under way, but the Government continue to work very closely with the Money and Pensions Service to look at new ways of increasing financial resilience and getting young people to understand the opportunities of saving earlier.
Lord Agnew resigned because he could no longer defend the level of fraud in the bounce back loan scheme and the lack of action to tackle it. Much of that has been facilitated by the absolute shambles of the Companies House register. I do not want Ministers to fob this off to the Department for Business, Energy and Industrial Strategy, because that is exactly the disconnected approach that Lord Agnew criticised. If there is an economic crime Bill, will Ministers take action to give Companies House anti-money laundering responsibility, rather than watching as fraudsters using UK shell companies waltz off with billions of pounds of public money?
I am grateful to be able to confirm to the hon. Lady, as I have on numerous occasions in Committees over the last two or three years, that this is a key priority for us in the Treasury. Obviously, as the Chancellor said, we cannot comment on future legislative agendas, but the measures she mentions, picking up on the Financial Action Task Force report from 2018 with respect to Companies House, are something we agree with.
T5. Does my hon. Friend have plans to help high streets such as that in Barnstaple in North Devon, which has many large vacant units with several storage floors above them, with measures such as business rates reform or a redevelopment fund, to enable those empty buildings to be repurposed and become smaller units combined with much-needed housing, so that town centres can bounce back after covid?
Like my hon. Friend, I am keen to support high streets in towns such as Barnstaple. At the autumn Budget, we announced business rates relief for thousands of retail, hospitality and leisure businesses to help them get through the pandemic and adapt to wider economic changes. I would also point my hon. Friend to the £4.8 billion levelling-up fund and encourage Barnstaple to apply for round 2, which will be opening this spring.
Last month, the Government came out against Labour’s plan to help people on modest incomes pay their energy bills using a one-off £1.2 billion windfall tax on the profits of oil and gas producers. The Education Secretary complained that oil and gas companies are “already struggling”. The truth is that pensioners and people on modest incomes are the ones who are struggling. Oil and gas companies are expected to report near-record income this year. Will Ministers now admit that the Government have got it wrong and commit to looking again at our plan?
The hon. Member will know that the oil and gas industry pays a significant amount in taxation—I mentioned the figure earlier. In terms of helping people who are struggling with their bills, he will know that we already have the energy price cap, the winter fuel payment, the warm home discount and the cold weather payment. We are looking out for and supporting those on the lowest income to enable them to get through this difficult period.
T7.   Pubs, restaurants, cafés and hotels were brought to their knees again over the festive period as people simply stayed at home. Will the Financial Secretary consider extending the reduced rate of VAT on hospitality and tourism to help those hard-hit businesses?
My hon. Friend will know that we have already made a significant input to support those in the hospitality and tourism industries. He will know that we extended the 5% reduced rate of VAT for those sectors to the end of September. On 1 October, we reduced the rate to 12.5%. That relief has cost the Government and the taxpayer more than £8 billion. Although all taxes are kept under review, there are no plans to extend the 12.5% reduced VAT rate.
T3. Threats to Putin’s regime would be stronger if the Government had implemented the recommendations of the 2020 Russia report. The lack of progress in the registration of overseas entities Bill and the economic crime Bill rings alarm bells here and with our allies. Will the Chancellor explain his failure to take action in our national interest and name a date for that to be remedied?
The hon. Gentleman is right to point out the measures that we can take to strengthen the powers against money laundering and illicit crime. Those measures require legislation, as he knows. Although I cannot pre-empt the Queen’s Speech, he should know that I, the Home Secretary and others strongly support the inclusion of the economic crime Bill, which contains those measures.
T8. I have heard a great deal from the local authorities that serve my constituency about the benefits of early intervention, especially when it comes to tackling poverty and disadvantage. What assessment is the Treasury planning to undertake to establish the benefits to taxpayers of that investment in vital services?
My hon. Friend raises an important point. My right hon. Friend the Chancellor worked closely with him in his previous post as a local government Minister. The supporting families programme provides funding for local authorities to deliver early intervention in children’s services. The programme was the subject of a robust national evaluation between 2015 and 2020, which demonstrated that in addition to improved outcomes for children and families, it delivered a return on investment of £2.28 of economic benefits for every £1 spent.
T6. Government Ministers will know that bus manufacture is an important skilled employment base in the north of England, Scotland and Northern Ireland. The zero-emission bus regional areas programme, which is due to bring in innovation in engine technology, is supposed to be technologically neutral, even though we know that hydrogen buses almost certainly create more jobs in the UK. In that context, can the Chancellor tell us why every scheme so far has been for electric vehicles and not hydrogen technology? Is that a Treasury bias or a bias in the Department for Business, Energy and Industrial Strategy?
I am happy to look at the point that the hon. Gentleman raises. I do not think there is a bias against that. The spending review contained billions of pounds for new bus transformation deals across the country and thousands more zero-emission buses. I know that the Prime Minister is passionate about hydrogen buses, so we will look into it and get back to the hon. Gentleman.
I have no argument against compensation being paid to the victims of the London Capital & Finance scandal, but I am concerned that they were paid 80% of the losses, yet the 800,000 victims of Equitable Life received only 22%. Does the Minister agree that it is a principle of fairness and of ensuring that people who save for their retirement are properly compensated?
I thank my hon. Friend for his question. He has a long-standing interest in the issue. The difference between the two is that people received compensation from Equitable Life on the basis of relative losses, which is the gap between what they received from their policy and what they could have expected from investing in a similar product. With LCF, the bondholders were expected to lose the majority of their principal investment and stood to get less back than they put in. The schemes were looked at in the context of their respective instruments and appropriate support was given. There are no plans to open up compensation for Equitable Life again.
The Budget confirmed that total funding through the UK shared prosperity fund will, at a minimum, match the size of EU funds in each nation, and in Cornwall. If the Treasury were to do the same with all the other less-developed regions, as it should, South Yorkshire would be on course to receive £900 million of investment over the next seven years. Will the Chief Secretary to the Treasury give an assurance that we will get our fair share?
I have the highest regard for the hon. Gentleman, and he is a doughty champion for the people of South Yorkshire. The levelling up White Paper will be a key moment in setting out our plans in that space, and my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities will be coming to the House shortly to set out our plans in that regard.
I welcome the Government’s intent that levelling up should be measured by more than simply spending money. Indeed, the data that is collected across the UK to measure its effect varies. What is my right hon. Friend doing to address that, and will he reassure Aberconwy residents of an effective UK-wide levelling up?
Absolutely. My hon. Friend makes an important point, and we should indeed measure success in outcomes, not just inputs. The Department’s delivery of levelling up ambitions will be monitored, and it will of course be held to account. I point my hon. Friend towards the levelling up White Paper, which will be published shortly.
Going after money means that the Chancellor is recovering a debt, so there is a hole in the finances. Will the Chancellor tell the House this: why did Lord Agnew resign?
Lord Agnew, obviously, has spoken for himself, and I do nothing but thank him for his service. We look forward to continue working on all the areas he has mentioned, in most of which we are already undertaking work. We are relentless in our aim to tackle those who have defrauded the taxpayer, and we will not stop until we have got as much back as we can.
The Wrexham Gateway levelling-up fund bid attracts around £35 million of private finance. However, that investment in Wrexham will depend on a successful levelling-up fund bid the next time round. Will the Minister explain what considerations are made for bids with substantial private investment?
My hon. Friend is a fantastic advocate for Wrexham, and for wider pride in north Wales, which is incredibly important. I am happy to meet her to discuss any aspect of the bid process that it would be helpful to discuss further.
Will the Chancellor confirm or deny that millions of pounds of taxpayers’ funds have been sunk into an online gambling company with the Government’s start-up scheme? If so, is this the right time to invest in a private gambling firm, since a review of the Gambling Act 2005 is already being undertaken?
I thank the hon. Gentleman for his question. This relates to the future fund, a rules-based scheme that means that any firm is eligible for funding, providing it meets the required eligibility criteria for the scheme and passes the necessary checks. Neither the Government nor the British Business Bank chose specific investments; it is about helping innovative equity-backed companies to weather the economic disruption caused by covid and continue their long-term growth projection.
I commend my right hon. Friend for the steps he has taken to level up in Darlington, with the establishment of the Darlington economic campus. Will he update the House on the progress to bring high-quality, well-paid jobs to my constituency?
I am delighted to update the House on the progress the Treasury is making with our Darlington economic campus. We have already recruited more than 100 Treasury employees to be based in Darlington, and we are on track for our ambition of 300 employees based there.
On a point of order, Mr Speaker. Seventy-six days have passed since this House agreed to the terms of a Humble Address compelling the Government to publish the minutes and notes of the meeting of 9 April 2020 between Lord Bethell, Owen Paterson and Randox representatives, and all correspondence relating to two specified Government contracts awarded to that company. Sixty-seven days have passed since the Secretary of State for Health and Social Care promised, in writing, that the Government would respond to the House no later than the end of January. Given that today is 1 February, and taking into account the fact that the Chair has expressed an expectation on the Government to fulfil their obligations under that Humble Address in a timely fashion, is it in order for Ministers to fail to meet a self-imposed deadline to comply with the instructions of this House? If not, what consequences should befall those on the Government Benches who failed to keep their promise?
The Secretary of State for Health notified me yesterday that he will confirm that the relevant materials will be laid by the February recess. If not, I am sure that the hon. Member would use an urgent question and other ways to ensure that they are delivered, but that is the state of play at the moment.
On a point of order, Mr Speaker. Yesterday the Prime Minister answered questions in this House on the initial Sue Gray report, and we saw the usual bluster and thrashing-about stream of unconsciousness that we are used to. But in reply to one particular question, I think from my right hon. and learned Friend the Leader of the Opposition, in thrashing about, he threw in the question of Jimmy Savile—and actually I think it was found out that he was factually wrong on that. There are many, many victims of that awful, awful person, and I felt that for him to use that scandal and that tragedy in the way that he did was not only inappropriate and tasteless but perhaps out of order. I seek your guidance on his use of that awful, awful example.
I remind the House that I am not responsible for Members’ contributions and will seek not to intervene unless something is said that is disorderly. Procedurally, nothing disorderly occurred, but such allegations should not be made lightly, especially in view of the guidance of “Erskine May” about good temper and moderation being the characteristics of parliamentary debate While they may not have been disorderly, I am far from satisfied that the comments in question were appropriate on this occasion. I want to see more compassionate, reasonable politics in this House, and that sort of comment can only inflame opinions and generate disregard for this House. I want a nicer Parliament, and the only way we can get a nicer Parliament is by being more honourable in the debates that we have. Please let us show each other respect as well as tolerance going forward.
On a point of order, Mr Speaker. I rise in relation to media reports this morning of new education investment areas across England. This announcement was, once again, made to the press instead of to this House. The Government are disregarding their duties to Parliament and short-changing the people by preventing their representatives from questioning Ministers on this. Our constituents will be reading about these changes without access to information about which areas will be affected or the criteria for extra funding. I would be really grateful if I could have your guidance on this, please.
I thank the hon. Member for giving me notice of his point of order. He will appreciate that I have not had the opportunity to look into the detail of the case he has raised. I have made my position clear on the principle that important announcements of policies should be made first to this Chamber. I expect, Members expect and our constituents expect that we should hear it first—and the ministerial code, as we keep stressing, requires it. Unfortunately, I say to Members, I have not got power over the ministerial code, but that is where it lies I expect urgency in that anything of this type should be brought to this House first for constituents of all parties. You were elected to hear it here. We have got to remind the Government that they are accountable to this House and not to the media. I am very worried and very concerned about where this House is going. I take seriously the way that it is going. Unfortunately, the public out there somehow think I have got this magic power, but you, the Members, give me the power. If you are not happy with the power I have got, it is in your hands to change it.
Further to that point of order, Mr Speaker. I congratulate you on what you have just said. Is there anything we can do about Ministers who are serial offenders? The Secretary of State for Digital, Culture, Media and Sport keeps doing this. Only this week, she announced a whole new package of investment in the arts in the northern regions without coming to this House. She is a serial offender. Could we do something about her?
I think I have made my position very clear, and I do not want to extend this into a debate. However, I recognise the frustration of Members in all parts of the House. This is a problem that we have to deal with: the House has the right to hear things first Let us not delay any more. We now come to the ten-minute rule motion.
I beg to move, That leave be given to bring in a Bill to give social housing tenants the right to continuity of secure tenancy in circumstances when they have to move because of a threat to the personal safety of the tenant or someone in their household; to place associated responsibilities on local authorities and social housing providers; and for connected purposes If a member of our household were threatened with violence, and the police advised us that we had to move straight away in order to stay safe, any one of us would find that terrifying and bewildering. We might reasonably expect to receive support; we would not expect to lose our home altogether and find ourselves in the homelessness system. However, that is what happened to my constituent Georgia when gang members came to her home and threatened her teenage son Georgia is a housing association tenant who had lived in her home for nine years. She and her children were very happy in their home, which she had recently decorated. Then her neighbours told her that one afternoon while she was at work, they had heard loud banging on her door. Georgia eventually coaxed out of her son the information that he had witnessed something that some local gang members had not wanted him to see, and they had come to her home looking for him Georgia contacted the police, who told her that she had to move, immediately, for her family’s safety. She got in touch with her housing association, who told her that it was the council’s responsibility to provide emergency housing. The council placed Georgia and her children in temporary accommodation. The temporary accommodation was in another borough, was of poor quality and was very expensive. Georgia’s children did not have enough space, the flat was damp and dirty, it was hard for her children to do their homework, and Georgia started to suffer from panic attacks which affected her work By the time Georgia’s friend got in touch with me because she was worried about Georgia’s health and the wellbeing of her children, they had been in the temporary accommodation for six months. Worse than that, her housing association had started the process of ending her tenancy because she was no longer living in her flat. The consequence of this, in the context of the UK’s housing crisis, would have been Georgia and her children being added to the statistics of homeless households, in temporary accommodation and on the housing waiting list No one should become homeless because their child is threatened. In one London borough, 47 housing association tenants have required homelessness assistance from the council as a result of violence since 2019. Across the country, that means that thousands of families have to leave their homes each year, with their secure tenancies potentially at risk, on top of having to rebuild their lives in a new area Homelessness is fundamentally destabilising, involving the loss of a sanctuary and of a place in one’s community. It is deeply traumatising to have to make an emergency move because of a threat of violence and start again somewhere else. Our housing system should do everything possible to help families in such circumstances make the transition to a new permanent home as soon as possible, to limit the harm caused by the threat. My Bill would do that. It would require social housing landlords, whether councils or housing associations, to protect the tenancy rights of their tenants who have to move owing to a threat of violence. It would also confer a new duty on social housing landlords to co-operate with each other in circumstances in which a tenant, for safety reasons, has to move to an area where his or her current landlord does not own any property. There are some good examples of co-operation already, such as the pan-London housing reciprocal, and I commend that work, but for as long as this remains voluntary, some tenants will fall through the gaps I am delighted that this Bill has the support of Shelter and the National Housing Federation. Shelter has highlighted the case of Corey Junior Davis, “CJ”, whose mum had asked her housing association for an urgent move after her son had been threatened and had told her that he feared for his life. CJ’s mum had done everything possible to keep her son safe, including sending him to stay with relatives in a different area, but six months after her initial request, while they were still waiting for a move, CJ was shot and killed. I have also met constituents who have sent their children away to keep them safe, because they fear the consequences of being placed in temporary accommodation and losing their tenancy. That is not a choice any parent should have to make We have a housing crisis in the UK, and we need a comprehensive plan to tackle it involving the building of genuinely affordable, secure social housing and reforming the private rented sector to give greater security and stability to private tenants. I pay tribute to councils and housing associations across the country that work tirelessly to provide social housing and to support their tenants, but there is more we can do, right now, to stop many families entering the homelessness system by preventing families that already have the security of a social housing tenancy from losing that security and being added to housing waiting lists. This is not asking social landlords to find additional properties, because the people who would be protected by this Bill are already their tenants. It would simply require them to do everything possible to limit the harm of the traumatic event that has resulted in a need to move home In the end, following my intervention, Georgia’s housing association found her a new home in a safe area, but the months in temporary accommodation took a devastating toll on Georgia and her children. What started as one traumatic incident spiralled into long-term consequences The provisions in this Bill would apply in any situation where the police decide that a tenant should move because of a threat of violence, including: domestic abuse where the perpetrator does not live at the same address as the victim; an escalating neighbour dispute; or the threat of violence to a young person in the household. It would not have any impact on the existing rights and responsibilities of either the landlord or the tenant under the terms of the tenancy This Bill enjoys cross-party support, and I am grateful to all the co-sponsors and the shadow Housing Minister, my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook)—I know he has seen similar cases in his constituency—for their support. I am grateful to the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for Walsall North (Eddie Hughes), for attending the Chamber to listen to the argument for this Bill I hope the Government will agree with us that no one should be made homeless because they or a member of their household is threatened, and I hope they will support this small reform that will make a really big difference to vulnerable families, such as Georgia’s, across the country Question put and agreed to. Ordered, That Helen Hayes, Mr Clive Betts, Bob Blackman, Ms Karen Buck, Stella Creasy, John Cryer, Florence Eshalomi, Robert Halfon, Dr Rupa Huq, Caroline Lucas, Luke Pollard and Christina Rees present the Bill Helen Hayes accordingly presented the Bill Bill read the First time; to be read a Second time on Friday 25 February, and to be printed (Bill 243).
I beg to move, That this House agrees with the remarks of Lord Agnew of Oulton in his resignation letter that the Government’s record on tackling fraud is lamentable; recognises the vast amount of taxpayers’ money that has been lost to waste and fraud since the start of the coronavirus pandemic, including the estimated £4.3 billion recently written off from Treasury-backed Covid business support schemes; notes the Government’s unacceptable record of poor procurement over the last decade, including £13 billion wasted on defence projects; further notes the warnings the Chancellor received in 2020 regarding the serious weaknesses allowing for public funds to be diverted to criminal enterprises; calls on the Government to set out a strategy to recover all taxpayers’ money obtained by criminal groups and to fully engage with a thorough National Crime Agency investigation into all issues related to the fraudulent exploitation of the covid-19 support schemes; and further calls on the Chancellor of the Exchequer to make a statement to this House before 31 March 2022 detailing how much taxpayers’ money has been successfully retrieved Millions across our country are facing a cost of living crisis, but while many are worried about soaring energy and food bills, the Government are preparing to hike taxes for working people and businesses. It will be the biggest tax burden in 70 years, yet while the Government are delving into people’s pockets for their hard-earned cash with one hand, they are throwing it away with the other. With endemic waste and fraud, taxpayers’ money is being poured down the drain. We see billions of pounds of waste on vanity projects, crony contracts and poor procurement. Basic checks and measures on who was handed covid support are completely ignored. We have had £4.3 billion in fraud written off by the Chancellor—that is a third of the tax hike that the Conservatives are about to impose on working people and the businesses that employ them The truth is, that is only the tip of the iceberg. That is why Labour has brought this motion before the House, calling on the Government to come back by 31 March with a clear answer on the true extent of fraud in their covid support schemes and to report back on how much taxpayers’ money has been clawed back from the criminals. It is because the Chancellor has lost a grip—and he seems to have fled the scene—that the motion calls on the Government to allow the National Crime Agency full access to investigate all aspects of fraud within covid support, not just the mere 13 cases that the Chancellor suggested they are looking at.
Was my hon. Friend as surprised as me not only by the terms with which Lord Agnew, the Minister in the Lords, resigned—the “schoolboy errors” made—but to learn that the National Crime Agency was shooed away by the Treasury when it offered help to try to get back some of the fraudulently taken money?
It was nice to see a Government Minister with a bit of integrity doing the right thing and resigning because of the errors that the Government are making. Let us look at the details. On 12 January, the following details were published on gov.uk: £5.8 billion of fraud, with—yes—£500 million already retrieved and up to £1 billion to be clawed back by the end of 2023. That leaves an outstanding £4.3 billion of fraud written off by the Government. The grants number refers to the assessment of the losses made by Her Majesty’s Revenue and Customs from just three schemes: the coronavirus job retention scheme, which was £5.3 billion; the self-employment income support scheme, which was £493 million; and eat out to help out, which was £71 million. That fraud adds up to a combined £5.8 billion. In addition, page 121 of the Department for Business, Energy and Industrial Strategy’s annual report states that bounce back loan fraud is estimated to be 11% of the total. When the Minister comes to the Dispatch Box, will he tell us whether he recognises those figures? Does he understand what an affront that is to taxpayers and to those who were excluded from Government support during the pandemic?
The shadow Chancellor is making an excellent speech. Does she agree that not only is it a disgrace to write off all those billions, but, to add insult to injury, working people will have to pay for that with the national insurance tax rise and through a lack of help on energy bills, which is another worry for households all around the country?
My hon. Friend is exactly right. The Government say that they need to raise taxes to fund public services, and yet at the same time they are writing off billions of pounds-worth of taxpayers’ money. That is why I say it is an affront to taxpayers and to all those businesses who were excluded from Government support when they most needed it. They now know that criminals got their hands on the money while genuine businesses and self-employed people could not get a penny.
Given the rate of return for every pound spent by HMRC in compliance, is my hon. Friend puzzled about why money is not being invested to get back furlough fraud?
My hon. Friend is absolutely right that it is good value for money to invest in HMRC to get that money back, but the truth is that it did not need to be like this in the first place. The Government could have avoided these enormous levels of waste and fraud, but they set up the covid support scheme without proper checks and balances. It is not beyond the wit of Government to direct money where it is needed without giving it to organised criminals and fraudsters. It is incredible that the Government were dishing out lump sums of £50,000 to businesses that were not even trading at the start of the pandemic. It just does not make any sense. The Treasury did not even require checks with Her Majesty’s Revenue and Customs to see that self-certifying businesses had made a tax return as proof that they were genuine. What on earth was going on in Government? Those checks take just a matter of minutes. The result of those failures was that criminals created fake companies to receive public money and that is a disgrace.
My hon. Friend the shadow Chancellor is making an incredibly powerful speech on the eye-watering sums that have been wasted by this Government. The amount of funding that has been lost in Barnsley since 2018 is £30 million. In that context, is it not outrageous that the Chancellor, who cannot even be bothered to turn up today, has wasted so much public money?
As an hon. Member mentioned earlier today, this morning was the first we had seen of the Chancellor at the Dispatch Box since the beginning of December—perhaps we were lucky to see him today Disturbing reports of court cases are now emerging. They reveal how an organised crime leader, with no less than 48 previous criminal convictions, was handed £50,000 of taxpayers’ money. If only that were a one-off case. The same judge had seen, two months prior, a case where a drugs gang had been given a £25,000 Treasury bounce back loan. Well, good for them to bounce back! What about those who were excluded?
I thank my hon. Friend for making an incredible speech. What we cannot forget are the stories we have heard, like the one from a woman in my constituency who had set up a business as a driving instructor. The rules the Government set meant that she was entitled to no compensation and no support whatever. She was left with no income and had to rely on food banks. As my hon. Friend says, at the same time that drug barons were being given taxpayers’ money, people in my constituency were given absolutely nothing and were forced to rely on charity. It is a disgrace.
My hon. Friend speaks powerfully. I would like the Minister to explain, at the Dispatch Box, why drugs gangs got tens of thousands of pounds of taxpayers’ money when my hon. Friend’s constituents could not get a penny The Chancellor and other Ministers were warned repeatedly about the risk of fraud. In June 2020, the Chancellor was advised by the Fraud Advisory Panel, Transparency International, Spotlight on Corruption and the former director of the Serious Fraud Office that there were “serious weaknesses that enable fraudsters and corrupt insiders to exploit the bounce back loan scheme and the covid business interruption loan scheme.” and that that would create a “risk to the taxpayer”. They offered to provide the Chancellor with information, advice and support to improve the control of the funds, yet it seems the Government were not interested in that advice.
Stripping away the political rhetoric, the hon. Lady is making some very serious points for the Government to consider. However, on reflection, does she now think it was wrong for her Labour colleagues in 2021 to call so readily for the Government to use taxpayers’ money to support GFG Alliance, which was subsequently investigated by the Serious Fraud Office?
I understand that MPs want to represent businesses employing people in their constituencies, but it is the role of the Chancellor and the Government to make sure that money goes only to people who deserve it, not fraudsters. The hon. Gentleman was a member of the Business, Energy and Industrial Strategy Committee, which I chaired. The Committee did ask the Government to get money to businesses that needed it, like those mentioned by Labour Members, but basic checks that could have been done in a matter of minutes were not done. He will know, because of this Government’s tax rises and the increase in energy prices, that an average household in his constituency will, from April, be £1,378 worse off.
Does my hon. Friend agree that the £4.3 billion that has been written off is a disgrace, given that the austerity that local authorities have suffered over the past 12 years has had a major impact on the people they serve and our communities?
My hon. Friend makes an important point. Her council in Liverpool and all our councils have lost money, and this Government are handing it out to criminals. Billions of pounds of taxpayers’ money has been written off, but it was not the Chancellor’s money to write off; it is the public’s. The Government have clearly lost their grip. We must restore faith and confidence in how taxpayers’ money is spent We have a National Crime Agency in our country for a reason: to tackle serious and organised crime. It should be the National Crime Agency that the Government ring first on such occasions, but instead there are reports that they do not even want it to look into the matter. The Chancellor said earlier that just 13 cases are being looked at by the National Crime Agency. That is why Labour has brought our motion to the House today: to call on the Government not only to come back by 31 March with a clear answer about how much of their money has been clawed back from criminals, but to allow the National Crime Agency full access to investigate all aspects of fraud within covid support. The Government should not be resisting any effort whatever to retrieve taxpayers’ money and to hold people responsible. We need to know how it is so easy for organised criminals to steal from right under the Treasury’s nose.
As a point of correction, the hon. Lady says that the Chancellor said that only 13 cases were being looked into by the National Crime Agency, but what he said was that 13 people have been arrested. Many more cases have been looked into I think the hon. Lady is in danger of missing the point. Lord Agnew actually said that the Government did a very good job of rolling out the schemes; his problems were with the checks and balances afterwards on banks drawing on the guarantee. Two banks were responsible for 81% of claims on the guarantee. That is where our attention should be focused: what are the banks doing about getting the money back?
Lord Agnew did not resign from the board of a bank; he resigned as a Government Minister because of “schoolboy errors…indolence and ignorance.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20-21.] How does the hon. Gentleman explain to constituents in Thirsk and Malton that they will be £1,175 worse off in April because of the energy price hike and the tax increases from this Government, who all the while are giving money away to criminals? That is why Labour has brought our motion to the House.
The shadow Chancellor is giving an excellent speech exposing the systemic problems with the Government’s schemes. Does she share my concern that the emergency procurement procedures and the crony contracts given out for personal protective equipment meant that £280 million-worth of substandard masks were contracted for, with £100 million on unusable gowns and £200 million to Conservative party friends and donors, yet those shady and untransparent emergency procurement procedures are still being used?
My hon. Friend is absolutely right. What we are talking about would be appalling even if it were a one-off example of waste, but it has become the hallmark of this Government that they waste money and treat taxpayers’ cash with a lack of respect: £13 billion was wasted on failed defence procurements, including £4.8 billion of taxpayers’ money handed out for cancelled contracts. If that waste of public money had been avoided, more money would surely have been available for our armed forces, whose budget was cut by the Chancellor in October As my hon. Friend says, that just scratches the surface. Some £3.5 billion went on crony contracts, £300,000 went from the levelling-up fund to save a Tory peer’s driveway and £500,000 went on the Foreign Secretary’s flight to Australia, ignoring her own advice from 2009: “Every public sector worker should feel personal responsibility for the money they spend and the money they save. They should spend taxpayers’ money with at least the care they would give to their own.” I do not know what care the Foreign Secretary gives to her own money, but I would not spend £500,000 of taxpayers’ money like that. Some £900,000 was spent on working out whether a bridge between Scotland and Northern Ireland was remotely viable and cost-effective. I could have given that advice for nothing It all adds up to a total disrespect for taxpayers’ money—and it all matters, because if a Government Minister wastes money by letting it slip through the net into the hands of fraudsters and wastes huge sums of taxpayers’ money on vanity projects, they have to raise taxes to find the money. The fact that taxes are at a 70-year high is the other side of the coin from the waste that we are talking about. With one hand, the Government raise taxes; with the other, they throw away taxpayers’ money Labour would treat taxpayers’ money with respect. We care about value for money because we respect taxpayers and we respect our public services, which have been starved of funds by 12 years of Conservative Governments. We want to break our economy out of the cycle of low growth and high taxes. We will build a stronger economy, in which prosperity and security are enjoyed all across our country. That is why we will tax fairly, spend wisely and get our economy firing on all cylinders. People are facing a cost of living crisis. Labour’s answer is not to dip into their pockets even more or waste their money on vanity projects or fraud. As the Conservatives ask families and businesses to pay even more, the very least the Government can do is try to get their stolen money back. That is why I urge all Members to support the motion.
This is a Government who have been relentless in their efforts to protect lives and livelihoods throughout the pandemic, taking unprecedented steps to see the country through what have been difficult times for us all. It goes without saying that we took and continue to take our responsibilities to taxpayers extremely seriously. They rely on us to make decisions on their behalf in their best interests, and that is exactly what we do. As a Government, we have been consistent in doing exactly that, acting, in the words of the Chief Secretary, “quickly, effectively and responsibly”.
I will just make some progress I am sorry that Lord Agnew chose to resign from his position as a Minister in the Treasury and in the Cabinet Office, and I want to take this opportunity to thank him very much for the important work he did while he was in government. The Government have been working to achieve better quality government for citizens, with relentless focus on outcomes, ensuring every £1 of taxpayers’ money is spent well; ensuring policy making reflects the communities we serve through, for example, the movement of civil service jobs away from London to Darlington, Stoke, Preston and elsewhere; driving the post-Brexit procurement rules reform to make procurement more transparent, provide better services to citizens and deliver social value; and procuring ventilators at the beginning of the pandemic. We have focused on value for money and supporting the taxpayer.
The Minister is talking about good stewardship of public money, but was he as concerned as I was to read in the press that, under the Tory Tees Valley Mayor, the public share of the joint venture to develop and secure major industrial opportunities, which has had tens of millions of pounds of taxpayers’ money invested in it, has been transferred to JC Musgrave Capital and Northern Land Management? Does that not raise major questions about how public moneys have been spent? Does he agree that, given wider concerns about governance and the vested interests of political donors, what is needed is an independent inquiry into the governance of the Tees Valley Combined Authority and the South Tees Development Corporation?
What I do know is that Ben Houchen is an excellent Mayor and Labour wishes that it had mayors like him Fraud is unacceptable wherever and however it is perpetrated. The Government remain determined to stamp it out. I can say that as a Minister and a former Attorney General, and as someone who prosecuted such cases in an earlier life—
I will make a little progress, if I may. As the House will be aware, since March 2020, the Government have delivered a comprehensive multi-billion pound package to support households and businesses. Before I turn to specific measures that we are taking and have taken to combat fraud, it is worth reminding ourselves of three key facts. First, with regard to the covid schemes that we introduced, the vast majority of people did the right thing. They understood what the schemes were for and accessed them in a way that was wholly appropriate. Secondly, this was a once-in-a-generation event and I ask the House to accept that. Businesses were on the brink of collapse. They needed support really quickly—something that the Labour party understood and Labour Members were screaming about at the time. We were able to deliver that support, and to do so properly, in record time and in a way that the world was envious of Thirdly, the support worked. Many thousands of jobs were saved, and today we have a thriving labour market, with record low unemployment, the economy returning to its pre-pandemic size faster than expected, and you know what, Mr Speaker—the fastest-growing economy in the G7.
Clearly, the Government have given unprecedented levels of support to people, especially those in Rother Valley. So would the Minister condemn, as I condemn, Labour-run Rotherham Council, which handed back millions of pounds of discretionary funding to the Government because it could not get the money distributed fast enough? That is a waste of taxpayers’ money and giving the money back to the Government was a scandal.
That is a very peculiar happenstance that my hon. Friend rightly mentions. Other local authorities around the country made good use of that generous provision, and I think Rotherham have questions to answer.
On Lord Agnew of Oulton, who resigned over the fraudulent covid business loans, the good, decent Lord said that there was “zippo of detail” on how the Government plan to deal with the issue of business loans. Can the Minister say how the Government will claw back the £77 million loss on the eat out to help out scheme from the missing Chancellor?
If the hon. Gentleman will allow me to make some progress, he may hear about what the Government have been doing, and will continue to do The Government’s priority at the time was to get financial support to businesses. That was the alpha and omega of everything—it was to get that financial support to businesses, and their employees by extension, and as quickly as possible, to protect jobs and livelihoods. In total, we made available over £100 billion of loans and grants to over 1 million businesses, through bounce back loans, the coronavirus business interruption loan scheme, the coronavirus large business interruption loan scheme, and business grants. There were myriad schemes that we were using.
The Minister’s defence—that this was a pandemic and the Government had to act quickly—does not seem to hold any water when we know that back in 2014 there were problems with Companies House. There were problems with international fraud and money laundering, and problems with how easily businesses could be set up through Companies House, yet the Government have dragged their feet; they have not taken action. That was years before the pandemic hit the United Kingdom. Had the Government taken action when they knew about the problems with Companies House, we probably would not be dealing with the amount of fraud that we are right now.
As it happens, we have given, as a Government, over £60 million to Companies House to continue its necessary reforms and we have undertaken myriad measures to prevent the problems that the hon. Lady refers to The first lockdown came into force on 23 March 2020. By 24 May, just a couple of months later, we had already paid out almost £28 billion in loans, rising to £80 billion by the time that the schemes closed on 31 March 2021—astronomical support.
Much has been made of Lord Agnew’s resignation and we should take his resignation points very seriously. We should also acknowledge that he described the bounce back loan scheme, in his resignation piece to the Financial Times, as an “important and successful intervention”. Is not his real point that we need to make sure that checks and balances have been followed by all banks who were given the responsibility of distributing these loans?
I agree with my hon. Friend on that, and also on Lord Agnew, who is a noble man and was an excellent Minister. The sheer volume of schemes introduced and the speed with which they were designed and implemented meant it simply was not possible at the time to prevent every instance of fraud and error, and I accept that. However—
I must make some progress. The measures that we implemented to minimise fraud and error were robust and comprehensive. Some £2.2 billion of what were deemed potentially fraudulent bounce back loan applications were blocked through up-front checks—£2.2 billion that the Labour party has not said anything about. Lenders were required to make and maintain appropriate anti-fraud, anti-money laundering and “know your customer” checks. Specifically, they were required to use a reputable fraud bureau to screen against potential and known fraudsters and, if an application failed the lender’s fraud checks, the lender was unable to offer a loan There were measures in place: those lender checks, with the duplicate loan check, incorporation date check and change in director check that were put in place in the following months, were the most impactful of all the checks implemented. The minimum standards were agreed following consultation with PwC and lenders on what would have the biggest impact on preventing fraud while still meeting the policy objective of delivering finance quickly. It is true that PwC originally estimated the extent of fraud relating to bounce back loans at £4.9 billion, but last December it revised that figure down to £3.3 billion—so, as usual, the Labour party has its figures wrong. We will not be taking lectures from a party that, I seem to recall, left a multi-billion-pound black hole in the Defence budget the last time it was in government.
I should just pick up on that point. As the Paymaster General knows, those figures are all still highly uncertain. Around £17 billion—another highly uncertain figure—of the £47 billion of loans may never be paid back. Some of that will be fraud and some because businesses have gone under. However, the key point is that he says checks and balances were put in place. He knows that was not the case: they were dropped for speed. We all lobbied for speed but, as my hon. Friend the Member for Leeds West (Rachel Reeves) said, it was the Treasury’s responsibility to ensure that the checks were in place. Why were 61% of loans by value out of the door before checks were introduced in June so that people could not apply twice? That is a simple thing, and the door was shut after the horse had bolted.
The hon. Lady has fairly said that she and others on the Opposition side did push for the Government to take action. They are right to accept that—and they were right to do so. This Government did take the precautions and, if we had waited any longer, businesses would have gone under. They would have gone down I suggest to the House that the news has been good in other ways too. In 2020, a National Audit Office report contained an estimate that as much as 60% of the sums lent might never be recovered. In fact, nearly 80% of the loans are being repaid or have already been repaid, and we are keeping up the pressure. For instance, we have given the Insolvency Service and Companies House new powers to prevent rogue company directors from escaping liability for their bounce back loans. So far, that has been used in respect of—
On a point of order, Mr Speaker, I am reluctant to make a point of order in a debate, but it is important to reflect on what the Paymaster General has just said and he may wish to correct the impression that he gave. Those loans are 10-year loans, so it cannot be the case that 80% of them have been repaid at this point. He may want to look again at his notes and perhaps correct the impression he gave.
I think that is more a point of clarification than a point of order, but it is now on the record.
It is not worth answering that point, Mr Speaker As I said, we have given the Insolvency Service and Companies House new powers to prevent rogue company directors from escaping liability for their bounce back loans. So far, that has been used in respect of almost 62,000 companies holding loans worth £2.1 billion. We are giving the Insolvency Service new powers to disqualify rogue company directors and we have already introduced regulations that allow for greater scrutiny of pre-pack administrations. Crucially, newspaper reports that the Treasury has written off £4.3 billion in fraudulent covid support payments are simply not true. The £4.3 billion is not a figure produced or recognised by HMRC. As the Chancellor of the Exchequer has said, we are not—I repeat, not—ignoring money relating to fraud in our covid support measures and we are definitely not writing it off. We were and remain determined to crack down on fraud wherever it arises. That is why, for instance, we invested more than £100 million in a taxpayer protection taskforce. At the March Budget last year, we created a taskforce of more than 1,200 HMRC staff to combat fraud in our coronavirus loan schemes. To hear the Opposition, they would deny the existence of those 1,200 staff, who are busy working away to combat fraud. The taskforce is expected to recover up to £1 billion from fraudulent or incorrect payments.
Can my hon. Friend take us back to the points that Lord Agnew made and clarify whether I have it correct? In putting out much-needed money, the Government relied on intermediaries, and therefore much of it went through the banking system. I think I heard Lord Agnew say in the other place that many of the issues related to two banks out of the seven. It looks to me that a lot of the concerns raised by Opposition Members—validly—relate to processes within some of the banks. Can my hon. Friend clarify whether I am right on that, and the Government’s intentions regarding that?
May I suggest that there is plenty of space if the hon. Gentleman wishes to speak? These are becoming speeches, rather than questions. I am more than happy to put him on the list if he wishes. We have plenty of room.
As Mr Speaker says, a more detailed response can be given to my hon. Friend’s question in due course, but he is quite right to focus on the point about banks. More than 75,000 people have been contacted and could face criminal prosecutions and financial penalties. HMRC has already recovered more than £500 million through other robust measures, including: building automated controls into the digital claims process, to prevent more than 100,000 mistaken claims; blocking more than 29,000 claims through pre-payment checks based on risk and intelligence; using cut-off dates around scheme eligibility; and requiring customers to be registered for pay-as-you-earn online and self-assessment. Nor is HMRC’s work done; work to recoup fraudulently obtained funds continues. Those identified face repaying up to double the amount they actually received, plus interest; in more serious cases, they risk criminal prosecution The motion also refers to public procurement, another area in which the Government take our responsibility to the taxpayer extremely seriously. In the case of personal protective equipment, our focus was on saving lives and protecting our healthcare workers. That was the top priority, and I make no apologies for that. But again, that did not mean, either then or now, that we were lax in our approach to procurement. We acted swiftly to secure and deliver more than 17.5 billion pieces of PPE to the frontline. The vast majority of the PPE we ordered—in the region of 97%—was suitable for use, either in the NHS or other non-medical settings. My right hon. Friend the Health Secretary explained in a written statement to the House that the need to procure PPE at incredible speed necessarily involved a change in risk appetite. However, I am also clear that, at all times, the principles set out in “Managing Public Money” continued to apply, even under the pressures at the time. The Health Department took decisions on the basis of sound commercial advice. All transactions were approved by the Cabinet Office and the Department of Health and Social Care clearance board. Treasury Ministers and officials made a calculated judgement that the costs of expediting normal processes were outweighed by the benefits to the health of the country. The health of our healthcare workers came first Importantly, as with alleged fraud relating to the covid support schemes, this is not over: the Government will pursue any contracts where there has been a technical failure or breach. I said that approximately 97% were okay, but we are pursuing those that were not, in line with the resolution process referred to in each contract.
On the issue of PPE procurement, which I have raised several times, it is frankly astonishing that the Government could not google “leading PPE equipment suppliers” and come up with the name Arco, which is a world leader in safety and PPE equipment. When it offered its services to the Government, it says that it was cold-shouldered and ignored, and that the Government went straight to those with connections to the Conservative party. It is disgraceful that the Government ignored a high-quality, world-leading company such as Arco.
I think the hon. Lady forgets that, at the time, the whole world was googling for PPE. There was a desperation for PPE. I do not know anything about the company that she mentions, but the reality is that there was a massive desperation to secure PPE for our healthcare workers The Government absolutely reserve the right to take legal action against suppliers where that is required, and the Treasury will continue to support the Department of Health and Social Care in doing whatever it needs to protect taxpayer money where there was a breach of contract. The House may also be interested to know that in cases where there is a significant surplus of PPE, we are passing that equipment to schools and public transport workers in this country, or we are donating it to other countries in need, alongside other efforts to sell or repurpose it The motion also refers specifically to defence projects. The Ministry of Defence is delivering some of the most complex and technically challenging programmes across Government. There is no doubt that defence acquisition has faced and continues to face some challenges, but we are working hard to address them. The National Audit Office has recognised that we are making progress. For example, in its March 2020 report, it noted that the MOD has reduced delays to delivering programmes over the last 10 years. We are determined to continue to build on that The financial settlement awarded to defence at SR20 has been a crucial opportunity for the MOD to move to a sound financial footing, and we are working hard with it to strengthen mechanisms to drive value for money, implement improvements in programme delivery and ensure that it can manage complexity, risk and the pace of technological change in a way that is rigorous and affordable This is not just about what we have already done; it is about constantly refining and improving the tools we have at our disposal. That is why we are committed to delivering reforms in the economic crime plan as well as those set out in the upcoming fraud action plan. The combination of last year’s spending review settlement and private sector contributions through the economic crime (anti-money laundering) levy will provide economic crime funding totalling nearly £400 million over the spending review period Importantly, the Government counter-fraud function is leading a review into counter-fraud workforce and performance, delivered jointly with the Treasury. The aim of the review is to map the counter-fraud workforce and capability across central Government and selected agencies to identify current resources and how that links to each Department’s ability to prevent, detect and recover fraud and error losses To conclude, the purpose of the debate seems to be to try to talk down all that the Government have done on behalf of the taxpayer in the last two years, but I am afraid that the facts paint a different picture. We understand our responsibilities as a Government and will never take them lightly. We will act at all times quickly, effectively and responsibly.
“Lamentable”, “woeful”, “arrogance, indolence and ignorance”—the words of Lord Agnew’s resignation should still be ringing in the Minister’s ears, as should the fact that the disconnect and disinterest in a range of Departments were part of the problem that he outlined. His words should prompt the Government to take action to fix the scandal of taxpayers’ money walking out the door In Lord Agnew’s resignation letter, he said: “As the Minister for Counter Fraud, I have been asked today to publicly defend in Parliament our track record in countering fraud across Government. Unfortunately I am simply not able to do that given the lamentable track record that we have demonstrated since I took up this post nearly two years ago It has certainly not been through want of trying, but the Government machine has been almost impregnable to my endless exhortations.” That is certainly a condemnation of the Government. The Paymaster General has become the Minister for defending the indefensible in the House, as he does yet again today. Perhaps if other Front-Bench Ministers and Conservative Back Benchers took the example of Lord Agnew and his attitude to them, many of them would learn something and resign too We are in a cost of living crisis, yet the sums of money that could go to help people now lie in the offshore bank accounts of crooks and fraudsters. Let us not forget that HMRC has stated that the levels of fraud in the covid support schemes are in line with its original planning assumptions. Planning for £4.3 billion-worth of fraud is absolutely breathtaking. The money that was committed in the Budget came far too late because these problems have been known about for years. The bounce back loan scheme, about which Lord Agnew was denied information as a Minister—that should really worry us all—is of course a UK Government-backed scheme, with an estimated £4.9 billion lost to fraud. Just look at the loans paid out to companies that were not trading. Lord Agnew indicated that 26% of losses are estimated to be attributed to fraud rather than to credit failure. This cannot be fobbed off to the banks, because the Treasury asked them to do this and they did it because the loans were Government-backed Let us put these figures into some context, because they are massive amounts of money. Scotland’s entire devolved social security system is forecast to cost £4.1 billion in the next financial year. The Institute for Fiscal Studies has calculated that a one-off £500 stimulus cheque for those on universal credit could cost £3 billion. A 5% pay increase for all the NHS staff in England would be £1.7 billion. This is money that could have been much better spent had it not walked out the door and into the hands of fraudsters We cannot deny that the money needed to go out the door quickly in the pandemic. I remember, during those early days, hearing on the Treasury Committee from banks and Treasury officials about how concerned they were about the fraud risk. Some of the checks that could have prevented this fraud are simple—a national insurance number or an HMRC reference—but others speak to a long-term systemic failure that the UK Government have been warned about repeatedly—the system of registration at Companies House. That is not an issue of reform, as some have tried to point out; it is an issue of legislation and an opportunity that this Government have missed time and again.
I am looking forward to hearing the hon. Lady’s recommendations on reforming this important area. She mentioned her role on the Treasury Committee. Did she, at the time, have concerns about the use of the British Business Bank for the delivery of loans to businesses?
The British Business Bank being a relatively new mechanism, of course there were concerns about that. We took a lot of evidence on the concerns that existed around loans and other things that were going out the door, but that does not mean that things could not have been put in place to prevent this, and we did hear evidence to that end.
rose—
I have a lot to get through. If the hon. Gentleman wants to make a speech later on, I am sure we will all be incredibly interested to hear what he has to say I have spoken at every opportunity, and Ministers have heard me at every opportunity, on the need for reform of Companies House, and it still baffles me why the Government are so lackadaisical about this clear open door to fraud. Companies House remains a repository of information, not a checking service. It is not an anti-money laundering supervisor. In answer to me at Treasury questions earlier, the Economic Secretary to the Treasury referred to the 2018 Financial Action Task Force report, but that still means four years of inactivity in this House. In 2018, as he will remember, we also had the Sanctions and Anti-Money Laundering Act 2018, a further missed opportunity to have closed this door and locked the fraudsters out. Companies House has no connection with the UK Government’s Verify scheme, which is required for a passport, a driving licence or a tax return. For a minimal fee of only £12, someone can set up a company in the UK with no checks on who they are and what they intend to do with that company. Compare this with, for example, the £1,012 for a child to take up their right to citizenship. The money involved is absolutely baffling. Last year, in This is Money, Martin Swain, director of strategy, policy and external communications at Companies House, admitted: “Even though, sometimes, we know that the information is incorrect or potentially fraudulent, the registrar is legally required to register it.” The Companies House website even has a disclaimer at the top that says: “Companies House does not verify the accuracy of the information filed” Why is this being allowed to continue? Even a simple drop-down menu in the registration process would stop people putting in things like “Anytown, Anywhere” rather than a place that really exists.
The hon. Lady is making an excellent speech and pointing out all the problems with Companies House. At the moment, as it says, it would take over 10 years, on the pace of change that we have from the Government, to see action taken on this, and all the time people are setting up these fraudulent companies.
The hon. Lady is absolutely correct. The rate at which people are doing that should be causing the Government real fear, and it is not. This makes no sense at all. Every day that the Government allow it to continue, the register becomes more and more useless and more and more full of junk information and fraudulent transactions, and they should be embarrassed by that It has been a matter of public record for years that the Companies House register is utter guff. It contains names such as “Holy Jesus Christ”, whose nationality is listed as “angelic”, residence as “heaven” and profession as “creator”, and “Adolf Tooth Fairy Hitler”, listed as one of the clearly invented directors of a company calling itself Spypriest Ltd. There are also some highly precocious company directors who are only a few months old. Research by Global Witness in 2018 identified 4,000 listed beneficial owners under the age of two, including one who had yet to be born—talk about being born yesterday!— as well as five beneficial owners who controlled more than 6,000 companies. This is just not credible, and the Government know it During the past week, the Companies House expert Graham Barrow has been monitoring in real time the construction of a network of companies using real names but fictitious addresses. This leaves real people affected, but often unaware that their names are being abused—and difficult to contact, because the addresses are not real. It also affects the counter-fraud efforts to which the Minister referred. The people setting up those fake companies cannot be traced and chased down, and are allowed to get away with it It gets worse, however, because this open door at Companies House allows dirty money to be laundered through the UK. Oliver Bullough is one of many who have pointed out that kleptocrats from around the world have been abusing UK corporate structures—including Scottish limited partnerships—for years to shift their ill-gotten lucre. There are pressing implications for the current situation in Ukraine, but this is not new; it has been going on for years, completely unimpeded. The news that the National Crime Agency has today been able to seize £5.6 million from an Azerbaijani MP based in London is of course welcome, but that is short of the £15 million that the NCA wanted to seize. It is the tip of a massive iceberg. Duncan Hames of Transparency International has said that it estimates that the ruling elite of Azerbaijan own £700 million worth of property in the UK, and that about £2 billion has been shifted around Europe, some of it through our corporate structures. That makes the delaying of a registration of overseas entities Bill even more unacceptable, and even more baffling.
Does the hon. Lady agree that while the arrangements relating to foreign entities do need to be a tightened, a culture change is also needed? She will be aware from press reports that the Foreign Secretary dined out at a Tory donor’s restaurant and charged that to the taxpayer although civil servants had said that the restaurant was too expensive. Does she agree that the Foreign Secretary should have to pay the money back?
I agree that there needs to be probity when it comes to that kind of money and that kind of behaviour—particularly the overruling of civil servants, if that has indeed been the case When I raised some of these matters in the House last week, Ministers pointed to unexplained wealth orders as a great badge of success, so I tabled a parliamentary question to find out how successful they had been. In 2018, the year in which they were introduced, there were three. In 2019, there were six. I thought, “That is great—the numbers are going up”, but there have been none since then. Is this a measure that is actually effective in tackling unexplained wealth? I am not sure that it is.
My hon. Friend will recall that the first ever unexplained wealth order was awarded against someone who was only allowed to become a United Kingdom citizen because of the billions of pounds that she had promised to bring into the United Kingdom. Does my hon. Friend believe that that is an indication that Government policy is fighting against itself? On the one hand the Government want to get people with lots of money into the UK, and on the other hand they do not ask too many questions about where that money has come from.
My hon. Friend is absolutely correct to draw attention to that. It is one of many deficiencies in the Home Office systems as well. It seems that those with money are given a free pass, whereas those who come here with more humble undertakings to begin their lives here, to work and to build a family, end up being penalised and having to pay an awful lot more in fees, and experiencing all the challenges that that brings Hon. Members may think that some of these issues with Companies House seem a bit remote from the real world and the real lives of our constituents, but that could not be further from the truth. During lockdown, a company in Glasgow using myriad company structures made claims under the furlough scheme, but employees of that company never received the money that they were entitled to. Even if the company directors ended up being prosecuted, or HMRC ended up getting its money back, those employees would still get nothing. That shows the complete unfairness in the system. I would be interested to know whether the Government have any figures, from when they have chased down these companies, on how many employees never saw the money that they should have got and that they needed to get by For those completely excluded from the covid support schemes, this is all the more galling. Limited company directors and pay-as-you-earn taxpayers were left out because they were deemed too much of a fraud risk, and new mothers who had taken time off to have a child in the preceding three years lost out because calculating their maternity leave was thought to be too complex. Yet as they were being told that by Ministers, the real fraudsters were raking it in, with drugs gangs getting payouts, and many of the people who benefited will never be caught These most recent examples of the Government’s relaxed attitude to the wasting of public funds are by no means the only cases. Best for Britain’s “scandalous spending tracker” sets out the following examples—I will list just some of them; otherwise, we could be here all afternoon, and I am sure that others want to speak—since the current inhabitant of No. 10 Downing Street came to office. It categorises them in three ways: as “crony contracts”, “duff deals” and “outrageous outgoings” Here are a few highlights: £11 million on blue passports; over half a million on chauffeuring Government documents, never mind Government Ministers; £56 million contracting to big consulting firms outside tendering processes; £29 million on the festival of Brexit; £900,000 painting a plane; £900,000 researching a bridge to Ireland, which I could have saved the Government money on, because I did a second-year geography project—at high school, not university—that could have told them it was a ropey idea; £32 million on unusable PPE suits; over £38 million on a test and trace contract that was not fulfilled; £10 billion on a failed test and trace system; over £300 million on expired PPE, and billions more on contracts for friends and family of Ministers and Conservative party donors through the fast-track lane All that totalled £25 billion, and all of it at a time when the screw was being tightened on those who have the least, with cuts to universal credit, some getting no money at all, and more effort spent chasing down those who happened to wrongly claim child benefit than those who deliberately defrauded the public purse to the tune of billions I find it difficult to understand why the Government are so careless with our money and why they do not want to act on fraud and money laundering. The question “who benefits?” continues to rattle around in my head. While those on the Government Benches do not like the inference that it was them and their chums, I wonder whether the fact that this coincides with the undermining of the Electoral Commission and the relaxing of the rules on overseas donors is any kind of accident. It is not just me; the Centre for American Progress flagged recently: “Uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling conservative party, the press, and its real estate and financial industry.” This should worry us all, but it does not seem to worry those on the Government Benches Lord Agnew’s estimate of the total fraud loss across UK Government Departments is £29 billion per year. That could go, as he suggested, to tax cuts or, as we on the SNP Benches would argue for, to investment in public services and increases in social security. Either way, there is a cost to this fraud, and it remains absolutely baffling that this UK Government have continued to let it go on their watch.
Will the hon. Lady give way?
I am just coming to a close, but I am sure that the hon. Gentleman will have a contribution to make later The solution is not difficult if the will is there. We have lost too much time and too many opportunities to bring forward measures in different Bills. If we are to have an economic crime plan, it must tackle all these issues; we must not miss another opportunity. If the Government will not act, they should devolve full powers in this area to the Scottish Parliament and let our colleagues in Edinburgh get on with the job. Scotland has no desire to be tarnished yet further by this grubby excuse for a Government.
I am slightly surprised to be called so early in the debate, but very grateful. It is an honour to follow the hon. Member for Glasgow Central (Alison Thewliss), who spoke a lot of sense about Companies House in particular. I welcome the Opposition’s use of their time on this debate, as this is an important matter that goes to the heart of competence in what the Government are supposed to deliver: good decision making while acting prudently with the public purse. Let us be clear that fraud and waste of public funds are entirely unacceptable Before I continue, I should point to my entry in the Register of Members’ Financial Interests. For 10 years, before becoming an MP, I worked in fraud and financial crime, and the organisation I worked for chaired the Joint Fraud Taskforce. I should perhaps also start with an apology. I have heard the phrase “single transferrable speech” a few times in this place, and this might be my opportunity to make one. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for Barking (Dame Margaret Hodge) secured a debate on economic crime, and I will repeat some of the points I made in that debate, if the House will indulge me We would be right to be dismayed by some of the unrecovered sums from the various covid support measures, but we should not be quite so quick to jump down the Government’s throat. The recovery of such moneys, as the Minister said, takes time, and we must be realistic that the headline figure will look very different in six months’ time, let alone 12 months’ time. Having spoken to Ministers about this, I am reassured by their determination to drive down those figures further and further, and by the measures that they have already taken, but this is another reminder that we should be considering an economic crime Bill as a matter of urgency Here is where the single transferrable speech kicks in. I met the National Crime Agency a few years ago, and it had mapped an organised crime group and followed how it laundered the proceeds of economic crime, picking up money along the way from our constituents who had been defrauded, from people running small boats across the seas, from organised crime and from the dark web. The chain runs from telephone fraud across the channel and to the poppy fields of Afghanistan, and these groups are not rag-tag bunches of criminals; they are organised, they are not chancing their arm and they are deeply successful. They are not paying tax, and there are many of them out there As sure as eggs is eggs, some of the people who have been exploiting these Government schemes are connected to organised crime. They know how to manipulate the system, and they know how to avoid all the very good, robust checks that the Government mandated for the covid schemes. One of the things we need to do is tighten up the system and, again, there should be an economic crime Bill.
The hon. Gentleman is making an incredibly thoughtful speech, and so far I agree with all of it. Does he share my concern that the cut in Government aid means the National Crime Agency has had to put on ice its plan to grow the international corruption unit to look at this international form of organised crime?
I do not know enough of the detail to answer that question responsibly, but what would unlock the power of the NCA is far more access to data and data sharing. If we can get people sharing robust, high-quality information from the public sector and the private sector, the NCA could draw down on some of this economic crime with the tools it already has Some of the people responsible for misusing and misappropriating Government funds are engaged in high-level economic crime, but we need to consider the circumstances of the time. These support schemes, as has been said, were set up in very quick order, and they were designed to help people and businesses that were facing a very imminent precipice. I think we all acknowledge that furlough and income support saved thousands of jobs and helped to aid the recovery and the buoyant economy we are now seeing as we leave the pandemic The Chancellor has been clear that he will do everything he can to get that money back and to go after those who took advantage of the pandemic, and the taxpayer protection taskforce, which has had a £100 million investment, is a welcome measure. It is a good demonstration that the Government are working together and pulling together We should also consider what has already been achieved. Last year, the Government stopped or recovered nearly £2.2 billion-worth of potential fraud in bounce back loans and £743 million in overclaimed furlough grants, but we cannot afford to take our eye off the ball. Fraud is the No. 1 volume crime in the UK. It is an epidemic that is out of control, and we simply do not have enough of a grip on it. I will repeat myself: we need an economic crime Bill to give law enforcement the tools they need to collaborate better with the private sector.
The hon. Member’s experience is really useful in this House. I have found, through a case involving one of my constituents, that the perpetrators of fraud are not being pursued and that the victims of fraud are being targeted, particularly by HMRC, for tax liabilities that should rest with the perpetrators. Does he agree that an economic crime Bill is really necessary to protect the victims of fraud, not just from the perpetrators but from tax liabilities?
The hon. Member makes a valid point. Too often, people are subject to fraud and they get almost no response whatsoever. That undermines faith in the system and in policing. In some truly terrible cases, it has a huge emotional and psychological impact on the victims As I was saying in answer to the previous intervention, we need to give law enforcement, the public sector and the private sector the tools they need to better share information so that they can drive some of this stuff down and start to turn the ship. Prevention is better than cure and, as great as the taxpayer protection taskforce is, we need to invest early on in spending a fraction of the money on stopping the money walking out the door, rather than trying to recover it after the fact. Data sharing is the key to that As the MP for Barrow, the home of the national deterrent, it would be remiss of me not to linger on some of the points that have been made by the Opposition on defence spending, which has been called out as an area of waste. I have read the report that this claim is based on, and I have to say that I am somewhat sceptical about some of its claims. It is of course crucial that the Government improve on the procurement of defence matériel, and on the contracts they sign. Some of the details in that report do raise eyebrows. They relate to accounting adjustments, extensions and overruns, which are not the same as waste, let us be honest. Going into the detail of the report, we see that two of the programmes commissioned by the Opposition account for half the waste being claimed: Nimrod, which accounts for £3.7 billion; and aircraft carriers, which had a £2.7 billion overspend priced in.
The hon. Gentleman seemed to cast doubt on the reliability of some of the reports that Opposition Members have relied on. I know that he has a keen constituency interest in the MOD’s nuclear activities. The Public Accounts Committee published a report on the management of contracts for defence nuclear infrastructure—the nuclear infrastructure part of the MOD—and found a total overspend of £1.35 billion. Does the hon. Gentleman accept the reliability of that report, which was unanimously agreed and backed by a Committee with a Conservative majority?
The hon. Gentleman makes a perfectly valid point. I am not throwing the entire report under the bus, but I think we have to be sceptical of some of the claims that were made in it. When I sit down with the managers in the shipyard in Barrow, it is clear that the programme is moving on and that we cannot look at it as a static object that is being built. The requirements are changing, and what will be delivered is also changing. There is a cost attached to that. We need to question the constant undercutting of our national deterrent. This is a real concern. To make a political point, which I rarely do in this place, the Leader of the Opposition did not come forward and back the AUKUS deal, which will lead to a considerable number of jobs and skills, and will bottom out the supply chain, not just in my constituency but across the country. That is a tremendous opportunity for us, in partnership with Australia, and we need to support such deals. We need to show across the House that we are backing them. I have digressed, but I hope it was worth it I praise the Chancellor and his team for their work to cut down on fraud and waste, but much more can and should be done. I return to my point that we need an economic crime Bill; as the hon. Member for Glasgow Central says, it needs to reform Companies House, make it transparent who owns property in the UK, and introduce an offence of failure to prevent economic crime. That would strike the right balance between shining a light and providing a disincentive of peril to stop bad actors going ahead My other point is that there needs to be enhanced data sharing across the public and private sectors and an emphasis on fraud, so that when our constituents are hit by fraud—when they get that phone call or that scam email—they can be relieved to know that there is support for them and that we will go after the perpetrators. Fraud so badly affects so many of the people we represent. We need to step up and deal with it.
It is a pleasure to follow the hon. Member for Barrow and Furness (Simon Fell). He made a worthy contribution, and I did not disagree with anything that he put forward, but from listening to him and the Paymaster General, one would not think that Lord Agnew, the anti-fraud Minister, had resigned in the past few days, saying that there was “zippo” detail from Treasury Ministers or officials on how they would deal with covid fraud, and that there was “arrogance, indolence and ignorance” when it came to the Government’s fraud agenda A Minister resigning on principle is a rare thing to see in politics these days. I congratulate Lord Agnew on standing up to “smash some crockery”, as he put it, and make a noise about all this. Thousands of companies that were not even trading were able to get access to bounce back loans. According to Lord Agnew, the Government will lose £29 billion a year to fraud The schemes that we are talking about had loopholes and openness to fraud built in. I sit on the Public Accounts Committee, and HMRC and others have come before us. Even since becoming aware of the numbers and the scale of the fraud, with £4.3 billion being written off on some schemes, HMRC and Treasury Ministers do not seem to have the appetite to go after it—and that is without even mentioning the billions handed over to Tory friends and donors over PPE contracts or the fast lane that the Government were operating, which was found to be unlawful The Chancellor has a very savvy image and the Government’s messaging on keeping the public finances in order is very tight, but the reality is that before the resignation of Lord Agnew, the Government were planning to drop the public register of foreign ownership. They rejected proposals and did not plan to bring them forward in an economic crime Bill. They ignored repeated warnings from the fraud advisory panel on the serious weaknesses in business loan schemes This is about more than the figures—the billions and millions that have been handed over to Tory friends and donors and lost through fraud. We have had the Panama papers, the Paradise papers and the Pandora papers. What we have learned from the past few months, whether from the Downing Street parties or from the lenient attitude to public money, is that there is a belief in this place that there is one rule for those at the top—they can party and break the rules, and if they have money it usually means access to more money and that the rules can be bent The importance of all this is that it goes to the heart of the kind of country we are. I think the public know that there is a stink. They deserve much better.
Like my hon. Friend the Member for Barrow and Furness (Simon Fell), I am rather surprised to be called so early. I am grateful to Her Majesty’s loyal Opposition for securing this debate, because fraud and the efficient use of public resources is a topic that we in this place should always be discussing and hold close to our hearts. I could have started with a mutual blame game, where we look back to the Blair years and point to fraud. A couple of my examples have already been drawn to the attention of the House, so I will not do that, save for one issue that is particularly close to my heart, because I remember feeling so angry about it at the time: the private finance initiative scheme, so beloved by Tony Blair and Gordon Brown The Centre for Health and the Public Interest has recently come out with a report that has calculated that, for the benefit of £12.4 billion of hospital assets, the taxpayer will now be paying £80 billion by the time those assets expire in 2050. If we are talking about waste of public money, Labour is late to the party, and I am not sure there are many lessons to be learned from that.
I know the hon. Gentleman is giving a speech about a popular view of the private finance initiative, but I wish to make him aware of the Atkinson Morley wing at St George’s Hospital, which is a brilliant neurological centre that cost £50 million through PFI. It was built in the late 1990s, and it has saved hundreds and thousands of people. It is a building, and an opportunity to have a service, that was not coming any other way. I give thanks for that PFI deal, and I give thanks for those people who have been saved by it.
I am grateful for the hon. Lady’s intervention. I was not suggesting that the assets should not be built; it is about the way they were financed. Think how many more hospitals we could have built, and how many more people who could have been helped, if we had taken a more responsible approach to PFI Turning to the meat of today’s debate, we have heard a lot of speeches about the covid response and the fraud that has been associated with it, and it is right that we focus on fraud. However, there seems to be a case of partial amnesia about this, because if we cast our minds back to the early months of 2020—it was not that long ago—the conversation was expressly about the trade-off between speed and the level of security needed to protect the public purse from fraud. That was not an after-the-event discussion; that discussion was going on, certainly on the Government Benches, at the time of the innovative and brilliant polices brought in by the Chancellor and the Government to support our economy and the people working in it. This was a deliberate trade-off, but it was not “get the money out” with no defence against fraud. We have heard in a number of contributions that there were a significant number of effective protections against fraud, including for business bounce back loans, and more than £2 billion of applications were caught by that protection We must recognise, in the fullness of our hindsight, the urgency of need. I refer to my entry in the Register of Members’ Financial Interests, because I used to be the managing director and a significant shareholder of a company that employed about 1,200 people in a leisure centre. On 23 March 2020, it was ordered to close by the Government. That was its week of minimum cash flow for the entire year. It is substantially closed during the winter, and it employs another 750 to 800 people at the start of the season and trains them up ready for Easter. By ill chance, the lockdown, which started on 23 March, coincided with that planned dip in cash flow. Without quick public support, that business would have had a very high chance of going under. It did not, because it was able to take advantage of the Government’s coronavirus business interruption loan scheme, and also the furlough scheme, which was enormously important as well. As a result, on 4 July 2020, when the economy was substantially reopened and recreation and leisure was reopened, those jobs were saved. The business was still going, and it has gone on to thrive. That is just a simple example of how the speed at which the Government acted was effective in saving jobs We can expand that out to the national economy, because hon. and right hon. Members will recall that the economists were predicting an unemployment rate of 12% in response to the covid closure. We forget that now, because in fact the unemployment rate nationally today is 4.2%. That is millions of jobs and millions of families—hundreds of thousands of families, certainly—whose economies and lifestyles have been protected by the very speed at which the Government acted, but there was a partial cost to pay for that I accept, and it was accepted at the time, that with speed necessarily comes a reduced ability to follow up on every single aspect of fraud prevention. Given that, it is noteworthy that the estimated percentage fraud rate is about 7.5% for the bounce back loan scheme and much less for CBILS. That compares with a national average for Government contracts of about 5%. To my mind, given the necessary need for speed, the differential between those two rates is surprisingly small, and it is coming down month by month in estimates from such bodies as PwC. We have already heard reference to the reduction in the estimates of overall fraud What is more worrying to me is not the headline rate of 7.5%, but the ongoing long-term rate of 5% for estimated fraud in Government contracts. That is a scandal, and I strongly encourage my hon. Friend the Economic Secretary to the Treasury to take that enormously seriously, because we need to focus on the real costs to the economy and to society that Lord Agnew ably demonstrated in his resignation speech. He highlighted the economic costs as being about £29 billion a year, or 1% off the cost of income tax. That is enormously important. We could do a huge amount with that money should we not choose to return it to its rightful owner, the taxpayer Arguably the greater damage to our society is if we as a society and a Government accept that fraud is one of the costs of doing business. That should never be the case. The morality of our society and the realistic expectation of our constituents is that people who do right are stood by—that is terrible English, but I hope the House understands what I am trying to say there—that fraudsters are not tolerated, and that we go after them and there is an ongoing war against fraud I commend Lord Agnew for having highlighted the need for a renewed focus on this issue. I do not accept that there are huge lessons to be learned from Labour on this, but I look forward with interest to the Government’s renewed long-term focus on fraud throughout the economy. I also adopt the multiple pleas from my hon. Friend the Member for Barrow and Furness for an economic crimes Bill.
It is a pleasure to follow the hon. Member for Broadland (Jerome Mayhew). I agree that we should not accept fraud as a cost of doing business—indeed, there is a moral imperative for us to pursue fraudsters for any losses to the public purse as a result of fraudulent activity. When we come to have further discussions about taxation and increases in taxation, it is even more important that any losses are pursued, as he described, with vigour and that those who commit fraud in such a way are brought to justice I thank the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), for bringing forward the debate. I intend to keep my remarks brief by focusing on some of the startling figures already raised in the debate, foremost among which is that about 26% of public money unlawfully taken from covid-19 schemes is likely not to be recovered by HMRC, so £4.3 billion of the total £5.8 billion stolen from covid-19 support schemes will be in effect written off It is important to put the figures in some context. In doing so, I would like to us to consider another large figure: £3 billion. That, at just over half the cost of the moneys lost to fraud, is the cost of increasing working-age benefits and pension credit by 6%—the likely inflation rate by April—rather than the planned 3.1%. That prompts the question of what the Treasury could afford, if it wished, to end the cost of living crisis and build towards our net zero transition, or indeed honour promises to match EU regional funding for Wales and other parts of the UK that previously received it The outrage and indignation that we have heard is understandable, but the mismanagement of some of our public finances by the UK Government should not come as a great surprise. One need only read some of the Public Accounts Committee’s work to understand that there are many examples of serious mismanagement of public finances. I call to mind its July 2020 report that concluded that “HMRC does not understand the impact of any of the largest tax reliefs” Indeed, it found that between 2015 and 2020, HMRC did not “evaluate the effectiveness” of the 10 largest tax reliefs supporting economic and social objectives. Those unevaluated reliefs cost about £117 billion, which is some 5% of the UK’s GDP. One could argue that we have been very lax with our public finances for quite some time, yet such laxity does not always extend to smaller businesses I listened with great interest to the Paymaster General’s remarks, and I accept that the need for speed, which we have discussed, meant that there was always a risk of some fraud. I do not think that necessarily justifies there being no need for checks and safeguards on any of the schemes. However, it makes me think of a few examples from Ceredigion of businesses that were in receipt of furlough funding and entitled to it—HMRC accepts that—but, due to some clerical errors in real-time information submissions, now have to repay thousands of pounds. HMRC acknowledges that those businesses would have been entitled to that money, but sadly they have fallen foul of RTI submission rules. One can accept that—those are the rules—but here are businesses being pursued for thousands of pounds for a clerical error while we see the potential for writing off billions of pounds of money lost to fraud. It is difficult for those businesses to accept that they must be brought to task when others are getting away with it We find ourselves facing a mounting national debt alongside cost of living and climate crises. I accept that the public finances are in a precarious position, but, if the Government seek to convince us that they cannot afford greater support for in-need households or greater measures to tackle the climate crisis, they must do more to recover the billions of pounds of public money lost to fraud and hold those who have benefited from unscrupulous deals to account. If they fail to do so, they will have little moral authority to increase tax on households and businesses in April.
It is a pleasure to speak in this debate; I welcome the Opposition motion on fraud. I am one of several people on the Government Benches who often speak out about tackling fraud, so I object a little to one or two of the comments from the Opposition that Conservative Members are not bothered about fraud. Nothing could be further from the truth, for a number of reasons, including the cost to our taxpayers. It undermines the very system that underpins our economy if people do not feel that the game is fair for all players, and fraud undermines the principle of everything I have stood for over my whole life in business—the fundamentals of a free-market economy are that it is a fair and level playing field I draw the House’s attention to my entry in the Register of Members’ Financial Interests. Like my hon. Friend the Member for Broadland (Jerome Mayhew), my company took a coronavirus business interruption loan—quite a sizeable one—which was paid back in full without touching it, which I am sure the Economic Secretary will be pleased to hear: we discussed it at length at the time. It is important to put the issue in context. I had an Urgent Question on the issue last week, following Lord Agnew’s statement, because I was very concerned by many of the things he said in it and in his subsequent press articles. He said that the bounce back loan scheme, which has been the subject of many comments in the debate today, was “an important and successful intervention” It was critical at the time. It is easy with hindsight to say that mistakes were made—of course they were, given the speed with which the scheme was rolled out. The initial iterations of the loan schemes did not include a bounce back loan scheme, which was introduced at a later stage, vitally.
I certainly would not disagree with the hon. Member about the remarkable speed from when the Treasury sat down to devise the scheme to when the first loans were delivered. Does he share my disappointment that in the 10 years from 2010, when we knew a pandemic was coming, no planning whatever was done for the economic impacts and the impact on businesses of the protective measures that the Government might be forced to implement when the pandemic finally got here?
The hon. Member makes a very good point. The whole country would acknowledge that we need to be better prepared for a future pandemic. One of the lessons that we need to learn is to have a template ready for bounce back loans and other measures that we can roll out at pace, but we should not undermine the ability of that scheme to get money out to businesses in need The British Business Bank said that it had “ensured that key counter-fraud measures consistent with the…design of the scheme were in place from the outset.” It is not the case that the schemes were rolled out without any consideration for the potential for fraud. That highlights the issue of what checks and balances were in place—the Paymaster General set out some of them in his speech, which was useful—and which banks performed better in taking into account those measures. As Lord Agnew said, 81% of the amount that has not been repaid so far—as far as we understand from the Treasury—relates to two of the seven biggest banks. Clearly some banks did better than others with know your client checks and fraud checks We need to understand exactly what happened. We cannot just roll out a scheme, let it run and that is it. The implications for recovering loans are hugely important. We need the dashboard of information that Lord Agnew called for so that we can clearly understand the performance of the banks. One criticism that I would level at the Treasury is that far more transparency is needed about which banks are issuing loans, what percentage of applications are successful and the success in recovering loans. As somebody who took a loan for my business, I would advocate complete transparency about which businesses take loans. If all that were open—access to Government loan schemes or furlough, and so on—it would be far easier for the public, the media and parliamentarians to hold individual businesses to account. Businesses motivated by wrong and perhaps nefarious purposes would be far less likely to try to access the loans in the first place. Far greater transparency is needed, and to get that taxpayers’ money back there certainly needs to be transparency around the bank’s performance now Many people have called for an economic crime Bill, and some of us have been banging on about that for some time. It could really help. One of the elements is the failure to prevent economic crime. I think that corporate liability should extend to individuals, rather than at corporate level. The No. 1 thing we could do to deter financial organisations and corporations, even smaller corporations, from defrauding people or enabling fraud and money laundering is to say to the individuals behind those companies that they will be held personally responsible. It could have had an effect on the bounce back loan scheme if the banks that cared a little bit less about where the money went were held to account through the senior managers regime and the Financial Conduct Authority, and potentially by other charges too. Failure to prevent is absolutely fundamental to the economic crime Bill Companies House reform is also absolutely fundamental. It is clear that that should be the case and I know the Government are doing something on that already. One perverse situation at the moment is that if someone sets up a business through a company formation agent, they should be subject to money laundering checks by HMRC. If they set up a company directly with Companies House, however, there are no money laundering checks. It simply cannot be right that if someone goes to one and cannot get set up, they can go to Companies House. Companies House, therefore, needs to be a regulator, rather than just a register The register of overseas entities does not come under the taxpayer, of course, but through a simple levy attached to the cost of creating a company, currently £12. That could raise enough money for Companies House to be that regulator, so we could see who was trying to launder money through UK properties. That is absolutely critical. The Government are committed to all this stuff, but we just need them to commit to bringing it forward in the next parliamentary Session. It was great to hear what the Chancellor said on that today. He seemed to be really keen on that being in the next parliamentary Session. I hope recent events will push it up the political agenda One issue we neglect in the conversation about cutting economic crime is the role of whistleblowers. Most economic crime is not highlighted by our very good agencies. They are good sometimes and the legislation we are bringing forward will help them to take forward successful prosecutions, but they need the evidence in the first place. I am sure my hon. Friend the Member for Barrow and Furness (Simon Fell), who made a fantastic speech and who has huge experience in this area, agrees that we need people to come forward with the evidence. Our regulators and fraud agencies can only really be watchdogs rather than bloodhounds and they need to be given access to the information in the first place Whistleblower protections in the UK are pretty woeful now compared with how they used to be. We used to be world leaders in this area. If we want to uncover economic crime, we have to make sure that the people who identify and highlight it, and help the Serious Fraud Office to make prosecutions stick, are protected. That is not the case at the moment. My constituent Ian Foxley highlighted the case of GPT special projects. Some £28 million-worth of economic sanctions against that company were handed down in Southwark court, but for 10 years my constituent has gone without a penny, having had a six-figure salary in his previous role. He blew the whistle. One could say that his whistleblowing led to the Airbus fine of £3 billion, of which £860 million came to the Treasury, but he has gone without a single penny and that cannot be right. We have to make sure people are protected when they come forward, and are properly compensated for the distress and financial impact it has on their lives.
It is quite simple really: the Tories cannot be trusted with taxpayers’ money. Since we have been in the Chamber, headlines in the national news have described as jaw-dropping the revelations in the Department of Health and Social Care annual report. Buried on page 199 is a suggestion that there were £8.7 billion in losses on PPE in the Government accounts: “£0.67 billion of PPE which cannot be used,” perhaps because it is defective, “£0.75 billion of PPE which is in excess of the amount” that might need to be used, “£2.6 billion of PPE which is not suitable for use within the health and social care sector”, and, “£4.7 billion of adjustment to the year-end valuation of PPE”.
I remember the statement in the House, way back in 2010, when the Government cancelled the new hospital for my constituency. It was going to cost about half a billion pounds. Does my hon. Friend agree that we could have had our hospital, and many others too could have had their hospitals, if this sort of waste was identified properly in Government?
I fully agree. What could the Government have used £8.7 billion for? A new hospital in my hon. Friend’s constituency? Other hospitals and clinics? Looking after the 6 million people who are still on the NHS waiting list as we sit in this Chamber That loss is in addition to what has already been explained in previous speeches. I repeat: the Tories cannot be trusted with taxpayers’ money. Lord Agnew’s resignation has rightly renewed interest in the Government’s attitude towards fraud and the wider handling of public money. He spoke about “schoolboy errors” with regard to this Government—hardly schoolboy errors, by the way, when we are talking about billions and billions of pounds. Is it any wonder that Lord Agnew—a true blue, a loyal blue—stormed out of the Lords? He stormed away because he thought this Government were making schoolboy errors, and he wanted absolutely nothing at all to do with the Treasury decisions and the facts of wasted taxpayers’ finances and fraud The figures are staggering. It is estimated that £29 billion a year is lost across Government in fraud, and £4.3 billion of that, paid out in fraud and error under covid support schemes, has simply been wiped away. It has been deleted. Some £3.5 billion in covid contracts was awarded to Tory-linked firms, implicating senior Ministers of the Cabinet. Yet, other than the odd ritual sacrifice to give the impression that they care, the Government and those involved have shown no accountability for that shocking mishandling of public funds I can guarantee that, had the 2019 election result been different, things would have been completely different. The right-wing politicians and the press would not have so keenly turned a blind eye to what is happening before our eyes. Mark my words, if £4.3 billion was lost through benefit fraud, the Government would not be taking such a relaxed view on things People are 23 times more likely to be prosecuted for benefit fraud than tax fraud in the UK, despite the fact that tax crimes cost the economy nine times more. I could talk for hours about how the Government attack people on benefits and disabled people, how they hound people through the horrible methods used to track down people who are merely existing in life. Yet, if someone has a super-yacht, they can go anywhere and forget everything. That is the sorry state we see our nation in It is not an accident or a fault in the system; it is how the system has been carefully designed. The richest in our society have close ties to the Government; they ensure that their money can be shuffled around in offshore accounts and through tax loopholes, while the poorest are relentlessly hounded by a bureaucratic leviathan, which ensures that the system does not give them an inch. This disproportionate focus on working-class crime and the benefit scroungers narrative, peddled relentlessly in the press through tabloids and programmes such as “Benefits Street”, which we all saw on television, has warped public perceptions in a deliberate strategy of divide and rule by the handful of those benefiting handsomely from this fraud at the very highest level Lord Agnew’s revelations tell us nothing that we did not already know. Whether that was through the Panama papers, the Paradise papers or the Pandora papers, it is a well-documented fact that the super-wealthy hoard their money to avoid tax that might actually improve society for the many. Instead of tackling this issue, which could save billions of pounds in funds for things such as social care, the Government would rather raise national insurance and cut universal credit, throwing thousands more families into poverty, while inexplicable sums of money accumulate in the hands of the global élite Just a nice taster: the rising fortunes of the world’s billionaires during the pandemic fuelled record sales of super-yachts, to the tune of £5.3 billion—that is not bad, is it? Eight hundred and eighty-seven super-yachts were sold in 2021—a 75% increase on the previous year. It is all right for some, is it not? It is not for others, of course I urge the Government to finally commit to putting an end to the rampant levels of corruption at the highest level, rather than punish the people of this country yet again.
On the Chancellor’s watch, £4.3 billion of covid business support has been stolen by fraudsters—£4.3 billion. Of course we recognise the scale of the covid support schemes and the speed with which they had to be developed, but upon their formation HMRC made it crystal clear that those schemes would be targets abroad. How right it was: 8.7% of furlough payments, 8.5% of the eat out to help out scheme and 2.5% of support for freelancers and entrepreneurs has all fallen into the hands of fraudsters and been written off by the Treasury. It is a complete disgrace However, from the evidence that I have heard in the Treasury Committee, we should add another half a billion pounds to the list of wasted funds. I am talking of Greensill Capital. At the height of the pandemic, Government Departments were infiltrated by the desperate lobbying of a former Prime Minister, phoning friends for Lex Greensill, the founder of Greensill Capital and the originator of a Ponzi scheme, a derivative of supply chain finance, known as prospective receivables. Twenty-five texts, 12 WhatsApp messages, eight emails, 11 calls and nine meetings with senior Ministers and officials—David Cameron was WhatsApping his way around Whitehall on the back of a fraudulent enterprise, based on selling bonds of high-risk debt to unsuspecting investors. It was all under the guise of so-called supply chain finance, but the reality is that 90% of Greensill’s business was nothing more than clairvoyancy, lending against transactions that had never happened and might never happen—companies did not even know that they were involved—and then selling that as a low-risk investment, half the time without any invoice evidence that anything had ever happened There was overwhelming evidence that this was a business based on deception, years before. In 2019, Reuters published articles highlighting the precise reasons why Greensill would collapse two years later. At the time of those articles, Greensill sued Reuters and lost. Meanwhile, the late Lord Myners, a former Treasury Minister, was asking questions about the Greensill business model in the House of Lords Again, at the beginning of 2019, the Bank of England’s Prudential Regulatory Authority began an investigation into Wyelands Bank, the banking arm of GFG Alliance, Greensill’s principal partner. In February 2020, the Bank even set out its concerns to the Serious Fraud Office and the National Crime Agency. It is inconceivable that this was not detected or known. Greensill was a crook parading a Ponzi scheme in plain sight, but was introduced across the highest levels of Government. It is an embarrassment for Britain’s financial reputation The biggest loser in this whole sorry saga is the British taxpayer. Our Committee’s concerns were batted away by the Treasury, which insisted that it had rejected Greensill’s attempts to secure funding. As ever, the devil is in the detail. The Treasury declined the lobbying with one hand but with the other palmed the organisation to the British Business Bank—a public institution backed by taxpayers’ money—which handed out £400 million of loan guarantee funds. As Mrs Thatcher famously said: “There is no such thing as public money; there is only taxpayers’ money.” Instead of unlocking finance for small businesses, it unlocked finance for fraudsters. Fraudulent organisations such as Greensill were able to lucratively lobby and receive hundreds of millions of pounds while many businesses and hard-working families in my constituency, and every constituency across the country, were left with nothing. Waste is not just happening in private business dealings; it is also happening in the scheme for the Prime Minister’s promised 40 new hospitals. The wild west of NHS South West London is recklessly plotting to downgrade Epsom and St Helier University Hospitals by moving the A&E, intensive care, maternity unit, children’s services and 62% of beds to healthy, wealthy Belmont. As I have repeated time and again to the Government, however, using allocated funds to improve services where health is poorest has been proven to save up to £200 million. That sum would not clear the Greensill balance sheet, but no doubt it would go some way to doing so.
Today, we have heard many extremely worrying examples of fraud, waste and corruption by this Tory Government, with the NHS getting the headlines. Sadly, that kind of behaviour is not limited to Westminster. In the Tees Valley, waste and dodgy deals are happening on a concerning and escalating scale under the leadership of the Conservative Tees Valley Combined Authority Mayor A few days ago, The Northern Echo and the Daily Mirror revealed that the majority of shares in Teesworks, the former steelworks site, have been handed to Tory donors. Until recently, half the shares were owned by the public, but at the end of last year, 90% were held by joint venture partners JC Musgrave Capital and Northern Land Management, with no procurement or open tendering process to oversee the site’s development A director of the same Northern Land Management has donated to the political funds of not only the Tees Valley Mayor but north-east Tory MPs. Joseph Christopher Musgrave, who gives his name to JC Musgrave Capital, has also donated to the Conservative party. The whole thing smacks of cronyism but, as today’s debate has shown, that is no surprise. Sadly, the Tory party and the Tory Government are becoming synonymous with the mismanagement of public money Teesworks has benefited from huge sums of public money since the steel producer SSI was closed in 2015 after the Tory Government let it go to the wall. That led to the redundancies of 2,300 steelworkers and the end of 170 years of steelmaking on Teesside—the industry on which the entire area was built. Taxpayers in both Teesside and across the country have paid tens of millions of pounds to purchase the site, keep it safe in the meantime and clean it up for regeneration What return will taxpayers have if the site ever returns a profit and what say will the public have over who comes there? Is the 10% share that the South Tees Development Corporation still has sufficient to ensure that taxpayers get value for money? To me, that seems very doubtful. We all want to see the successful development of the site, but if it is successful, 90% of the profits will go to the private companies that now control Teesworks There are also hugely valuable materials in the land at the site, including millions of pounds’ worth of sandstone, steel and copper. I am told that lorry loads of materials are leaving the site every day without proper audit—to where, who knows? I would also like to know who got those contracts and how they were won. Was there a tendering exercise or was it just the old pals act? Now that so much of the site is under private ownership, I wonder whether the public will reap the financial benefits of the assets when they are sold on, or whether instead the millions will line the pockets of the Mayor’s donors The site is fundamental to the economic future of Teesside. It has the potential to be a major site for new green industries such as carbon capture and storage and hydrogen. It can help us to rebuild a sustainable modern industrial future for Teesside, but who will be making the decisions on who invests there and what industries and businesses are allowed to set up shop? Surely such decisions are too important to our local economy to be left in the hands of property developers who will always put profits before anything else I am at a loss about where to turn to get answers for local people on these pressing issues. One of the most frustrating elements of the Tory Mayor’s apparent leadership of the combined authority is how difficult it is to access information about how public funds are being managed and spent because he acts behind a cloak of secrecy. Deals that involve such large amounts of public money should benefit from public scrutiny, but there is a complete lack of transparency in the Mayor’s dealings, which seems to me to be evidence of a contempt for his constituents, who have a right to know how their money is being spent It has become impossible to get information that in the past would have been routinely available to the public. The Mayor has created layers of organisations through which his dealings take place, some of which are not even subject to the Freedom of Information Act. Teeswork itself is a classic example: the Mayor set it up in summer 2020, promising that the body would oversee the regeneration of the SSI steel site. But it is not clear what Teeswork actually is. Is it a brand name? Is it a company? What is its constitution? How are decisions made? None of that can be found anywhere online. Its board was hand-picked by the Mayor—a mix of local Tory businessmen, local government officials, the independent leader of Redcar & Cleveland Borough Council and the Tory MP for Redcar. There are no published minutes or paperwork anywhere on the website It is appalling—this is simply no way to run a public administration. Taxpayers footed the bill for the site when it was purchased and it is only right that they should reap the benefits of what the site has to offer. As my hon. Friend the Member for Middlesbrough (Andy McDonald) said, there needs to be a full investigation into all of this I have seen the Mayor commenting that handing over such a large proportion of the site to private firms was apparently necessary to create jobs. To which I say: we lost 2,300 jobs when Conservative inaction shut down the steelmaking industry on Teesside after a proud 170-year history. Local shareholders lost out when the Conservative Government and Tees Valley Mayor stood by when the Sirius mine project needed support, instead leaving it to be taken over by a multinational company, which left local investors—some of whom had put their life savings into the project—high and dry. We lost jobs when the Tories failed to support the world-famous Cleveland Bridge Company, which built the Sydney bridge. It just had a cash-flow problem. Despite the Tories’ promises to save the company, it closed, with the loss of a large number of highly skilled jobs. I understand that the Mayor has been in the news this week throwing his weight behind our disgraced Prime Minister. He shared his concern that, without the Prime Minister, levelling up will be dead. I am sure that, like all of us here, the Mayor is looking forward to reading the levelling-up White Paper tomorrow. I wonder if he will find it to be the rubbish that the Secretary of State apparently says it is. I wonder whether this is what the Mayor means by levelling up—giving more power to Tory donors at the expense of local people, who should be benefiting from investment and jobs. I wonder whether he thinks levelling up includes billions of pounds of taxpayers’ money being mishandled while a town such as Billingham, in my constituency, fights to get £20 million from the levelling up pot but keeps being rejected, even though it has a higher need than other areas that have been awarded cash That is what so-called Conservative levelling up looks like to me—more money for the Tories’ friends and crumbs left for the local community. The message is clear: the Conservatives, both nationally and locally, cannot be trusted to treat taxpayers’ money with respect and get them the value they deserve.
I call Jessica Morden.
Thank you very much, Madam Deputy Speaker, and happy birthday. What a wonderful way to spend your birthday. May I thank members of the Opposition Front Bench for choosing this subject to shine a light on? With everything else that is going on, it is really important not to lose sight of the Government’s woeful record on waste and fraud. I will speak on behalf of constituents—taxpayers—in Newport East hit by rising bills and energy costs, stagnant wages and facing the national insurance rise in April Families struggling just to get by, desperately wondering how they will cope through the coming months, are told time and again by the Government that there is little they can do to help; that the NI rise cannot be rethought because the Chancellor sees “little headroom for fiscal loosening”; that the £20 universal credit uplift cannot be maintained because of costs and an “ever-emerging and changing situation”; and that they will not take VAT off fuel bills, with Government Members even trooping through the Lobby to vote against Labour’s motion on this, despite the Prime Minister telling us during the Brexit referendum that: “When we Vote Leave, we will be able to scrap this unfair and damaging tax.” That is not to mention all those excluded throughout this from Government schemes Yet all the while, the Government are writing off billions of pounds of taxpayers’ money lost to waste and fraud. As Conservative peer Lord Agnew—often mentioned today—said when resigning last week: “Total fraud loss across government is estimated at £29 billion a year. Of course, not all can be stopped, but a combination of arrogance, indolence and ignorance freezes the government machine.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 21.] That is from their own side. The Government have been cavalier not only with lockdown rules and drunken parties but with due diligence when it comes to public spending. Just this week, it was revealed that £2.7 billion of taxpayers’ money was spent on PPE products that will go unused by the NHS; 71 UK Government contracts, with a total value of £1.5 billion, were awarded to suppliers without due diligence, with hundreds of millions going to firms with no experience of public contracts, including the Florida jewellery company and the pest control company; and £3.5 billion of covid contracts were given to Tory-linked firms. As the National Audit Office said, the Government’s approach “diminished public transparency” and fell short of the “standards that the public sector will always need to apply if it is to maintain public trust.” The Conservative party defends all this by pointing to the extraordinary circumstances of the pandemic, but other Governments did not make the same mistakes. In Wales, the Auditor General saw no evidence of priority being given to potential suppliers depending on who referred them, and the Welsh Labour Government introduced legislation, the Social Partnership and Public Procurement (Wales) Bill, to ensure that procurement contracts are fully open and responsible throughout supply chains—a Labour Administration doing it the responsible way As we have heard throughout the debate, the Department of Health was not alone in squandering our money. Thanks to my right hon. Friend the Member for Wentworth and Dearne (John Healey), we know that the Ministry of Defence wasted £13 billion of taxpayers’ money since 2010 on failed procurement projects, overspends and other admin errors. The Public Accounts Committee concluded that the Ministry of Defence procurement system “is broken and is repeatedly wasting taxpayers’ money.” The Ministry of Justice also wasted around £240 million in the last year on an array of projects, including £98 million on the new case management system for the electronic tagging of criminals, which was scrapped before it could be used As the Public Accounts Committee reported, the Department for Work and Pensions allowed universal credit fraud to spiral during the pandemic, with more than £8 billion lost to scams and errors. We all wanted money to go as quickly as possible to those who needed it, but the system was vulnerable to attack by organised crime groups and was overseen by Ministers who, to quote the Public Accounts Committee, had simply “lost control.” The Chancellor has now decided to write off £4.3 billion of funds allocated to the coronavirus help schemes. As my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) highlighted last month: “It is roughly the same as half the annual policing bill for the…country.”—[Official Report, 18 January 2022; Vol. 707, c. 219.] Hard-working police officers in Gwent police would have valued that money after a decade of Tory cuts in which they saw their budgets cut by 40%. It is more than the whole towns fund, it is almost the cost of the levelling-up fund, it is the same amount as the Chancellor took off universal credit in the autumn Budget, leaving thousands of my constituents worse off, and it would have been enough to help every family in the country who are suffering with their energy bills. As my hon. Friend the Member for Leeds West (Rachel Reeves) said, this all matters because it means less money for everything else and nothing to help with the cost of living crisis, and it means the Government are raising taxes in April. One of the many families in my constituency who have been in touch with me talked about how they have had to cut down to one meal a day so they can heat their home through the night to keep their baby warm. That is just one of hundreds of harrowing stories, and it is all down to competence and political choices. What this Government have shown us is carelessness, incompetence and cronyism.
It is a pleasure to speak in this debate and to follow the hon. Member for Newport East (Jessica Morden). I thank the Labour Front Bench for calling this debate, in which we have heard so many powerful arguments. The debate follows the powerful statement made by Lord Agnew on his resignation, where he drew attention to the “lamentable” litany of mistakes, errors and inexplicable decisions by this Government I will not take up the House’s time by going into detail again, but we have heard today about the problems at Companies House, about the approximately £5 billion that we understand will just be written off and about the procurement mistakes that mean billions of pounds have been wasted on equipment that was of no use to anybody at a time when the emergency services in this country were crying out for proper personal protective equipment I speak not just on behalf of my party but, perhaps more importantly, on behalf of my constituents, who would recognise the shadow Chancellor’s description of the situation as a disgrace and an affront. Yes, it is a disgrace, and it is an affront to all my constituents and the 3 million people across the country who were told time and again by this Government that support would not be available to them during the pandemic from the job retention scheme and the self-employment income support scheme because it would be too difficult to administer due to the risk of fraud. We know now that, at the same time, companies were defrauding taxpayers It is an affront to them, and it is also an affront to my many constituents who are hounded on a weekly basis by the Department for Work and Pensions and Her Majesty’s Revenue and Customs because of errors made not by them but by those two Departments. It is also an affront to all those who have been pursued for loan charges. They are taxpayers who followed the rules and then, in many cases, faced bankruptcy because of a retrospective change in the law How is it that the Government are able to support the pursuit of those people? How is it that there is no support for them, while we stand here knowing that those who have taken money from the taxpayer fraudulently, at a time of national crisis, are not going to be pursued? I cannot believe there are any Conservative Members who think it any more acceptable than we do that their constituents can be treated in this way, and that criminal action—because it is criminal action when money has been stolen from our constituents, from honest, hard-working taxpayers—is simply going to be accepted, and these people will allowed to get away with it. I think that that is an affront to all of us.
I call Paula Barker.
Thank you, Madam Deputy Speaker, and many happy returns of the day Notwithstanding what the Paymaster General suggested earlier, this debate called by my party is absolutely the right one. It is easy to forget, given the plethora of scandals afflicting this Government, that when it comes to actual good governance they fall short of that marker. Perhaps it is as a result of the cumulative effect of those scandals— certainly on the back of the Owen Paterson debacle—that these issues are starting to pick up traction. The issues of waste, fraud, fast-track procurement processes and contracts that did not deliver are all interconnected. They did not begin with Owen Paterson and end with Lord Agnew’s resignation Ever since the pandemic began, Members on the Opposition side of the House have raised questions, as any good Opposition should; but we were derided and ignored, accused of playing party politics throughout a national crisis. These days the Chancellor is conspicuous by his absence. That is in stark contrast to the dizzying heights of his popularity early in the pandemic, but it also means that he cannot continue to evade accountability and run from the truth It is not as if the Government were not warned. I attended a Westminster Hall debate called by my good and hon. Friend the Member for Liverpool, Walton (Dan Carden) on 8 December 2020, on the back of the National Audit Office report that was critical of the Government in respect of transparency about the use of public funds for covid contracts. Companies with no track record or experience of delivering comprehensive outcomes on anything, let alone specialist services, were awarded contracts to the tune of hundreds of millions of pounds of taxpayer cash, and the only criterion, as far as we can tell, was their personal connections with the Conservative party and Conservative Ministers—a bit like the pub landlord, for example. It is absolutely shameful. At about that time, Conservative Ministers such as Lord Bethell were refusing to publish a list of the companies awarded contracts to provide PPE because of the “commercial sensitivity” associated with the high-priority VIP lane; others might call it the Tory gravy train Then there is the abject failure in terms of outcomes, most famously that of track and trace, at an eye-watering £37 billion. Consultants were on £7,000 a day; there were jobs for mates such as Baroness Harding, who was completely out of her depth, and money was being funnelled to companies like Serco which cannot even deliver decent asylum accommodation in my own constituency. When this Government claim that they got the big calls right during the pandemic, they are so far off the mark that one must wonder whether the booze consumed during recent Downing Street parties has killed off considerable numbers of brain cells We know that these are difficult times for a Conservative Government when the Telegraph runs with the headline “Government waste is an insult to taxpayers”. Now the latest reveal is that £4.3 billion has been lost to fraud in the covid support schemes—written off, never to be seen again—while £3.5 billion in public contracts has gone to Conservative pals in the private sector. The Government’s so-called levelling-up fund alone could have been three times as large if No. 11 had not been so flagrant with public money. Who knows? We could have afforded Northern Powerhouse Rail, not the cheap and nasty integrated rail plan that we have received I have to mention the 3 million excluded self-employed taxpayers who continue to be ignored by this Government and who have not had one penny in support, because the Government say that could be open to fraud. The hypocrisy is astounding. When all is said and done after the pandemic, history will not be kind to this Government. They are economical with the truth—and that is putting it kindly—but less so with the public finances. They have been nothing short of an abject failure.
I call Peter Grant.
Thank you, Madam Deputy Speaker, and my birthday wishes to you. You are almost a twin of my wee sister, although I think Wikipedia may have got the year wrong. We will give you a chance to correct it later, because it cannot possibly have been that long ago I commend the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), for her opening speech. Some of this afternoon’s Back-Bench speeches have been quite outstanding. One thing that struck me on listening to them was that hon. Members were using very specific examples to point to themes that come back time and again—examples where there were obvious danger signs and things were going wrong, but nobody did anything. Sometimes publicising them and getting people embarrassed—those who are capable of being embarrassed—is the only way to deal with the problem It is very easy to make political capital in this place, which is designed to encourage the political ping-pong of playground insults that sometimes passes for debate, but vitally serious questions are being raised not just about failings in the present party of government, but, perhaps even worse, failings in the machinery of government that have to be sorted out. A change of Government just now will not fix the problem on its own unless we change the mechanisms by which decisions are taken Running a Government is not easy, and running a Government at a time of global crisis is even more difficult. No Government get it right all the time. Complimentary things have quite rightly been said about the Welsh Government, but the Welsh Government have got it wrong sometimes, and the Scottish Government have got it wrong sometimes When Governments get it wrong, they have to expect to be held to account, and it is reasonable for them to expect to be held to a reasonable standard. We are not expecting people to have been perfect or able to see into the future; we are expecting them to have planned for the most likely and foreseeable contingencies, to have been able to change their plans when circumstances changed, and to have been willing to come back and hold up their hands when they got it wrong and say, “We got it wrong.” I would like to see certain people in this place saying, “I am sorry for what I did,” instead of constantly saying, “I am sorry for what other people did” or “I am sorry for what happened to me.” Inevitably, a lot of our comments today will be directed against this Government, but in some cases I am talking about failings that have been there for decades or even longer. The Paymaster General appeared to speak somewhat dismissively of figures cited in a National Audit Office report in October 2020. I have gone back and had a look at that report. For those who are interested, paragraph 3.7 and figure 16 gave forecasts for the levels of fraud in some of the schemes that have turned out to be over-pessimistic, but the report says in a footnote that the sources for those over-pessimistic forecasts were the British Business Bank, the Department for Business, Energy and Industrial Strategy, Her Majesty’s Treasury and the Office for Budget Responsibility It is a matter of public record that the advice that went with the ministerial directions required to allow some of the schemes to be established very often talked about levels of fraud of the same order of magnitude as those that the NAO talked about. The Government went into these schemes knowing that the best advice that they could get was that such eye-watering levels of fraud were possible—maybe not particularly likely, but distinctly possible Comments have been made about some National Audit Office and Public Accounts Committee reports that have been published recently. I want to flag up a few of them to demonstrate that wastage and inefficiency are not just a problem within one or two Government Departments; they are actually endemic in this place. On the defence nuclear infrastructure, which I mentioned earlier, the Public Accounts Committee found a total overspend of £1.35 billion. Even at that level, projects are delayed at best by 1.7 years and some by 6.3 years. If these projects are so important to the defence of all of us, then I suggest that leaving us undefended for 6.3 years in the present climate is not a particularly good idea As for the national law enforcement data programme, 68% of its budget was overspent—an overspend of £445 million. Things got so bad that at one point the police chief constables threatened to walk away because they had lost confidence in the way that the programme was being delivered—or not delivered On a smaller scale, but with a significant impact on individuals, the green homes grant voucher scheme promised to improve the energy efficiency of 600,000 homes, but managed 47,500. It still spent £50 million on administration. That is over £1,000 in administration for each house that it dealt with—almost a sixth of the entire budget When the Committee looked at the problems in a lot of digital change programmes across Government, we found, worryingly, that the intended transformation programme in primary care services in England was so flawed that it “potentially put patients at risk of serious harm” We need to remember that this is not just about money. If there is inefficiency, mismanagement and sheer incompetence in managing the money, then the chances are that outcomes for people who rely on this work could be seriously affected as well A common theme in a lot of Public Accounts Committee reports is that the Government are always over-promising, giving wildly optimistic forecasts of all the benefits that will come from these schemes, and then quietly slipping out a report admitting that they have not really delivered anything like the promised benefits. It is also a standard practice of this Government that among the achievements they claim credit for having delivered now are things that they were saying they might manage to deliver sometime in future—when their track record is that if they promise 1,000 of anything, we will be lucky to see half a dozen Not only has there been a long track record of massive overspends, massive delays and massive inefficiencies throughout the Government, but, speaking personally from my experience over the past couple of years on the Public Accounts Committee, I am still not convinced that there has been a sufficient culture change to be willing to be accept that this level of waste is simply unacceptable. Structural and cultural problems in the way the Government are set up and the way they operate mean that we will be very limited in how much of this waste we will be able to get to grips with For example, HS2 has overspent by almost £40 billion above original estimates, for a single project that we have recently discovered is not actually going to get as far as it was supposed to. All these things are supposed to be accountable to us, but I discovered at the first meeting of the Public Accounts Committee I went to that in the year that the massive overspends on HS2 were brought to the attention of the National Audit Office, HS2’s own annual report did not mention the fact that it had been delayed. It managed to produce a glossy report for its shareholders and the public but somehow forgot to mention that the public money it was overspending was not even delivering what it was supposed to deliver Let me pick up on a few of the comments made by others. It is small money in some ways, but £900,000 could do a lot in my constituency. The Prime Minister, over the heads of the Scottish Government and against the wishes of 80% or 90% of Scottish MPs, hired a consultant and paid them £900,000 to say to him, “A bridge to Ireland? Are you daft?” I have 80,000 constituents who would have given the Prime Minister exactly the same answer for £900,000 less than he chose to spend on it. Remember that this is a Prime Minister who couldnae build a bridge over the Thames, which is not quite such a technologically innovative project as building one to Ireland There has been comment about the economic crime Bill. Earlier, the Chancellor promised us that nothing is off the table in relation to economic crime, but unfortunately the economic crime Bill has not got as far as the table yet. Last week, the Government said that that was because they could not find time in the parliamentary timetable. Almost exactly two hours after they said that, the business in this place collapsed three and a half hours early. For the second time in three weeks, it had collapsed over three hours early because the Government could not think of important enough business to fill up a day. I suggest that it is not about a lack of parliamentary time but a lack of Government will. This is a Government that can find the time to legislate to strip citizens of their right to peaceful protest, but cannot or will not find the time to legislate to strip Putin’s pals of their ill-gotten billions I entirely agree with the comments from the hon. Member for Thirsk and Malton (Kevin Hollinrake), who is no longer in his place, about the protection of whistleblowers and the encouragement of whistleblowing. When it is done properly, it is one of the best defences against any kind of financial crime that we have. I wonder what it says about this Government’s genuine commitment to protecting whistleblowers when we see the comments that Sue Gray made about the culture of bullying at the heart of Government. Nobody asked her to look to look at bullying—it was not part of her remit—but there were clearly a lot of people in No. 10 who decided that this was a chance to talk about it The best way to deal with fraud is to prevent it from happening, rather than trying to deal with it a year or two after it has happened. I used to do fraud awareness courses when I was a local government senior auditor, and it was always made clear—as it was when I was chair of the audit committee of the third biggest council in Scotland—that the culture has to come from the top. It is the same as dealing with bullying, harassment and other unacceptable behaviour in any organisation. The message that is sent out and the ethos that is demonstrated day in, day out by the leaders of the organisation is much more important than what is written on an official document in a policy library somewhere The ethos and the example set by those at the top are crucial. What example does it set when the Standards Committee of this House finds that a senior Member of the House is guilty of “egregious” and “corrupt” acts, in the words of the Chair of the Committee, and the Government’s response is to try to discredit the Committee and the Standards Commissioner and get them removed from office? Does that look like the action of a Government who are committed to setting a culture where no level of corruption and no level of abuse of position is acceptable? It does not look like that to me I know that there are Members on the Conservative Benches—I certainly include the Economic Secretary to the Treasury among them—who are utterly decent people. I can understand why some of the Conservative Back Benchers who were here earlier were not too pleased to be included in some of the accusations that have been levelled against their party. There are decent and honest people on Conservative Benches, but we need to say to them that it is time for them to step up. What we have just now is a system of government that has always been wide open to serious abuse, with far too much power concentrated in far too many hands and far too little genuine oversight or genuine responsibility. It is a system that has just been waiting for the wrong person to come along and abuse it, and I believe sincerely that we are bearing the fruits of that now. It is up to those who have the integrity that is needed—particularly those on the Government Front Bench—to step forward now and start clearing out the corruption in this place.
It is a pleasure to speak in this debate and to follow the hon. Member for Glenrothes (Peter Grant). It has been a really interesting debate. It is a shame that the hon. Member for Thirsk and Malton (Kevin Hollinrake) is not in his place, because, like the hon. Member for Glenrothes, I thought his comments on whistleblowing were really important. The importance of protecting those who call out economic crime is not often raised in this place. Since 2019, economic crime has increased. Action Fraud has talked about a 36% increase in fraud offences for the year ending June 2021, compared with the year ending June 2020, and a 51% increase in financial investment fraud. I cannot remember who said it, but an earlier speaker in the debate pointed out the emotional upset that comes with fraud. It is worth contemplating for a moment that people who are defrauded can feel incredibly, personally hurt by it. It has a huge impact on them We need to look at a system that is fairer. One of the things that we like to say about this country when asked to describe it is that it is generally a fair and just country, but the system we have at the moment does not feel fair or just. It has been mentioned many times that the fraud relating to bounce back loans amounted to around £4.9 billion. When we include the coronavirus job retention scheme, the self-employment scheme and eat out to help out, we are looking at a total of £5.8 billion in overall fraud losses. It is worth remembering the comments made by Lord Agnew in his article in the Financial Times on 25 January. What he said was important, because it was not just about the loans introduced because of the coronavirus pandemic. He said: “Fraud in government is rampant. Public estimates sit at just under £30 billion a year. There is a complete lack of focus on the cost to society, or indeed the taxpayer.” Those are the words of the Government Minister who has just resigned in the Lords. It was not just a comment on the bounce back loans or coronavirus. He said that “fraud in government is rampant”, and as the anti-fraud Minister, surely he should know. In the same article he went on to say: “The government machine has failed spectacularly both in the business department in its weak oversight of the British Business Bank and in the Treasury for allowing such dysfunctionality to continue on such a colossal scale.” One of the Government’s own Ministers is making those comments about the level of fraud we have in government. That is absolutely shocking As I said in an earlier intervention, I am concerned that some of these problems are long-lying, not immediate or concerned just with the recent coronavirus pandemic. The National Crime Agency is unable to grow its international corruption unit because of cuts to the UK aid budget. One part of the Government is making changes such as cuts to UK aid—I still cannot understand the justification for that—and that will impact on our ability to tackle international fraud. We know that tackling fraud is under-resourced and under-invested. One third of all reported crime is fraud, but tackling it has only 1% of police resources. Of course we need an economic crime Bill, and we also need the Online Safety Bill. Had the Government not been so tied up in desperately trying to save the Prime Minister, we might be seeing some concrete action on the things that really matter The Economic Secretary to the Treasury has been before the Treasury Committee, of which I am a member, and he spoke about Companies House. The hon. Member for Glasgow Central (Alison Thewliss) made a good speech, detailing all the difficulties and concerns about Companies House, but again, we have known about that since 2014—it is not new. The Government’s defence that, “Oh, we had to do things quickly because of the coronavirus pandemic, and this is why we have problems”, simply does not wash. We know there has been under-investment in tackling fraud because we do not have the resources the police need, and we know that the international aspect of that is under-invested in further because of cuts to UK foreign aid. We know there have been problems in Companies House since 2014, which the Government keep talking about and failing to take action on Reform of Companies House is essential. We cannot allow UK companies to be used to launder money and conduct economic crime. The pace of change is too slow, and if we continue with our current speed, we will not see the action needed for another 10 years. Transparency International UK has identified 929 UK companies involved in 89 cases of corruption and money laundering. That equals—I think this will shock most Members present—£137 billion in economic damage. That is not a small amount of money. We are talking about huge amounts of cash The three consultations launched by the Department for Business, Energy and Industrial Strategy, which were looking at Companies House, closed on 3 February 2021. Since then we have seen nothing; two years later, nothing. Where is the legislation to bring the changes and funding that we need to reform Companies House? This goes back to the point I made at the beginning of my speech: this is a question of fairness and justice. It is not just about the pandemic. I understand why the Government want to blame all the mistakes on the pandemic and the need for urgent action, but the problems are much deeper than that When we think again about what we could have spent that money on, that is where it becomes quite difficult. I have been contacted by many of the excluded community, who are really upset about the lack of support they have been given, the bankruptcy they faced, the need to go to food banks or claim benefits for the first time, and how unfair they think that is when they see how much money went out in fraud. It is not just them, because we have seen the same with social care. I have mentioned in the House on a number of occasions the Conservative-led East Riding of Yorkshire Council, of which my constituency is small part. It has a desperate need for money to deal with the number of elderly people who need care. It has a deficit of £1.4 million for the current year, and it needs more to offer competitive wages. We have people in the East Riding of Yorkshire not getting the care they need because the local council does not have the money it needs to fund it properly We cannot talk about this issue without relating it back to normal life. If we are talking about wasting £4.3 billion, that is £4.3 billion that is desperately needed by other people across our country—people struggling with the cost of living, excluded members of the community and people not getting the care and support they need. It is ludicrous, as others have said, that we have a Prime Minister who spent £900,000—it is hilarious—employing a consultant to tell him that he could not build a bridge from Scotland to Ireland. My goodness me. I am sure someone out there has a tin of tartan paint that they could sell to the Prime Minister for around £900,000. If not, I am sure someone in my constituency could make the same offer. Or perhaps a ladder to the moon could be the next scheme the Government would like to invest in. I could offer myself as a consultant to look into the matter for him. What we need, seriously, is an economic crime Bill, and we need it now. There is time in the parliamentary timetable to look at it. We need to a register of overseas interests. That was promised under David Cameron and by successive Conservative Prime Ministers, but we still have not seen it. We need reform of Companies House, and we need that to be accelerated. I have respect for the Minister. I am sure he wants to reform Companies House, too, and I urge him to make that change urgently—sooner rather than later. I also ask him to include the investigative arm in the resourcing of Companies House, so that it is not just about filing companies’ details but could look into the legitimacy of some of the companies that want to register. Finally, we need the implementation of all the recommendations of the Russia report from 2020.
Many happy returns of the day, Madam Deputy Speaker. It is an honour to follow my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who made an excellent speech I am very pleased to be able to speak on this topic today. Good governance and public trust rely on prudent public spending. The Conservative Government have a track record of wasting public money and failing to deliver value for money. The Chancellor has written off £4.3 billion of fraud related to the covid business support schemes. Let us put that in perspective: it is equal to the total 2022-23 combined planned spending of the Department for Digital, Culture, Media and Sport, the Department for International Trade and Her Majesty’s Treasury. It is more than the entirety of the towns fund, and it is almost all the money allocated to the levelling-up fund People should not have to pay for the imminent Tory tax rises that will exacerbate the cost of living crisis when billions are leaked to fraud and wasted. It demonstrates this Conservative Government’s incompet-ence, letting fraudsters off the hook while continuing the underfunding of local communities and suppressing pay packets. That is especially so when it is reported that they expect to recover only £1 in every £4 lost The amount of fraud being written off works out at about £154 a household. That is a total cost of more than £6 million for my constituency of Luton South. I am sure my hard-working constituents would rather see it in invested in our community or have it in their pockets to spend in our local shops to drive our local economy. My constituents know that when living on a tight household budget, you have a keen eye for waste. From the Government’s actions, however, that does not seem to be a skill that Ministers have learned. We have cancelled contracts, overspent projects and written-off investments—“schoolboy errors”. Those are not my words, but those of the Government’s own anti-fraud Minister, Lord Agnew, as he resigned in protest. Are those on the Treasury Front Bench embarrassed when Lord Agnew talks of “a combination of arrogance, indolence and ignorance”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 21]— in the Government’s decision making, which has led to an estimated total fraud loss across Government of £29 billion a year? It is just shameful. The Government’s reckless waste is not just related to fraud—it cuts right across other areas of public spending. There has been £13 billion wasted on defence procurement in the last decade; £2.8 billion spent on PPE that was ultimately useless; £17 billion to rectify the Treasury’s discriminatory public sector pension reforms; and £550 million wasted by the Ministry of Justice in the past decade This Conservative Administration cannot be trusted—do not take it just from me and Opposition Members; take it from independent, trusted organisations. The Royal United Services Institute, the world’s oldest and the UK’s leading defence and security think-tank, has spoken of “indifference and negligence at the heart of government.” The bounce back loans scheme was “vulnerable to abuse by individuals and…organised crime” according to the British Business Bank, and the National Audit Office said: “Counter-fraud activity was implemented too slowly to prevent fraud effectively” No Government should play fast and loose with public money, and the Tories’ appalling record on public spending must end I look forward to hearing the Minister acknowledge the shocking level of waste and Government mismanagement. I say that in the light of our greater recent focus on the Nolan principles—the principles of public life—which apply to anyone who works as a public office holder. All public office holders are both servants of the public and stewards of public resources. Let us take the principle of selflessness. The Nolan principles state: “Holders of public office should act solely in terms of the public interest.” On accountability, they state: “Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this.” Will the Minister explain how giving out crony contracts, significant waste in Government and writing off huge levels of fraud serve the public and reflect good stewardship of public resources In particular, many ministerial directions were issued in 2020, and Ministers are fully accountable for those decisions. Let us take eat out to help out as an example. On 7 July 2020, the Chancellor gave a ministerial direction even though the first permanent secretary and chief executive officer of HMRC—he is the principal accounting officer, who needs to make decisions that are appropriate and consistent with managing public money—talked of “uncertainty” and said that “there are…particular value for money risks surrounding the level of potential losses that could arise.” Indeed, we have seen 8.5% of payments made under the scheme—£71 million—lost in fraud or paid out by mistake. I recognise that there may be some elements of fraud and payments lost, but 8.5% is a significant margin The Government have repeatedly shown a lack of respect for public money, and our constituents deserve better. They deserve a Government who play by the rules and value every penny of public money.
I call Pat McFadden.
Thank you, Madam Deputy Speaker. I begin by wishing you a very happy birthday and wishing everyone in No. 10 a very happy end to dry January. I thank all right hon. and hon. Members who have spoken in the debate We began with the Paymaster General, No. 10’s fireman, coming once again to pour oil on troubled waters. Members raised a number of important issues. Several rightly raised the need for an economic crime Bill. They also raised the mismanagement of public finances, banks with poor records, losses other than those we are focused on today, crony contracts, and other examples described by the Public Accounts Committee. The overall picture is one of serious deficiencies in the management of our constituents’ money Let me focus on the issues in our motion. I turn first to the numbers. On 12 January, HMRC published figures on its website estimating the losses in covid grants due to fraud and error, which it broke down by saying they would be 8.5% of furlough payments and 8.7% of eat out to help out payments. It said that, all in all: “This equates to £5.8 billion” Adding up what has been recovered so far and what it is estimated will be recovered through the taskforce that the Paymaster General referred to in his opening speech gives us a figure of £1.5 billion between 2021 and 2023, leaving us with the £4.3 billion that we have been talking about for the last couple of weeks. Put another way, the Government state on their own website that they expect to recover only a quarter of the sum that they estimate has been lost in fraud and error on these grant schemes. It is important to understand that the losses on bounce back loans are additional to that. Estimates of those losses vary, but they are on top of the £4.3 billion estimated to have been lost through the grant schemes The Government say they are chasing down every pound, but on the same website, they say that these losses were “in line with the original planning assumptions,” so from the get-go there was an assumption that a significant amount of money would be lost. Loans were made to over 1,000 companies that were not even trading when coronavirus began. Duplicate applications were made, with checks only introduced after 60% of the loans had been made. These are huge amounts of money The Government’s defence is that there was pressure to get money out of the door because genuine businesses and individuals needed help; for example, many businesses had been ordered to cease trading as part of the public health measures. Of course it is true that there was pressure to get money out of the door—no one is denying or disputing that—but that cannot be an excuse not to have even a semblance of controls in place. One control could have been asking whether a company had ever traded in the past. Another could have been checking whether the same company was submitting multiple applications to different organisations. Those basic checks were not put in place. Neither can the legitimate desire to get money out of the door quickly be an excuse for the lack of action since. The Government were warned of the risk of fraud. Before the bounce back scheme was even launched, the chief executive of the British Business Bank wrote to the Secretary of State for BEIS at the time: “The scheme is vulnerable to abuse by individuals and by participants in organised crime.” In June 2020, the Fraud Advisory Panel warned that “we feel we should draw your attention to serious weaknesses that enable fraudsters and corrupt insiders to exploit the” bounce back loan scheme “and CBILS loan scheme. Not only does that see public funds diverted to criminal enterprises, but it risks painting the scheme in a bad light and reducing public support for the government’s actions.” In December 2020, the Financial Times described bounce back loans as a “giant bonfire of taxpayers’ money” One source told the newspaper that “the scheme was being abused…on an industrial scale.” Three months before that, in September 2020, former detective Martin Woods said that criminals had identified the scheme as “a fabulous opportunity”. Another said: “This is basically” a criminal’s “dream scenario”, adding that it was an “incredibly lucrative fraud that requires very little work and has almost no chance of law enforcement action.” I accept that there was pressure to get money out of the door and get help to people, but that is not an excuse for not having even basic checks in place, and it is not the case that the Government were not warned about the risks. Indeed, as I said, their own website shows that assumptions of the levels of losses that we are talking about were built in from the very beginning. Let me turn to the lack of action since. The speech by the former Minister for fraud has been extensively quoted in this debate, and it is no wonder. Ministers cannot just come here, thank him for his service and ignore what he said. The quotes from his speech, of which we have heard many today, are completely damning: “Schoolboy errors…indolence and ignorance…no knowledge of, or little interest in, the consequences of fraud to our economy or society.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20-21.] That is not the verdict of the Opposition; it is the verdict of the Government’s own Minister on the issue. He also said that this is not an issue of the past. It matters now, because this is the time when the 100% Government guarantee starts to kick in—that is, when the taxpayer starts having to pay the cost of the defaulted loans. It is impossible not to draw a contrast between the dismissal of all those warnings, and the lax way that money was allowed to go to the unscrupulous, with the Government’s determination not to give help to many of the freelancers and others that got no help at all. How angry must they feel watching our proceedings today, when they see billions of pounds being discussed that we may never see again, while their claims were rebuffed by the Treasury time and again Lord Agnew rightly made the link between the huge sums that we are discussing and tax, because the context of this debate is that in the year following those losses the Government will bring in a tax rise that will add hundreds of pounds a year to the average family’s tax bill and raise the overall tax burden to the highest levels since the 1950s. It does not matter how many times the Chancellor and the Prime Minister describe themselves as tax-cutting Thatcherites: between them, they have raised taxes far more than any Chancellor of either party since she left office. It is completely absurd for the Chancellor to stand up and give a tax-raising Budget and then try to wash his hands of it at the end There is now a yawning gap between the rhetoric and the actual record of stewardship of public money. It smacks of a Government who have been in power for too long, and who have become complacent and, overall, arrogant—although I would never accuse the Minister of that, as I have enormous respect for him. There is an arrogance about the mismanagement of the money, and it is totally cynical to drive through tax increases when families are being squeezed by rocketing energy bills and declining real wages, just so the Chancellor can cut taxes before the next election. Taxes should be geared to the needs of the country, not the political campaign grid of the Conservative party This is not just about covid grants and loans. As my hon. Friend the Member for Wansbeck (Ian Lavery) highlighted, it has emerged, on page 199 of the Department of Health and Social Care annual report, that £8.7 billion of losses in PPE have had to be accounted for in that Department’s spending. We should pause and think about that—£8.7 billion of losses. What could that money have done in the NHS? It is twice the Government’s entire hospital building programme, but it is dismissed on page 199 of the Department’s annual report. If we add, for example, that £8.7 billion to the £4.3 billion that we have highlighted today, we get a whole year’s worth of receipts from the national insurance rise that will be imposed on families in April. The Chancellor says those tax rises are all about public services, but it is impossible to escape the conclusion that they are, at least in part, to fill the hole caused by that colossal mismanagement of public money. Working people across the country are being asked to pay the cost of the Government’s mistakes The Department of Health and Social Care report does not get any better. The public sector’s auditor in chief has refused to give a clean bill of health to the Department’s 2020-21 accounts, because £1.3 billion has been spent without Treasury approval, and he has pointed out the risk of fraud. This is about grants, loans and departmental spending, and it matters because there is now a direct link with the cost of living crisis that our constituents face. The Chancellor was very keen to claim ownership of the money that has been distributed: he must also claim ownership of the entire record, including the money that has been lost Finally, I return to the calls in this debate for an economic crime Bill. That has been called for time and again, and it is supported by the Opposition. We need to bring forward the registration of overseas entities Bill, which the Government know has cross-party support but which they have been sitting on for four years. We need not just to talk about reforming Companies House, but to get on and do it We need to implement the Russia report; I saw the Foreign Secretary at the weekend saying that there would be no hiding place for oligarchs. Why have the Government not acted on the Russia report, which is now some two years old? The UK should not be an easy home for illicit finance, the proceeds of looting and kleptocracy. At the end of the day, it is not just a matter of finance and taxation, although it is that, but a matter of national security. The Government’s inaction on that has been gaping for far too long I appeal to the Minister: the Government must act on fraud, on both public finance and national security grounds, particularly when they are asking working people to pay more tax. That is what our motion today is all about.
It is a privilege to close this debate on behalf of the Government. I thank the 14 Back-Bench Members who made contributions this afternoon; I listened carefully to all those speeches, and I will try to address many of their points in the next few minutes. I particularly thank my hon. Friend the Member for Broadland (Jerome Mayhew) for his thoughtful speech I think it is clear that we are united in our recognition of the importance of tackling the twin scourges of fraud and waste, and I start by taking this opportunity to remind the House why we consider it a matter of great importance. This Government are ambitious for this country; that is why, during the pandemic, we sprang into action to save the economy, rapidly unleashing more than £400 billion in a package of support to protect jobs and businesses That is also why we are opening up opportunities to all through our transformative levelling-up agenda and our plan for jobs, and why we are focused on building back better and stronger from the coronavirus. All those policies and ambitions are underpinned by a pledge we made to the British people to safeguard our nation’s finances, so I turn now to the specifics of the debate First, I address the matter of covid-related fraud. Our covid support schemes have safeguarded millions of jobs and livelihoods throughout the country during the most difficult of periods. Our priority during the pandemic was always to ensure that support swiftly reached the businesses and individuals who needed it most. I think back to the reality of the situation in March, April and May 2020, when the first iteration of the CBILS met with delays; it did so because banks, following the previous crisis, had been forced and indeed constituted to do affordability checks. There was an outcry of anxiety, quite reasonably, from business owners and individuals up and down this country, and from hon. Members across the House. As a consequence, the Government recognised that we needed to develop a new iteration of that particular support, involving a 100% guarantee. We had conversations with the shadow Chancellor at the time about certain measures that needed to be taken to accommodate some of the challenges in getting that scheme to work quickly. We did so in full knowledge that the speed of delivery was critical if businesses were to be protected. Indeed, I am glad that so many were. That did not involve recklessness, but know your customer, AML and anti-fraud checks The bounce back loans helped 1.5 million businesses through the crisis. As the Paymaster General pointed out, the sheer volume of schemes that we introduced and the speed at which they were designed and implemented meant that it was not possible to prevent every instance of fraud and error.
We all vividly remember the triumphant statements from the Chancellor at the time about how much money was being made available, but can the Minister refer us to any mention in Hansard from the Chancellor at the time about the levels of fraud that were being provided for in any of those schemes?
When we designed the schemes, it was clear that we had to put in reasonable measures around the identity of individuals and that we had to allow people to self-report their turnover. The whole conversation with the banks was designed to ensure that that money was available as quickly as possible while not being reckless with those finances. We did it on the basis that, inevitably, there would be a measure of fraud. I am grateful for the measured way in which the hon. Gentleman speaks in the House. I cannot give a specific answer to his question, but that explains the context in which the schemes were designed The measures that we put in place were robust and comprehensive. There was no one single point in time where we said, “We’ve got everything right”—I would never stand at this Dispatch Box and say that. Some £2.2 billion of potentially fraudulent bounce back loan applications were blocked through up-front checks and extra fraud checks were introduced in relation to the bounce back scheme at the earliest practical point. The Government categorically do not accept the suggestion, however, that those checks could have been part of the scheme at its launch I have spoken to officials on several occasions over the last two years about what more could have been done at the inception of those schemes. The extra checks that we put in place as quickly as we could would have delayed the start of the schemes, which were already delayed because of the circumstances I explained earlier. It would have caused further delay—in some cases, not just weeks but months—and would have led to serious harm for many SMEs at a time of what we all acknowledge was acute crisis Subsequently, however, we have given the Insolvency Service and Companies House new powers to prevent rogue company directors from escaping liability for their loans by winding down their businesses. We have invested £4.9 million in the National Investigation Service to probe serious fraud and it has recovered £3.1 million in the last year alone.
The Minister has made the point about pursuing rogue company directors. Can he tell me more about how he intends to pursue them if the name given is clearly false or the address is incorrect?
I pay tribute to the hon. Lady’s work to highlight the inadequacies, which she reflected in her amusing but serious speech about Companies House reform. She knows my view, which I have stated numerous times, including at Treasury questions earlier today, that the reform of Companies House is an urgent priority. That is why, in the last spending review, the Treasury gave an extra just over £60 million to start that process. More needs to be done and legislation will be required to fulfil that process I will now address the motion’s claim that the Treasury has written off £4.3 billion in the furlough scheme and other HMRC-delivered covid support schemes, which could not be further from the truth. As the Chancellor has previously said, no, we are not ignoring that money and no, we are definitely not writing it off. We are taking decisive action to recoup it. We have invested more than £100 million in a taxpayer protection taskforce, which has over 1,200 HMRC staff focused on combating fraud. Make no mistake: this is one of the biggest and swiftest responses to a fraud risk ever made by HMRC. In fact, over 13,000 one-to-one inquiries were set up in the last tax year, and already the taskforce has contacted over 75,000 people, some of whom could face criminal prosecutions. Meanwhile, HMRC has already recovered over £500 million through a host of other robust measures, and I know that it will continue to consider every avenue when it comes to recouping money lost through fraud and error The motion refers to an NCA investigation. I stress that we have not prevented the NCA from investigating fraud associated with covid-19 support schemes. The NCA has investigated cases of fraud against the schemes and contributed to 13 arrests in relation to bounce back scheme fraud. The Treasury has worked closely with the Home Office on the law enforcement response to fraud, and I agree that the NCA should continue to pursue cases of serious fraud against bounce back loan schemes. As part of the 2020 spending review, the Government committed a further £63 million to the Home Office to tackle economic crime, including fraud I now want to address some of the points raised on procurement; the motion talks about public procurement. As my right hon. and learned Friend the Paymaster General said, we take our duty extremely seriously. On personal protective equipment, our focus during the crisis—rightly—was on saving lives and protecting our healthcare workers. However, as has been mentioned today, the pace of this roll-out involved a change in risk appetite, and meant that Treasury Ministers and officials had to make calculated judgments on how to apply that spending control. It was not business as usual. None the less, at all times, the principles set out in “Managing Public Money” continued to apply, DHSC took decisions on the basis of sound advice and all transactions were approved by the Cabinet Office and the DHSC clearance board. We will continue to combat fraud in that area. We will pursue any contracts where there has been a technical failure or other breach, and we will not hesitate to take legal action against suppliers where needed I will finish on some of the other aspects included in the motion, starting with defence. As somebody who was a member of the Defence Committee for a couple of years and attended the Royal College of Defence Studies course, I take a great interest in these matters personally. My hon. Friend the Member for Barrow and Furness (Simon Fell) mentioned the complexity of some of the procurements and the evolving scope of individual projects—sometimes, at the inception of these capabilities, their formation is not fully known, so it is a particularly challenging element of Government spending. However, the National Audit Office has noted the progress that we have made so far. The financial settlement of the 2020 spending review is helping the Ministry of Defence to move to a sound financial footing and we are focused on driving improvements that will result in greater value for money Equally, we are sharpening our tools to deal with the scourge of economic crime. We are committed to delivering reforms through the economic crime plan and the forthcoming fraud action plan and, thanks to the spending review settlement and private sector contributions, as has been mentioned, we have an additional £400 million to tackle such crime over the next spending review period I repeat my thanks to Members across the House for participating today. I have listened very carefully to their remarks and will reflect carefully on them. There can be no doubt that fraud and waste hamper a Government’s efforts to change lives and transform a country for the better. That is why we are focused on combating those threats to our national wellbeing, while working hard at boosting efficiency across every part of Government. We are right to take this action to fulfil that enduring commitment to the economy, to the country and to every citizen Question put and agreed to. Resolved, That this House agrees with the remarks of Lord Agnew of Oulton in his resignation letter that the Government’s record on tackling fraud is lamentable; recognises the vast amount of taxpayers’ money that has been lost to waste and fraud since the start of the coronavirus pandemic, including the estimated £4.3 billion recently written off from Treasury-backed Covid business support schemes; notes the Government’s unacceptable record of poor procurement over the last decade, including £13 billion wasted on defence projects; further notes the warnings the Chancellor received in 2020 regarding the serious weaknesses allowing for public funds to be diverted to criminal enterprises; calls on the Government to set out a strategy to recover all taxpayers’ money obtained by criminal groups and to fully engage with a thorough National Crime Agency investigation into all issues related to the fraudulent exploitation of the covid-19 support schemes; and further calls on the Chancellor of the Exchequer to make a statement to this House before 31 March 2022 detailing how much taxpayers’ money has been successfully retrieved.
I inform the House that Mr Speaker has not selected amendment (a) in the name of the hon. Member for Aberdeen South (Stephen Flynn).
I beg to move, That this House notes the cost-of-living crisis hitting families across the country and that the energy price cap is predicted to rise by 50 per cent from April; recognises that rocketing energy prices are hitting businesses as well as household budgets; calls on the Government to introduce a windfall tax on the profits of North Sea oil and gas producers; and further calls on the Government to use that windfall tax to help fund a package of support for families and businesses facing the energy price crisis In the last few days, we have often heard the Government say that they are desperate to talk about the biggest issues facing the country. Conservative Member after Conservative Member has lined up to say that there is nothing they would rather do than end the distractions and talk about the burning issues facing people. I have to say, Madam Deputy Speaker, where are they all? Where are they? Today, we are giving them—[Interruption.] There are a few of them, but not very many. Today, we are giving them and the House the chance to talk about those issues, and there is no bigger issue facing families than the energy price crisis. For months, we have waited for the Government to tell us what it is that they are going to do and there has been silence. Today, we are making a generous offer to focus on what really matters and to give them the chance to support the principle of a windfall tax on the oil and gas companies to help to address the energy crisis Let me set out the case. In just six days’ time, we will know the scale of the price cap increase to be announced by Ofgem. It is expected, on the latest gas prices, that there will be a £600 increase in the cap, on top of the £120 increase we have already seen. April’s increase alone is expected to drag 1.5 million more families into fuel poverty. Let us be absolutely clear what that means. Consider a recent Citizens Advice case of a man in his 60s from Devon who had given up his job as an engineer when he was diagnosed with spinal cancer. He had been claiming universal credit but cannot work and recently saw that drop by £20 a week. He told Citizens Advice: “I don’t buy the things I need to buy. I’m constantly looking at the bank account. I put things off as I can’t afford the petrol to drive. I feel isolated and stressed, but what can I do? I’m living in one room to keep the heat down as low as I possibly can, but everything is just mounting up. It’s direct debit after direct debit.” I have had similar cases in Doncaster. This is the reality facing millions in our country, and that is before the price cap has actually gone up. It is against the backdrop of inflation running at nearly 6% and the national insurance rise on top. So people are facing very difficult times. Businesses, too, are facing great difficulty as a result of what is happening.
Does not my right hon. Friend agree that the Government’s version of the energy price cap, along with “use it or lose it” penalties on developers, banning letting fees for tenants and gender pay gap reporting, have his fingerprints all over them from our 2015 Labour manifesto, but that, unfortunately, they have made the schoolboy error of copying homework incorrectly? That is why we now need a windfall tax to rectify those errors. In a parallel universe—the Miliverse—this was done right, but sadly it has been done all wrong by them!
I thank my hon. Friend for that intervention. I am old enough to remember when an energy price cap was living in a “Marxist universe” and now it is Government policy The Federation for Small Businesses reports that 45% of members are seeing soaring costs from higher energy bills. Meanwhile, the Energy Intensive Users Group, representing vital industries such as steel and pharmaceuticals, has called repeatedly for “immediate action” This is an economic crisis plain and simple. What is extraordinary is that the Government, months into the crisis, have not produced a single solution. Where is the solution? There can be no greater evidence of a Government paralysed by inaction. Millions of families who want reassurance are instead subject to the spectacle of a rule-breaking Prime Minister still too distracted by trying to save his own skin Our case today is that millions of struggling families should not be left to face this situation alone and that we should do all we can to act. It is right to look to those benefiting from this crisis to make a contribution.
I am glad the right hon. Gentleman is highlighting this issue. Does he agree that gas prices are a lot dearer in Europe and the UK than they are in America because we are short of gas here? Would it not therefore be a good idea for us to get more gas out of our North sea to ease the squeeze?
The right hon. Gentleman and I differ somewhat on this. The real problem is that we have not gone far enough or fast enough on the green transition. The more we are subject to the volatility of fossil fuels—the prices are set internationally—the more we are at risk of the kind of crisis we are seeing at the moment If there is one principle that should get us through these tough times, it is that those with the broadest shoulders should bear the greatest burden. Britain’s families and businesses are facing the toughest times, but that is not true of everyone. For the oil and gas sector, the price spike has been a bonanza—a trebling of prices today compared with a year ago. Let us be clear about the effect that is having on oil and gas company profits Listen to Bernard Looney, the chief executive of BP. He says this: the rise in prices is a “cash machine” for his company. Those were his words—a “cash machine”. Let those words ring in the ears of right hon. and hon. Members in this House. Let us be clear about who is on the other side of the cash machine: the British people. In other words, it is an ATM from which the oil and gas companies collect billions and into which the British people pay—people like the man in Devon who could only afford to heat one room. He is one of the millions paying into the cash machine for BP. Once the companies are withdrawing the cash from the cash machine, where is the unexpected windfall going? Let us not fall for the argument that may be made in this debate—that it is somehow going into investment or workers in the oil and gas sector. [Interruption.] The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) says from a sedentary position that it is. Let me tell him that he is wrong. All the evidence is that the companies are so flush with cash that billions are being used to inflate the share price in buybacks from shareholders. BP did a share buyback of over £1 billion in August, but it was so overwhelmed with cash that it did another worth nearly £1 billion in November. Shell has done the same, with a £1.1 billion share buyback in December. But that is not enough: it says it will do another one, worth £4 billion, at pace, in 2022 This is simply a redistribution of wealth from the energy bills of the British people—those who can least afford it—to the shareholders of those companies. The question before us, then, is one that has confronted previous Governments: should we do something about the situation or say that it is wrong to take account of the windfall in the tax decisions that we make? I say that it is not wrong to take account of it—it is fair and it is right and it is principled.
The right hon. Gentleman is setting out the problem, but the trouble is that his solutions do not add up. Does he acknowledge that last year Shell and BP, the two largest oil and gas producers, posted a £26.9 billion and £22.5 billion loss respectively? How much would his windfall tax get from those situations? Does he also acknowledge that the biggest investments in renewable energy—not least hydrogen, into which hundreds of billions are being invested—come from companies such as BP and Shell, which we need to continue investing in alternative non-fossil fuels?
I will answer all the hon. Gentleman’s points. We would raise £1.2 billion from the windfall tax. I will come to this later in my speech, but the tax position is incredibly generous for companies, including Shell and BP. He says that their money is going into renewables, but I am afraid that he is not correct. Shell’s near-term plans involve investment of just £2 billion to £3 billion in low carbon activities and £8 billion on upstream fossil fuel production. It is just greenwash to say that these companies have somehow moved out of fossil fuels and into renewables. The truth is that when profits have risen by billions and billions and when billions are being paid out in share buybacks, it is not credible that somehow a one-off tax rise, taking just a small proportion of the windfall profits that these companies did not expect, will somehow lead to a collapse in investment There is a clear consensus that a windfall tax is the right thing to do. An overwhelming majority of people support it—including, I might point out to Government Members, three quarters of Conservative voters. I do not know what Conservative Members are waiting for: they should support a windfall tax because some of the people who vote for them—or used to vote for them, anyway—also support it. Leading charities have endorsed it and some Conservative Members, including the right hon. Member for Harlow (Robert Halfon) and the former business Minister the right hon. Member for Kingswood (Chris Skidmore), have supported it too Of course the oil and gas companies do not want the windfall tax to happen. Let us take their arguments head on. As I have said, the argument that the tax will lead to a collapse in investment is not credible given what the companies are doing with this windfall, and it also misunderstands the long-term basis of these companies’ investment plans. I should also point out that the companies would keep a significant proportion of the windfall, even under our proposals. It is an unexpected, unearned windfall, half of which they would keep Secondly, as I said to the hon. Member for East Worthing and Shoreham (Tim Loughton), the proposal comes against a backdrop of the incredibly generous tax position in the UK, which meant that BP and Shell actually paid no net tax at all between 2018 and 2020 Thirdly, there is a wider context. [Interruption.] The hon. Member for East Worthing and Shoreham is muttering, from a sedentary position, that those companies are not making profits. Actually, they are forecast to make near-record profits this year, as the hon. Gentleman will see if he looks at what outside analysts are saying As I was saying, there is a wider context. The oil and gas sector provides important employment for our country and communities. We need a phased transition, but, as I said to the hon. Gentleman, the long-term answer to this crisis is not more reliance on fossil fuels. Indeed, the Business Secretary himself has said: “the UK is still too reliant on fossil fuels.”—[Official Report, 20 September 2021; Vol. 701, c. 95.] The answer must be instead to go further and faster on renewables, nuclear and other zero-carbon alternatives, but that is not what the fossil fuel companies are doing with their profits.
My right hon. Friend is making a powerful speech. He has identified the immediate issue of energy poverty and crisis that we have in this country. Those of us who are old enough to have lived through the 1970s and 1980s recall how the Norwegians used the wealth generated from the North sea to create sovereign wealth funds. Should we not be thinking about that? Could we perhaps not just use the windfall tax, but deploy such funds in the way that my hon. Friend is describing, to invest in renewables and invest in our country?
My hon. Friend has made a powerful point Labour has come up with a clear and costed plan. We plan, by levying the windfall tax, to reduce VAT to zero, to increase the warm homes discount from £150 to £400, and to extend it from the 2.2 million families who currently receive it to 9 million. On top of that, we have set aside £600 million to help our businesses out. This is in stark contrast with what is being proposed by the Conservatives—the Government of the day, who, six days before the announcement of the rise in the price cap, seem to have nothing to say. What is their explanation for why they are not acting? It is very hard to find the explanation, although perhaps we will hear one today. The one person who has ventured to provide one is the Education Secretary, who has said: “A windfall tax on oil and gas companies that are already struggling in the North Sea is never going to cut it.” Even the oil and gas companies do not describe themselves as struggling. They say that this is a cash machine. I have to ask what planet the Government are living on. Does it not say everything about them that it is the struggles of companies making billions from an expected windfall that stir them, not the struggles of the British people? How dare they leave families in the lurch because of their refusal to stand up to vested interests in the oil and gas sector?
In 1998, when Labour was in power, oil prices bottomed out at $12 a barrel. By 2008, the price had risen to nearly $100 a barrel. What did Labour do with that money? It is regrettable that it did not create an oil sovereign fund, as Norway did.
I am very proud of the investments that the last Labour Government made in our public services.
Will the right hon. Gentleman give way?
No, I am going to make progress The truth is—we cannot get away from it—that the Conservatives are a party bankrolled to the tune of nearly £5 million by oil and gas interests since 2016. Bankrolled by oil and gas executives, they cannot act on behalf of the British people Let me end by saying this. The British people are fed up with what they have seen from the Government in recent months. They want a Government who are on their side. They want a Government who will act for them. That is why we need a windfall tax. It is a test of whose side they are on, and whose side we are all on in this House—on the side of gas and oil companies making billions of profits, or on the side of millions of struggling families. We know whose side we are on. If this Government were truly on the side of the British people, they would act, and that is why I urge Members on both sides of the House to vote for our motion tonight.
Thank you, Madam Deputy Speaker, for giving me the opportunity to open yet another Opposition day debate on behalf of the Government Another chunk of time has rightly been set aside for Her Majesty’s Opposition to explain their mature approach to politics—their open and transparent methods for taking difficult decisions or balancing nuanced trade-offs—and to articulate their thought-through programme for government if, heaven forbid, they ever win an election. At least, that is what I assumed these Opposition day debates would be like, as a new Minister. Now, on my fourth in relatively quick succession, I realise that that is not the purpose of such debates at all. How foolish of me to assume such laudable ideas when, instead, we are presented with further half-baked, sensationalist ideas solely for the headlines. We can do better than this. None the less, let me try again to make sense—[Interruption.] If Opposition Members would give me a moment, I will try to make sense of the motion for which they are about to argue. The motion splices together two very important matters, the cost of living and business taxation, in a proposition whose coherence is inversely proportional to its attempt to grab the headlines. As this is a motion of two halves awkwardly coupled together for effect by the Opposition Front Bench, I will take each half in turn First, on the cost of living and in the spirit of being constructive, I will try to find areas where we can agree. There is no doubt that this is a difficult time, with rising energy prices, growing demand, stretched supply chains and the most unique set of economic and political circumstances in a century. Latent demand has been held back across the world by health factors, with countries competing among themselves to serve people, businesses and society I acknowledge the concern of industry, businesses and consumers. The right hon. Member for Doncaster North (Edward Miliband) may be wrong on many things, but he is right that this is a challenging time. I make it clear that the Government are committed to working with industry, businesses and consumers, both now and over the long term. We know some things are challenging at the moment, and we will continue our extensive engagement with them, not least the large energy users, businesses, consumer groups and energy retailers, to consider what action may be necessary.
The right hon. Member for Doncaster North (Edward Miliband) pointed out that Ofgem will be setting the cap in just a few days’ time, so there is no point in this endless consultation looking ahead. What will the Treasury do in the here and now to mitigate the energy cap rise?
I will come to that in a moment, just as I will come to the sedentary exhortations from the right hon. Member for Islington South and Finsbury (Emily Thornberry).
Get on with it.
If I were not being heckled, I might get on with it As most of the House knows, and as most reasonable people will accept, the recent rise in energy prices in the United Kingdom has largely been driven by the increase in the wholesale price of gas caused by growing demand and broader geopolitical issues as we emerge from the pandemic. Those price rises are visible across many parts of Europe and beyond, and they demonstrate the importance of long-term security of supply and energy resilience, to which I will return in a moment With that in mind, it is important to answer the questions that have been asked, although it was wholly absent from the speech of the right hon. Member for Doncaster North that the Government are already doing much to support those in the greatest need.
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If the hon. Gentleman will give me a moment, I will try to answer these questions. The first solution is the warm home discount scheme, which provides support for household energy bills through rebates, helping households stay warm and healthy in winter. The scheme currently provides more than 2 million low-income and vulnerable households with more than a £100 rebate on their winter energy bill, and a further consultation is under way on whether that is to be expanded Secondly, the winter fuel payment from the Department for Work and Pensions is worth between £100 and £300 and is paid automatically to those in receipt of the state pension and other social security benefits. Thirdly, the cold weather payment is a £25 payment to vulnerable households on qualifying benefits when the weather is, or is expected to be, unusually cold Fourthly, last autumn the DWP announced a £500 million household support fund to help those most in need during the winter, which includes provision for utility costs, including energy. Longer-term energy schemes are also assisting, and every year more and more people are having their home insulated or upgraded to reduce their energy bills for the long term.
The Minister is right to say that we are in a unique position, but that requires a unique policy response. He will know that the most vulnerable are at risk from inflationary pressures, especially in energy prices. We are looking at inflation of 6%. When the rates for social protection were set in September, inflation was 3%. Do we not need a unique response just for this situation and this year, to reset those levels to reflect the true cost of living in April?
I am grateful to the hon. Gentleman for his intervention. The reason I articulate and go through existing programmes and policies that have already been done is because hon. Members, such as the right hon. Member for Islington South and Finsbury (Emily Thornberry)—[Interruption.] She continues to heckle from a sedentary position. She absolutely refuses to acknowledge that the Government are doing a substantial amount and, as has been indicated, we will continue to look at what else we can do in the coming days, weeks and months ahead. We of course recognise that the immediate situation is challenging, but it would be remiss of the Opposition to refuse to acknowledge the significant immediate help and the long-term subsidy going in to support those who need assistance with energy costs. As I have said, the Government remain committed to working with all to see what more can be done Let us turn to the second part of the motion. As the House knows, taxation matters are dealt with by the Treasury. As hon. Members are aware, and as Governments of all colours have regularly reminded them from this Dispatch Box over many decades, all taxes are kept under review. Yet given that the Opposition want to couple the cost of living with fiscal matters such as this, let me say a few words about this particular rabbit out of the hat from the Labour party—its big idea; its solution to the problem. This money will no doubt be spent multiple times, as it always is, and on multiple causes in the multiple Opposition day debates ahead. This is the Labour party’s generous offer, to take the words of the right hon. Member for Doncaster North a moment ago, and its reason to be cheerful. I confess, following the right hon. Gentleman’s speech, that if this Miliverse is the reason to be cheerful, we should all be very gloomy. I am none the wiser about the ultimate purpose of what the Labour party proposes. Its objective is mystifying. Its aim is confused So what is the purpose? Is it simply a money source? Or are we instead talking about the use of the tax system for something more fundamental? The right hon. Gentleman talks about the long term, but he should also recognise that short-term decisions are required. Either way, he should be clear about the position he argues for and its implications. If this is to be a money source, the best way to maximise that money—both at the time the Opposition presumably want to implement this, and then in the future when they inevitably come back for more money—is to maximise the amount of oil and gas coming out of the ground.
The Conservative party has received more than £1.5 million in donations from companies and individuals linked to the oil and gas sector. Is it not the case that although some Conservative Members want a windfall tax to help their constituents, they and their Government are not prepared to stand up to vested interests?
What is the case with this Government is that we will take decisions in a proportionate and reasonable manner, rather than using Opposition day debates and the half-baked motions underneath them to make decisions as a result The right hon. Member for Doncaster North needs to be clear whether this is a money source. If it is, he will need to maximise the amount of oil and gas coming out of the ground. That exact principle of maximising economic recovery has been the building block of the approach to the North sea over many decades. If that is the case, the Labour party should be clear about that—we will welcome it to the reality-based community—and that the transition to net zero will take time and will require the use of conventional energy to get there. The right hon. Gentleman needs to understand the logic of his position The Labour party now appears in favour of encouraging as much activity on the UK continental shelf as possible so it can tax it. The Labour party needs to accept that oil and gas will be a significant part of the future of the UK’s energy supply for the coming decades during the transition, if only because it wants the money that comes with that. I presume that the Labour party will therefore immediately go out and proclaim to its friends and fellow travellers who shout about keeping it in the ground that that is not possible, advisable or practical, and that it has made a political choice to keep the oil and gas flowing because it wants the money that comes with it The Labour party will presumably be withdrawing its opposition to further exploration as a result, because if it is all about the money, the taxes and the spending, by default it also has to be about the exploration, the extraction and the production. That is the choice that the right hon. Member for Doncaster North has made in coupling the two propositions together as he has done in his own motion.
My hon. Friend is being far too gentle on the Labour party. Is what we have heard from it not completely disingenuous? It has suggested a cut in VAT, which of course we can only do because we are out of the EU, which it voted against leaving. That cut would bring in a 5% reduction against what will possibly be a 50% rise in energy prices, so it would be a drop in the ocean. In addition, we have just heard that the windfall tax on profits—profits that do not exist at the moment—would bring in £1.2 billion, another drop in the ocean of the problem that we need to address. The Labour party is trying to con us into thinking that that is the answer to the problem that we will have. It is not.
My hon. Friend makes a number of hugely important and powerful points.
rose—
The hon. Gentleman has been waiting for a long time, so I am happy to give way.
The Minister is being generous with his time. We need to put his point about the drop in the ocean and the value of £1.5 billion in the context of the £4.3 billion that the Treasury has just written off. We are talking about not dissimilar sums of money, are we not?
I am very glad that the hon. Gentleman raises that point. I am not sure whether he was present at the end of the last debate, but it was made clear from this Dispatch Box that that is not the case in the slightest. This Government will continue to pursue the recovery of as much of that money as possible. The Labour party can keep repeating the point if it wants, but it would not be fair, accurate or real to do so To come back to the Opposition motion, if it is not all about the money, the motivation has to be different. If that is the case, the Labour party should just be clear. The right hon. Member for Doncaster North knows that policy actions have consequences and decisions have reactions. He has put forward a specific proposal for a windfall tax, so he should be held to account for it The implications of a windfall tax structured in such a way would have to fall somewhere: on consumers, on investors or on the activity itself. I assume that the Labour party does not propose to go after consumers or to reject the idea of oil and gas as a commodity, so ultimately it will have to be the investors who shoulder the burden. If so, the right hon. Gentleman should be clear that he is expecting less of a return for pension funds and therefore for pensioners and the many hundreds of thousands of people out there who are reliant on the performance of the stock market to ensure that they can be supported in old age Perhaps the proposal is just a blunt tool to reduce production in general. If so, the right hon. Gentleman should just say so. That certainly seems to be the inference to draw from his statements today, and from his questions over recent weeks to other Government Front Benchers. It does not sound as if he is simply looking for a source of money to fund others; it does not sound as if he is seeking to maximise economic return; it sounds as if he is deliberately trying to penalise activity on the UK continental shelf and, if possible, to reduce it. If that is the case, he should say so out loud, because then will we know.
Will the Minister give way?
I will make progress The Labour party’s position is to immediately and artificially retard the amount of oil and gas that we produce domestically through penalty taxation, not necessarily because a windfall is needed, for aims that should or should not be laudable, but because reducing production is the ultimate objective. If the Labour party wants to reject the notion that getting to net zero requires a transition period, let it be clear about that. Let it highlight the fantastical world that Labour Members live in, shorn of the reality that we are on a journey over a generation Moreover, the Labour party should be clear that its objective over the long term—no doubt as it comes back for more and more money—is to reduce our energy security. Taxing out of existence the oil and gas industry, which we need to conclude the transition, will make us more dependent on other countries whose actions may have caused some of the things that the Labour motion seeks to deal with—greater foreign imports and fewer jobs in north-east Scotland and in supply chains all the way through constituencies such as mine, North East Derbyshire, or the shadow Secretary of State’s constituency of Doncaster North. The Labour party has no clear plan for energy to ensure in a measured and balanced way that we move from hydrocarbons to renewables and tread more lightly on the earth. That is what the Labour party is about these days: extinction, not transition We are used on Opposition day debates like this, on motions that do not add up, and this one has it in spades—incoherent, confused and unclear. Perhaps some of the hon. Members who are about to speak might be able to clear up the ultimate objective in the way that the right hon. Member for Doncaster North failed to do. For a party that talks so much about good government, Labour has demonstrated this afternoon that it is only interested in good headlines.
First, reflecting on the Minister’s response to the shadow Secretary of State’s contribution, I am a little perplexed, because we continually find ourselves in this situation, where the Tories portray themselves as the defenders of the North sea oil and gas sector, and that is the best that they can provide to do that. It is simply not good enough and it will not wash with people in the north-east of Scotland whatsoever The situation facing families in my constituency, up and down Scotland and indeed across the entire United Kingdom is devastating. I, like every other person in the Chamber, will be receiving emails from constituents who are having to choose between heating their homes or feeding their families. It is intolerable. It is simply not justifiable. It is simply not acceptable. What I really struggle with the Government about on this is that, irrespective of the fact that food prices are rising, clothing prices are rising, fuel prices are rising—
Not once in the Minister’s response did he talk about those ordinary people that are having to choose between heating and eating. That is the real debate. Does the hon. Gentleman agree?
Yes, absolutely I agree. Over a number of months, irrespective of the challenges that families are facing, this Conservative Government have consistently not come forward with any new support. The price cap increase is imminent, yet there is still nothing on the table for families up and down the country. That needs to end SNP Members do not have a monopoly of knowledge of how to solve those problems, but we have consistently put forward suggestions to the Government, some of which, I think, would gain the support of many of their own Back Benchers. The situation in relation to VAT has been talked about at great length. I see Conservative Members nodding. The deplorable decision to take £20 away from those on universal credit could be reversed—I think we would probably get significant agreement on that as well. The UK Government could match the Scottish Government by introducing a £20 child payment to assist those in the most difficult situations. We are putting forward these proposals to try to be constructive, but unfortunately the Government are not responding in any way, shape or form The Government will say, “How do we pay for new measures to support people?” The Labour party has come forward with its proposal, which I will come to in due course. I sometimes struggle in this place with this argument about where the money is going to come from. We have just had a debate about £4 billion that has been squaffed away to fraudsters. This afternoon we have seen a release from the Department of Health saying that there has been a loss of £8.3 billion in the value of PPE that has been purchased. There is going to be £3 billion of additional income to the Treasury, notwithstanding the windfall tax, from the North sea oil and gas sector. They can find half a million pounds to fly the Foreign Secretary to Australia. Of course—this is also true of the Labour party—they can always find tens if not hundreds of millions of pounds for nuclear weapons on the Clyde. So I will not take any lessons from them about where the money is going to come from. In relation to the specific proposal for a windfall tax put forward by the Labour party, what was missing from the contribution of the shadow Secretary of State and the Minister himself was the workers. What impact would it have on the workers The shadow Secretary of State rightly, as he sees it, challenged the notion that the money that oil and gas companies are receiving is going directly into investment in renewable technologies and the pathway to net zero. He made that argument with a great deal of passion, but he failed to recognise that the last time the UK Government implemented a windfall tax, 10 years or so ago, investment in the North sea oil and gas sector plummeted. It fell off a cliff; in fact, it has never got back to where it was If that happens again, what does it mean? It means that my constituents will lose their jobs. Some 35,000 jobs have gone in the past couple of years alone. The price of oil was barely scraping zero last year, yet the Opposition come forward to tell us that this tax is the right thing to do, notwithstanding any concerns about the impact it might have on investment in the North sea.
Is the hon. Gentleman not making an excellent case for a just transition, where taxes such as this, on those who have made billions—perhaps trillions—over the past century from sucking our resources out of the ground and making excessive profits, are invested to ensure that his constituents and the workers in those oilfields are entitled to a decent, sustainable, well-paid job?
A just transition is at the forefront of my thoughts almost every day, because I see first-hand the impact of the decisions taken in this place on oil and gas. My own constituency contributes £14.4 billion of gross value added to the economy. How many other people’s constituencies can say that? However, I am aware of the poverty that exists notwithstanding that We need to see a just transition, which is why we have tabled our amendment today, but I must repeat that I have concerns about Labour’s proposal. Without their detailing what they believe the impact on investment would be and what the subsequent impact of that would be on workers, it is a proposal I simply find difficult to support in its current form That is not to say that the Government should be let off the hook, because the just transition, as has been said, is incredibly important. It is important to my constituents and to the constituents of Government Members, because there will be a change in the coming years and a transition to net zero. From the Scottish Government, we have seen a £500 million just transition fund put in place, with £80 million put towards the Acorn project, which the UK Government continue to drag their heels over supporting.
I welcome many of the comments the hon. Gentleman makes, representing as he does the southern half of Aberdeen, the oil capital of Europe, but he also refers to the so-called just transition fund of £500 million and the £80 million that has been announced as being on the table for the Acorn project. Does he or the SNP have any detail yet on precisely what any of that money would be spent on?
Yes, it is £580 million more than the UK Government are putting in place. That does not start and stop with—[Interruption.] I am sure the hon. Gentleman can make his contribution in his own way later on. There is also the £62 million energy transition fund and the £30 million that has just been given to Aberdeen’s south harbour, specifically to ensure that we can meet our net zero future Notwithstanding the just transition and the windfall tax, what irks me more than anything is the lack of an oil fund in this country, mentioned by the hon. Member for Warwick and Leamington (Matt Western) and by my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown). If we look across the North sea at Norway, £1 trillion is sitting in a bank account because the Norwegians invested in their future. With that money, they are able to shield their public from the shocks that all our constituents face at this moment in time Why did Norway do that and this place not do that? Why did this place choose to squander Scotland’s wealth? It is simply unforgivable. When I have discussions with my constituents about the challenges they face, I simply hope the Government will not repeat the mistakes of the past.
Order. As colleagues can see, this is a well subscribed debate. I encourage colleagues to keep their contributions to about five minutes, and we should be able to get everybody in.
I welcome this opportunity for us to discuss one of the biggest issues facing the country. April could indeed be the cruellest month this year if more action is not taken to tackle the forthcoming problem, because we are likely to see an unfortunate coincidence of a big surge in electricity and gas bills as the cap is relaxed, an increase in council bills, general inflation that is a bit too high, and a national insurance increase hitting people’s work incomes. I urge the Government to think again about the possible severity of that squeeze on real incomes, as it would have a knock-on effect, reducing people’s ability to spend on other discretionary items as they struggle to pay energy bills. It would therefore slow the economy quite considerably, at the same time as creating this shock to living standards The Ministers sitting on the Front Bench are, I am sure, engaged in conversations more widely in Government, including with senior members of the Government who will make the ultimate decisions. Today is not really the day to debate more general taxation issues, although even at this late stage I would like the Government to cancel the national insurance increase, on the grounds that public finances generated a big surge in revenue compared with the Budget forecast last March, and our deficit is around £60 billion lower than they thought it was going to be. I say to the Government that they can accommodate the £12 billion they need to spend—rightly—on health improvements, without that money The proper subject of this debate is our energy markets. If we compare the two sides of the Atlantic, we see in Biden’s America, where he inherited a period of successful exploration and development of domestic gas, a market that can more than supply its own needs and has kept prices considerably lower than the damaged European market. President Biden, while clearly putting his country on the road to net zero at COP26, returned home to authorise more exploration and development of both oil and gas wells, and to license more territory in the gulf of Mexico. He took the view that we will have a transition need for gas for this decade or more, and he needs to keep the American market properly supplied I urge my colleagues on the Front Bench to be sympathetic, as I think they are, to the case that while we still need to burn quite a lot of gas, and while we are awaiting plentiful supplies of renewable or nuclear power that will be affordable and reliable, we must accept that we will be burning somebody’s gas, and it must make more sense to burn our own, rather than imports. Indeed, I would start that case from the green point of view. A while ago I had a useful answer to a parliamentary question, pointing out that the CO2 generated by importing liquefied natural gas and burning it in whatever we wish to burn it in is more than double the amount of CO2 generated from burning a comparable thermal equivalent of gas taken from the North sea. There is a very good green case for substituting domestic gas for imported LNG.
Over the past two years, the North sea oil and gas that was exported doubled. It is not our oil and gas. It belongs to the corporations that bring it out of the ground, and they sell it to the highest bidder. It does not increase our energy security. The right hon. Gentleman made a point about Biden inheriting fracked shale oil and gas in the US, but he failed to mention the ecological costs, which every year run into hundreds of millions of pounds of damage to the natural world. That is the price the United States is paying for its fracking, which I imagine the right hon. Gentleman would expect us to take up here as well.
I was not talking about onshore gas at all; I was talking about North sea gas, which comes from under the sea. A variety of reservoir easing techniques have been used for many years and never caused political controversy. I was recommending that we review again the opportunity to explore for more, to develop more and to bring into production the fields that we know are out there. That would also help the SNP spokesman, the hon. Member for Aberdeen South (Stephen Flynn), who would rightly like more jobs or to sustain jobs in his successful oil and gas city, which faces the problems that he described. I was interested in his warning about how a windfall tax could, like last time, collapse investment and reduce the amount of extraction and future investment that we get The hon. Member for Norwich South (Clive Lewis) said that not all the gas produced in the North sea would be sold to us. That may be right, but the European market in general is chronically short of gas and the continental market is cruelly dependent on Russian gas, which today we can see is not a good idea. A North sea supply would therefore help when we are trying to ease supply pressures and bring prices down The second reason why it makes much more sense to use our own gas—or to extract more of it—rather than rely on imports is that we collect much more tax on it, and we are losing all that tax revenue on imports. The hon. Gentleman should remember that we now import 53% of the gas that we need, and we do not get anything like the revenue that we could if we extracted more of our own. Preferably, we would sell it to ourselves, but even if we exported it—we may well do that—we would still collect the extra revenue. There would also be a benefit in jobs and prosperity, because the industry tends to create quite a lot of well-paid jobs, which is good for the communities that sponsor those activities I hope that Ministers will look favourably on the idea that, during this transition, we will burn a lot of gas—as will everyone else—so it makes a lot of sense for the UK to produce gas and offer it on long-term contracts, trying to smooth some of erratic prices that we see because of what is happening on the continent, and make our contribution to greater security of supply for ourselves and—indirectly—for Europe Finally—I know that time is limited—electricity is much in demand, and it will be much more in demand if the electrical revolution that the Government wish to unleash comes true. One reason why we had a big spike in gas prices was that the wind did not blow, which added to the need to burn a lot more gas in power stations. That can happen again, because the wind clearly is an unreliable friend, and it is particularly difficult if it goes down at times of peak demand or when it is very cold. We therefore need to ensure that we are putting in enough reliable electricity capacity, because that has a direct relationship with the gas supply and demand issue as well as with gas prices, and I do not think that the current plans have nearly enough new capacity in them.
While the Prime Minister, the Government and Tory MPs have spent the past several months arguing among themselves about the untenable future of the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), my constituents have been on the blunt end of rising fuel prices, mounting food costs and soaring energy bills, which have pushed already struggling household finances to the brink and created a grave cost of living crisis for many families across the Bradford district. I remind the Minister that that is the central part of the debate. Let me be clear, however, that the cost of living crisis, which means that many families in Bradford need to choose between heating and eating, is no accident. It is the direct result of a decade of this Conservative Government’s incompetence and complete indifference to the lives of ordinary people in places such as Bradford, and it is the direct result of their ideologically driven austerity cuts targeted at some of society’s most vulnerable. It means that in places such as Bradford, nearly half of all children continue to live in poverty, working families continue to be forced to use food banks and destitution continues to spread like a cancer The cost of living crisis is not of the making of my constituents in Bradford or, indeed, of the constituents of any Member in this House, but they are the ones literally having to pay the price. Now this Government’s failures to get a grip on soaring energy bills mean a further attack on the most vulnerable, as the needs of greedy energy companies and their profits are put before the needs of our constituents. That is frankly scandalous, and people struggling to make ends meet in Bradford and across the country deserve much better. They deserve better than a Conservative Government who delay taking action on this cost of living crisis to spend time trying to save their doomed Prime Minister. We have to be clear: when people are struggling to put food on the table, to heat their homes and to keep a roof over their head, it is not the time for dithering or for political games; it is the time for leadership and immediate action—something that is lacking from those on the Government Benches.
Does the hon. Member agree that there is an incentive for the Government to act, because people living in cold homes are far more likely to get ill with respiratory diseases? That then leads to a huge hit on health budgets and social care budgets. It is a false prophecy to let market forces rip. We have to act quickly and we have to act now.
I absolutely agree with the hon. Gentleman, but the reality remains, as I stated earlier, that this tragedy has not just started now. The last decade under this Government has seen some of the biggest ideological austerity cuts in places such as my constituency in Bradford and in many other places across the country. The reality remains that it is ideological, and the Government know the impact. That is the worst thing: they know the impact of what they do. Not once in the Minister’s speech did he talk about the impact on ordinary people up and down the country. He could not bring himself to talk about the fact that today, children in our constituencies will go hungry. He could not bring himself to discuss the fact that many people go days on end without a hot meal. He could not bring the words to his mouth to say that destitution is now rife in our country, or that we now have international reports that say that we—the fifth largest economy in the world—are not providing for the public. He does not mention any of that. I am not sure he was in the right debate. He is a new Minister, so perhaps he was in the wrong debate, and I forgive him if so Those things are why, as the shadow Secretary of State, my right hon. Friend the Member for Doncaster North (Edward Miliband) stated clearly, a Labour Government would scrap VAT on domestic energy bills, expand and increase the warm home discount, and impose a windfall tax on greedy energy companies that are taking people for a ride The reality is that, even as people in Bradford continue to suffer and even as the plan set out by the Opposition stares them in the face, the Government have no answers, no solution and no offer for my constituents. Frankly, it seems that they could not care less if the most vulnerable places in the country, such as Bradford, are plunged into further poverty and deprivation. I assure them that the longer they take people in Bradford and across the country for fools and the longer they delay in taking the action that ordinary people need to save them from the cost of living crisis, the more that those people will repay them with interest in the ballot box at the next election.
Perhaps unsurprisingly, I rise to speak against the motion. I declare an interest, although it is not necessarily required, as having been employed in the oil and gas sector for 25 years prior to being elected to this place. [Interruption.] Despite the groans from my hon. Friends, I think that provides me with some context and experience, rather than anything sinister On behalf of my constituents, many of whom are employed in the oil and gas industry, I will focus my remarks mostly on Labour’s proposal for a windfall tax on oil and gas businesses and the harm that it would do not just to the north-east of Scotland economy but to that of the wider United Kingdom. I will also remark on why such a punitive intervention will have the opposite of the desired effect and put at risk the success of the country’s energy transition to net zero I am aware, as are Ministers, of the anxiety of people across the country, including in my constituency, about the increased cost of living. I welcome the measures that the Government have already taken to support those on low incomes with their energy and heating bills. One of those, the energy price cap, has already saved customers about £1 billion a year, which is equivalent to about £77 to £100 a year for typical households on default energy tariffs. Some 2.2 million pensioners and low-income families are protected with a £140 discount on their electricity bills, which has been extended to 2026 and will rise to a £150 discount from October.
On the energy cap, is it not the case that it is not Government money that is protecting people? Other consumers pay for it in the long run—we are all paying for it—so it is not a direct Government intervention.
The hon. Member may have some data to back up his claim, but the decision, as was voted for in this House, was to apply the energy cap Another scheme is the winter fuel payment, which delivers an annual tax-free payment of between £100 and £300 to help to meet heating costs. The £25 cold weather payment was also awarded to 4 million vulnerable households in England, Wales and Scotland in the last financial year The Opposition have proposed a cut in fuel VAT, which is already at a reduced rate of 5%. That was not included in today’s motion, although it was mentioned by the shadow Secretary of State, the right hon. Member for Doncaster North (Edward Miliband). The fundamental flaw with that approach is that, unlike the measures I mentioned earlier, such a cut would disproportionately benefit wealthier people with larger houses and higher fuel costs. It is far better to focus support on the most vulnerable who need it most, which is what the Government’s measures do, such as the £500 million household support fund. That includes £41 million for the Scottish Government, which I am pleased they are passing on as the winter support fund As well as support for energy bills, the Government have a great record on improving support in general for those on low incomes or looking for work. The national living wage increases to £9.50 later this year. The reduction in the universal credit taper means that workers on low incomes keep 8% more of what they earn. The double lock on pension increases means that state pensions will increase by 3.1%. This morning in Treasury questions, the Chancellor reminded us that since 2010, 1 million fewer people across the UK are in poverty I welcome the Government’s action on reducing the reliance on hydrocarbons and on growing renewable and low-carbon sources of energy, heat and transport. Renewable energy has quadrupled since 2010 and coal is due to be phased out completely by 2024. The energy transition to net zero is already under way—it has been for a long time; I saw evidence of it when I was still working in the industry—but we are not there yet. There is still a demand for oil and in particular gas to meet our energy, heat and transport needs, and we must do what we can to ensure that as much as possible of that demand, albeit declining, is supplied from our own local sources Nearly three quarters of the UK’s energy currently comes from oil and gas, of which production from the UK continental shelf—UKCS—was equal to around 70% of demand in 2020. Even as we transition to a net zero future, the work of the Climate Change Committee shows that around half of the UK’s cumulative energy requirements between now and 2050 will be met by oil and gas. Almost 200,000 jobs are supported in the industry, not just in Scotland but right across the United Kingdom. Those jobs, which the motion puts at risk, are a key part of driving the energy transition, as I have mentioned previously British companies such as BP and Shell, as well as Total, Equinor and other international energy companies, already have access to the skills, expertise, technology and capital to help deliver net zero. The current offshore oil and gas tax system is one of the most competitive and progressive regimes globally; through it, the sector will pay an additional amount of at least £3 billion over two tax years. That is due to the automatic mechanisms that are part of the specially designed tax regime by which the oil and gas sector already pays a total of 40%, made up of 30% in corporation tax and an additional supplementary charge of 10% The current tax regime was developed as a result of lessons learned from three previous significant increases in UKCS corporation tax. After each increase, as has already been mentioned, a range of incentives was needed to win back investment into the UKCS that had been lost as a result of the increase. Windfall taxes such as the one proposed today have been tried before; although they were intended to increase returns to the Treasury, tax revenues actually fell As I said earlier, the oil and gas industry already plays a key part in efforts to deliver the UK’s climate change objectives; it was actually one of the first sectors to come out in support of those goals. The industry’s own “Roadmap 2035” is underpinned by the groundbreaking North sea transition deal between the sector and the UK Government. I know from my background in the industry and my ongoing engagement with stakeholders that they remain committed to providing that reliable home-grown source of energy for consumers, including in renewable energies such as offshore wind and in much-needed low-carbon technologies such as carbon capture and storage and hydrogen, to name a few A one-off windfall tax on oil and gas companies would significantly undermine the sector’s ability to sustain its investment in the oil and gas industry, make us more dependent on foreign imports of hydrocarbons—which are not just used for fuel, by the way; they are also used for manufactured products such as recycled plastics, detergents, and even medicines and personal protective equipment—and put security of supply, as well as thousands of jobs, at risk The main factor against this windfall tax—alongside the uncertainty that it would bring to the industry, its investors and the workers whose families have the very same cost of living worries that have been discussed in this debate—is the restrictions that it would place on the oil and gas industry’s vital contribution to driving forward the energy transition to net zero.
Labour’s plans would bring genuine help to millions of households across the country who are facing an unprecedented increase in their energy costs. They are fully funded plans that would give some support to all households and a more substantial package of support to the 9 million households who need it most The plans would not increase taxation on working people; they would raise the money by a windfall tax on the North sea oil and gas companies, which are raking in huge profits from the price increases. The plans anticipate the increases that people will see in their bills. Perhaps unusually, we have a clear view of those increases coming down the track, so there is time for the Government to act, and I beg Conservative Members to vote for our motion today in order to tackle the misery that people find themselves in This fuel bill crisis comes at a time when people are already being hit by other problems. There has been coverage in the press over the last 10 days of how the rising cost of food is hitting the least well-off the hardest, not just for the obvious reason that they spend a greater proportion of their income on food, but because the rate of inflation is much higher on basic items, with many basic lines having been withdrawn altogether by the supermarkets Of course, the least well-off often have the least control over their energy costs. Someone who is renting their home does not have any choice over the type of heating they have, and they will not necessarily have the most efficient cooker or boiler, or the best insulation. There are some shocking examples where lean-to parts of houses—former breakfast rooms or kitchens—become a flat on their own and the thin-skin roof provides no insulation whatever. The lack of sunshine between high blocks of terraced housing makes it almost impossible to heat those homes. There is evidence that housing associations are having to cut back on maintenance projects. Food banks are even reporting that people are saying that they do not want pasta because they cannot afford to cook it, and admitting that they only eat cold food out of tins High energy costs mean families cutting right back, living in cold, damp rooms with particular risks to the very old, those with disabilities or chronic illnesses and the very young, such as increased risk of respiratory disease. It is not just heating and cooking. How can people get their washing dry in a cold, damp flat? How can they afford to iron school uniforms for their children? If they get cut off, more complications will follow The warm homes discount is totally inadequately funded. The total amount allocated to the fund is barely enough to help half of the households eligible. Then there is the difficulty of applying. Claimants have to know about the scheme and know how to ask their energy provider, which is made all the more difficult for those who cannot go online, for economic reasons or lack of skills. Even if they get through, the main energy supplier in my area, for example, has no warm homes discount money left. It depends on whether people get in early, the demand on their particular energy company or where they live. The likelihood is, of course, that the most needy will miss out. Even if people do get it, £140 does not go anywhere near far enough, given the huge hike in energy prices The Welsh Government are trying to do their best with the winter fuel support scheme. It has given £100 to households on universal credit, income-based JSA, income-related ESA, income support or working tax credits and, in view of the frightening increases, today, the Minister for Social Justice has doubled that to £200. That is a Government with far fewer options in their economic decisions, and far fewer economic levers at their disposal, recognising the desperate need to help the least well-off to heat their homes. The cut in VAT would help everyone. Labour’s proposal today would offer additional help to 9 million households in the most precarious financial situations, with up to a further £400 of help for each household. Together with the VAT cut, that would leave households with bills that are marginally higher than last year’s. Why are we facing such energy price rises, worse than in other countries? It is not just because world prices are rising or because the Conservative Government are taking no action whatever, either because they simply do not care that people are cold and miserable, or because they cannot get their act together to do anything—either they do not care or they cannot do. It is also because the Government dismantled gas storage facilities and, crucially, have been sending very mixed messages about investing in renewables The Government wasted precious time in the development of renewables with the nonsense of the moratorium they imposed on constructing onshore wind farms in England. That not only thwarted opportunities to increase the generation of renewable electricity, but sent a very negative message about the future commitment of the Government to renewables. We should be far further ahead now in our production of electricity through renewable means. The fact that we are not is an abject failure by the Government to stimulate the production of renewables. Luckily, we have devolved powers in Wales and we are able to continue the development of wind power We also had the reluctance of the Conservative Government to consider the Swansea tidal lagoon. Thanks to the initiative, imagination and hard work of the Labour-controlled city and county of Swansea, the project will go forward, providing power for thousands of local homes The gas price hike should be a wake-up call to the Government to make up for lost time and accelerate the development of renewables. We must reduce our reliance on gas, both to reduce our carbon emissions and to increase our resilience. If we want to have a hope of making the transition to electric vehicles and decarbonising the heat in people’s homes, not to mention meeting the needs of business and industry, the development of renewables must be a priority for Government Labour would also implement an up-to-date energy and industrial strategy, drawn up with businesses, and invest—as my hon. Friend the shadow Chancellor announced at conference in the autumn—the sort of sums of money needed to make a green transformation: some £28 billion a year to ensure that we have industries fit for the future that provide good jobs. But of course an immediate crisis faces energy-intensive industries such as the steel industry. If that is not resolved as a matter of urgency, we could see steel production go elsewhere. Labour would also use money from the windfall tax on North sea oil and gas production to help our struggling energy-intensive steel-producing firms and protect our world-class industries for the future.
I recognise the enormous challenges that many households are facing in struggling to pay their energy bills currently, but unintended negative consequences would arise from such a tax rise, and I shall briefly outline what they are. I make these observations as an MP representing a constituency where many people work in the oil and gas sector, as chair of the British offshore oil and gas industry all-party parliamentary group, and as a supporter of offshore wind—a technology with which the oil and gas sector is increasingly collaborating. First, it is necessary to set the context. Extraction of oil and gas on the UK continental shelf over the past 55 years has brought an enormous dividend for the UK. It has provided heat for our homes and businesses. It has created hundreds of thousands of well-paid and highly skilled jobs—expertise that we have exported around the world—and, importantly for successive Chancellors, much-needed revenue Extracting oil and gas in the North sea is not straightforward. It is a difficult basin in which to work. It needs a stable fiscal regime to attract investment, which is globally footloose. Some might say that, as we move towards a zero-carbon economy, that matters less, and that we should not be promoting further investment in the North sea. The response is that we need that investment as we will continue to use oil and gas, albeit in lesser amounts, for some time, and that funding is required to secure a just and optimum transition to a zero-carbon economy, where we can add to and enhance the skills and expertise built up over the last half-century It is necessary to highlight that the existing tax system is working well without the need for a windfall tax. The UK oil and gas industry will pay about £3 billion in extra corporation tax as a result of the global rise in gas prices It is appropriate to look at the consequences of previous windfall taxes—most recently, that of the coalition Government in 2011. After all such previous increases, the Treasury has had to offer incentives to claw back investment into the UKCS. That additional fiscal risk puts a cost premium on investments compared with the cost in most other nations, in particular Norway, which is experiencing an economic surge and is well ahead of the field in the race to zero carbon The North sea oil and gas industry has a key role to play in the drive towards a zero-carbon economy. That is evidenced in the North Sea transition deal from last March.
Will the hon. Gentleman reflect on the point raised by the hon. Member for Aberdeen South (Stephen Flynn)—that it was a huge mistake not to create a sovereign wealth fund in order to reinvest in the transition that we now face?
I thank the hon. Gentleman for that intervention. He may well be right, but that decision was made 55 years ago. Norway has, I think, far bigger resources than we do, and of course it is a much, much smaller population and country. So that is a debate for another time. I understand where he is coming from, but there is another side to that argument.
The fact that Norway is a small independent country actually backs up Scotland’s argument for independence, does it not, considering Norway has a $1.3 trillion sovereign wealth fund?
I think we are actually on the same side of the argument here. Norway has done remarkably well and there are lessons to be learned. I was actually pointing to the fact that they have had that stable fiscal taxation regime, which has enabled them to be at the forefront of the drive towards a low-carbon economy The North Sea transition deal from last March has enabled the industry to deliver investment of £14 billion to £16 billion by 2030 in new technologies such as carbon capture and storage and hydrogen. While the supply chain of the oil and gas industry extends across the UK, activity tends to be concentrated on the North sea coast in north-east Scotland around Aberdeen, on Tyneside and Teesside and in East Anglia around Great Yarmouth and Lowestoft. These are coastal communities that have their own particular challenges and it would be very wrong to add to them at this particular time Off the East Anglian coast, there are exciting opportunities to promote a prosperous transition in the southern North sea by redeploying infrastructure and expertise from the oil and gas industry to create a leading hydrogen production and carbon capture, usage and storage hub around the Bacton gas terminal in the constituency of my hon. Friend the Member for North Norfolk (Duncan Baker). The energy price crisis presents many people with enormous challenges, and I look forward to scrutinising the Government’s proposals to address it, which will probably come forward next week. A windfall tax might, at first glance, be a compelling way of meeting that challenge, but it would have untold negative consequences.
Over the past few months, I have been approached by numerous constituents in Birmingham, Hall Green who have expressed serious concern over the affordability of their fuel bills. Many people are now facing a significant cost of living crisis that has been driven, in my view, by two main factors. First, over the last 20 years in the UK, gas prices have nearly tripled; the increase is staggering: 221%. Given the reliance on gas in many households across the country, this significant increase, which is set to further accelerate this year, has driven the cost of living up for millions of families and businesses and forced families to choose between heating and eating The second factor is the anaemic growth in wages over the same period. Wage growth has been slow and has struggled to recover to pre-2008 levels. Taken together, what does this mean? It means a significant squeeze in the standard of living for millions of families, who are seeing more and more of their hard-earned wages being absorbed by the gas and oil companies, which have registered record profits over the course of the pandemic. If that is not bad enough, some of the largest North sea oil and gas companies, such as Shell and BP, have paid zero corporation tax in recent years. Not only is that deeply unfair for hard-working families; it also means growing inequalities in the distribution of our national resources That situation is unsustainable. Without massive investment in alternative sources of energy, the spiralling cost of gas and oil will only continue to worsen in future years, yet this Government seem to have no plan to address the issue. They are content to see a low-wage, high-cost economy where the wealthy continue to profit while hard-working families struggle to make ends meet. That is why we on this side of the House are proposing a windfall tax on gas and oil companies. It is high time that we began to redistribute the massive wealth built on the back of consumers who have no choice but to pay the ever higher prices for energy bills The revenue generated by such a tax would help to relieve the burden of higher energy bills for millions of families and businesses throughout the country and for my constituents in Birmingham, Hall Green. That would further help to sustain our economy. Money saved on energy bills can be spent on our high streets and in our small and medium-sized enterprises. Most importantly, this can help the families whose children get their only meal of the day at school. We can make school meals free for everyone. We can make sure that no child goes hungry. We can make sure that food banks, a landmark legacy of this Conservative Government, are eradicated and do not exist This is why I know the people of Birmingham, Hall Green are fully behind the proposal for a windfall tax. Unlike this Government, we will not simply sit back and watch as families are made poorer while energy companies continue to post profits and avoid paying their fair share in tax. The right hon. Member for Wokingham (John Redwood) said that energy companies had made a loss. No, they have not. No energy company has made a loss. What he means is that they did not make as much profit as they did in previous years. If they had made a loss, they would be among the energy companies that have folded and do not exist I would like to congratulate the Minister on his contribution, matching what we have seen in recent days in terms of the verbal diarrhoea from the Prime Minister. He is on a par with that.
It is a pleasure to rise to speak in this debate and to follow the remarks of the hon. Member for Birmingham, Hall Green (Tahir Ali). It has been quite a remarkable afternoon, not least because I found myself in agreement with much of what was said by the hon. Member for Aberdeen South (Stephen Flynn), which is an uncomfortable and unusual position for me to be in—it is a shame that he has left the Chamber just now—because we keep being told by the Labour party that the grown-ups are back in the room and the Labour party is back to where it was and all the rest of it. We are hearing Member after Member on the Labour Benches get up and castigate successful British businesses for having the audacity to make a profit, and castigate successful British people who have chosen to invest in British success stories as somehow evil or the devil incarnate, because they have chosen to invest in oil and gas companies, which employ hundreds of thousands of people across this country and, indeed, many thousands in my constituency For most of my life, the Labour party dominated Aberdeen city politics. Until 2015, it held both Aberdeen North and Aberdeen South, ran the city council and elected numerous MSPs to the Scottish Parliament, not that we would know it listening to Labour Members today. The party of Frank Doran and Dame Anne Begg —or Donald Dewar when it comes to it, who represented Aberdeen South—seems completely disconnected from the oil and gas industry. It seems ignorant of how the industry operates and the workers who are employed by it. It is on those workers that the impact of the windfall tax would be most harshly felt were we to introduce the Labour party’s policy, as put forward today. I see some on the Labour Benches shaking their heads, but it is absolutely true The very reason that the UK’s oil and gas industry recovered to the extent that it has following the crash in 2014, is in very large part due to the fiscal stability offered to it by this Government. That led to the North sea becoming the most attractive basin in the world in which to invest, which was an incredible reversal of fortunes considering where the industry was in 2014. I just wonder how many international companies would look at a situation that the Opposition would have us in, where the tax regime could be changed at the stroke of a pen or the drop of a hat, and think, “That is the sort of stable fiscal regime I want to invest in,” and not take their business and create jobs elsewhere around the world—the middle east, Russia or the gulf of Mexico—anywhere there is another successful oil and gas sector When those companies fail to create new jobs or invest in platforms in the North sea, it will be my constituents, and the constituents of many Members in this House today, who will suffer. It will be the over 100,000 Scots who are directly employed by the oil and gas industry who will suffer. It will be the economy, particularly in the north-east of Scotland, that will suffer. And how exactly do Labour Members think the cost of living of the people I am elected to represent will be impacted if they have uncertainty about their future employment and how they are going to put food on the table for their families It is not a surprise that Labour is still so far behind in Scotland that it cannot elect a Member north of the Forth if this is how it understands, or misunderstands, one of Britain’s most successful industries. It is an industry, by the way, that has contributed—I heard the right hon. Member for Doncaster North (Edward Miliband) say its profits were unearned—£330 billion to the UK Treasury. It has a supply chain worth £30 billion. We heard that exports were somehow a bad thing. It exports almost £12 billion of goods and services around the world. The north-east as a region was only just recovering from the oil price crash of 2014 when covid struck. As the hon. Member for Aberdeen South said earlier, this time two years ago the oil price was barely scraping zero That is a key point: oil and gas prices fluctuate wildly. Gas may be sitting at near record prices today and oil may be sitting at $88 a barrel right now—that is, of course, impacting on energy bills—but tomorrow that might all change. It is grossly incompetent, naive, inept—this is the Labour party, of course—and totally ignorant to base a policy around the price of oil and gas. Imagine anybody being so stupid, short-sighted or ignorant as to do that. The SNP would never base a significant policy proposal on the price of oil or gas, I am sure More than that, the measure would be bad for the environment. It would almost certainly cause companies to cease or pause investment in what is already one of the cleanest basins in the world, which will be net zero by 2050, with the vision being 2035. As all eyes are trained on Ukraine, the Labour party’s policy would lead Britain to a place where we were less secure in our energy supply and more reliant on Vladimir Putin of Russia and countries in the middle east. That is why the Labour party should think again before it comes in here with headline-grabbing stunts, instead of well-thought-through policy, when it has no idea about how those stunts would impact on the working people of this country.
In starting my contribution in support of Labour’s proposal, I would like to consider what it is actually about. We have heard a mass of iteration in support of the oil and gas industry, but this debate is about the cost of living crisis hitting families in all our constituencies across the country, and I am afraid I heard no mention of that during the last contribution I support the proposal for a one-off windfall tax on the profits of North sea oil and gas producers—a one-off tax that will help families and businesses across this country as they face enormous rises in their energy bills. Windfall taxes have been used before and could be used again. This is a one-off measure to try to help the immediate situation facing every one of our constituents in this country There is no doubting that the energy market is in chaos; it has been for a decade or more. For many years, I was the shadow energy Minister, and seven years ago we were here talking about the very same thing. This measure will not solve the crisis, but it will help alleviate the massive impact that the cost of living, including energy prices, is having at the minute. Twenty-seven companies have gone bust in the sector since September. Customers are being transferred to new suppliers. That is also a crisis: although Ofgem says that money built up through direct debits will be transferred to the new suppliers within 70 days, that is not happening. Some of my constituents are having to pay bills now when they have hundreds and hundreds of pounds in the bank with the previous suppliers, without that money being used to offset. They have the threat of debt collectors coming to their homes if they do not pay the bills. That needs addressing by the Government as well The energy price cap is supposed to protect customers, but last October bills went up by 12%. We are expecting them to go up by 50% or more next time in April, and my constituents cannot afford that. The cost of living is going up all the time, but wages are not going up at the same rate. As of November, inflation was at 5.1% and wages were rising by 3.5%—a real-terms cut of more than 1.5% on average prices. And then we are going to be hit with the rise in energy prices I represent Sunderland in the north-east of England—an area where many people work in the oil and gas industry, which I know very well. Rounded up average earnings in the north-east are £28,000 a year, while in London they are £38,000 a year, yet energy prices are the same. How are my constituents going to pay for that enormous rise in energy prices? No one can afford it, and Sunderland and the north-east can afford it least The energy market is broken; as I have said, we have known that for years. People need help now while other things go on to try to fix the disaster in the energy market. I heard nothing from the Minister to suggest how the Government will address this real crisis hitting every one of our constituents. It has nothing to do with politics. The energy bills of every person in this country are going up enormously in a couple of months’ time. If the Government do not accept our motion for a one-off windfall tax, or our call for a cut in VAT, what are they going to do We are now at a point where warm words simply are not enough. We need action from the Government to help every one of our constituents in this crisis that means people will not be able to pay for their energy supply. This utility is essential to every person in the country, so I look forward to hearing what the Minister has to say in summing up. Something simply has to be done.
We have had a pandemic, and the Prime Minister and the Chancellor put £400 billion into the economy to support businesses, people and employment. At one point, 11 million people—a third of the workforce—were being paid by the Treasury. If at that point one had said, “We will emerge with a growing economy, falling unemployment and 1.5 million vacancies,” it might have been thought to be a very optimistic scenario Yet the British economy is growing, and Europe, America and Canada are growing. The reason for the inflation spike and rising oil prices—they were zero during lockdown—is that the world economy is recovering. I make the gratuitous point that that is rather good news. It causes a problem for the Government in how to deal with some of the shortages and some of the price increases, but it is all good news. There are jobs out there, and people have a great opportunity to get into employment. The key point is that the Government’s policy of saving jobs has been a tremendous success The North sea has been a tremendous British success story, as my Scottish colleagues have said, but it is now in a mature phase. It needs stable, calm husbanding and tax rates so that less viable fields are eked out to their maximum life and so that newer fields in deeper waters are able to be developed. That is why we need a stable tax regime The arguments that have been made are perfectly sensible. Companies were losing money only a year or two ago, and now they are making money. The corporation tax regime and the petroleum revenue tax generate money when they make profits, which is the fair solution. The oil companies are owned by pension funds, and most of the people in those pension funds are ordinary people up and down the land. We have already heard about the 100,000 jobs that rely on the North sea. Why kick a successful industry when it can generate a lot more wealth, a lot more jobs and a lot more gas and fuel for the benefit of our nation, just to make a quick political point and make a few runs One of the things the last Labour Government did not do was develop the nuclear industry, which will be vital if we are to get to net zero. Hinkley Point C is being built, and I hope we will soon sign off Sizewell C. Rolls-Royce’s proposal for small nuclear reactors is excellent. The Nuclear Energy (Financing) Bill, introduced by the Minister for Energy, Clean Growth and Climate Change, allows more sustainable financing for these companies, and I think it will be a game changer We need more nuclear power, so we need to give it a big push. We need to value and to continue supporting the North sea. We should leave alternative measures, on top of all the measures the Minister set out at the beginning of the debate, for a statement from the Treasury. I think the Government’s policy is perfectly sensible and will get more supply of energy and a stable tax regime.
The impact assessment for the Nuclear Energy (Financing) Bill gives an upper-limit estimate of £63 billion for the capital and financing costs of a new nuclear station. Is that really good value for money for bill payers?
Yes, it is very good value for money, because that is a lot cheaper than Hinkley Point C. The reality is that the Government are underwriting the industry, and if the industry overspends when it is producing a nuclear power station, it either gets equity or gets paid in cash. That is a very sensible way of doing it The only way that we will get to net zero is with a vibrant industry. Let us not forget that all the Magnox stations will close down over the next 10 or 15 years and we will have to replace that capacity. The solution to our problems is to have a balanced energy policy, with renewables, nuclear and the use of gas. If we have that, and if we do all we should to insulate homes and make people’s use of energy more efficient, we have a good policy. The Government have an excellent policy; I think they should say more about it.
Yesterday, many Conservative Members, not many of whom are here today, said that they wanted to talk about the real things that affect their constituencies. I am as happy as they are to talk about the things that affect our constituencies One of our constituents’ most immediate concerns, of course, is the increase in their energy bills, which amounts to an energy crisis for millions of people. As we have heard, rising wholesale gas prices are threatening to drive energy bills up by almost a third—a huge £700 increase to £2,000 a year. As for getting things done, delivering on people’s priorities or levelling up, the situation is worth a perusal. What did the Government get done on energy infrastructure? Not a lot. They have refused to invest in the infrastructure necessary to decarbonise our energy supplies and reduce our reliance on external providers. Instead, the British public have been left at the whim of oil and gas companies Financial challenges loom for our constituents because the Government did not get the job done in that policy area. The Joseph Rowntree Foundation has found that single adult households on low incomes could soon be spending 54% of their income on energy bills—a shocking statistic. The energy crisis is compounded by inflation at 5%, the highest level since 30 years ago when the Tories were last in government. There is a slash-and-burn approach to the country’s energy supply. Households across our nation have had their resilience tested time and again by this Government. Millions more are struggling with the cost of living, and it is becoming impossible to heat houses. Energy bills are shooting up and there is no action of any substance from the Government What is the Government’s response? Let us say that there are two options: a windfall tax on the oil and gas companies that have profited from the Government’s mess, or an increase in taxes on struggling low-income families and workers. Of course, we all know what the Government will go for and have gone for: taxing £12 billion out of people’s pockets. It is worth remembering that a 1.25 percentage point increase on national insurance contributions is in effect an 8% increase, given a national median wage of about £29,900. On that income, in 2021-22, a person will have paid £2,439, but in 2022-23 they will pay £2,652, which represents an increase of 8% The gas companies have made mega-profits over the years. The largest made a combined profit of $174 billion in the first nine months of 2021. Huge profits are being made, but despite the ambitious plans from BP, for example, to reduce its carbon footprint and move towards renewables, they are not being reinvested at the level that they should be—not at all. Data published by the UK Government-backed extractive industries transparency initiative shows that in 2019-20, ExxonMobil received £117 million in total from HMRC, while Shell got £110 million and BP received £39 million. What are the Government going to do about those tax reliefs? Can we have an answer to that? What was the total expenditure forgone in tax reliefs in 2020-21 Households will continue to struggle unless the Government get a grip. The behaviour of the oil and gas companies only goes to show that we cannot rely on the sector alone to deliver net zero in the time available. We need to take action. The Government really do need to take action. They need to get a grip on this issue, because people out there—our constituents—are struggling and challenged Finally, we have heard the outrageous suggestion that no one supports a windfall tax. May I remind—or bring it to the attention of—Conservative Members that 75% of Tory voters support a windfall tax?
I thank the hon. Gentleman for being so succinct. As Members can see, there are 12 standing. I advise them to speak for no more than five minutes, then we will be able to get everyone in.
It is clear to anyone living in this country that we are experiencing a cost of living crisis. As food and energy prices are spiking, my constituents tell me that they are anxious and outraged at ever larger bills. The Resolution Foundation estimates that in April, when changes to the energy price cap are introduced, those bills will soar by 50%. That will lead to more than one in four households spending at least 10% of their income on energy. With housing costs already taking up a significant proportion of household spending and food bills increasing, more and more people will be forced to choose between heating and eating while this Government dawdle I strongly support Labour’s proposal to introduce a windfall tax on oil and gas. While my constituents worry about their bills, North sea oil companies have been reaping criminal profits. The think-tank Common Wealth reports that Shell and BP alone have paid £147 billion to their shareholders since 2010, which is more than seven times the £20 billion that it would take to keep household energy bills at their current level. Those profits have only become more obscene as the current energy crisis has worsened. At the end of last year Bernard Looney, the chief executive of BP, described the crisis as a “cash machine” for his company. That cash is coming from my constituents’ pockets, and those of people who are struggling to pay their bills. There is simply no argument when it comes to whether these companies can afford a windfall tax. It is my constituents who cannot afford the Government’s inaction. This refusal to act, however, comes as no surprise when the Conservative party has taken almost £1.5 million from the energy industry under this Prime Minister In the short term, the proposed tax will lessen the burden on families; in the longer term, we desperately need to reduce our reliance on gas, seriously invest in renewables, and create a national programme to insulate homes. We must also acknowledge that the privatisation of our energy system has failed. Competition has not driven down bills; in fact, gas bills have risen by 50% since 1996, and private companies have failed to switch to the sustainable energy sources that we need in order to tackle the climate crisis. Public ownership of our energy system could have helped us to withstand the current turbulence in the energy market, and the public support it: in 2019, 52% of people polled were in favour of it I therefore urge the Government to implement a windfall tax now, to bring energy into public ownership, and to invest in the transformative changes that will protect struggling families and our planet now and for years to come.
We are facing two energy crises. The first is the one that is right in front of us. In opening the debate, my right hon. Friend the Member for Doncaster North (Edward Miliband) made a powerful case for action to help people. I would say to the Minister, were he still in his place, that he may have felt that his speech got him through this afternoon, but it is not going to get the Government through to the end of April, because I think we all know that the Government are going to have to do something. They are going to have to raise funds. We have a plan; we have debated it today. The Government do not have a plan, but they will have to come up with one In Leeds, fuel poverty is rising, and is now up to 57,000 households. We can trade statistics, but in each of those households, a debate takes place. Parents have to make decisions that they do not want to have to face. We heard about the choice between heating and eating, or between buying clothes for their children and heating or eating, and about people going up to a complete stranger and saying, “I know we have never met, but can you help to feed my family this weekend, because I cannot”, which takes a lot of courage. This is happening in the sixth richest country in the world The second crisis is also coming, because we know we will have to change the way in which we heat our homes in order to meet the net zero challenge. Since we are talking about home heating, what about the 23 million homes that currently have gas boilers? All of those will eventually have to go, because we will not be able to use gas any more. What will replace them? There are two basic choices, as we know: heat pumps or electric boilers on the one hand, and possibly heating our homes with hydrogen on the other. There is a lot to be worked through to make this work But how will we pay for that change? How will my constituents, our constituents, pay for that change? This is really important. As we touched on earlier, the transition to net zero has to be just and fair, and people have to be able to deal with the costs involved. Back in October, the Government announced plans for £5,000 grants to help install heat pumps in homes. In so far as it goes—not very far—I welcome that, but under that plan, only 90,000 homes will be eligible. Given that the Government’s target is to install 600,000 heat pumps per year later this decade, that is clearly nowhere near enough. I hope, of course, as do the Government, that in time the cost of alternative forms of heating will fall, and I hope that the technology will develop However, to go back to the start of the debate, we are already concerned about the ability of our constituents to pay the bill today, never mind the bill in April. How on earth will so many of our constituents be able to afford to make that change? A heat pump can cost between £5,000 and £15,000. We think hydrogen boilers will be cheaper, but we do not yet know whether that technology will work; I hope it does. At the moment, there is no way in which many of our constituents will be able to afford that transition. The Government, as well as needing a plan for April, will have to come forward with a plan for the next 10, 15 and 20 years to make that happen. It has to be a plan that can be afforded by the nation and by our constituents. We do not have a lot of time for it to appear.
We associate energy poverty with the poorest people and the most deprived communities. Liverpool, Walton is home to many people struggling to afford everyday essentials and wishing their streets and neighbourhoods might see some of the prosperity this Government promise in their empty words For the young mum struggling with the top-up payment card in the local shop, trying to keep the lights on and the heating running in her home, that poverty is humiliating, yet the experience of living hand to mouth for energy, and that humiliation, is now spreading across the UK, because the energy market is broken. It is not even really a market but a racket of monopoly suppliers, capped prices and enormous excess profits. Rising energy bills are not an act of God. They are the result of the anarchy of global energy supply and the total mismanagement of Britain’s energy industry by a Tory party that seems to put any interest above the interests of the British people. I support a windfall tax on oil and gas producers to lower bills this year. I listen to my hon. Friends asking Government for an extra £1 billion here or an extra £1 billion there. Now more than ever, the evidence before us—an industry pleading with Government to lift its cap, families pleading with Government to make the cap tighter, and oil and gas producers boasting that their companies are like cash machines—demands a new settlement I stood for election pledging to take the whole energy supply industry into public ownership, to set up a national energy agency to own and manage the grid and to put the big six energy suppliers, the only ones likely to survive this crisis, under public control. I believe it is the job of Government to fix the energy crisis, not to prop up the failing energy market To manage security of supply when gas is being used as a geopolitical tool is bigger than an economic issue. To decarbonise energy is also bigger than the forces of supply and demand, and to stop energy bills wiping out the income and savings of families up and down the country is a matter of social justice. The market provides no solutions to those problems. The only way to resolve those issues is to have a Government with the will to act and to put the interests of the people we in this House are supposed to represent above the interests of big energy companies and their shareholders. Sadly, that seems a long way off.
I do not know whether any of my colleagues present listen to the “Political Thinking with Nick Robinson” podcast, but the Leader of the House was the guest on Saturday, and it was interesting to note that he referred to the cost of living crisis. He was using it as an excuse to avoid talking about Downing Street parties, but the fact that he acknowledged that we have a cost of living crisis is something he may need to go and discuss with the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for North East Derbyshire (Lee Rowley), who opened this debate People will know that the Leader of the House is my constituency neighbour, and he may have popped across the border to buy some fish and chips, although I think that is unlikely. If he did, he might have spoken to a fish and chip shop owner who got in touch with me recently to say that his gas and electric bill has increased fourfold in the past three months. That is simply unsustainable and he cannot pay it, so a valued business that has served the community for more than 30 years now faces closure. The same scenario is playing out across the country in people’s homes and businesses, with April’s price cap rise looming large Surging gas prices are a global issue, but the extent to which the consequences are allowed to crush consumer and businesses finances is a Conservative issue. While bill payers grow increasingly anxious about how they will make ends meet, UK oil and gas producers are making near-record profits, on a scale not seen since before the 2008 crash. The industry has suggested that to tax it more would deter investment in renewables, and we have heard some comments of that nature from the Government Benches today, but the fact is that the UK is one of the most profitable countries in which it operates, because of the favourable tax environment Despite David Cameron’s pledge to lead “the greenest Government ever”, measures introduced by his Chancellor have meant that many oil and gas companies have paid negative tax in recent years. Despite our commitments at COP, oil and gas producers are rushing to taking advantage, determined to exploit to the max what is left of our fossil fuel reserves, instead of doing as we should and keeping it in the ground. It is not just environmentalists who say this: there is a very sound business case, if we listen to people such as Lord Adair Turner The current regime just cannot be reconciled with our climate commitments. The long-term solution to this crisis is not churning out more fossil fuels, but switching to sustainable energy sources to avoid a reliance on volatile gas markets. That means investing now in renewable energy, insulation of homes and installation of heat pumps, rather than kicking the can down the road, as this Government have done with their net zero strategy The Chancellor needs to act on this issue, but until he does, oil and gas producers need to pay their fair share of tax rather than expecting energy bill payers to pick up the tab for them. If Tory MPs—I see there are only one or two left in the Chamber—care about their constituents and the cost of living crisis, they should join Labour in the Division Lobby tonight. Rather than adopting Labour’s plans to prevent millions from falling into fuel poverty, the Government, in presiding over wage stagnation, universal credit cuts and a national insurance hike, have accelerated that process The owners of local cafés, barbers and bakeries did not have the luxury of jetting off to California like the Chancellor did when the going got tough over the Christmas period; they were struggling to keep going despite the supply chain issues, depleted workforce and rise in inflation. Was expecting the Chancellor to be doing his job too much to ask? At least Labour is here today doing the Chancellor’s job for him. The £600 million contingency fund proposed by Labour offers tangible and immediate support to businesses and families crippled by inflation. Our plan to cut VAT on energy bills—which, incidentally, the Government used in the referendum campaign as a reason to support Brexit—and to roll out targeted support would take hundreds of pounds off most households’ monthly costs. In rejecting the windfall tax on oil and gas companies, the Government send a clear message to millions of families and business owners across the UK that when it comes to choosing which side they are on, they care more about the oil and gas producers profiting and polluting than they do about keeping pensioners warm this winter.
It is a real pleasure to participate in this debate, particularly because we have heard so much from the Tories about this being the issue that their constituents would like us to talk about instead of cakes and parties. It is great to see so many of them here to discuss it! [Laughter.] The Liberal Democrats support Labour in its call for a one-off windfall tax. I regret that the Minister would not allow me to intervene earlier, because I wanted to ask him what exactly is his understanding of a windfall tax, as he did not seem to be very clear on that point. We are clear that the profits being made by the oil and gas sector over the past few months are related to the market price of gas going up way beyond typical levels, and that that is very much as a result of increased demand. We expect it to be very much a medium-term rise that will not last very long. That is why we support the calls for this one-off, targeted tax in order to lessen the burden on those who will feel the impact. We have heard many great contributions, particularly from the Labour Benches, about the impact on ordinary people who will have to pay. It is quite right that we try to equalise that impact. We are proposing not only to double the warm home discount payments from £150 to £300 but to extend it to all those on universal credit and pension credit, and to double the winter fuel allowance to give up to £600 a year to 11.3 million elderly pensioners to help them with their heating bills There is no doubt—I think there has been some unanimity on this—that we are where we are with oil and gas, but we really need to move towards renewable forms of energy, with a long-term plan in order to make that happen. The Government keep talking about their plans for net zero but we do not see those plans. We do not know what the Government are planning to do to move us from our dependence on oil and gas towards our net zero future. I commend the hon. Member for Aberdeen South (Stephen Flynn) for everything he said about the impact on his community. I think he agrees with us and with many other Members that we need a plan for that transition.
On the UK Government’s plans for transition, may I politely refer the hon. Member, just as a starting point, to the North sea transition deal, the Prime Minister’s 10-point plan for a green industrial revolution, and the energy White Paper?
I have read the Prime Minister’s 10-point plan for a green industrial revolution, and it gives no detail as to how we are actually going to transition from a dependence on oil and gas towards net zero One thing we could be doing much more is reducing the demand for domestic electricity and gas. We have seen that come down over the past 10 years, but we could do much more if we could commit to a programme of proper insulation of homes. Since the dismal failure of the green homes grant, we have not seen enough action from the Government on how we are going to do that. We are not seeing action on standards for buildings to make them net zero in future. There is so much more that the Government could be doing to insulate our homes properly, particularly for the poorest The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) talked about business and the importance of the oil and gas industry, but he needs to remember—I am addressing an empty seat, since he is no longer in his place—that there are many other energy-intensive businesses across the UK that are facing a double whammy this April. They face not only increased energy costs—and they already find themselves uncompetitive compared with EU businesses on energy costs, which tend to be higher in this country than they are abroad—but the planned increase in national insurance, which will hit employers as much as it will hit employees. We have been calling for the Government to scrap that planned tax rise. It is the wrong tax rise at the wrong time The Government need to look at the cost of living crisis in the round. They need to look at energy costs, tax rises, and at all the other costs being imposed on British consumers. One Member—I am afraid I forget which—made the point that the more people have to pay for basics, the less they have in their pockets for discretionary spending on our local high streets, and to help our economy grow. The Government need a much better plan for the cost of living crisis, and we are seeing woefully little of that.
One thing we all seem to agree on is that there is a cost of living crisis, although the Tories seem to agree on that only now, and they are using it as an excuse, having done nothing about it, for the Prime Minister needing to stay in his place. That makes no sense. Given that we agree there is a cost of living crisis, I understand why many people would sympathise with the proposal that Labour has brought forward. In reality, however, it may be an easy political soundbite, but it does not seem well thought out, and it does not address the immediate practicalities of this cost of living crisis. Nobody has yet explained how the proposed windfall tax will work. Either it will be a retrospective tax to try to claw money back once profits are announced at the end of the financial year, or it will not kick in for a year’s time. We need to bring in money here and now, so that it can be used to help households that are struggling with eating, or heating their houses The motion also illustrates that Westminster always views Scotland’s oil and gas as a cash cow. There is no strategic planning whatsoever; it is another cut and run move. If we are talking about excessive profits, why just the oil and gas industry? Where is the line drawn for sectors in profit, given that many companies did very well out of covid? Should we debate that and target their profits as well? What discussions has Labour had with the oil and gas industry about this matter? What assessment has been made about levels of investment—investment that could be part of a decarbonisation agenda—that might be rowed back? As others have said, the harsh reality is that every previous windfall tax has led to a drop in investment There is clearly room for a sensible debate about long-term tax policies, particularly carbon taxes, and we must do that. I get uneasy when I hear about companies such as Shell not having paid corporation tax for a couple of years, or BP talking about its company being a cash machine. We must have a serious debate about this, but policy on the hoof is not the answer The North sea has contributed £375 billion in revenues over the years, but as we have heard, unlike Norway’s $1.3 trillion oil and gas fund—the largest sovereign wealth fund in the world—we have no legacy from that money. As well as having that fund, Norway has used its money to invest in renewable energy such as hydro, to create a much greater uptake of electric vehicle ownership. More importantly, it has created a much fairer, equitable and happier society. Meanwhile, in Scotland we are tied to Westminster, and we are getting blocked with pump storage hydro, the Acorn CCS project is still a reserve, and we could have had higher levels of investment in tidal stream Unlike Norway, here in the UK there are much greater levels of fuel poverty. We have heard about the 6 million fuel poor, when the energy price cap rises to £2,000 in April. Again, that is due to a lack of long-term strategic thinking. Earlier I pointed out that, under Labour’s watch, we saw the price of oil bottom out at $12 per barrel, rising to nearly $100 per barrel in 2008. There is no legacy to show for that, and no sovereign wealth fund created. Times have moved on, and the Scottish Government have created a just transition fund for north-east Scotland, but Westminster is not providing any match funding for that As I have said many times, at the moment during this crisis the Treasury is raking it in, compared with what it predicted would happen in the March 2021 Budget. The November Budget already estimated that this financial year will see an increase of £1.1 billion in oil and gas revenues, an extra £2 billion next year, and £6 billion in total over the Parliament. That is money that the Treasury has got here and now, which should be used to help households—and we should also consider what the additional VAT from our energy bills and extra fuel duties are bringing in The Treasury allocated £1.7 billion in the November Budget for the development of Sizewell C. If that money was reallocated, that would mitigate the cap for those households who qualify for the warm homes discount. Once more, I say to Labour: rethink this madness on nuclear, spending up to £60 billion, adding that to our energy bills, for a new nuclear station. The phrase “Let’s speed up investment in nuclear” is an oxymoron because nuclear projects take that long to come to fruition Households do need help and the Treasury has got money that it should be using to help people. We have not heard one new Treasury-funded policy from the Government—hopefully the Minister will be able to provide one in summing up. In the meantime, that is why I make the case for Scotland to go its own way.
I applaud my right hon. Friend the Member for Doncaster North (Edward Miliband), the shadow Secretary of State for climate change and net zero, for demonstrating the strong leadership and breadth of vision that is so sorely lacking on the Government Benches. While Ministers issue desperate excuses from the Dispatch Box for their lack of action, the Labour party has today put forward a fully costed package of proposals that would provide millions of UK households with much needed support. By axing VAT on domestic energy bills, ensuring that no domestic consumer is forced to cover the cost of supplier failure and providing support for those most in need, we can slash energy bills by at least £200. In the midst of this Tory cost of living crisis, that is the difference between just about getting by and deepest destitution As people in my constituency bear the brunt of this unprecedented crisis, oil and gas companies are set to report near record profits, with private shareholders cashing in on soaring wholesale energy prices.
Will the hon. Member give way?
No—[Interruption.] I am sorry Even so, that is not enough for this Cabinet of millionaires. In fact, last month, the Education Secretary had the temerity to take to the airwaves and plead poverty on behalf of the fossil fuel giants, saying that they were struggling enough already. This morning, when my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) challenged the Chancellor to put the interests of ordinary people before those of the oil and gas companies, the Chancellor made it clear exactly whose side he was on. Today, Conservative Members have a simple choice: they can either insist that the fossil fuel giants step up and accept responsibility for a crisis from which they have profited so handsomely, or they can continue to turn a blind eye to the immense human suffering unfolding not just in my constituency but in theirs, as they have throughout this long and bitter winter Labour is offering the Government the chance to right their failure to prevent the crisis. We know from the Prime Minister’s grotesque performance in the House yesterday that the word “responsibility” is entirely missing from the Conservative party’s vocabulary, but, as recent research by Carbon Brief demonstrates, had successive Conservative Governments not taken a wrecking ball to the zero-carbon homes standard subsidies for onshore wind and spending on essential energy-efficient measures, household bills would be £2.5 billion cheaper than they are today With the greatest respect to my good and honourable Friends on the Front Bench, I am convinced that we must be even more muscular in our response to the crisis. At the moment, the energy sector is simply not fit for purpose. Costs for consumers are far too high, investment in green energy is wholly inadequate and we remain dangerously dependent on volatile foreign energy supplies. We learnt last week that extraordinary amounts of UK gas were exported in autumn and winter, even as rising costs decimated hard-working families’ standard of living and hit small businesses’ bottom lines. Our energy system must always put ordinary people’s interests before those of private profits. Confronted with this historic crisis, we must surely accept that public ownership is the only way forward We must not forget that the public are watching. They will remember who stood up for them at this terrible time and they will never forget those who looked away. I hope that Conservative Members will reflect on that before walking through the voting Lobby today.
The impact of the cost of living crisis on my constituents and people across the country is truly harrowing and a shameful injustice inflicted by the Government. An article in the Liverpool Echo this week talked about the “perfect storm” that people in our city are facing of soaring energy costs and record inflation—all against a backdrop of a decade of Conservative austerity that has cut our support services to the bone According to research from Feeding Liverpool, about 14% of households in Liverpool experience fuel poverty, which is significantly higher than the England average. Some 32% of adults in Liverpool are food insecure, where food is a source of worry, frustration and stress—that is more than 150,000 people in Liverpool alone. That was all before inflation started to spiral. A humanitarian crisis demands permanent solutions, not tinkering with a broken system An example of that broken system was highlighted by my good friend Tony Caveney, a cabbie from Liverpool, who said in a message last week: “An old woman in the taxi this morning said she had to get out the house to get warm.” I did not know whether to laugh or cry, but we should all be raging with anger, because it is the political choices of the Government that have enabled the scandalous situation that many people in our communities find themselves in This crisis will affect generations to come. Before Christmas, I spoke in the House about what Professor Ian Sinha, a paediatrician at the fantastic Alder Hey Children’s Hospital in my constituency, said to me: “A big issue at the moment is the interplay between food and fuel poverty—eat or heat—in essence babies and infants in the coldest houses will spend their calories trying not to get hypothermia rather than utilising the energy to grow their body systems and lay the foundations for a healthy life course” That is shameful. Fuel poverty is a political choice and hunger is a political choice. They are all choices made by the Government and inflicted by the Chancellor in particular. The £20-a-week cut to universal credit and his current failure to intervene in the spiralling costs of fuel bills are political choices Many households have already seen a significant energy price rise and the household energy price cap is expected to rise by up to 50% in April. Fuel poverty campaigners estimate that that increase will drive 2 million people into fuel poverty and impact older households already seeing the suspension of the triple lock on pensions. By voting for the motion today, the Government could introduce a windfall tax on the profits of North sea oil and gas producers, which is a much-needed first step towards funding a national package of support for households The crisis has been long in the making and we need the Government to bring about systemic change. Trade unions and campaigners have long argued that the privatisation of the energy sector has resulted in high profits while the public foot the bill and costs rise. People who cannot afford the extortionate bills pay with damage to their health, livelihood and wellbeing Workers in the industry are being made to pay through attacks on their terms and conditions by industry bosses, which have pushed many workers into fuel and food poverty. We saw that when British Gas used fire and rehire tactics against its workers at the height of lockdown, and we see it today with OVO, which is threatening to make between 1,700 and 2,000 staff redundant despite, according to Unite the Union’s estimate, its top directors taking £4.6 million out of the company in salaries and benefits in the last five years The system is broken. To transform this shocking situation, we need action from the Government on public ownership, decarbonisation in the energy sector, and the urgent retrofitting and insulating of houses to bring down energy costs. The practice of bailing out and subsidising private energy suppliers without the benefits of public ownership and control is wasteful and unjust. Research by Greenwich University’s public services international research unit showed that public ownership of water, energy grids and the Royal Mail would save UK households £7.8 billion a year and pay for itself within seven years The technology and solutions exist. What is lacking is the political will from a Government whose mission is always to prioritise private profits over the wellbeing of the people who they are supposed to represent. We do not have to look far. Across the border in Wales, the Welsh Government are going to set up a publicly owned energy provider in the near future, so another way is possible I urge the Government to back the motion, bring some much-needed relief quickly to worried communities across the country and have the bravery to tackle the systemic failings that are driving this humanitarian crisis to alleviate the suffering of millions. We cannot let this plight continue when it can be eradicated by the correct political choices.
That we are living presently with a cost of living crisis is surely undeniable. Inflation is at 5.5%, and that is reflected in our food prices and our energy prices. It is exacerbated by a supply chain crisis due to coronavirus and from the twin shotgun holes that the UK Government have blasted in each of their feet through the Brexit that they have stumbled towards This motion, I am sorry to say, probably looked great on the desk of a researcher somewhere in this building, or that of a press officer, but it collapses the instant it comes into any kind of contact with reality. The problem we are facing with the cost of living crisis is undeniable. While we have heard many stories about the pressures facing our constituents—we have similar stories we can tell—I am sorry to say that I have not heard anything to persuade me why a one-off smash and grab on the North sea industry is the best way to deal with this crisis In Scotland, we are used to dealing with fuel poverty amidst energy plenty, but the real problem—I am sorry to say it is encapsulated by the motion from the Labour party today—is exacerbated by the short-termism that we have seen in UK energy policy. Some £375 billion has been taken out of the North sea since oil started coming ashore along with gas, but in the years of those peak revenues, the revenues were pumped out by a Conservative Government as quickly as possible to try to close a catastrophic balance of payments gap. That drove sterling up to unsustainable levels, drove out manufacturing jobs and drove 3 million on to the unemployment queues. Unlike Norway, we have been left with nothing tangible to show for it, whether a long-term oil fund for future generations, or an energy company such as Statoil, given that the UK equivalent, Britoil, was privatised early in the 1980s Successive UK Governments have lied about the extent of that resource, almost as assiduously as they have mismanaged the public policy that should have been going on around it. We are seeing that repeated in many respects with the failure of the UK Government to press on with the carbon capture project at Peterhead and with the intransigence that we see over electricity grid charges, and once again Scotland and Scottish jobs risk being the casualty of that It is perhaps hardly a surprise that trust among SNP Members in the UK Government to do the right thing by the North sea and its massive resources is low. Given our previous experience of windfall taxes and the impact they have had, we certainly have no confidence that a UK Government of any stripe can be trusted to use that windfall wisely. This measure is simply a short-termist one-off that will not tackle the fundamental problems Despite what some Members might believe, the finances and economics of the North sea have been precarious over the past few years. We will need oil and gas for years to come as fuel and feedstock as part of a transition. It may not fit the preferred narrative, but it is many of the energy companies operating in the North sea that are investing most heavily in the renewables revolution. To give an example, a couple of weeks ago, there was the announcement of the ScotWind round of investment. That is 25 GW of electrical power from the seabed around Scotland, which has brought £700 million up front for the Scottish Government. It will bring supply chain benefits, and once the projects are under way, there will be an ongoing revenue stream per megawatt-hour of energy generated. That is what can be done with the limited powers that the Scottish Government currently have. Would that we had had similar powers over oil and gas in the ’70s, ’80s and ’90s, we might have something to show for it If we are to reduce energy bills, we need to drive energy efficiency and reduce our CO2 emissions, and we need to recognise that the windfall tax will do nothing useful in that regard and will likely do great harm. It will sap confidence. It will destroy jobs in the North sea, and with that it will harm investment and damage the skills base and human capital we will be relying on for the renewables sector. The UK Government have had a windfall of their own from these higher energy prices. They could use that to reduce consumer bills, cut VAT and restore the universal credit uplift that was so cruelly snatched away, and they could copy the Scottish Government’s £20 child payment. In the long term, they could use that windfall to decarbonise heating and industry, to improve the quality of housing and energy efficiency to reduce bills and, above all, to introduce a progressive tax and benefits system to embed social justice. That will not happen with a Conservative Government who are failing to move far enough and fast enough on energy transition and security. I am sorry to say that it certainly will not happen with a main Opposition who seem to prize headlines from short-term gimmicks over embracing the long-term principles that might actually address the problems of people’s household bills.
It is a real honour to speak in the debate. The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) said that the Labour party is not the party of business, and I refute that and disagree with him, considering that many businesses up and down the country are very worried about the increase in energy prices and how that will continue to affect them. In my constituency and across the borough of Lewisham, we have among the highest numbers of self-employed people in London, and they are well supported by the local council I support the motion, which is all about the cost of living and how it will affect families. We have a seen a global rise in wholesale energy prices that has already led to 27 energy suppliers going bust last year. Energy prices are at their highest levels for the last three decades. Customers have seen increases in their bills that have largely been protected by the energy price cap. The chair of the Lewisham Pensioners’ Forum, Bridgit Sam-Bailey, recently spoke on BBC News about her personal experience of rising fuel prices. She explained the misery of suffering in her home due to increases in fuel prices that she can no longer afford from her pension. She said that she often stays in bed to keep warm and only heats one room. She no longer has the financial freedom that she used to have. We have heard other such stories today, and they are indeed heartbreaking. Her situation is not unusual. So many other people are experiencing a diminished quality of life. Surely the Government do not wish that for our older generation. Older people should be treated with respect and dignity. Do the Government really view such experiences as acceptable Energy bills are due to rise again, and that will affect mainly older people, vulnerable people and low wage earners. Recently, I met a lady in her home who was wearing a winter coat and a blanket to keep warm. From the outside of her semi-detached house, nobody could identify the misery and deprivation that she was experiencing from poverty and lack of heat As for children and young people, the Government need to consider how being cold can affect children’s development and their ability to learn, play and grow. It does affect them. It is harmful to them to be cold and it is a sign of poverty. The rise in fuel prices is driving people and families deeper into poverty. When a child is in poverty, they experience deprivation. If that continues, their family becomes a family in need and they will go on to need support from social services and other public services, perhaps leading to a cascade of situations in which they will need support According to Maslow’s hierarchy of needs, the most basic needs are food, water, warmth and rest. People’s most basic need for warmth is not currently being met. For some people suffering illnesses such as sickle cell disease, lack of sufficient warmth can bring on a sickle cell crisis and lead to hospitalisation, organ damage and, at worst, death. Other problems arise from damp and rot after prolonged loss of heat in the home, and those can also affect children. The Government must not bury their head in the sand. Deprivation of warmth is a serious issue Our country faces a cost of living crisis and a growing strain on businesses, with petrol, food and energy bills sky-rocketing. What will the Government do about that? What will they do to prevent further hikes in gas prices, as those can be prevented by the Government? According to the energy sector specialist Cornwall Insight, bills could rise by 46%, from £1,277 a year under the current price cap to £1,865 a year. When faced with a crisis, this Government shift the brunt of the burden on to the most vulnerable. To fix the social care crisis, they decided to increase national insurance contributions, which will disproportionately hit working families, young people and businesses trying to create more jobs. Despite pressure from those on his own Benches, the Prime Minister will not halt those plans Faced with an energy crisis, the Government now have an opportunity to break that trend and find sensible solutions rather than dipping into the pockets of those only trying to get by. As energy bills soar for consumers, natural gas operators in the North sea will rake in their biggest profits in over a decade. UK-based natural gas companies such as BP and Shell are expected to record profits of $20 billion. A one-off tax on those companies makes sense This is not unheard of; Thatcher introduced a windfall tax on North sea operators, as did Blair. Will the Secretary of State for BEIS do the same? Wales has stepped up to help those who are struggling, and France and Denmark are likely to follow suit, but we have seen dither and delay from this Government. I remind the Secretary of State that this all reveals how deeply unreliable fossil fuels such as natural gas are. Even natural gas in our backyard is tied to global prices. We need a safer long-term plan A green industrial revolution guarantees greater home-grown energy, decreasing our dependence on unreliable fossil fuels and better protecting us from external price shocks. Will the Secretary of State therefore also promise to increase capital investment in renewable technology in order to keep my constituents’ energy costs down, now and in the future?
Before I start, may I say gōng xı̌ fā cái—happy lunar new year—to everybody celebrating today? When we were kids, we used to cheekily add the phrase “âng-pao gia lái”, which means, “Where’s my packet of red money?”—and boy couldn’t ordinary people do with some pounds in their pocket after more than a decade of Conservative government. That is why I am pleased to speak in this incredibly important debate about a windfall tax to help consumers with energy costs. We are here in the mother of all Parliaments discussing the issues that matter and, importantly, the solutions—solutions that Labour has put forward, which would save people money and help them with the problem of skyrocketing energy costs. This debate is so very important because it is the same discussion that people are having up and down the country—“Why are our energy bills going up so much, how are we going to afford them, and why aren’t this Government doing anything to help?” A family in Luton North came to see me last week, absolutely terrified about the real impact of the cost of living crisis—and it is a real crisis. The cost of their rent, their energy bills and their food costs, all things that they were able to cope with not so long ago, are now becoming a struggle, to the extent that this wonderful family—who are working, before anyone wants to come at them on that point—are struggling so much that they came to their MP for help Throughout this entire energy crisis and the debates we have had about Labour’s plan to cut the cost of people’s energy bills, we have heard a lot of tone-deaf attacks from those on the Government Benches—particularly from the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for North East Derbyshire (Lee Rowley), who sadly is not in his place. Shamefully, they even voted against out plans to cut VAT on energy bills to help people get through these difficult times. It is as if they do not know the value—the breathing space—that an extra two hundred quid would give a household who were struggling. They just do not get it at all During the pandemic, children told the charity the Food Foundation that their parents skipped a meal so that their child could eat. One child said: “Mum is receiving those school meal vouchers because she tends not to eat so she has enough for me.” Another kid confided that they were worried about their mum’s job, saying that “she only eats a little.” Last week, when I raised the issue that women were 36% more likely to struggle with housing costs or be in arrears, it was met with utter disdain. But this is the very real and very horrible reality that thousands of people are living day in, day out under this Government: having to choose between eating, heating and keeping a roof over their heads There is another way. Labour’s fully costed package to help keep energy bills low would scrap VAT on home energy bills for a whole year, alongside focused and targeted support through increasing and expanding the warm home discount to 9.3 million people. That would not only help the average household with around £200 off bills; it would also deliver targeted and focused support to those who need it most, including low earners and pensioners That targeted help for pensioners cannot come soon enough. Rising inflation is already hitting pensioners hard. That, combined with increased food costs and this Government’s retrograde decision to scrap free TV licences for all over-75s, means that the unprecedented hike in wholesale energy prices will be totally unmanageable for those living on low fixed incomes. Age UK has reported that the latest Government figures show that around 1 million pensioners—8%—said they could not afford an unexpected bill of £200. The charity also warns that if nothing is done to tackle rocketing energy costs, that 1 million older households that will be struggling with their costs will be added to the 150,000 households who already fell into fuel poverty this winter, yet the Government are still taking a hands-off approach, saying that they cannot do anything to help. That is simply not good enough. There is plenty that can be done to help; they just need the political will to do it So why are the Government still on the side of big businesses instead of consumers, despite clear evidence that oil and gas producers are reported to have near-record incomes for this past year? The Government have still so far ruled out that windfall tax—why? Because they lack the political will and backbone to do it, and the understanding of why it is so necessary. A simple, straightforward solution is staring the Government in the face today; one that is carefully costed and clearly laid out. But they will reject it again, and the British public, and the ordinary people who play by the rules, will be all the worse off for it.
The planned rise in energy bills will be devastating for tens of millions of households, and it is clear from the contributions of right hon. and hon. colleagues that there is widespread understanding of just how devastating those price increases will be. Unfortunately, that understanding does not seem to extend to the Government Benches. Not only is that complacency very misplaced, but it is a political error. I know that I am relatively new to the House, but I would like to offer those on the Government Benches some advice: “When you are in a hole, stop digging.” The fortunes of the Government are not going to recover if they stand by and allow energy prices to skyrocket. As my hon. Friend the Member for Bradford East (Imran Hussain) pointed out, if they make the public pay, they will in turn pay. Because obscene profits are being made by the energy wholesalers and the energy retail companies while our constituents are suffering, and it has nothing to do with their own efforts My hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) recently reminded us that the disastrous rise in prices should not be a surprise; we were all warned that closing Britain’s largest gas storage plant in 2017 was illogical, when we already faced volatile winter gas prices and were becoming too dependent on energy imports. Scrapping our own energy storage capacity also obliged the energy companies to make short-term purchases in the wholesale markets—quite possibly the most short-sighted and idiotic way to run a utility business Therefore, in the motion before the House the Opposition have offered a way forward: a windfall tax to help fund a package of support for families and businesses who are facing this crisis. I hope that such a package would include a programme of home insulation to increase energy efficiency. Our poorly insulated homes are giving rise to higher fuel costs and increasing our carbon emissions. But the ultimate solution would be one that helps fund the green industrial revolution, as the Labour party outlined at the last general election. We committed to a just transition fund, which was predicted to generate an £11 billion support package Utility businesses provide public goods, but there is nothing good about the current conduct, or how the market is chaotically structured under this Government and their predecessors. The main objection to windfall taxes is that they are very destructive to business planning, but that is not really a fair description of a one-off price rise if it is met by a one-off tax increase. Businesses continue as before, but the windfall is redistributed to consumers rather than shareholders The further objection is: what if it is not a one-off energy price rise and is instead a permanent—or at least a long-lasting—increase in energy costs: what is the response then? Windfall taxes year after year. Although that objection has some merit, the appropriate response is not to let these poorly run energy companies make excess profits in perpetuity. If it is found that they are making huge profits year after year, and households continue to struggle year after year, that would undoubtedly be a failure of Government policy, in which case the logical response would be to take them into public ownership. After all, who better to provide a public good than the public sector? That is something that trade unions such as Unison and campaigns such as We Own It have been arguing repeatedly. The model of diversified owners, new entrants and challenger companies has completely failed. Many of those companies failed so much that they have gone bust. It is a fake competition model, because they all buy energy from exactly the same source The objection that my proposal is hugely costly does not carry much weight because the Treasury, through the Debt Management Office, can borrow for 10 years at interest rates below 1.4% per annum. The energy companies’ dividend yield is currently 4% or 5% per annum, so purchasing them would generate cash for the public finances, and the excess could be used for public good. The priorities for public good are to cut bills and invest in capacity. Overall, this capacity should overwhelmingly be from renewable energy.
I support the motion for a windfall tax on the profits of oil and gas companies. Household utility bills will rise by an estimated £50 a month in April, and we have heard many moving stories today about how struggling households will have to make very difficult and awful choices. Millions of people will be turning down their heating, or turning it off altogether, so that they can keep eating, and millions more will feel the pinch, including many of my families in Bath I will focus on how we got here, how our dependence on volatile gas supplies from abroad could be avoided in future and why more has not be done. Two things have shocked me. First, I am shocked by how dependent we still are on gas when we must dramatically change our fossil fuel consumption if we want to stand a fighting chance of reaching net zero in 10 years’ time. Secondly, I am shocked that consumers who have switched to renewable electricity companies will foot the extra bill for gas, although they do not use any gas at all—I made that point in another debate, as the Minister knows. Ideally, all power should come from renewables: onshore and offshore wind, solar and marine. There are few countries as well situated as the UK for wind and marine. Not only should we be generating all our power renewably but we should be exporting it across Europe. This is a perfect opportunity to be a global leader The cost of wind power is coming down year on year, and it will soon be a mature market with steady costs. Once a wind farm is built, apart from small overhead and maintenance costs, the electricity cost is almost nothing. That is the beauty of all renewables, and it was the idea behind the contracts for difference introduced by the Liberal Democrats in government when my right hon. Friend the Member for Kingston and Surbiton (Ed Davey) was Secretary of State for Energy and Climate Change. Contracts for difference are best described as fixed-term contracts for the electricity produced over a 20-year period. Once they are out of contract, electricity from these installations should be extremely cheap, which is perfect for consumers A lot more should have been done over the last seven years, when the Tories have been in government on their own. The Government quadrupled the number of contracts for difference offered in the last auction round, but that is not enough. Why limit the number at all, as it slows the roll-out of renewables So far, the Tory Government have allowed renewables to grow, but only slowly to maintain the fossil fuel and renewable industries alongside each other. As businesses and residential customers shift from gas to electricity, limiting the growth of renewables by restricting the number of contracts for difference keeps the fossil fuel industry in the game That brings me back to the millions of consumers who are committed to climate action and have switched to a renewable electricity supplier. In April they will find they are paying more for their electricity, even though they are not buying any electricity generated from gas. This is a clear example of the market being regulated for the benefit of the gas companies. Renewable electricity prices are approximately the same now as they will be in six months’ time, so why should such customers have to pay higher bills The Government need to fix this unfairness as a matter of urgency. Although it would not fix the energy crisis for everybody, it would at least reward customers who are doing the right thing on climate action. It would incentivise more people to switch and, in turn, drive climate action, but a windfall tax on the profits of the oil and gas companies is needed immediately.
Thank you for calling me to close today’s debate, Mr Deputy Speaker. Throughout the debate, there has been at least one area where we have had clear agreement: no one has disputed the fact that we are living through a cost of living crisis. Prices are up, real wages are down, taxes are being hiked and growth is stalling. No one has denied that the looming spectre of eye-watering energy bills is now hanging over households and businesses. That is precisely what the motion today seeks to address, with real solutions to the problems people are facing. Many Members across the House have shared examples of the hard choices their constituents are already making, and I am extremely grateful to them for that. In responding to the debate, I have to begin with the scale of the problem. My hon. Friends are right to say that people are struggling now. I am sure we have all spoken to constituents who are genuinely scared about the impact of sky-high bills. Those people are feeling the pinch now when they go to the shops or fill up their car, but that is mild compared with the storm that is about to hit households this April. If the average energy bill hits close to £2,000, most people I know will feel it very much, and some will not be able to pay In closing this debate, I want to respond to the points that have been raised and to say why I believe the interventions that we have put forward and the windfall tax we would use to pay for them are fair, proportionate and necessary. Many Members have lamented the fact that we were in this position to begin with, and I acknowledge that. A decade of poor Government decisions has left us particularly exposed to global gas prices. This Conservative Government were wrong to reduce our gas storage capacity, they were wrong not to proceed with their original plans for better home energy insulation and they were wrong to prevent the further development of some of the most cost-effective renewables, such as onshore wind It is also down to this Government that families are having to consider the prospect of rising energy bills alongside other things that will hit their household budgets hard, particularly the very large rise in national insurance scheduled for April this year. Let us not forget that this tax rise will see the poorest subsidising the wealthiest, the north subsidising the south and the young subsidising the old. So with inflation soaring and energy inflation of particular concern, I put it simply to Conservative and SNP colleagues that action is essential. Despite the unholy alliance of Conservative and SNP Members ranged against the motion today, I put it to them that it is a question of how, not if, the Government should intervene The Labour plan would save everybody at least £200 off their energy bills. Those who are most vulnerable would receive £600. That most vulnerable group would include all working families with children claiming universal credit and all pensioners in the savings credit group of pension credit. We would pay for that by levying a windfall tax for 12 months on profits from North sea oil and gas companies. We can do this, and we need to do this because, as my right hon. Friend the Member for Doncaster North (Edward Miliband) said in opening the debate, given the scale of the challenge, we need to maximise the resources available to alleviate it. In today’s debate we have heard an overwhelming case for that, including in the speeches from my hon. Friends behind me We are advocating a one-off, proportionate tax on firms that are experiencing record profits directly as a result of this crisis, to help customers and other businesses secure our economy for the long term. The North sea will continue to be one of the most profitable and attractive places to extract oil and gas from. It will also continue to provide a substantial amount of our domestic supply. No evidence has been put forward today that a windfall tax on those profits, which were never expected or anticipated, would reduce investment or have a negative impact on jobs. It has been done before, by Labour and Conservative Governments, and we can do it again I want to give three explicit reasons why such a tax would be in the interests of businesses and the economy as a whole. First, despite the unprecedented squeeze on household budgets, consumer spending is still forecast to grow this year. That is because some households saw a considerable increase in their savings during the pandemic, but if concerns about energy bills and other pressures were to result in consumer spending not growing as expected, we would be in a very difficult position indeed. I think the right hon. Member for Wokingham (John Redwood) made a similar point in his speech Secondly, inflation is high. It is currently being written into contracts as businesses try to protect themselves against future price rises, which means that even if global inflationary pressures diminish, inflation will be baked into our economy for some time. A rise in energy bills of the kind that the Government contemplate would add as much as two additional percentage points to inflation and would have a significant spending cost for the Government Thirdly, under our plans, the windfall tax would give us a contingency fund of £600 million to help energy-intensive businesses through the energy crisis. I recently visited Pilkington Glass in St Helens, where the rise in energy prices means millions of pounds in additional costs. If Conservative Members are worried about the impact of a windfall tax on investment, will they think about the cost of not acting for investment in jobs, growth and the future of energy-intensive industries I was surprised to hear Conservative Members arguing against the case for cutting VAT on energy bills, given that in many cases they themselves advocated the same policy. The argument that cutting VAT does not help those most in need simply does not hold water. Crucially, cutting VAT is a step that we could take now. Labour’s policy, which would give every household some relief from sky-high bills, would also mean extending the warm home discount, saving those most affected, such as pensioners and low earners, nearly £600. Many Conservative Members are on the record as supporting the measure precisely because of the arguments made in this debate. Claims that cutting VAT is unprogressive and would benefit only the wealthiest simply do not take Labour’s motion and our policy in the round; they are as disingenuous as they are insulting to constituents who are crying out for some help The reality is that the Conservatives cannot fix the cost of living crisis, because they are the crisis. They have become the high tax party because they are a low-growth Government. Some of the defences that I have heard today of voting against the motion are as thin as the Prime Minister’s excuses for flouting his own lockdown rules. Labour has shown the leadership that our country needs and delivered a plan to tackle the energy crisis that would take £200 off the average household bill, offer up to £600 for the most vulnerable in the current crisis, including low earners and pensioners, and provide funding to help the energy-intensive businesses worst hit by energy spikes—all fully costed, with a windfall tax on the North sea oil and gas producers that have profited from the price rises It is so telling that at no point today have I heard any Government representative outline an alternative or offer a coherent explanation of how the Government will help families. Labour laid out our plan to address the cost of living crisis two months ago, and still the Government have failed to rise to the challenge. We know why: they are too mired in their own scandal to take the action required. They are more focused on saving the Prime Minister than on serving the public The performance of this country’s Prime Minister at the Dispatch Box yesterday was quite frankly shameful. The continued dereliction of duty in not facing up to the big challenges of the day, such as the cost of living crisis, compounds that shame. The Government are out of ideas, out of energy and out of time. The sooner they all go, the better.
This has been a useful debate. May I start by paying tribute to those workers who are working hard out there, helping the recovery from Storms Malik and Corrie? As we know, the storms hit Scotland and north-east England very hard. Some 214,000 customers have had power restored, but approximately 10,900, particularly in the north-east of Scotland, were still without power as of 10 o’clock this morning. I spoke to Scottish and Southern Electricity Networks last night and have updated MPs As we have heard today, the Government have a wide range of support measures in place to help the most vulnerable households. We have both rebates and energy efficiency measures to help households reduce their energy consumption. To recap, the warm home discount scheme provides support with energy bills through rebates, helping households to stay warm and healthy in winter. The scheme currently provides more than 2 million low-income and vulnerable households with a £140 rebate off their winter energy bills. The Government have already consulted on proposals that would expand the scheme from approximately £350 million in value to £475 million per annum in 2020 prices, which will help it reach 3 million households from winter 2022-23 onwards We are of course considering a range of options to address the current challenges further, but we must also be mindful of the wider consequences of any actions that we take. The Government already place additional taxes on the extraction of oil and gas, with companies producing oil and gas from the UK continental shelf subject to headline tax rates on their profits that are currently more that double those paid by other businesses.
While the Minister is on his feet, will he respond to the comment from the head of BP that his company was like a cash machine?
We have ourselves raised more than £375 billion-worth of production taxes. North sea oil and gas have been a big success story for this country, and also for our Exchequer. As a former Treasury Minister, I can repeat that of course all taxes are kept under review by the Treasury, and any changes are considered and announced by the Chancellor.
Will the Minister give way?
No, I am going to make a bit more progress The oil and gas industry and its supply chain are supporting more than 195,000 jobs, but investment in 2020-21 was at an all-time low of £3.5 billion. Meanwhile, there are £11 billion-worth of opportunities awaiting investment. We would be cautious about the potential implications that any change in the tax regime could have on investment, not just in oil and gas developments but in the development of cleaner-energy technologies. Moreover, continuing investment in the UK continental shelf is needed to support production and our security of supply. That is particularly important this winter, but it is also important in the longer term, because UKCS production can help to mitigate potential supply issues When it comes to the sector itself, I heard nothing from any of the Opposition Front Benchers about whether they supported our world-leading North sea transition deal. However, we want to support up to 40,000 high-quality direct and indirect supply chain jobs, including jobs in Scotland and our industrial heartlands in the north-east and east of England, generating up to £14 billion to 16 billion of investment to 2030 and delivering new business and trade opportunities to assist our transition to a low-carbon future For the longer term, the Government are looking at how policy costs, which help to fund low-carbon energy infrastructure, support vulnerable consumers and ensure security of supply, are distributed between gas and electricity. Investment in renewable and nuclear energy will be key to achieving that, and we have made and are continuing to make massive progress in both those areas since 2010. As of 2020, renewables contributed 43% of our electricity mix, more than six times the percentage in 2010, when the right hon. Member for Doncaster North (Edward Miliband) was Secretary of State. On 13 December, we launched the latest round of our flagship renewable energy deployment scheme, contracts for difference.
I hope the Minister will forgive me if I point out that an increase in the energy price cap is likely to be announced on 7 February, and ask what he will say to my constituents who will be pushed into fuel poverty as a consequence of that.
I would say this: we are providing support. We have the warm homes discount, we have winter fuel payments, we have cold weather payments, we have the household support fund, and, of course, we have the energy price cap itself to protect customers The latest CfD round is the largest yet, with a goal of about 12 GW, more capacity than the last three rounds combined. The offshore wind that this round will deliver could be enough to power up to 8 million homes.
All the policies that the Minister has described as helpful are policies that already exist. Is he having any discussions with the Chancellor about new Treasury-funded policies that will kick in to mitigate the cap rise in April?
I have been clear that matters of taxation are for the Chancellor, but of course the Government continue to monitor the situation very closely. I was answering a specific point about what support is already available for consumers I did not hear a word from any of the Opposition parties in support of our incredible North sea transition deal, concluded just last March, between the UK Government and the oil and gas sector. It will support workers, businesses and the supply chain through this transition by harnessing the industry’s existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies such as hydrogen production, carbon capture, usage and storage, offshore wind, and decommissioning.
rose—
I will make a bit more progress We will see commitments from industry that will achieve a 60 megatonne reduction in UK greenhouse gas emissions, including 15 megatonnes through the progressive decarbonisation of UK production over the period to 2030, which puts the sector on a path to deliver a net zero basin by 2050 I turn to the contributions in the debate itself. My right hon. Friend the Member for Wokingham (John Redwood) made an excellent speech. He said: please can we burn our own gas, rather than importing it? That is a really strong point, not just in terms of jobs in this country but for our energy security as well. It makes no sense for us to be importing, beyond what we have to, expensive volatilely priced foreign hydrocarbons—hydrocarbons that come with a significantly increased emissions content. LNG has up to two and half times the emissions content compared with natural gas produced in the UK. He also made strong points about tax revenues My hon. Friend the Member for Banff and Buchan (David Duguid) knows oil and gas better than anybody in the House. The sector is hugely important for his constituency, as I saw when I visited in December. He talked about the punitive intervention that Labour is proposing. He also rightly pointed out that renewables have increased by four times under Conservative Governments since the right hon. Member for Doncaster North was Secretary of State My hon. Friend the Member for Waveney (Peter Aldous) talked about the unintended consequences. He is right that in the transition we need the oil and gas sector to co-operate with the offshore wind and hydrogen sectors. He is the living embodiment of transition, representing both the older and newer energy industries My hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) made an excellent speech. He praised British business and discussed how Labour is giving up on Aberdeen. Mr Deputy Speaker, you, the right hon. Member for Doncaster North, the Labour Chief Whip, the right hon. Member for Tynemouth (Sir Alan Campbell), and I were here in the days when Labour had two Members of Parliament for Aberdeen. It has now totally given up on the North sea and the North sea transition deal, and the jobs that it represents. My hon. Friend’s excellent speech was about how Labour is giving up on Scotland. We have seen the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) implicitly doing a deal with the SNP—it was implicit in one of his rare visits to Scotland just this last week My hon. Friend the Member for Poole (Sir Robert Syms) made another excellent speech, rightly pointing out that energy prices are rising due to world economic recovery and praising the work of this Government on job numbers and economic recovery. I agree with him. The North sea is a great British success story. He also made a really strong point about nuclear energy. I want to correct a few points made by Labour Back Benchers. The hon. Member for Birmingham, Hall Green (Tahir Ali) made an extraordinary speech. He seemed to be saying that companies cannot make a loss without going bust. That is extraordinary: of course companies can make a loss without going bust. The hon. Member for Sunderland Central (Julie Elliott) made some important points about the supplier of last resort processes. If she has constituents whose credit balances are not being transferred from their previous suppliers to their new suppliers, could she write to me—or even better, to Ofgem—with details? I am sure we could look at that The right hon. Member for Leeds Central (Hilary Benn) made his usual quality speech. He said that there are not enough heat pumps—of course there are not. The role of the Government, though, is not to provide a heat pump for every home but to stimulate the private sector heat pump market, so that it can provide that solution. He asked where our plan was for 10, 15 or 20 years’ time. The answer is the net zero strategy, which we published back in October and which the Climate Change Committee says is a leader in the world We then heard from the SNP spokesman, the hon. Member for Aberdeen South (Stephen Flynn). I am afraid his nice words about oil and gas are at odds with his party overall, which has a nonsensical energy policy. The people of Scotland will be relieved that energy policy is reserved Not only is the SNP anti-nuclear, cheering the closure of plants such as Hunterston and Chapelcross and reportedly telling Rolls-Royce that its small modular reactors are not welcome in Scotland, but the hon. Gentleman’s colleagues and the Scottish First Minister seem to be opposed to new gas licences off the Scottish coast. They want to close oil and gas down. They say they want a windfall tax—just not the same windfall tax that Labour wants. They are still on a mission of trying to close down the industry. The SNP is against Scottish energy consumers, it is against Scottish energy jobs and it is against Scotland’s energy transition To finish off, Labour is still in a state of confusion. This time, the motion is not four pages. It has been shortened to around 100 words—or perhaps 280 characters; I am not quite sure. Where Labour has cut the words, however, it has not made up for them with any numbers. The motion includes no costings. There are no numbers in it at all. We have no information about this windfall tax and no information on the package of support for families and businesses. There is no detail there, but still a lot of confusion. There are no impact assessments on the taxes raised, on jobs—there are 40,000 jobs in north-east Scotland and 195,000 jobs in all—on fuel bills or on gas production Labour has split energy from climate change; the right hon. Member for Doncaster North is the person who combined them, and now the Labour Front Bench has split them, which means inevitably it is following a policy of hammering business. Labour is not the party of business; it is the party against business. The hon. Member for Kilmarnock and Loudoun (Alan Brown), who often makes quite acerbic interventions on other Opposition parties’ policies—I sometimes wish he would probe his own party’s policies as well as he probes those of others—asked whether the Labour Front Bench had spoken to anybody in the sector, and there was no answer. We did not hear anything about whether it had engaged with anybody in the sector Does Labour agree with our ground-breaking North sea transition deal? No answer. Its solution is, again, to hammer domestic UK continental shelf production and increase imports, reducing our energy security and increasing our emissions at the same time. Labour’s approach is confused and misguided. It is not a plan, it is a motion for less energy security, higher emissions and higher fuel bills. I urge the House to stick with our approach: North sea transition, support for households and the UK’s remaining open for business.
The Question is as on the Order Paper. As many are of that opinion say “Aye”—[Hon. Members: “Aye!”] Of the contrary no—I think the Ayes have it, the Ayes have it. [Interruption.] I am sorry, you had the opportunity to do it then, and nobody shouted “No” when I put the Question. Do you want me to put the Question again? [Hon. Members: “Yes.”] Can you be a little more prompt this time, please? Do not forget that your votes should follow your voices Question put.
The petition calls for the construction of a railway link between Aylesbury and Milton Keynes. The link, or spur, was part of the original plans for East West Rail and is vital to the future prosperity of our town. As Aylesbury continues to grow, we need the right infrastructure both to support new houses and to benefit existing residents. The line would cut congestion on the roads, improve journey times on the rails and reduce air pollution. More than 2,000 people locally have signed an additional petition on the subject, showing the strength of feeling in this area. The petition states: The petitioners therefore request that the House of Commons urge the Government to consider the concerns of petitioners and commit to the completion of the proposed spur between Aylesbury and Milton Keynes Following is the full text of the petition: [The petition of residents of the United Kingdom, Declares that, whilst welcoming the £760M that the Government is investing in East-West Rail and the 1,500 jobs it will create, petitioners remain concerned that the funding announcement did not commit to the completion of the proposed spur between Aylesbury and Milton Keynes, which was originally conceived as part of the project; further that Aylesbury rail links consist only of a slow railway line to and from London and a single-track railway to and from Princes Risborough; further that if towns like Aylesbury are to both expand and to meet the net zero target of 2050 it is vital that the Government builds sustainable transport links and improves connectivity; and further that excluding Aylesbury from the direct benefits of this project risks the town missing out on the levelling up of transport infrastructure and hampering potential economic growth. The petitioners therefore request that the House of Commons urge the Government to consider the concerns of petitioners and commit to the completion of the proposed spur between Aylesbury and Milton Keynes. And the petitioners remain, etc.] [P002708]
I rise to present a petition on behalf of the constituents of Linlithgow and East Falkirk, which has been collected by David Balfour of Grangemouth. The petitioners express their concerns regarding the Government’s position on the Acorn project. The petition states that this decision will damage not only the energy sector in the North East, but also…across the country, including Grangemouth…The petitioners therefore request that the House of Commons urge the Government to acknowledge the blow this decision will have on the energy sector in the North East and beyond, including its impact on climate change, and reverse its decision to give the Acorn project reserve bidder status, and thereby honour its commitment to support a just transition to a low carbon economy in Scotland Following is the full text of the petition: [The petition of residents of the constituency of Linlithgow and East Falkirk, Declares that the UK Government’s decision not to back the Acorn project in Scotland was incredibly disappointing; further that a significant energy sector expertise exists in Scotland and that this decision will damage not only the energy sector in the North East, but also the downstream sector across the country, including Grangemouth; and further that this decision will have a serious detriment on Scotland meeting its 2045 net zero target. The petitioners therefore request that the House of Commons urge the Government to acknowledge the blow this decision will have on the energy sector in the North East and beyond, including its impact on climate change, and reverse its decision to give the Acorn project reserve bidder status, and thereby honour its commitment to support a just transition to a low carbon economy in Scotland. And the petitioners remain, etc.] [P002711]