Working People’s Finances: Government Policy — House of Commons, 2021-09-21
Topic: Macroeconomics
Daniel Rayne Kruger (Conservative, Centre-right): May I say what a pleasure it was to hear the maiden speech of my hon. Friend the new Member for Hartlepool (Jill Mortimer)? It was absolutely tremendous. I was lifted off my feet by its sheer patriotism. It was so inspiring to hear her love for her place, her attachment to it and her commitment to Hartlepool. It makes me proud of the day I spent campaigning for her—well, maybe it was more like an afternoon, but it was enough. We are all Hartlepudlians after that speech, so I am very pleased that she has joined us The British economy is booming. We have the fastest growth in the G7, this year and next. Unemployment is falling across the country, wages are up and the strongest recovery is for the youngest people in our economy. I am very proud of what the Government are doing to invest in people—2,500 young people are joining the kickstart programme every week, 1 million people in long-term employment are being helped with £2,000 restart grants, there is £3,000 for every new apprentice, and the Government are doubling the number of work coaches—and to help them take the benefit of our high-wage economy. However, I recognise that there is a problem This is an appropriate debate for us to have at a time when inflation is creeping into the economy and the cost of living is a concern. It is creeping in partly because of the exuberance of the global economy as countries come out of lockdown and the huge pent-up demand for raw materials. Covid has obviously caused disruption to global supply chains and to logistics. We are a group of islands, and we are vulnerable to shocks in international trade; indeed, I think we are rather too vulnerable to such shocks. We are too reliant on imports, especially of energy, which, of course, is salient this week. Beyond that, however, are some profound structural issues in our economy that I think we need to address, on the supply side. There are distortions in the market Let us think about the four most essential aspects of life, the things that we all spend our money on first: housing, food, water and energy, such as heating. Each of those markets is distorted and they have different effects, in that some are overpriced and others underpriced. Housing is overpriced—more specifically, the land under houses is overpriced—and as a result the proportion of household spending that goes on housing has doubled over the last 50 years. Food costs are going up, and there is real concern about that, but it is happening after years of artificially low prices. As the proportion of household spending that goes on housing has doubled, the proportion spent on food has halved over the same period, so something is up. Of course it would be great if the quality of the food were just as good or if the real costs of its production were reflected in the price, but they are not. We have an obesity crisis, and we have polluted rivers and a polluted environment The same story could be told about our water systems. We have artificially cheap water in this country, because the real cost of water is being borne by the environment, by all of us in our taxes and by public services, resulting in bad health. As for energy, we are all now very familiar with the fact that prices are rising because of our dependence on foreign supply Those different distortions in our markets have different effects on prices, but what all the markets have in common is a lack of effective competition. We have a small number of very large companies—house builders, supermarkets, water companies, energy companies—all of which act to distort markets and have negative effects, and ultimately to pass on high prices. Even if in some cases the price at the till is low, for instance as a result of subsidies, the overall effect of these cartels is to increase prices for all of us I say yes to the Government’s demand-side reforms, and congratulate them on a high-wage economy with rises in wages and investment in skills. I look forward to the spending review, and hope that we will see more support for the worst-off families. Fundamentally, however, we need more plural markets and more local production in homes, food and energy, which will empower local communities, help local economies, and keep down the cost of living.