Cost of Living — House of Lords, 2022-06-09
Topic: Macroeconomics
Stephen Benn (Labour, Centre-left): My Lords, I rise to support my noble friend Lord Eatwell, who made a masterly speech in introducing this debate—to which there has been, if I may put it this way, a rather professorial aspect. I rather share the view of my noble friend Lord Davies that it was a little on the intimidating side—although I should say that I myself have had a lot of storage problems in life, partly because I have not yet thrown away my undergraduate essays. Of course, this is also a timely debate, not least because of yesterday’s OECD report predicting that the UK economy will slow down and that the issues we are facing today will only get worse In my brief contribution, I will emphasise a few of the basic facts about the current increases in the cost of living. Yesterday’s news of the biggest rise in the price of petrol in a single day for 17 years provides an ample reminder that the phrase "cost of living crisis" really means something to people. I have found that filling up my car costs more than £100, and I have the receipt to prove it—which makes me feel really old, because I can remember when petrol was two shillings and 11 pence a gallon Whatever the nature of the political debate about whether the Government are doing enough to mitigate the effects of these rises, it is important in this debate to get some of the basic facts on the record. Like other Members here, I am indebted to the House of Lords Library for its impartial assessment of the facts, and I hope that it will help the debate if some of these find their way into Hansard. In late April, the Office for National Statistics published the findings of a survey undertaken in March that found the following. First, nine in 10 adults reported an increase in their cost of living in the previous month, compared with around six in 10 the previous November. Secondly, nearly a quarter of adults reported that it was "very difficult" or "difficult" to pay their usual household bills in the last month, compared with a year ago—an increase of 17% since last November Thirdly, around four in 10 of those who paid energy bills reported that it was "very difficult" or "somewhat difficult" to afford them. Heaven knows, this is only going to get worse. I add here one extra point: it is scandalous that people on prepayment meters, some of whom are the poorest in our society, continue to face utterly unjustifiable discrimination by being forced to pay more for their energy, at a time when energy costs are rising sharply, and will do so again in the autumn. If the Minister can find time when she replies to address the unfairness of prepayment meters, I would appreciate it According to the ONS survey, 30% of adults paying off a mortgage, a loan or rent on shared ownership reported that it was "very difficult" or "somewhat difficult" to afford housing costs compared to November. Some 17% of adults reported borrowing more money or using more credit than they did a year ago; and 43% of all adults reported that they would not be able to save any money in the next 12 months—the highest reported figure since the question was first asked in March 2020 On 23 March—the very day the Chancellor introduced his Spring Statement—the Office for Budget Responsibility forecast that real household disposable incomes per person will fall by 2.2% in 2022-23, which would be the largest fall in a single financial year since 1956. This forecast was based on a projection that inflation will reach a high of 8.7% in the fourth quarter of this year, but we all know it is likely to be more Other bodies have reported on the current situation. The Institute for Government has reported that rising prices for living essentials have disproportionately affected poorer households, which spend more of their disposable income on food and energy and have less flexibility than richer households to absorb price increases. It is not as though the Government are responsible for every aspect of the rising cost of living. Of course they are not, and I am not suggesting they are. The effect of the Russian war in Ukraine is something no Government could reasonably have been prepared for. Its consequent impact, as we can already see, on grain availability, never mind the price, is a very serious aspect of what we currently face. However, tax and benefit changes and higher interest rates are the responsibility of this Government and they have further affected incomes and the capacity of household budgets to absorb rising living costs. We await to hear what the Minister says regarding current government policy There is one issue I want to raise before finishing. The rising cost of food and energy, as I say, disproportionately affects the lower-income members of our society and means their choice about what to eat is being adversely affected. I have heard people talk about being at their wits end when trying to save money. When it comes to the food they buy, to be told that they should "shop around" is an utterly inadequate response to the crisis they face in their daily lives. The use of food banks speaks for itself. People are desperate for help and, unsurprisingly, they are changing their food habits in the light of the rising cost of basic foodstuffs We heard earlier this week in this House about the buy-one-get-one-free policy. I have no time to talk about that now, so I will come to my final point. Today’s cost of living crisis will, in time, become a health crisis. We are storing up future health problems as people understandably react to the rising cost of living by changing their healthy eating habits. We all know that you can eat a pack of biscuits and get the calories you need for a day. That is not a healthy meal I hope that when the Minister replies, she will acknowledge the risks to the health of people who are being forced to eat increasingly unhealthy meals to save money. I do not want to take part in a future debate on a health crisis in which we look back on what is happening today and wish we had done more to prevent it.