It’s a popular line with this government. And it should be true – but sadly, it isn’t.
The majority of people in poverty (57 per cent, or 8.3 million people) live in a working household. That rises to 75 per cent of children in poverty.
The government’s record on this is atrocious. The number of people in in-work poverty has increased by 2 million since they came to power in 2010. It’s now at a record high, as is the number of children in poverty living in a house where at least one adult is in work.
If work is to be the best route out of poverty, the government must do more to get pay rising. In the meantime, it can’t use “work is the best route out of poverty” as a cop out for not properly addressing the cost of living crisis. We need proper action. Structural solutions – such as improved trade union rights, nationalisation of energy companies, and improvements to the benefits system – are needed alongside a windfall tax to fund urgent support to pay energy bills.
17-year pay squeeze
A key reason for the rise of in-work poverty is that work simply doesn’t pay enough. The government’s minimum wage, even the one it calls a living wage, isn’t a real living wage.
And we’re in the midst of a 17-year pay squeeze. Real pay is currently lower than it was in 2008, and the Office for Budget Responsibility forecasts that it won’t return to above 2008 levels until 2025. This 17-year pay squeeze is, by far, the longest in living memory.
The impact of this on workers’ pay packets has been massive. If real weekly wages had continued growing at the pre-2008 rate, they’d now be £111 per week higher than they are. By 2026, if forecasts are correct, this’ll be £164.
Impact of energy costs
It’s against this background that real pay is falling again. Inflation, at 9 per cent, is hitting wages hard. In March 2022, average weekly earnings fell by £16 per week (-2.7 per cent) compared to the same month a year ago. Public sector pay growth is the worst on record – falling by £30 per week (4.9 per cent) over the same period.
The news that the energy cap will rise by around £800 in October is incredibly worrying. If this does happen, it means that between December 2021 and December 2022, energy bills will have risen by a massive 119 per cent. In contrast, nominal wages will have risen by just 5.2 per cent. The standard benefits payment will have risen by just 3.1 per cent. This means that energy bills are set to grow 23 times faster than wages and 38 times faster than benefits this year.
Pushing work as the route out of poverty is also often the government’s way of refusing to improve the welfare system. decent work and social security must go hand in hand, not be seen as alternatives.
Since it came to power, the government has repeatedly cut benefits payments in real terms. The real value of the standard benefits payment has fallen by £51 per month since 2010.
As set out above, in the face of massive rises in energy bills, the government has made real term cuts to benefits payments. When the price cap rises again in October, energy bills will be £1,523 per year higher than they were a year before. The standard benefits payment will only be £121 per year higher.
A common proposal around benefits is to bring forward the increase in benefits and pensions that would be expected in April 2023/24 to autumn of this year. For example, if inflation hit 10 per cent in September of this year (September is the reference month for benefit uprating), rather than waiting to increase benefits in April, they could be increased in October, and then maintained at that level from April onwards.
But this would increase benefits by around £7.70 a week, meaning it wouldn’t even go close to making up for cutting the £20 uplift.
Like the standard benefits payments, pensions also went up by just 3.1 per cent in April this year. Government made an active decision not to maintain the triple-lock – which would have seen pensions rise by around 8 per cent in line with the wage figures last autumn. This will cost pensioners almost £500 across the year.
Good, well-paid work is a route out of poverty
The current government has a proclivity towards badly funded temporary schemes and half-baked novelty ideas, which has again become clear during the current crisis. If it’s serious about tackling the cost of living crisis, we needed proper solutions to support people right now, alongside structural changes to fix these problems in the long term.
It’s not enough to just say that work is a route out of poverty. The reality is that too much work is low-paid and insecure. If government wants work to be a route out of poverty, it needs to ensure all work is well-paid and secure.
When it comes to pay, government should stop attacking trade unions, and instead improve trade union rights. Trade unions need stronger powers and better access to workplaces to drive up wages and conditions.
Fair pay deals need to be implemented in whole industries, negotiated with unions, and designed to get pay and productivity rising in every sector. We also need an emergency boost to the national minimum wage, as well as the long-awaited introduction of that employment bill they’ve been promising for ages to tackle insecure work.
To help people with energy costs, the government must recognise that energy is an essential public good that should come under public ownership, and implement an accelerated programme to insulate homes. To help people right now, we need a windfall tax to pay for additional grants to help with the costs of energy. With the energy cap rising by £1,523 in the space of just a year, this support will need to be substantial.
Government must also fix the benefits system. We want much more generous benefits payment (with the standard payment raised to £260 per week), alongside the scrapping of the cruel aspects of the system, such as the five-week wait, the benefits cap, the two-child limit and no recourse to public funds.
Work isn’t currently a route out of poverty, but it can be if government takes steps to ensure that all work is good, well-paid work.
MORE SUPPORT NEEDED, SAYS SCOTTISH FINANCE SECRETARY
The most vulnerable households across Scotland will receive support of over £1,000 this year, including a new one-off £650 cost of living payment
Universal support increases to £400 across Great Britain, as the October discount on energy bills is doubled and the requirement to repay it over 5 years scrapped
This new £15 billion support package is targeted towards millions of low-income households and brings the total cost of living support to £37 billion.
New temporary Energy Profits Levy on oil and gas firms will raise around £5 billion over the next year to help with cost of living, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK.
Millions of households across the UK will benefit from a new £15 billion package of targeted UK government support to help with the rising cost of living, the Chancellor announced yesterday.
The significant intervention includes a new, one-off £650 payment to more than 8 million low-income households on Universal Credit, Tax Credits and legacy benefits to be made in two tranches starting in the summer, with separate one-off payments of £300 to pensioner households and £150 to individuals receiving disability benefits – groups who are most vulnerable to rising prices.
Rishi Sunak also announced that the energy bills discount due to come in from October is being doubled from £200 to £400, while the requirement to pay it back will be scrapped. This means the vast majority of households will receive a £400 discount on their energy bills from October.
The new Cost of Living Support package will mean that the most vulnerable households in Scotland will receive over £1,000 of extra support this year.
To ensure there is support for everyone who needs it, Mr Sunak also announced a £500 million increase for the Household Support Fund. This brings the total Household Support Fund to £1.5 billion.
To help pay for the extra support – which takes the total direct government cost of living support to £37 billion – Mr Sunak said a new temporary 25% Energy Profits Levy would be introduced for oil and gas companies, reflecting their extraordinary profits. At the same time, in order to increase the incentive to invest the new levy will include a generous new 80% investment allowance. This balanced approach allows the government to deliver support to families, while encouraging investment and growth.
The Chancellor of the Exchequer Rishi Sunak said: ““I know that people in Scotland are anxious about keeping up with rising energy bills, which is why today we have introduced measures which will take the support for millions of the lowest income households over £1,000.
“As a nation we have a responsibility to help the most vulnerable, which is why this support is mostly targeted at people on low incomes, pensioners and disabled people. But we understand that all households in Scotland will be concerned about the rise in energy costs this Autumn, so every household is set to get £400 off their energy bills from October, with no repayments necessary.
“It is right that companies making extraordinary windfall profits from rising energy prices should contribute, and I’m introducing a temporary energy profits levy to help pay for this support, while still encouraging the investment that generates jobs in Scotland.”
Scottish Secretary Alister Jack said: “Global issues are causing real pressures in the cost of living for UK families. We understand how tough it is at the moment for many households, which is why the Chancellor has today announced a further £15 billion support package.
“A total of £400 per household towards fuel bills will help protect families from rising energy costs. Cash payments of £650 for low-income households on means tested benefits will target support at the most vulnerable in our society at this difficult time. This comes on top of our existing £22bn support package.
“Some of these measures will be paid for by a temporary levy on oil and gas companies – one which incentivises investment in the UK’s energy security.”
There is now more certainty that households will need further support, with inflation having risen faster than forecast and Ofgem expecting a further rise in the energy price cap in October.
So as part of the UK government’s targeted support, the Chancellor announced that around eight million of the lowest income households on Universal Credit, Tax Credits, and legacy benefits will receive an automatic £650 cost of living payment in two instalments via the welfare system this year.
Yesterday’s announcement is on top of the government’s existing £22 billion cost of living support which includes February’s energy bills intervention and action taken at this year’s Spring Statement including a £330 tax cut for millions of workers through the NICs threshold increase in July and 5p cut to fuel duty.
Energy Profits Levy
Surging commodity prices, driven in part by Russia’s war on Ukraine, has meant that the oil and gas sector have been making extraordinary profits. Ministers have been clear that they want to see the sector reinvest these profits in oil and gas extraction in the UK.
In order both to fairly tax the extraordinary profits and encourage investment, the Chancellor announced a temporary new Energy Profits Levy with a generous investment allowance built in. This nearly doubles the tax relief available and means the more investment a firm makes, the less tax it will pay.
The new Levy will be charged on oil and gas company profits at a rate of 25% and is expected to raise around £5 billion in its first 12 months, which will go towards easing the burden on families. It will be temporary, and if oil and gas prices return to historically more normal levels, will be phased out.
The new Investment Allowance, similar in style to the super-deduction, incentivises companies to invest through saving them 91p for every £1 they invest. This nearly doubles the tax relief available and means the more a company invests, the less tax they will pay.
The government expects the combination of the Levy and the new investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in their next forecast.
The Levy does not apply to the electricity generation sector – where extraordinary profits are also being made due to the impact that rising gas prices have on the price paid for electricity in the UK market, which has also been making extraordinary profits partly due to record gas prices but also due to how the market works.
As set out in the Energy Security Strategy the government is consulting with the power generation sector and investors to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.
The Chancellor announced yesterday that the Treasury will urgently evaluate the scale of these extraordinary profits and the appropriate steps to take.
During the announcement, the Chancellor also set out the government’s strategy to control inflation through independent monetary policy, fiscal responsibility, and supply side activism – a plan he said that should see inflation come down and returning to its target over time.
Finance Secretary Kate Forbes has welcomed the short term action announced by the Chancellor of the Exchequer, but warned more support is needed for households and businesses as the cost of living crisis worsens.
Following calls from the Scottish Government, the UK Government has taken steps to ensure that cash grants, rather than loans, are provided to those on lowest incomes. Ms Forbes has also cautiously welcomed the decision to introduce a Windfall Tax on energy companies benefiting from significant profits but commented that it means Scottish industry is disproportionately funding interventions across the UK.
Responding to the Chancellor’s statement, Ms Forbes has said UK Ministers should have acted earlier and gone further to provide more support that would make a real long term impact, including following the Scottish Government’s lead by doubling the Scottish Child Payment to £20 per week – which is due to increase to £25 from late 2022 helping lift an estimated 50,000 children out of poverty in 2023-24.
Ms Forbes said: “Many households will be relieved to see the support belatedly announced today, but we still need a long term solution to the cost of living crisis and reassurance that the UK Government is going to tackle long term inequalities rather than provide one-off bursts of crisis support.
“Rather than listen to our plea for a comprehensive funding package that fully addresses the unprecedented rise in the cost of living and uses the full £30 billion of fiscal headroom, this piecemeal approach makes it highly likely that more support will be needed later when energy prices rise significantly in the autumn.
“There is also a severe lack of support for businesses – many of them are still struggling to recover from the pandemic and now face crippling increases in energy costs and the damaging impacts of Brexit on supply chains and the labour market. Without urgent economic support there is a real risk that the UK economy is heading for a recession.
“Inflation is at its highest levels in 40 years and the UK Government’s failure to fully invest in increasing incomes, tackling inequality and boosting economic competitiveness will only risk pushing households into further debt and poverty
“The UK Government has almost £30 billion of fiscal headroom, spending only half of this during a cost of living crisis does not go far enough, especially when a further £5 billion from the Windfall Tax will be raised.
“The introduction of a windfall tax is a start, but as a stand-alone measure this means Scottish industry is carrying the weight of UK-wide interventions.
“The removal of the £20 Universal Credit uplift last year was a hammer blow to hard pressed families and the Chancellor’s failure to restore it and increase it to £25 only places a disproportionate burden on the shoulders of those who need help most. The statement was also worryingly silent on public-sector pay with no related consequential funding, when the lowest paid need urgent assurance in the face of rising inflation.
“The refusal to reverse the National Insurance increase implemented in April and temporarily suspend VAT on household energy bills will also cost families hundreds of pounds annually at a time when their budgets have never been more squeezed.
“The Scottish Government has already taken action to support people, communities and businesses as much as possible, with almost £770 million per year invested in cost of living support. We have increased eight Scottish benefits by 6%, closer to the rate of inflation, and introduced a range of family benefits not available elsewhere in the UK.”
Commenting on the government’s cost of living support package announced today (Thursday), TUC General Secretary Frances O’Grady said: “Unions have repeatedly called for an Emergency Budget to help families, and a windfall tax on energy companies.
“The Chancellor should have acted far sooner after his inadequate Spring Statement. His dither and delay has caused unnecessary hardship and worry for millions.
“While today’s intervention is badly needed, we should have never been here in the first place.
“Years of attacks on wages and universal credit have left many households on the brink.
“The government still doesn’t have a plan for giving families long-term financial security.
“With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate – not just a one-off boost.
“That’s the best way to protect livelihoods and to support the economy.”
Madam Deputy Speaker, The high inflation we are experiencing now is causing acute distress for the people of this country. I know they are worried, I know people are struggling. I want to explain what is happening, why it is happening, and what we propose to do about it.
I trust the British people, and I know they understand no government can solve every problem, particularly the complex and global challenge of inflation.
But this government will never stop trying to help people, to fix problems where we can, to do what is right – as we did throughout the pandemic.
We need to make sure that for those whom the struggle is too hard…and for whom the risks are too great…they are supported.
This government will not sit idly by whilst there is a risk that some in our country might be set so far back… they might never recover.
This is simply unacceptable. I will never allow that happen.
And I want to reassure everybody – we will get through this.
We have the tools and the determination we need to combat and reduce inflation.
We will make sure the most vulnerable and the least well off get the support they need at this time of difficulty.
And we will turn this moment of difficulty into a springboard for economic renewal and growth.
With more jobs, higher skills, greater investment – our plan for a stronger economy.
Madam Deputy Speaker, Before I turn to the details of our plan, let me put into context for the House, the challenge we face.
This country is now experiencing the highest rate of inflation we have seen for forty years.
The Bank of England expect inflation to average around 9% this year.
Our exposure to global shocks continues to explain most of the inflation above the 2% target.
Supply chain disruption as the world reopened from Covid…
…combined with Russia’s invasion of Ukraine…
…and potentially exacerbated by recent lockdowns in China…
…are all contributing to significant price increases for goods and energy.
However, over the course of this year, the situation has evolved and has become more serious.
There are areas of particular concern.
Even excluding energy and food, core inflation has become broader based and elevated.
Of the basket of goods and services we use to measure inflation, a record proportion are seeing above average price increases.
Also, we are acutely exposed to the European energy price shock and, like the US, we have a tight labour market.
Make no mistake – the lowest unemployment in almost 50 years, just months after averting a jobs crisis during the pandemic, is good news.
But combined with the shock to European energy prices, it does contribute to the UK’s relatively high rate of inflation.
And lastly, as the Bank have noted, longer-term inflation expectations have risen above their historical averages, by more than they are in the US and Europe.
We cannot and must not allow short term inflationary pressures to lead people to expect that high inflation will continue over the long term.
Because Madam Deputy Speaker
We can get inflation under control.
It is not some abstract force outside our grasp.
It may take time, but we have the tools we need and the resolve it will take to reduce inflation.
Madam Deputy Speaker,
We have three specific tools available to combat and reduce inflation – and we are using them all.
Independent monetary policy. Fiscal responsibility. And supply side activism.
First, our primary tool is a strong, independent monetary policy.
Since control of monetary policy was taken out of the hands of politicians 25 years ago, inflation has averaged precisely 2%.
It is right the Bank of England are independent.
And I know the Governor and his team will take decisive action to get inflation back on target and ensure inflation expectations remain firmly anchored.
Second, we need responsible fiscal policy.
That means providing fiscal support where required but not making the situation unnecessarily worse…causing inflation, interest, and mortgage rates to go up further than they otherwise would.
Excessively adding fiscal stimulus into a supply constrained economy…
…especially one in which households and businesses have built up over £300 billion of excess savings…
…risks being counterproductive and increasing inflationary pressures.
In other words, fiscal support should be timely, targeted, and temporary.
Timely, because we need to help people when the shock is at its worst.
Targeted, because unconstrained stimulus will make the problem worse.
And temporary, because if we do not meet our fiscal rules, and ensure the public finances are resilient in the longer run…
…we create even greater risks on inflation, interest rates, and the trend rate of economic growth.
And third, we are taking an activist approach to supply side reforms.
This will increase our productive capacity, ease inflationary pressures, and raise our long-term growth potential.
The PM’s energy security strategy will, over time, reduce bills by increasing energy supply and improving energy efficiency.
The W&P Secretary is moving half a million jobseekers off welfare and into work…
…and doing more to support older people back into the jobs market.
The Home Secretary is making our visa regime for high-skilled migrants one of the most competitive in the world.
And, in the autumn, we will bring forward tax cuts and reforms to encourage businesses to invest more, train more, and innovate more – the path to higher growth.
So, independent monetary policy.
Fiscal responsibility.
Supply side reform.
The country should have confidence, that using these three tools…
…we will combat inflation – and reduce it over time.
But of course, we know that households are being hit hard, right now.
So today, Madam Deputy Speaker, we will provide significant support to the British people.
But as I have said, a critical part of how we are dealing with inflation is responsible fiscal policy.
What this means in practical terms is that as we support people more, we need to think about the fairest way to fund as much of that cost as possible.
The oil and gas sector is making extraordinary profits.
Not as the result of recent changes to risk taking or innovation or efficiency.
But as the result of surging global commodity prices – driven in part by Russia’s war.
And for that reason, I am sympathetic to the argument to tax those profits fairly.
But as ever, there is a sensible middle ground.
We should not be ideological about this…we should be pragmatic.
It is possible to both tax extraordinary profits fairly…and incentivise investment.
And so, like previous governments, including Conservative ones – we will introduce a temporary, targeted, Energy Profits Levy.
But, we have built into the new Levy a new Investment Allowance, similar to the super-deduction…
…that means companies will have a new and significant incentive to reinvest their profits.
The new Levy will be charged on profits of oil and gas companies at a rate of 25%.
It will be temporary, and when oil and gas prices return to historically more normal levels, the Levy will be phased out – and with a sunset clause written into the legislation.
And, crucially, with our new investment allowance, we are nearly doubling the overall investment relief for oil and gas companies.
This means that, for every £1 a company invests, they’ll get back 90 per cent in tax relief.
So the more a company invests, the less tax they will pay.
And we understand that certain parts of the electricity generation sector are also making extraordinary profits.
The reason for this is the way our market works.
The price electricity generators are paid is linked not to the costs they incur in providing that electricity…but rather to the price of natural gas – which is extraordinarily high right now.
Other countries like France, Italy, Spain and Greece have already taken measures to correct this.
As set out in the Energy Security Strategy, we are consulting with the power generation sector and investors…
…to drive forward energy market reforms and ensure that the price paid for electricity is more reflective of the costs of production.
Those reforms will take time to implement.
So, in the meantime, we are urgently evaluating the scale of these extraordinary profits…and the appropriate steps to take.
So, Madam Deputy Speaker,
Our Energy Profits Levy will encourage investment, not deter it.
It raises around £5bn revenue over the next year so that we can help families with the cost of living.
And it avoids having to increase our debt burden further.
Because there is nothing noble in burdening future generations with ever more debt to pay…
…because politicians of the day were too weak to make the tough decisions.
Madam Deputy Speaker,
I know the whole House will agree we have a responsibility to help those who…
…through no fault of their own…
…are paying the highest price for the inflation we face.
To help with the cost of living, we are going to provide significant, targeted support to millions of the most vulnerable people in our society:
Those on the lowest incomes, pensioners, and disabled people.
First, people on the lowest incomes.
Over eight million households already have incomes low enough for the state to be supporting their cost of living through the welfare system.
They could be temporarily unemployed and looking for work.
Unable to work because of long-term sickness or disability.
Or on low pay and using benefits to top up their wages.
Right now, they face incredibly difficult choices.
So, I can announce today we will send, directly to around eight million of the lowest income households, a one-off Cost of Living Payment of £650.
Support worth over £5bn to give vulnerable people certainty that we are standing by them at this challenging time.
DWP will make the payment in two lump sums – the first from July, the second in autumn, with payments from HMRC for those on Tax Credits, following shortly after.
There is no need for people to fill out complicated forms or bureaucracy – we will send the payment straight into their bank accounts.
Our policy will benefit over eight million households in receipt of means-tested benefits, from July.
Uprating, in that time frame, could only be done for those on Universal Credit.
And our policy will provide a larger average payment this year of £650.
Whereas uprating the same benefits by 9% would only be worth, on average, £530.
There are two further groups who will need targeted extra support.
Many pensioners are disproportionately impacted by higher energy costs.
They can’t always increase their incomes through work.
And, because they spend more time at home, and are more vulnerable, they often need to keep the heating on for longer.
And we estimate many people who are eligible for Pension Credit are not currently claiming it…
…which means there will be many vulnerable pensioners not receiving means-tested benefits.
So, I can announce today that, from the autumn, we will send over eight million pensioner households who receive the Winter Fuel Payment – an extra, one-off Pensioner Cost of Living Payment of £300.
Disabled people also face extra costs in their day-to-day lives – like having energy-intensive equipment around the home or workplace.
So, to help the 6 million people who receive non-means tested disability benefits, we will send them, from September…
…an extra, one-off Disability Cost of Living Payment, worth £150.
Many disabled people will also receive the payment of £650 I have already announced, taking their total cost of living payments to £800.
And I can reassure the House that next year, subject to the Secretary of State’s review, benefits will be uprated by this September’s CPI…
…which, on current forecasts, is likely to be significantly higher than the forecast inflation rate for next year.
Similarly, the triple lock will apply for the state pension.
Of course, we recognise the risk that, as with any policy, there may be small numbers of people who fall between the cracks.
For example, it is not possible right now for DWP or HMRC to identify people on Housing Benefit who are not also claiming other benefits.
So, to support them and others, we will extend the Household Support Fund, delivered by Local Authorities, by £500m from October.
This is a significant set of interventions to support the most vulnerable in our country.
We will legislate to deliver this support on the same terms in every part of the United Kingdom – including Northern Ireland.
And, taken together, our direct cash payments, will help one third of all UK households with the cost of living, support worth over £9bn.
So, Madam Deputy Speaker,
We are meeting our responsibility to provide the most help to those on the lowest incomes.
I believe that is fair and I’m confident the House would agree.
But there are many other families who do not require state support in normal times.
They are also facing challenging times.
Is it fair to leave them unsupported?
The answer must surely be no.
While it is impossible for any government to solve every problem, we can and will ease the burden as we help the entire country through the worst of this crisis.
So, we will provide more support with the rising cost of energy – and that support will be universal.
Earlier this year, we announced £9bn to help with the cost of energy.
Including a Council Tax rebate of £150 for tens of millions of households.
And we plan to provide all households with £200 off their energy bills from October, with the cost of that repaid over the following five years.
Since then, the outlook for energy prices has changed.
I’ve heard people’s concerns about the impact of these repayments on future bills.
So I have decided that those repayments will be cancelled.
So, for the avoidance of doubt, this support is unambiguously a grant.
And furthermore, I have decided that the £200 of support for household energy bills will be doubled to £400 for everyone.
We’re on the side of hard-working families, with £6bn of financial support.
So, Madam Deputy Speaker,
To summarise:
Our strategy is to combat and reduce inflation over time through independent monetary policy, fiscal responsibility, and supply side activism.
We are raising emergency funds to help millions of the most vulnerable families who are struggling right now.
And all households will benefit from universal support for energy bills of £400 – with not a penny to repay.
In total, the measures I’ve announced today provide support worth £15bn.
Combined with the plans we’ve already announced…that means we are supporting families with the cost of living to the tune of £37bn or 1.5% of GDP.
That’s higher or similar to countries like France, Germany, and Italy.
And I’m proud to say that around three quarters of the total support will go to vulnerable households.
As a result of the measures we’ve announced today, and the action we’ve already taken this year:
The vast majority of households will receive £550.
Pensioners will receive £850.
And almost all of the eight million most vulnerable households in the country will, in total, receive support of at least £1,200.
Let me put this into context.
The House will have noted the news from Ofgem earlier this week.
They currently expect the energy price cap to rise in October to £2,800.
That’s an average increase in people’s bills this year of just under £1,200.
The same amount our policies will provide for the most vulnerable this year.
I know there are other pressures.
I am not trying to claim we have solved the entire problem for everyone.
No government could.
But I hope that when people hear the significant steps we are taking…
…the millions we are helping…
…they will feel some of the burden eased, some of the pressures lifted.
And they will know, this Government is standing by them.
And Madam Deputy Speaker in conclusion,
Supporting people with the cost of living is only one part of our plan for a stronger economy…
…A plan that is creating more jobs…
…Cutting taxes for working people…
…Reducing our borrowing and debt…
…Driving businesses to invest and innovate more…
…unleashing a skills revolution…
…Seizing the benefits of Brexit…
…And levelling up growth in all parts of the United Kingdom.
The British people can trust this government because we have a plan for a stronger economy and I commend this Statement to the House.
Rocketing fuel and energy bills, forecasts of double-digit inflation, and rising interest rates mean misery for many families. And unless there is urgent action from Government, the situation is only going to get worse (writes NASUWT’s Dr.PATRICK ROACH).
Teachers and schools leaders do not need to be reminded of the stark effects of this crisis on their pupils and in their own lives.
They see it every day in their schools and in their classrooms.
Children whose parents find themselves in insecure jobs and are struggling to make ends meet. Many relying on food banks and struggling to pay their bills. Hungry pupils can’t concentrate on their learning and the knock-on effects on behaviour are making a challenging job even more stressful.
Schools are struggling as they find themselves taking on more to try and support children, work which was often supported by local authorities but is no longer provided due to austerity.
Teaching has become even more challenging because of deep cuts to school budgets, the loss of vital support for children and families and a crisis of teacher and headteacher recruitment and retention.
Despite ministers’ promises to protect education, in the last decade education spending has fallen by 10%. And the salaries of teachers has fallen too – across the board, teachers’ pay has been slashed by at least 19% since 2010.
Many teachers are relying on credit cards, overdrafts and some are even using the same foodbanks their pupils’ families rely on as well. Around one in ten teachers work second jobs and many more are worried about their financial situation.
And in addition to the cost of living crisis, there is a wellbeing crisis caused by extreme workload pressures.
However, at the Department for Education, ministers are presiding over a system where teachers and headteachers are at breaking point. Unless action is taken now, a desperate situation is set to become even worse.
Already, one in three student teachers choose not to enter the profession after they’ve qualified because of the stress of the job and 40% of new teachers leave within five years.
The latest data from our own ‘Big Question’ survey found that two-thirds of teachers are seriously considering quitting the profession – citing workload, wellbeing and pay as key reasons.
More headteachers are leaving and fewer and fewer teachers are wanting to take their place.
Perhaps not surprisingly, nine in ten teachers we surveyed report that their job has adversely impacted their mental health in the last year and a disturbing 3% have self-harmed and are experiencing a severe mental health crisis because of the job.
And on top of that we have the growing problem of Long Covid which is a ticking time-bomb in our schools.
As part of our campaign, we’re calling on the Government to recognise that a world-class education system needs highly motivated teachers working in world-class schools and colleges.
To that end, we want to see:
a substantial real-terms pay rise for every teacher,
an enforceable contractual working time limit for teachers,
the right to switch off and disconnect from work at the end of the day and at weekends,
the ending of fire and rehire practices,
banning zero-hours contracts,
equal rights for supply teachers
scrapping the link between performance and teachers’ pay,
and safer workplaces underpinned by safe and respectful working practices.
We will be highlighting these demands at the national demonstration that takes place in London on 18th June, where teachers and workers from across the public and private sectors will be demanding action on the cost of living crisis, a decent pay rise for workers and a better deal for all working people.
It’s time for the Government to understand that the situation needs to change. Teachers are demanding change and so are parents and the general public.
Spread the word: be there on June 18th – join us, join in, and help win a better deal for teachers.
More information about the national demonstration can be found here.
Rental growth to highs not seen since the Global Financial Crisis
6% strong annual rental growth in Scotland.
The proportion of gross earnings used for rent falls to 17.3% for dual renters in Edinburgh.
Rental demand is strongest in London, Scotland and Wales with demand levels more than 65% above the five-year average. London’s market is also one of the most constrained when it comes to stock levels, with homes available to rent at just over half the 5-year average, creating the conditions for the sharp rises in rents.
Average UK annual rental growth has reached a 14 year high (+11%), with rents increasing to £995 in Q1 2021, an extra £88 a month compared to the start of the pandemic
On average, UK tenants are staying in their rental properties for an extra five months compared to five years ago, with the average tenancy length up to 75 weeks, from 51 weeks at the start of 2017.
The highest rental growth since the Global Financial Crisis, coupled with the cost of living crisis, is putting increased pressure on renters – according to Zoopla, the UK’s leading property destination, in its quarterly Rental Market Report.
Higher rents and cost of living magnify pressures faced by renters
Average UK annual rental growth has reached a 14 year high (+11%), with rents increasing to £995 in Q1 2021. This represents an increase of £88 a month compared to the start of the pandemic and follows a strong bounce back from
last year, when average UK rents were down by more than 1%, despite wage growth peaking at 8.8% last summer.
For renters, this has led to a significant increase in the proportion of gross income spent on rent, particularly in London where it has risen to a significant 52% for a single earner (a level not seen since March 2020).
This falls to 26% for sharers and means that a new let agreed for an average rental property in London will cost more than £20,000 in rent over the next 12 months – putting significant pressure on renters already dealing with the backdrop of the cost of living crisis.
In the UK as a whole, the average rent now accounts for over a third of gross income (37%) for a single earner. Around a third of renters live alone, according to the English Housing Survey.
There’s also been a strong bounce back in rental growth in London from falls of 10% seen last year. Average annual rental growth in the capital rose to 15% at the end of Q1 – driven by demand for flats from students, office workers and international demand.
Demand for rental property continues to outpace supply across the country, pushing up rents, although the rate of rental growth will slow through the second half of the year
Stock constraints leading to longer tenancies
With renters facing increased pressure on their disposable income – there’s been a marked increase in tenants deciding to stay in their rental property for longer.
On average, UK tenants are staying in their rental properties for an extra 5 months compared to five years ago, with the average tenancy length up to 75 weeks, from 51 weeks at the start of 2017.
Interestingly, this trend has extended beyond lockdowns when the ability to move was hampered and indicates that landlords with tenants in situ may not be raising rents at the same rate as rental growth.
Rental demand is strongest in Scotland, Wales and London, with demand levels more than 65% above the five-year average. London’s market is also one of the most constrained when it comes to stock levels, with homes available to rent at just over half the 5-year average, creating the conditions for the sharp rises in rents.
Rental markets remain highly localised
The rental market remains highly localised, with the most affordable rental markets for dual earners located in more rural areas including Great Yarmouth in the East of England, South Somerset in the South West and North East Lincolnshire in Yorkshire & the Humber. In these markets, average rents account for up to 15% of joint gross income.
In London, Bromley is the most affordable rental market, where average rents account for 19% of joint gross income. In the North West, Copeland, a local authority on the edge of the Lake District, encompassing the towns of Whitehaven and Cleator Moor is the most affordable rental market.
Gráinne Gilmore, Head of Research at Zoopla comments: ““UK rental growth is being driven by high rental demand and limited supply, trends that are more pronounced in city centres. The surge of post-pandemic pent-up rental demand will normalise through Q2 and Q3 however, which means rental growth levels will start to ease.
“Affordability considerations will also start to put a limit on further rental growth although this may occur at different times depending on location. Rents are likely to continue rising for longer in areas which have the most constrained stock levels – currently London, Scotland and the South West.”
Gareth Atkins, Managing Director, Lettings at Foxtons comments: “ “The tenancy renewal numbers we have seen so far in 2022 are unprecedented. Steadily increasing demand, severely limited stock and a swift rise in rental prices are all compelling reasons to renew – and renters are responding.
“Through Foxtons renewals department, we have seen a 29% rise in renewals year-on-year vs 2021. Renters are also choosing longer tenancies to avoid a market in flux; our deal length for renewals has gone up 9% in 2022, reaching an average tenancy of 15.7 months.”
PCS has warned of the consequences for everyone who relies on public services of Boris Johnson’s plans to cut up to 91,000 civil service jobs to tackle the cost-of-living crisis.
It is understood the prime minister wants to see civil service staffing levels cut to 2016 levels.
PCS General Secretary Mark Serwotka condemned the plans and said: “Cuts have consequences.
Not just on those whose jobs are being sacrificed to throw red meat to the dwindling number of Conservative voters, but on everyone who relies on the services our members provide.
“The government complains about longer delays for passports and driving licences at the same time as sacking the people who are working so hard to clear the backlog.
“He has chosen to cause our cost-of-living crisis and is desperate to point the blame somewhere – and he has chosen to point the finger at hard working PCS members who kept the country running throughout the pandemic.
“Our members will not be the scapegoats for a failing government. We have our conference in 10 days’ time: taking national strike action is very much on the table.”
A CHARITY is offering a £200 grant to former coal miners to help them cope with the rise in fuel costs in 2022.
CISWO – the coal mining charity – has launched the scheme to provide some support towards combatting the huge hike in the energy price cap which came into effect in April.
The one-off grant will be available to former coal miners, or their partners or widows, who are identified as being particularly vulnerable due to being on a low income, live in their own home and are responsible for paying for energy costs.
It is also only available to those former mineworkers who have ten years’ service in the industry or those whose last place of work was in the industry. Only one grant is available per household.
The price rises will see millions of people having to pay around £700 more each year to heat their homes.
And with former miners often suffering from health issues, poor mobility and managing on low incomes, they may be disproportionately impacted by the changes.
Nicola Didlock, Chief Executive at CISWO, said: “We are very aware that many of our beneficiaries are vulnerable and susceptible to the cold, especially those on low incomes and trying to cope with ill-health, mobility issues and older properties to maintain.
“We want to ensure that those individuals are identified and supported to keep warm and healthy, particularly during the colder months as the energy price rise begins to impact those most affected.”
CISWO’s Personal Welfare team will be identifying people in need and supporting them to get the help they are entitled to. As well as the CISWO grant, they will help people to obtain other financial aid and subsidies from the government.
The team will also be on hand to provide information about other support on offer from CISWO for former coal miners and their dependants, including:
Confidential home visiting service
Advocacy, information, advice and guidance
Emotional support
Benefit applications
Access to mobility equipment
Reducing loneliness and isolation
Access to holidays and convalescence
For more information about claiming the £200 CISWO grant, visit:
Governments across the world are raising wages, cutting tax and announcing hefty financial aid packages for people and workplaces affected by the energy crisis (writes TUC’s NINA REECE):
War in Ukraine is exposing the cracks in a global energy system that privileges profit over people and the climate and is too reliant on international trade in fossil fuels. The result is a massive increase in energy costs that is hurling people into poverty while energy companies announce another year of eye-watering profit.
But the Conservative government’s decision not to help the people or sectors most affected by the energy crisis is the exception, not the rule. Here is how other governments across Europe are providing support.
Germany
In Germany, €16billion (£13.4billion) has been made available to ease the burden of rising costs. The support package includes a €9 pass for commuters, giving them a month’s unlimited use of public transport. Making public transport more accessible in the UK is key to reaching our emissions targets.
There is a one-off €300 tax cut for individuals, extra discounts for low-income families and fuel taxes will be cut for three months, with the price per litre cut by €0.30 for petrol and €0.14 for diesel.
Importantly, this package includes a commitment to reducing German reliance on gas, oil and fossil fuels long term.
Germany is also set to raise the national minimum wage by 15 per cent, benefitting nearly 6.2 million low-paid workers – two thirds of them women – giving Germany the second-highest minimum wage in Europe. The rise, agreed as part of the coalition deal, will also cover self-employed and flexible workers.
Nordic countries
A six million Swedish kronor (£473m) pot was set aside by the Swedish government to soften the impact of soaring bills. This may not sound like a lot, but with population that is fraction of that of the UK – it is significant. The government has also issued winter bill subsidies of up to 6000 kronor (£488) for 1.8m households from winter into 2022.
The Norwegian government’s package of measures to help households totals more than eight billion kronor (£664m). In January, Norway even committed to covering 80 per cent of electricity costs for a short period whenever the rate for electricity is above 70 Norwegian øre (6p) per kilowatt-hour.
France
President Macron is targeting energy companies.
EDF, the state energy provider, will charge electricity at below market rate and will take an €8.4bn financial hit. It has also been ordered to sell nuclear power to rivals at below current market rate as its reactors generate 70% of the country’s electricity.
This month, the CEO of Total Energie has also announced a freeze on dividends. In the UK, despite massive profits, no caps or restrictions have been placed on the Big Six energy providers.
The French government has also cut electricity taxes in a bid to slow the increase to bills. While here in the UK, gaps in the Chancellor’s support package means the energy crisis will hit the poorest families the hardest, in France 5.8million low-income households were given a €100 payment for energy bills in January this year.
Spain
The Spanish government’s €16billion response to the energy crisis is the most comprehensive. The focus is on curbing profits and protecting jobs.
Some €2billion will be raised from a windfall tax on energy providers. €500million in subsidies will be provided for electricity-intensive industries and companies that receive this aid won’t be able to dismiss staff to balance out their rising energy costs.
€10billion of state loans will also be given to companies in other industries who are forced to spend more on energy. There is protection for truckers and professional drivers with €450million in direct aid for transport professionals.
And for families and individuals, a fuel sales subsidy of €1.4billion will reduce prices by €0.20 a litre, making a full tank about €9 cheaper, far better than Rishi Sunak’s 5p cut to fuel duty which would take just £2.25 off the cost of a full tank.
These responses from other countries show that our government can do more to help families and industries survive what the Governor of the Bank of England calls a ‘historic shock’ to our living standards. Households currently face an annual energy bill of £2000 and prices are to rise again in October.
Sign petition to demand action from Rishi SunakRishi Sunak must come back to parliament and present an Emergency Budget. We need a proper package of economic support for families.
Support is being expanded to improve the energy efficiency of homes and tackle energy costs.
In response to the cost of living crisis, three key Scottish Government energy efficiency and heat programmes will be boosted from April.
These include:
Expanding the Home Energy Scotland (HES) advice service, which provides free, impartial advice available to all households in Scotland on making homes warmer, greener and easier to heat. Capacity will be increased by 20% to support an extra 12,000 households a year, whilst a service offering bespoke advice to the most vulnerable households will be doubled.
Widening the eligibility criteria of the Scottish Government’s flagship Warmer Homes Scotland fuel poverty programme to include more groups within the 60 – 75 years age range.
Increasing the level of funding individual fuel poor households could benefit from through the local authority-led Area Based Schemes.
More than £160 million of funding is being invested this year to help make Scotland’s homes and buildings warmer and more efficient, supporting efforts to tackle fuel poverty whilst helping householders manage their energy bills and reduce carbon emissions.
Zero Carbon Buildings Minister Patrick Harvie said: “Everyone needs a safe, warm place to call home. I am acutely aware that soaring energy prices will be causing many people to worry about the cost of their fuel bills and it is vital that people struggling with energy bills get the information and support they need, while governments step up with appropriate actions.
“We are using all powers and resources available to us to support people through the cost of living crisis and the Scottish Budget last month included a package of measures to provide immediate help with rising bills. At the same time, powers relating to energy markets remain reserved and we have repeatedly called for the UK Government to urgently take further, tangible actions to support households.
“However, immediate help also has to go side by side with longer term action. Investing in energy efficiency is the best buffer against the ebb and flow of global energy prices. That is why we are boosting energy efficiency programmes today and over the whole parliamentary term.”
Householders can access free and impartial support through Home Energy Scotland to improve the energy efficiency of their homes.
Home Energy Scotland can be contacted on their freephone number 0808 808 2282 or via the Home Energy Scotland website.
PRACTICAL POINTERS TO HELP BATTEN DOWN THE HATCHES AGAINST SPIRALLING ENERGY COSTS
The last two years has created the perfect storm for cost-of-living problems across the UK and it’s speculated that things could get worse by April.
As many households struggle to reach the first payday since before Christmas, we explore the measures households can take now to help make things more manageable.
New research shows that lower income households in the UK may have to spend half their income on energy. The industry regulator, Ofgem, has also announced that it will increase price caps in April, painting a bleak picture for some consumers.
UK households should double check they’ve made use of all the help available this winter such as:
· Government schemes: research government schemes like the Winter Fuel Payment which provides £100 to £300 to help pay heating bills. Customers are eligible for the scheme if they were born on or before 26 September 1955.* Be aware that the government is also exploring options such as making payments to energy suppliers to soften the blow to consumers.
· Switch providers: according to Ofgem, households can save around £360 every year. Switching provider doesn’t just help save money, it can also allow consumers to seek out more environmentally friendly suppliers and those with better customer service.
· Tax relief: check out the tax relief option, which allows anyone working at home on a regular basis to claim relief on gas and electricity bills – as well as metered water and business phone calls. HMRC are offering relief worth £312 per year with no need to provide receipts or factor in any complicated calculations.
· Discounts and efficiency checks: use energy efficient lightbulbs – a relatively inexpensive solution which helps to reduce costs over a long period of time. Also, look out for schemes such as the Warm Home Discount that provide a one off discount of £140 off the winter electricity bill between September and March.**
Greg Wilson, Founder of energy comparison website Quotezone.co.uk, comments: “Given the upcoming rise in energy price caps in April, it’s important that people get on the front foot and look for ways to save.
“If you’re eligible, making use of the government’s schemes to help with the cost of energy bills is a good start. There are many schemes out there, including the Warm Home Discount and Winter Fuel Payments scheme, that should make bills a little easier to pay. These schemes are targeted to both the elderly and those on a low-income, providing support to the most vulnerable demographics.
“But there are also many other ways to tackle increasing energy cost – one of the most effective ways is to switch provider, a process which has never been easier. By choosing an Ofgem-accredited comparison site, consumers can get an understanding of what’s on offer across a range of energy suppliers – instantly providing an overview of more competitive prices.”
Quotezone.co.uk is one of the leading price comparison websites in the UK, helping over 3 million users find more competitive deals.
