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Lab SP: Labour's cost of living package

Ruth Murphy

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After visiting foodbanks in Dewsbury with the Leader of the Opposition Dame Arya West, the Shadow Chancellor Jim Riley gave a speech to the press:
“Good afternoon,
First, I’d like to pay tribute to the volunteers and campaigners who work at food banks, meal centre or soup kitchens across the country. As the Conservatives have allowed poverty and inequality fester, it shows there is still so much our country has to be proud of that people stepped up and ensured the most vulnerable were fed through these most difficult of times. Every volunteer I have met is brilliant and dedicated, and if their energy was not spent fighting the poverty created by this government I know our country could go on to achieve even greater things.
We thought it was bad when we saw the rise of foodbanks in Britain. All of us here want to see a government that will put foodbanks to an end. Instead, we are left with the grim reality where some are ending because people across the country are having to scale back and are no longer able to keep food banks supplied.
In a matter of weeks, we know energy bills could be as high as £4000 a year. Addressing this should be the Chancellor’s main priority. Instead, he is spending time in Parliament reciting sermons and tweeting. When he is confronted with questions on how he'll resolve the cost of living, he'll simply roll his eyes as if he is the one inconvenienced. I know he has never had to choose between heating and eating – the only electricity expense he’s ever worried about is his luxury air conditioning. I know he’s never been too afraid to open an energy bill. But his absolute refusal to even discuss the cost-of-living crisis, let alone address it, feels like a slap in the face for the millions of hard working families across the country who take on more hours and can’t keep up with their bills rising.
This is my promise to the British people:
I know what it’s like to worry about going without. It is my priority that I would work tirelessly, night and day, to draft viable proposals that will ensure that you can put food on the table through these hard times.
Thankfully, Labour have already forced the government’s hand. After demanding a windfall tax on oil and gas companies who have made record profits so that we can help people through this cost-of-living crisis, we saw reasonable proposals that saw every household supported but with support targeted towards those struggling the most.
So unlike the Chancellor who has already given up on the hard work the Treasury put towards supporting families this winter, I’ll promise this: Labour would keep those proposals almost in full to provide a lifeline for families up and down the country through the coming months. However, there’s three problems we have identified with the original package.
Firstly, far from supporting families through a cost of living crisis by fairly taxing oil and gas giants who have made unprecedented profit in the previous months, Rishi Sunak still find time to give a £1.9 billion tax handout to oil and gas giants. Since those profits have increased even further, we know the handout he has given them will be significantly bigger. Oil and gas giants aren’t worried about their breadline; but working people are. To have given them a significant tax break was reprehensible.
Secondly, while the original cost of living proposals were distributed effectively – with those needing the most support receiving it – there was one area in which it fell short: in supporting children and families with children through the winter. Households receiving lump sums of support have seen that money more eroded should they have children. With 4 million children in the UK in poverty, it is clear more must be done to safeguard and feed children. Labour is clear that is the priority.
Last, we understand that this was a cost-of-living package designed to address a much less sharp rise in energy bills than we anticipated and its clear a further wave of support is needed.
There is good news though: we can address the second and third problem and partially fund it through the first.
By doing this, we can provide stronger cost of living support that can be funded through the multiple tax handouts and giveaways that have been handed to the wealthiest and most well connected in the past decade.
Labour has always been clear that the livelihoods of British households, not the profits of the wealthiest few, must be prioritised. This is a plan that makes clear moral sense but also makes business and economic sense: if consumers can’t even afford the basics, what hope do they have in going out and buying from our high streets?
As well as removing the Chancellor’s tax handout to oil and gas companies, we’d scale back on his immoral proposals to scale back the bank surcharge, we’d remove the ineffective business asset disposal relief and we’d clamp down on loopholes in inheritance tax which have done little for farmers but has given loopholes that the rich have exploited to avoid paying their fair share.
With this, we can create a further cost of living package designed for the winter to supplement the existing package.
It would include a £500 cost of living payment to Universal Credit recipients this winter.
It would include further measures to support children and families with children through the crisis – by providing £200 to all children receiving the child element of UC.
And we would eliminate VAT on domestic fuel: so while the Chancellor looks to keep taxes on oil and gas giants as low as possible, we’re clear we’d look to keep taxes on ordinary families as low as possible, saving the average household up to £100 in the process.
Everyone is struggling through this crisis and is worried about the winter ahead. We’d provide every household with the support they need – up to an extra £350. But, more crucially, we would work tirelessly to ensure the poorest households in the country do not go under as a result of profiteering from energy giants by providing the most vulnerable households with a further £900. Protecting working households is my first and utmost priority as Shadow Chancellor.

All of this will be fully funded with the measures I have outlined today alongside the additional tax receipts the government has stated it will be receiving.

But I want to be clear: there are two interloping crises and what Labour is proposing today won’t resolve those.
The current energy crisis and crisis of inflation can still be solved in the longer term. The Chancellor must actively be part of a global effort to strategies and resolve supply chain issues, and must take the necessary action to reach net zero so we are no longer reliant on the whims of despots and dictators.
And there is a long term crisis of poverty in Britain, created by the Tories refusal to craft a strategy that will boost wages and their insistence of implementing a welfare system that is punitive and cruel and punishes working families the most. The Chancellor must also acknowledge and get to grips with this.
But these are long term solutions.
British households need a lifeline to get them through this winter.
Only Labour's plan is providing that funded, credible lifeline for working families, and we will be fighting tooth and nail to force this Chancellor to support hard working families."

The Leader of the Opposition, Dame Arya West, then spoke:

"Thank you Jim. 

It is important as politicians to never lose touch with the real and pressing issues that people are facing in their lives. The issues we are elected to help solve. Today is a stark reminder of that. A country as wealthy as Britain should not need foodbanks. The people who volunteer here and donate represent the absolute very best of Britain. But the fact that they have to exist at all should be a wake up call.

If a country as wealthy as Britain should not need foodbanks, then what does it say that a country as wealthy as Britain is struggling to even find people in local communities with enough spare to donate to them?

This cost of living crisis is real. My message to William Croft is this - you need to get real. Rein in your part time Chancellor, get him off twitter, and get him in Parliament offering real solutions and real relief, not empty platitudes and religious sermons.

And we’re here to help. Jim has already laid out measures we can take to get more money to struggling families right now, building on the cost of living package the previous government delivered under pressure from Labour.

But I want to talk specifically on energy costs. Very shortly, Ofgem is expected to announce a further £1,200 to £1,500 increase in the energy price cap. That is a financial disaster. People simply cannot afford it. To William Croft and Michael Marshall, that probably means a bit of belt-tightening. To your struggling family in Britain, it means making the kind of hard personal choices that you associate with the past, not a modern wealthy country. Can they afford to be warm. Can they afford to feed themselves and their kids well. Can they afford the basic necessities of life.

This too will pass. The global energy crisis will not last forever. But people need real help while it’s here. And what they need like a hole in the head is for the people charging them those prices to be paying out record dividends.

So Labour would introduce two further changes to support families with energy costs, which I promised during my leadership campaign.

The first is on the energy price cap.

Currently, the energy price cap is about as effective as a chocolate teapot. As soon as wholesale prices rise, the cap rises automatically. That is despite the fact that many suppliers benefit from higher wholesale prices. 

The point of a cap is  to shield working families from these wild, and temporary, swings in prices by sharing the risk associated with energy providers, and prevent excess profiteering on the back of a basic human necessity; when most energy we use is produced domestically..

It utterly fails in that. Energy companies are planning to pay out billions in dividends on the back of record profits, and wild swings in prices on energy markets are simply being passed right through to consumers without any of that burden being shared by the companies who should take a fair share of the pain, or at the very least should not be benefitting.

It comes down to this: energy is a basic human need and a social good, it is not just a privately traded good like something you should buy in the high street. Energy companies have a social obligation to provide a public service that people cannot live without, not just a profit motive. 

The Shadow Energy Secretary will set out our plans for resetting the regulatory environment for energy and water so ensure that they fulfil social obligations as public services, not just a profit motive. But in the meantime, Labour is calling for a stronger and more effective energy cap now, urgently, so that struggling families are not faced with excessive bill rises. 

We would achieve this with a temporary “price brake” mechanism in the energy price cap.That brake will share the cost of the increase in wholesale energy prices between the profits of the energy supplier and the consumer rather than entirely passed on. This is important as a matter of principle and would mean a smaller increase in energy bills this Winter. Ofgem would, effectively, take a longer-term view in setting energy price caps. Rather than expecting consumers to take all the pain right now from higher wholesale energy prices, it would look for a more stable energy price cap that fairly shared the impact of the instability we are seeing right now. That measure would include risk sharing measures in the industry to support smaller energy suppliers who do not have domestic sources of wholesale energy, like the big energy companies making record profits.

The second measure we would take is to return the proceeds of growing revenues from the Emissions Trading Scheme to consumers. While other environmental levies return benefits to consumers in lower prices and insulation, the Emissions Trading Scheme imposes net costs. It is a critical part of our net zero ambitions as a country by limiting and creating a market for emissions in the UK. The price will rise, and revenues from the Government will rise. This year, the Government expects to raise nearly £6 billion in revenue - nearly £5 billion more than last year.

Our policy would be to pay low and middle income households a twice-yearly “green dividend” equal to the money raised from the emissions trading scheme. This will support people with the rising cost of living, but also support our economy in a just transition to net zero 

Our intention would be that all households, except those with a higher rate taxpayer, would receive a twice-yearly payment based on their household size. The average household under this plan would receive more than £250 this year - a real help with rising living costs. This would simply be extra unexpected revenue foregone - rather than a new cost on the government.

The package that Jim and I have outlined today is a credible, funded, fair response to the cost of living crisis. It recognises the immediate urgency of the crisis that millions of families are facing. 

William Croft and Michael Marshall now have a choice. They can adopt our common-sense proposals. I can promise that we won’t charge royalties. Or they can leave millions of families at the mercy of their cost of living crisis. For Labour, there would be only one choice right now. I urge them to make the right one.

Thank you."

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Ruth Murphy.

Labour Member of Parliament for Liverpool Walton (1974-).

Opposition Whip (1982-).

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