Mike Wood – 2022 Speech on the Cost of Living Crisis

The speech made by Mike Wood, the Conservative MP for Dudley South, in the House of Commons on 17 May 2022.

Helping our constituents with the rising cost of living is clearly the most pressing challenge facing our country, and most other countries in western Europe and North America, over the next year. The issue was rightly at the top of the Queen’s Speech, because it needs to be right at the top of the Government’s agenda for the year ahead.

Prices are rising right around the world. A number of factors have come together. Some are supply-led; some crucial supplies are still suffering from the impact of the pandemic. Others are demand-led. Pent-up demand has been released, resulting in excess demand, as people make purchases that have not been possible over the past couple of years. There has been a switch to lower-carbon fossil fuels; people are moving away from coal and other dirty fossil fuels to cleaner fuels such as gas. That is all coming together to cause an increase in prices that few of us have seen in our adult lifetime.

A large package of support is clearly necessary. I welcome the support the Chancellor has already announced and introduced, and in particular the strong focus on helping low-paid workers and those most likely to be struggling. There is last month’s increase in the national living wage; the additional money through the universal credit taper, which gives well over 1 million families over £1,000; and, from July, the increase in the national insurance contribution threshold, which will put another £330 in people’s pay packets. Together, those measures will mean that the lowest-paid workers are significantly better off. That is part of a £22 billion package, which is an enormous amount. It is difficult to grasp quite how big a number it is. It is, for example, more than the budget for the police and Border Force combined. These are not insignificant figures. They also come on top of the sums that were spent to help to get people through the pandemic, when the wages of 12 million workers were paid, either through furlough or the self-employment income support scheme.

However, many of our constituents are still struggling. As prices continue to rise over the coming months, even more will struggle, so more will need to be done. The Government need to look constantly at what can be done to provide effective and sustainable support. I welcome the special Cabinet meeting last Thursday, and hope that it will be part of a long series of reviews to consider the measures that might be introduced. I urge the Treasury and other Ministers to look at how we can narrow the time gap between the calculation of consumer prices index and earnings growth figures for uprating pensions and benefits, and those increases coming in. The figures are calculated so far ahead of when they come in. In normal times, the difference between, say, September’s CPI figures and April might amount to half of 1% of a pension, or 50p or 60p a week. However, when there are very sharp increases in inflation, it can be £4, £5, £6 or £7 a week.

On a windfall tax, I would normally oppose retrospective taxation, but given the circumstances in the energy markets, it can be justified here. However, we need to be confident, as my hon. Friend the Member for Sevenoaks (Laura Trott) said, that the benefits of such a tax outweigh the costs. We have to understand what the costs are, and the benefits are perhaps not quite as high as people imagine. They certainly would not pay for the package that the right hon. Member for Doncaster North (Edward Miliband), the former Leader of the Opposition, set out. There would probably be about £14 billion or £15 billion spare. That would be about £5 per month per household, instead of the large amounts that the Government have delivered.