Cost of Living and National Insurance

gas

UPDATE: 1st April 2022  

People in Bosworth have, quite rightly, asked me what the Government is doing to help with the escalating cost of living, and it is something which I am very conscious of, and regularly working on. Although we are fortunate to be an area with high local employment, there are families across the community who will undoubtedly struggle in the months ahead with rising costs seen across the globe, and an elderly population who should not be forgotten. 

My team and I continue to assist constituents where we can through casework, much of this inflation is being driven by the rising cost of energy due to increased demand worldwide – and that feeds through into pressures on the cost of living. I completely understand constituent anxiety over rising prices and inflation.  

My work in Westminster

I have raised the cost of living with: 

  • The Chancellor of the Exchequer and Treasury Ministers, about Energy Costs, seeking Government assistance to provide some relief to consumers (written before the Chancellor’s announcement on 3 February 2022). 
  • Treasury Ministers, about rising petrol prices and the mechanisms about passing reductions in wholesale costs onto hard pressed drivers. 
  • Raised a number of Parliamentary Questions on fuel duty. You can read the Ministerial responses here: https://bit.ly/3uLSZHA 
  • Senior Leadership at OFGEM, to ensure that the Energy Price Cap can provide real protection to consumers at this time of rising energy prices. 
  • Senior Leadership to each of the ‘Big Six’ energy companies about the energy price cap and the importance of assistance schemes to vulnerable customers. 
  • Senior Leadership of Energy UK about the importance of the Energy Price Cap and assistance schemes to vulnerable customers. 
  • Senior Leadership of the Petrol Retailers Association about rising petrol prices. 
  • Senior Leadership of OFCOM on broadband contracts and mobile phone contracts. 

I will of course update this page as I receive responses from these organisations, and continue to have further meetings with the Government on the cost of living and how the Government can help.  

If you, or you know personally of anyone struggling in the constituency, please do get them to contact me so I can do my best to provide signposting and guidance towards relevant assistance. Please email luke.evans.mp@parliament.uk, and I would be more than happy to get back to you. 

I have also asked the Treasury how they are making people aware of the support schemes which are in place. You can read my question below:  

Question:  
To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the adequacy of steps taken by energy providers to promote and ensure take up of support schemes for vulnerable individuals struggling with rising energy costs.  

Answer:  
Greg Hands: The Government meets regularly with Ofgem, energy suppliers and consumer groups to help support vulnerable consumers save energy and reduce their bills. The Warm Home Discount scheme currently provides over 2 million low-income and vulnerable households with a £140 rebate off their winter energy bill.   

The scheme will be extended to 2026, and from 2022 it will be worth £475 million a year (in 2020 prices) and reach nearly 3 million households. The Energy Company Obligation Scheme has delivered around 3.3 million measures in around 2.3 million homes since 2013. As per the Sustainable Warmth Strategy, the Government has committed to a four-year, £4 billion successor scheme to accelerate efforts in helping homes meet fuel poverty targets.  

Similarly, I have raised the cost of broadband tariffs with the DCMS. In response, they advised that they have ‘been working closely with the independent telecommunications regulator Ofcom’ on ‘the issue of affordability’. They advise that social tariffs are available in the 99% of the UK and represent a 50% discount on the average cost of broadband.   

Given how rural our area is, I am also conscious that car is the only way to travel in some areas, and that the current price of fuel is also a concern to many, so I have asked the Treasury about the extent to which the Government can ensure that any reduction in wholesale prices is passed on to the motorist.  

Government work in this area

Since the start of the pandemic, the Government has announced a £400 billion package of support to protect jobs and income. The economy is in recovery, with a record number of people on the payroll, with recent ONS statistics showing the UK's GDP grew by 1.3% in Quarter 4 of 2021. 

Although Government intervention can be limited with the global rising costs of energy, I am pleased the UK Government have acted and implemented a £9 billion package of support to help 28 million households with the cost of living: 

You can find out more above the above provisions here: Government support for energy bills and the cost of living - factsheets - GOV.UK (www.gov.uk)

  • Increased the National Living Wage by 6.6%, meaning an extra £1000 a year for a full-time worker  
  • Announced a non-repayable £150 cash rebate for homes in Council Tax bands A-D – equivalent to 80 per cent of all households, helping both lower and middle-income families  
  • Froze the licence fee at £159, halting an increase to £180  
  • Introduced a £1000 tax cut for nearly 2 million families, through the cut to the Universal Credit taper  
  • Cut fuel duty by 5p per litre for a full year
  • Continued to freeze fuel duty for 12 consecutive years - this has saved the average driver over £1,900 compared to the pre-2010 escalator. 
  • Allocated £1 billion for helping those in need on bills and other essentials - In England, the fund will be distributed via upper-tier Local Authorities. At least a third of the £500 million extension funding (£140m) will be spent on pensioners on low incomes and at least another third (£140m) will be spent on families with children.
  • Announced £144 million of discretionary funding for local authorities to support households not eligible for the council tax rebate  
  • Continued the Holiday Activity and Food Program for children on Free School Meals with £200 million  
  • Retained the Energy Price Cap, helping 15 million households  
  • After asking a Parliamentary question regarding support for vulnerable individuals struggling with the cost of energy bills, I welcomed the news that the Warm Homes Discount will be increased and eligibility extended by one-third to 3 million vulnerable households (worth £150). You can read the full Ministerial response here: Written questions and answers - Written questions, answers and statements - UK Parliament; Find out more here: Warm Home Discount Scheme - GOV.UK (www.gov.uk)
  • Since 2011, over £3 billion in direct support has been provided to low-income and vulnerable households under the Warm Home Discount scheme
  • A £200 ‘smoothing’ rebate on energy bills for all households from their supplier
  • Delivered Cold Weather Payments of an extra £25 per week to vulnerable households in exceptionally cold weather: Cold Weather Payment - GOV.UK (www.gov.uk)
  • Pledged £3 billion over this Parliament to help more than half a million lower income homes become more energy efficient, saving households on average £290 per year
  • Winter Fuel Payments are the largest benefit paid to pensioners, and will continue to be available to all pensioners: Winter Fuel Payment: Eligibility - GOV.UK (www.gov.uk)

Spring Statement 

On the 23rd March, The Chancellor announced his annual Spring Statement setting out further support the Government is putting in place during these difficult times. I note this was not a full budget, which will be announced in the Autumn. 

The Chancellor unveiled a new Tax Plan to ease the rising cost of living and to deliver the biggest cut to personal taxes in a quarter of a century:

  • Cutting fuel duty by 5p for 12 months – a £5 billion tax cut and largest fuel duty cut ever.
  • Cutting National Insurance now – a £6 billion tax cut for 30 million working people across the UK from July, worth over £330 a year – 70 per cent of people will pay less tax even after the levy.
  • Cutting the basic rate of Income Tax to 19p from 2024 – the first income tax cut for 16 years, a £5 billion tax cut for over 30 million workers, savers and pensioners.
  • Cutting business employment taxes now by raising the Employment Allowance to £5,000 – a tax cut for half a million small businesses worth up to £1,000 per business.
  • Cutting VAT on energy saving materials like solar – a tax cut only possible because of Brexit.
  • Doubling the Household Support Fund to £1 billion for councils to support the most vulnerable.
  • Creating the conditions for private sector-led growth – through Autumn Budget tax cuts on business capital investment and R&D.
  • Building on our over £9 billion package of support to help households with £350 to address rising energy costs.

You can find out more here: Chancellor announces tax cuts to support families with cost of living - GOV.UK (www.gov.uk)

UPDATE: 10th December 2021

On a purely personal level, I understand concerns around energy costs for pensioners and the most at-risk individuals when it comes to fuel poverty. From my conversations in Westminster, I also understand this has been reflected by many, whether parliamentary colleagues or Ministers.

Global gas prices are high due to various factors, including an increase in demand following the end of lockdowns in various countries and in return economies reopening; a cold winter in the UK; high demand in Asia for liquified natural gas (LNG) transported globally by freight which has meant that far less LNG has reached Europe; and weather events in the US limiting supply to Europe. With reduced variety of supply globally and much higher than anticipated demand, high wholesale gas prices have subsequently driven an increase in wholesale power prices, with a few short-term markets trading at, or near, record levels. 

As a final note, customers may be able to reduce their energy bills by shopping around for a better deal. Changing energy provider has never been easier, either online or over the phone, with comparison sites providing useful information on the best deals. Almost 500,000 energy customers switched to a new supplier each month in 2020, according to Energy UK.

Useful links to help with energy bills this Winter:

Home Energy Improvements

As part of the Clean Growth Strategy to make as many homes as possible reach EPC Band C or above, there are grants and support available for home energy improvements such as cavity wall and loft insultation.

  • Find national and local energy grants here: Find energy grants and ways to save energy in your home - GOV.UK (www.gov.uk)
  • Hinckley and Rugby Building Society provides funding for customers to carry out green home improvements: Green mortgages | Hinckley & Rugby Building Society (hrbs.co.uk)
  • As part of the Smart Energy GB campaign, you can request a free Smart Meter from your energy supplier to measure and display how much gas/electricity is being used in the home, to reduce energy waste and save money.
  • Under the Government’s Energy Company Obligation, energy suppliers fund the installation of energy efficiency measures in households: Energy Company Obligation (ECO) - Support for improving your home | Ofgem
  • The Energy Company Obligation follows previous supplier obligations and was introduced in 2013. It obliges energy suppliers above a certain size to reduce home heating costs through the installation of energy efficiency and heating measures. The scheme, ECO4, is focused on households who are low income and vulnerable, or at risk of fuel poverty, living in inefficient Energy Performance Certificate Band D-G homes, with a greater focus on insulation, making greater improvements to the least energy efficient homes.
  • Which? guide to the Energy Companies Obligation:  Energy Company Obligation (ECO) - Which?

 

National Insurance

I note the Opposition held a debate recently regarding the National Insurance Contributions Increase and I believe it important to emphasise the words of the Chief Secretary of the Treasury;

“We are faced with a serious challenge on the cost of living. The Government entirely accept that and are working to address it, but we must address it in a smart and financially sustainable way. That is why, this financial year and next, we will provide over £20 billion to help the public with the cost of living.”

You can read the full debate here: National Insurance Contributions Increase - Hansard - UK Parliament

At the time of writing, I am minded that there are currently more than 6 million people waiting for elective care in England and more than 300,000 people are waiting longer than a year. Through my work as the MP for Bosworth, I am also reminded daily by constituents who are struggling for social care or suffering in pain due to the pressures on our local health services and the need for access to services, who are experiencing delays in medical treatment.  

I am therefore pleased the Government have set out a clear plan to tackle the backlog which was exasperated by the pandemic, but also the most pressing of issues including reform of social care.

The Health and Social Care Levy (HSCL), will be effectively introduced from April 2022 when NICs for working age employees, self-employed, and employers will increase by 1.25 percentage points. I have spoken with colleagues at the Treasury about the introduction of a HSCL, and I understand that they viewed this measure as a difficult but necessary one. The Levy will be legislatively separated from 2023 when NICs rates will return to 2021-22 levels. Dividend tax rates will also be increased by 1.25 percentage points to fund the Plan for Health and Social Care.

The decision to base the Levy on NICs was made with the view that every individual should contribute according to their means, and that the cost of improving the health and social care systems should be shared between individuals and businesses. For individuals, the Levy will be progressive. A typical basic rate taxpayer earning £24,100 will contribute £180 in 2022-23, while a typical higher rate taxpayer earning £67,100 will contribute £715. With the NICs system set up to fund social security, increasing contributions to invest in the NHS is not new. It is worth noting that France, Germany and Japan have all increased social security contributions to fund social care provision – the latter two with specific social care levies.

Governments have recognised the importance of tackling our social care issues for a long time, and with my background working in GPs and Hospitals, I am pleased this Government is taking action for reform to meet the demands that we are facing now, and in the future. You may be aware that I am a member of the Health and Social Care Committee and I signed up to a report called: MPs call for £7bn annual increase in social care funding as a starting point for reform – doing nothing ‘no longer an option’ - Committees - UK Parliament – with the latter ‘no longer doing nothing’ ringing true to me.

On as wider note, I am pleased the UK economy continues to build back quicker and stronger than previously forecasted, and it is encouraging to know that the economy grew above its pre-pandemic size for the first time in November 2021. Nonetheless, I believe it is now important to ensure the money raised from the NI contributions is spent wisely and appropriately. The public will rightly demand the backlog is dealt with and reform demonstrated accordingly. I will continue my discussions with our local NHS Leadership and with Ministers in Westminster, and probing in my role on the Health Select Committee.