Finance Bill

I thank the hon. Gentleman for making that point, which allows me to emphasise that certain households have their income linked to the cost of living—whether it be calculated by Rossi, RPI, CPI or whatever mechanism. As the cost of living goes up, those families are automatically given an increase in income. If that increase is greater than their increase in costs, they end up marginally better off. I am not saying that it is a massive amount of money, but the key is that the poorer households, as a result of the VAT increase, actually end up slightly better off. [Interruption.] They do. It is very simple. If the hon. Member for Glasgow Central (Anas Sarwar) wants to intervene again, I can explain it in far more detail. Every year, there is an uprating in benefits. It happens in April and it is calculated according to a cost of living increase, which includes VAT. There are arguments about what should be included in the cost of living calculation and whether it should include mortgages, as the RPI does, or it should not include them, as the CPI does not. The realistic situation is that every April there is an increase based on the cost of living. VAT is part of the cost of living, so the households depending on index-linked benefits end up with an increase in excess of their extra costs—it is a relatively small amount of money, but it does happen. I would like the Government to address one particular issue, about which I wrote to the Office for National Statistics. We need to be careful about households that include the disabled, through no fault of their own. Essentially, it is very difficult for them to work themselves out of poverty. I accept that some households use DLA to work, but that might be only 7% of the households receiving DLA. Those households could face, for example, substantial increases in energy costs, which would not be factored into the CPI in the same way as other things would. I ask the Government to track the overall effect of the cost of living for households on lower incomes. A typical one might be a household whose head suffers from a disability and cannot get out of poverty. I am concerned that we might encounter other changes over time that would not be picked up by RPI or CPI. Because we as a Government are concerned to protect people on lower incomes—we are doing so as part of this process; if we used only the RPI increase, the benefit to claimant households of the VAT increase would be only 0.6% as opposed to about 1%—it is important to assess the effect on them.