Brandon Lewis (Great Yarmouth) (Con):
Given that I represent one of the most deprived wards in the country, I find it ironic that I should be speaking in this Opposition
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debate. In fact, Nelson ward is in the bottom 1% in England, particularly when we look at the lower layer super output areas.
Great Yarmouth is a constituency that, like many coastal towns, suffered from many years of being forgotten and left at the end of the track by Labour. One of the phrases that people often use is that we were at the end of the line and that the last Government forgot about us for 13 years. One of the problems was that too many things were done in isolation—working in silos with pet projects or with specific, centrally led Government projects that did not have enough focus locally, so were never able to have enough impact on the general living standards of people in my constituency or other coastal towns.
Let me give a clear example. Some years ago, Great Yarmouth was given about £17 million, which had to be spent on improving the seafront. I have to say that our seafront now looks superb; the council have set it up brilliantly. It looks fabulous and I advise all hon. Members to visit and see the great improvement. I also advise them not to step too far back from the seafront into Nelson, Southtown or Cobholm; they would see the areas left behind as industry faltered through lack of support and the last Government drew jobs away from rural areas. That included Government public sector jobs; they closed HMRC and set up the programme that eventually led to the closure of our coastguard call centre.
We need a Government like this one, who see things far more holistically and do not focus on only one specific area. That is why I am so supportive of what the Government, across all Departments, have been doing. It can benefit constituents across our country—including, from my selfish point of view, Great Yarmouth.
Amber Rudd (Hastings and Rye) (Con): Did my hon. Friend experience what I did, in the similar coastal community of Hastings? During those Labour years, there was a dramatic fall in average income in comparison with the rest of the country. In Hastings, it fell by £100 a week per person during that period.
Brandon Lewis: My hon. Friend makes a very good point, and I shall give another example. The UK average of gross weekly earnings is about £500 per week or £26,100 a year. In Great Yarmouth, the figures are £420 and £21,900 respectively; in fact, 10% of our full-time workers have earnings of £250 a week or £13,000 a year. That is partly because we have seasonal employment, and nobody did enough to move the situation forward until this Government. What the Government have done in improving things for business is to open up better opportunities for people to earn, look after their families and raise their living standards.
In Great Yarmouth, in conjunction with Waveney constituency and Lowestoft, we now have an enterprise zone. The importance of an enterprise zone cannot be overestimated; it has been set out and led by business people in our area who know what they need to grow businesses and attract them into the area to create jobs. The jobs that we need are not seasonal, but those based on an industry in energy and engineering that has a long-term future. The renewable energy industry believes that there are contracts worth about £80 billion across our coastline, with oil and gas decommissioning and renewable energy. That business will bring jobs to our area.
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The enterprise zone, focused on areas designed and requested by local business and business leaders, is already attracting companies. The first company to go into an enterprise zone is likely to be in Great Yarmouth. ScottishPower and Vattenfall have already announced a memorandum of understanding that alone could create hundreds of jobs in one spot in my constituency. That is the kind of thing that will increase living standards. We need a more joined-up, holistic approach.
Education also needs to be part of the issue, to ensure that the skills are right. One of the complaints that I get from businesses, not just in my constituency but across industry, is that there is a shortage of people with the skills required by engineering companies and the energy industry. We need to make sure that we match that skill set to the job requirements of businesses.
Only a few weeks ago I met prime providers for the Work programme. One of them said to me that they were surprised that in certain parts of the country where they expected to have an issue in finding jobs, the problem is not finding jobs, but finding people who will apply for those jobs. In Great Yarmouth, we have third-generation, and in some cases fourth-generation, unemployment. Over the next few years, we need to change that culture—to change the programme so that people want to aspire to that first job. They should understand that that first step on the ladder is not the end of the story. They should not just stay on benefits.
A school pupil actually said to me that their ambition was to go on benefits, because their parents were doing nicely, thank you very much. That does not represent the majority of people, but we need to change that culture so that people look at that first opportunity and want to take the step on the ladder. That first job may not be the perfect one with the perfect salary, but it is the first step on the way to getting where people want to be and can be for themselves and their families. That is good for the entire community.
Justin Tomlinson (North Swindon) (Con): Does my hon. Friend agree that the welcome expansion of apprenticeship schemes is giving young people the opportunity not only to take that first step, but to learn applied, real-life skills that businesses in constituencies across the country are crying out for?
Brandon Lewis: My hon. Friend is right, and directs me perfectly to the point I was about to make, which is that apprenticeships are a hugely important part of raising living standards. In my constituency alone, the number of people taking up apprenticeships has increased by about 60%. Apprenticeships give opportunities for people to get real-time work experience and for companies to train people so that they have the skill set that readies them to take on work. One of the things the Government have done well and that we can do more of is highlight the value of apprenticeships, so that young people do not regard university as their only or primary option, but see apprenticeships and going straight into the workplace as a genuine, viable and valuable way to contribute to their own family as much as to society.
Angie Bray:
Does my hon. Friend agree also that the Government’s creation of the national citizen service scheme, which is giving 16-year-olds the chance to train together, work together and develop projects together,
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provides a sure-fire way for them to gain the self-esteem and the confidence they need to take them forward into the workplace?
Brandon Lewis: Absolutely, and I would add that we also need to look at how to get businesses growing faster and quicker to employ more people. Having more people working in the private sector is without doubt the best way to raise living standards both for them and for our country, because having more jobs reduces welfare costs. That is hugely important and it is why I was so pleased to hear the Chancellor’s announcement yesterday about fuel duty being frozen and not increased in January. That, combined with the work already done to get rid of the fuel duty escalator, will get prices, although high, lower than they would otherwise have been. That is important—
Sheila Gilmore: Will the hon. Gentleman give way?
Brandon Lewis: No, I will not give way again.
The fuel duty measures are important not only to commuters and consumers—parents trying to get their children to school and young people trying to go to work or get to job interviews—all of whom will be better off, but to firms in transport and logistics, which need to be able to invest more in their businesses, to grow them and to create more jobs.
The Government are also working to protect the elderly, who have given so much already. Making sure that they get their winter fuel allowance and the right protection for their pension, as was announced yesterday, means that we are doing all we can, in the circumstances we inherited from the previous Government, to provide for the people who need help the most.
To me, the key is to bring all that together—education and welfare reforms, and the work being done through the Treasury and BIS on taxation and apprenticeships—in an holistic approach. In that way, our country will be able to move forward and we will see the real improvement in living standards that we all want.
4.12 pm
David Miliband (South Shields) (Lab): This is a time of some gravity for our economy and our society. I shall address two aspects of today’s debate: first, the past 18 months and whether, if the Chancellor had made different decisions, we would be in a different position now; and secondly, the future—the prospects for growth and jobs for our constituents and, above all, whether we can avoid successive further downgrades, after the four that have already occurred, to the economic forecasts published since the general election.
The Prime Minister has introduced a bazooka test for the eurozone countries. My shorthand reading is that in Britain the bazooka marked “austerity” has been far too big and the bazooka marked “growth for the future” far too small. I shall explain that view in my speech today.
The Chancellor’s claim is very specific: that his plan of fiscal austerity is the best route to economic expansion. He uses four arguments to support his case. First, he says that the evidence of Canada in the 1990s shows
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that the seemingly impossible, a “contractionary expansion”, is proved possible by the Canadian experience. In fact, the Canadian squeeze took place at the same time as the Clinton boom in the United States—Canada’s primary export market. Yet the export of which the Prime Minister and the Chancellor are the most proud is the export of their austerity message to the rest of Europe—our primary trading partners. That was seen at the Busan summit, within a few weeks of this Government coming to office. In the process, they are killing the markets on which we depend.
Secondly, the Chancellor has said that private sector growth was previously crowded out by the public sector, but in his speech yesterday he accepted that Government needed to support private enterprise, including through fiscal policy, although admittedly using the off-balance-sheet tactics that he denounced so forcefully during the last Parliament. Retrenchment in the public sector is no guarantee of renaissance in the private sector.
Thirdly—this, I think, is particularly important—the Chancellor says that international markets have voted with their feet in buying UK gilts and driving down yields over the last 18 months. However, the biggest buyer of gilts in recent years has been not the international markets but the Bank of England. I will not dwell on the fact that the Chancellor denounced quantitative easing when he was shadow Chancellor, but he surely knows that for this financial year the Bank of England will have bought no less than 42% of gilt issuance. The Bank now owns more than 30% of the total gilt stock, compared with zero in 2008, while the proportion of international market ownership has barely changed. Interest rates are low in this country because of Bank purchasing policy, not because of Government fiscal policy.
Mrs Jenny Chapman (Darlington) (Lab): I am no expert, but is my right hon. Friend saying that the Chancellor’s economic plan is a catastrophic failure?
David Miliband: My hon. Friend has demonstrated that it is harder to make a short speech than a long one, but she has summed up very well in a few words what I am trying to say in rather more.
Fourthly, the Chancellor says that without austerity we would be in the same position as Greece, but the maturity of British bonds is closer to 14 years than to the 14 weeks or 14 days that seem to afflict the Greeks; much more of our borrowing is covered by domestic savings; and above all—unlike countries including Italy, which the Secretary of State mentioned—we have our monetary sovereignty. Far from the Government’s having instilled confidence and stirred entrepreneurial spirits for the future, confidence has dropped further and faster in Britain than anywhere else in the last 18 months, and had done so well before the euro crisis. Moreover, the level of confidence is lower than it was when the Government came to office.
Claire Perry:
It is so refreshing to hear a grown-up make a speech from the Opposition Benches. Does the right hon. Gentleman agree, however, that quantitative easing took place originally in 2009—so the money was effectively already in the Bank of England’s coffers at the time of the election—that since then interest rates in
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Britain have dropped by more than one percentage point, and that we are now borrowing money more cheaply than Germany?
David Miliband: The hon. Lady is right, in that the zero stock held by the Bank of England in 2007-08 meant that quantitative easing had not yet started. When it did start, the stock went up. However, as she will know, since the general election there have been three further rounds of quantitative easing, including the most recent injection of £75 billion. That does much to explain why, although yields have fallen, international market ownership of the stock has not changed. I hope that she will engage with the issue that I am raising in all seriousness, because it is a serious problem for the Government’s argument.
In respect of the future, I want to concentrate on an aspect of the debate that relates directly to the Secretary of State’s responsibilities: youth unemployment. Let me repeat something that I said on television last week, half of which the Prime Minister and the Chancellor have enjoyed quoting. The current Government did not invent the problem of youth unemployment, but my goodness, they have made it worse. That is the charge against them. As the Secretary of State will know, it is a fact that structural unemployment among 16 to 25-year-olds stubbornly refused to fall below 10% even in the good years, when the economy was cantering along, and it is true that unemployment rose in 2005-06.
Stephen Williams (Bristol West) (LD): Will the right hon. Gentleman give way?
David Miliband: No, let me make this point.
It is also true, however, that between the start of the Labour Government and the financial crisis, long-term unemployment fell by 78%. It fell again, by 38%, between January and December 2010, before the Government’s first Budget decisions were implemented. In January, 150 people aged 16 to 25 in my constituency were claiming jobseeker’s allowance for more than six months. Today the figure is 420, and the figure in the north-east has doubled to nearly 9,000. Youth unemployment across Britain is now at record levels. Severe long-term youth unemployment—the number of people who have been out of work for at least 12 months—stands at 260,000, up by over 100,000 in 18 months, and the number of NEETs, those not in employment, education or training, has risen to 1.2 million. The Secretary of State agrees with me that those figures are a disgrace for any Government or any country. The question is what we do about it. I hope that the Government will take the following points into consideration as they think about the roll-out of their work contract.
First, the Work programme is fine in good times, in a growing economy, but it is not enough to give people job interview preparation when not enough jobs are being created in the economy as a whole. Secondly, the wage subsidy that is being introduced is designed to help 53,000 of the 260,000 long-term youth unemployed. When in 1995 the then Chancellor of the Exchequer introduced a similar scheme, however, it helped 2,300 people. The Secretary of State needs to look at those figures and understand why. Thirdly, the growth in apprenticeships is welcome, but it has got to be for the under-25s. Finally, young people who need help with transport costs, disabled young people and young people with carers need extra help. He knows it as well as I do.
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It is bad enough to be young and stuck on the dole. It is double the agony to be promised a job and then find that you will not get it.
Let me finish with this thought. The Chancellor’s
“latest economic commentary shows just how out of his depth he is when it comes to important economic issues. Slashing spending now could push the economy back into recession and inflict further structural damage on the UK”.
Those are not my words, but those of the current Business Secretary in February 2010. How right he was. It is time for a change of course, and it is time for a change of course now.
4.21 pm
Stephen Williams (Bristol West) (LD): Yesterday, I think we all agreed when listening to the Chancellor’s statement that much of what he had to say was grim news indeed. It was worse than many of us had anticipated. The situation was certainly worse than the last Government declared when they were in office, or even predicted when they could choose their own predictions. It was also worse than the independent Office for Budget Responsibility forecast when this Government came to office.
We now know that finances will be difficult throughout this Parliament. There will be a squeeze on many people’s real incomes. Perhaps more importantly, in terms of confidence, there will be a suppression of hopes and expectations. I understand absolutely why many people are anxious, and I even understand why many people are right to be angry about the situation in which we find ourselves. They are also right to think that some people are indeed “out of touch”, as the motion puts it.
We have seen in many major cities around the world the Occupy people, who are protesting against capitalism. I do not agree with much of what they say; I am a free-market liberal, and I want capitalism to work. Those of us who believe in the functioning of the market economy, however—I think that this now unites the three main parties in this country—must address the concerns that many of our constituents feel about the failure of the market economy to deliver fairness in our society. Last week, the High Pay Commission referred to the “gross inequality” that has arisen in our society, most of which arose, of course, during the period of the last Labour Government. The average pay of someone in work is now £25,900, whereas the pay of a chief executive of a top 100 company has risen to £4.2 million —145 times average pay.
Mr Byrne: The hon. Gentleman is kind in giving way, and I am following his argument closely. I am not certain which measure of inequality he is looking at, but I am sure he would accept that the Gini coefficient, which is one of the most popular measures of inequality, was practically the same at the end of Labour’s term of office as at the beginning. I am sure he would also accept that, looking around the world, the UK was one of the only countries in the OECD—I think that Turkey and Ireland were the others—where inequality was held in check. It went through the roof everywhere else.
Stephen Williams:
We can trade statistics, but the right hon. Gentleman cannot deny what everyone is seeing and what all our constituents are saying to us. They are fed up that the people at the top of companies—
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Labour Members have referred to bankers, but it is not just the bankers; this also applies to others—seem to have got away with it, while people at the middle or bottom are being squeezed. I hope that the Government act on the High Pay Commission recommendations.
The Government are acting to safeguard the living standards of those at the bottom of the income scale.
Hugh Bayley: What would be the hon. Gentleman’s policy to reduce the incomes of those on high income, to reduce inequality?
Stephen Williams: I recommend that the hon. Gentleman looks at the High Pay Commission report, which is an excellent document containing many recommendations for controlling executive pay. I urge the Government seriously to consider many of those recommendations, including on the revolving door of non-executives on boards of companies effectively determining each other’s pay, where some of the most serious breaches occur.
On hard-working families, to which the motion refers, the Liberal Democrats’ No. 1 policy commitment at the last general election was that, in order to make work pay, we would raise out of income tax those on low earnings and those working part time by increasing the income tax threshold to £10,000 over the lifetime of the Parliament. Progress towards giving effect to that aspiration is being made throughout this Parliament. Let us contrast that with the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in 2007, when, just before becoming Prime Minister, he financed an income tax cut through a tax rise for the poorest in society. I remember watching Labour Members waving their Order Papers and cheering that income tax cut—
Steve Webb: They did not understand.
Stephen Williams: As my hon. Friend the Pensions Minister says, they did not understand that their own Chancellor was financing election populism on the backs of the poorest workers in society. Let us have fewer lectures from Labour Members on how to treat people on low pay in work.
Stephen Williams: I have taken two interventions. I will not take any more.
The Secretary of State for Work and Pensions referred to another reform that the coalition Government will introduce—universal credit—to sweep away the labyrinth of benefits and tax credits that are a legacy of the last Labour Government. In the autumn statement, the Chancellor confirmed that working-age benefits and benefits for disabled people would be increased by the full CPI rate of 5.2%, which puts into the pockets of the poorest in society extra cash that they will spend almost immediately in their local communities.
Sheila Gilmore: Will the hon. Gentleman give way?
Stephen Williams: I have taken two interventions.
There was pressure from certain quarters not to make that increase, but the coalition has done the right thing and stuck by its promises to the poorest people in society.
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On children, which the motion also covers, tax credits for children are being increased—given all the rhetoric, one would swear they were being cut—by the rate of inflation, 5.2%. In the long term, we want to transform the life chances of the poorest children in society, through the pupil premium and extra child care for two-year-olds announced in the autumn statement.
For young people, the Government are putting millions of pounds behind increasing apprenticeship places. The right hon. Member for South Shields (David Miliband) did not want to take my intervention on youth unemployment—
David Miliband indicated dissent.
Stephen Williams: He can shake his head and then he can deny that youth unemployment was 650,000 in 1997, and after one of the longest booms in Britain’s peacetime history the Labour Government left behind 930,000 young unemployed for this Government to deal with.
For pensioners, the autumn statement confirmed that the basic state pension will be increased by £5.30, the biggest cash increase in the history of the state pension. That increase comes about because of the triple lock that the coalition Government have put in place. Let us remember another policy choice that could have been made. In 2000, when the previous Government were in office and when earnings rose by 4.4%, the CPI was 1.2% and inflation was 1.1%, which measure did the previous Labour Government choose? They chose the lowest, producing a 75p pension rise. That was at a time when the budget was in surplus and we were in the middle of a boom. In these difficult times, the Government have done the right thing by pensioners as well. No wonder that pensioners were left out of the motion that has been tabled today.
The motion mentions a squeeze, but the biggest squeeze that could be inflicted on citizens in our country—the 29 million people in work—would be on their mortgage payments, their debt interest payments, and the loans of the businesses that employ them, if the international markets were to lose confidence in this country.
The motion says that the government are “out of touch”. There is some cheek, some chutzpah, at the heart of a motion worded in that way by a party formerly led by Tony Blair, alongside whom the architect of new Labour, Peter Mandelson, said that he was “intensely relaxed” about people becoming filthy rich. If the shadow Secretary of State wants to see who is out of touch, I suggest that he and his colleagues look in the mirror, because it is they who are out of touch with reality.
Mr Deputy Speaker (Mr Nigel Evans): Order. In order to fit in more Back-Bench contributions the time limit is being reduced to five minutes, and it is likely to be reduced further because of the number of interventions being made.
4.25 pm
Teresa Pearce (Erith and Thamesmead) (Lab):
I spent this morning talking about living standards with mothers in my constituency, who are losing a day’s pay today to stand with other public sector workers fighting for a decent pension. They told me that they had not taken
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strike action lightly or easily, and had never been on strike before. Many of them are low paid; they are all women. They told me that under the Government’s proposals for public sector pensions, when they retired they would receive only just enough to keep them above the threshold for means-tested benefits.
The Government like to encourage the myth that pensions in the public sector are gold-plated; they are anything but. The average pension in local government is £3,800 a year, and for women it is even lower—£2,800 a year. More than half of all women pensioners who have worked in the national health service receive a pension of less than £3,500 a year. Nobody in society benefits when pensioners are in poverty, and if people are reliant on state benefits in retirement, that costs the taxpayer more in the long run.
Although in my lifetime we have seen progress in terms of a fairer deal for women, it is undeniable that the women now reaching pension age are still at a disadvantage because of the decades for which women’s pay was lower. The Government talk the talk about a fairer deal for women, but I do not believe that they walk the walk. Many of us who campaigned alongside thousands of women born in 1954 will remember that the coalition had to be dragged kicking and screaming to make concessions to those women.
Under this Government the pay gap between rich and poor has been widening, and last week the Office for National Statistics figures showed that for the worst-paid jobs, the jobs traditionally held by women—the hairdressers, the dinner ladies and the waiters—pay has fallen sharply in real terms.
Lilian Greenwood (Nottingham South) (Lab): Will not those very women that my hon. Friend is talking about—the dinner ladies and the classroom assistants—be further hit by two years of a pay freeze, followed by years to come in which they will get wage increases of just 1%, if their jobs stay in the public sector and are not privatised?
Teresa Pearce: I totally agree with my hon. Friend. There is wage stagnation at the bottom of the income ladder. People are seeing their pay frozen at the same time as they face higher food, fuel and energy costs. There is a quiet crisis going on behind the front doors of the homes in my constituency, where families are struggling week in, week out to make ends meet. Their financial affairs can be thrown into total crisis by even the smallest unexpected bill.
Today, therefore, I want to talk about how the Government have decided what side they are on. They have driven on with that course, no matter what. It has to be said that we in this House are the privileged few, and surely the moral duty of those with privilege is to defend those who have little or no power. But that is not what I have witnessed since I came here in May 2010. What I have seen is a systematic, focused political attack by the Government on the poor, the weak and the voiceless.
In the May 2010 emergency Budget child benefit was frozen, housing benefit was capped, the health in pregnancy grant was abolished, and Sure Start grant was restricted to the first child. The Library said that 72% of those cuts fell on women. In October 2010 the same thing happened: more cuts—cuts to local government, cuts to
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Departments whose work affects women, and nearly half a million jobs cut from the public sector. When it comes to cuts, it seems to me that it is “women and children first”.
That leads me on to yesterday’s announcement. In June 2010 the Chancellor announced plans to increase child tax credits above inflation as a measure to prevent rises in child poverty. The spending review in October reaffirmed that pledge. Yesterday the autumn statement said that that decision would be reversed. The Daily Telegraph said today that the Treasury admitted that the cuts in tax credit would “theoretically” push 100,000 children into poverty. Let me tell the House that the child poverty in my constituency is not theoretical. It is heartbreakingly, grindingly real. So why do the coalition Government think that it is fair, or morally right, to hit hardest those who have the least?
It is not just me who thinks this way. The Children’s Society has said that it is “deeply concerned” that the Chancellor
“has decided to compound the hardship felt by low-income families.”
“Children in low-income families need to be protected from rising living costs. Instead, the Chancellor has condemned thousands of low-income families to a winter of discontent, with many more to come.”
The Working Families charity has said that
“today’s measure will lead to higher levels of in-work poverty, or to more parents being priced out of work.”
Anna Soubry (Broxtowe) (Con): Is the hon. Lady really saying that child poverty has only existed in her constituency for the past 18 months, and that it did not exist in the 13 years when her party was in power?
Teresa Pearce: What I am saying is that child poverty in my constituency will increase as a result of this Government’s plans.
Inequality is often most obvious in the context of housing. Every week my postbag is full of letters from families who are living in overcrowded, shoddy, private-rented flats, and whose dream of a decent home seems to drift further away every month. I would welcome any initiative that helps to remedy that, but, sadly, I do not think that the measures announced by the Government, such as underwriting mortgages for families to buy new-build homes, will help families in Erith and Thamesmead.
The indemnity scheme involves taking a lot of risk on to the public-sector balance sheet. That is bad for taxpayers and could be worse for those who take up the scheme. The scheme applies only to new build, and it is widely acknowledged that new build is often marketed at a premium above market value of about 2% or 3%, so a 95% mortgage will, in effect, be close to a 100% mortgage, and if house prices fall buyers will face negative equity and the taxpayer will have to cover any losses. A better way to help families and first-time buyers is through extending stamp duty relief.
Time and again, therefore, the Government show whose side they are on: they cut corporation tax while increasing VAT; they cut housing benefit rather than tackle the unscrupulous landlords who are profiteering from housing benefit while their tenants live in substandard
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properties. As for the Chancellor, it is clear that not one of his post-election assertions has turned out to be correct: inflation is up; growth has stalled; the eurozone has crashed; the structural deficit is bigger than previously thought; and unemployment continues to rise month on month as the private sector fails to take up the public sector slack, although the Chancellor was certain that it would do so. It appears, too, that everybody else is to blame. The Chancellor has blamed the royal wedding, the weather, civil servants, Brussels, employment tribunals, trade unions, banks, bank holidays, people living longer, energy prices and, of course, the Opposition. We have a Chancellor who wants the power but not the responsibility, and I fully expect him to say at the next Budget, “It’s not my fault—”
Mr Deputy Speaker (Mr Nigel Evans): Order. Time is up. I call Guto Bebb.
4.37 pm
Guto Bebb (Aberconwy) (Con): I am pleased to follow the hon. Member for Erith and Thamesmead (Teresa Pearce) because it is important that we challenge some of the myths we have just heard. Before I was elected as Member for Aberconwy, I remember going out in the constituency with the police, and we came across people who were living rough. That was before this coalition Government came to power. From listening to Labour Members, however, one would think that poverty did not exist until May 2010. Their rewriting of history is completely unacceptable.
Mr Byrne: Is the hon. Gentleman as concerned as I am about the Institute for Fiscal Studies estimate that a further 600,000 children will be plunged into absolute poverty over the course of this Parliament, and is he worried about the Treasury’s own analysis published yesterday showing that 100,000 children may fall into child poverty over the next year or two?
Guto Bebb: There is not a single Member of this House who will not be concerned about the fact that there are people who are facing real difficulties, but this Government are trying to make sure we tackle the real poverty we have in this country. In Wales, for example, in many instances what we have is a poverty of ambition, which was fostered by 13 years of Labour Government. For 13 years the economic performance of Wales was worse than that of the rest of the United Kingdom. For 13 years, Labour Members happily threw money at an issue in order to salve their consciences—they threw money at the issue and felt they could then forget the communities that I am proud to represent.
I am part of a coalition Government who are aiming to ensure that if people are willing to work and take part in this economy, they will be better off by doing so. The Government are tackling a long-term problem with long-term solutions. It is unacceptable that the Labour party is attacking a Government who are willing to have a long-term strategy by trying to make short-term points about the past 18 months. This Government are brave enough to look not to the next electoral cycle but to the future.
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I was astounded when I read the motion, which refers to the need to look after hard-pressed families. It does not read very well if one is a Welsh MP, because the Labour Assembly Government have completely forgotten about hard-pressed families. What has happened with the council tax in Wales, compared with that in England? The Westminster Government have made money available to allow council tax to be frozen, but the Labour Administration in Wales have decided that supporting hard-working families is not a priority. Some Labour Members have said to me, “The council tax saving is £12 a month. What’s £12 a month?” For people in my constituency, where the average wage is £23,000 a year, £12 a month is a lot.
Mr Byrne: The hon. Gentleman is making his argument with passion and force, as he always does. He will be worried, I am sure, that the cuts made over the past 18 months mean that in his constituency 700 families are losing help with child care, and the tax credits of nearly 6,000 people are being cut. He must surely accept that that is contributing to the squeeze his constituents are feeling.
Guto Bebb: Indeed. The problem is that the Labour party believes that the Government should be responsible for ensuring that families have money in their back pockets. I believe that my constituents want to take that responsibility for themselves. Hon. Members should be proud of the fact that this Government are trying to ensure that those who work are better off. My constituents will be able to keep more of their earnings because we are moving to higher personal allowance rates, and I welcome that.
Guto Bebb: I have already taken two interventions.
It is disingenuous of Labour Members to say that they are concerned about the incomes of hard-working families when the Labour party in Wales is unwilling to pass on council tax savings that would be appreciated by people in my constituency and across Wales. They have the cheek to say that the VAT increase implemented by the Government—made necessary by the financial situation that the previous Government left—should be reversed without explaining where the money will come from. Even more bizarre, Labour spokespeople explain in the media that the VAT reduction they propose would save the average family £450. I have no idea where that figure comes from. Such a saving would mean that an average family had £18,000 of disposable income to spend on “VAT-able” goods. I will not come across a family in my constituency with £18,000 of disposable income, let alone one with £18,000 of disposable income to spend on “VAT-able” goods and services.
The inflation figures show that families are being squeezed by increasing food prices. What should the Government do about such increases? Food is subject to VAT at 0%. As a result of high street competition, the prices of goods and services subject to VAT are going down.
We must be honest in this debate. In very difficult circumstances, the Government have attempted to look after the weakest in society. I was proud of the fact that yesterday, despite the changes to the Government’s
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finances, the triple-lock guarantee on pensions was kept. Average ages in my constituency are the highest among constituencies in Wales, and the Government’s decision will go down very well, compared with the previous Government’s 75p insult to pensioners. We should also be proud of the fact that we are increasing child credits by £390.
More crucial is the fact that, unlike the previous Government, this Government recognise the real threat to family incomes—the increase in fuel prices. I welcome the fact that the Chancellor listened and that, in extremely difficult circumstances, the previous Administration’s proposed 3p increase in fuel duty, scheduled for January, is to be postponed. Fuel prices are high—again, owing to circumstances beyond the control of the Government—but time and again the Government have listened. We had the 1p reduction, and the 5p increase was cancelled.
Albert Owen (Ynys Môn) (Lab): And the VAT rise?
Guto Bebb: The VAT rise is a fair point. That is possibly 2p, but we have seen duty frozen—11p, in effect, off the price, and frozen for 19 months. When the previous Administration were in power, we saw fuel duty increase by 20p and I did not see any Labour Members express any concern for those living in a rural area such as mine, where people have to travel 20 miles to get to the supermarket. This Government listen. They listen to the concerns of the elderly and of people in rural communities.
Nia Griffith (Llanelli) (Lab): Will the hon. Gentleman give way?
Guto Bebb: I have already taken two interventions.
More importantly, this Government know that the way out of the situation that we inherited is to champion self-reliance and enterprise, and to say to people in Wales, “Back in the 1980s we were creating more businesses than any other part of the United Kingdom. We had more new VAT-registered businesses than any other part of the United Kingdom.” I have confidence in the people of Wales. Unfortunately, the past 13 years have been wasted, but with this coalition Government, we will see change and we will see growth.
4.45 pm
Ms Margaret Ritchie (South Down) (SDLP): I support the motion before the House and I want to bring to the debate the perspective of a rural constituency in Northern Ireland.
There is irrefutable evidence that families, young people, the elderly, low to middle income earners and those in receipt of benefits have all found themselves squeezed, have less money to provide for essentials for daily living, and justifiably feel that they have been unfairly treated by the coalition Government. They also feel that the Government have removed the sense of fairness and equity from their vocabulary.
Proposed punitive regulations and legislation surrounding welfare reform will make the situation worse, making it more difficult for people to access benefits. At the same time they will be unable to obtain jobs. Although the concept is laudable, the jobs are not there because of the economic recession. The spectre of emigration therefore
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looms again, this time to Australia and New Zealand, and many small rural communities have found that young people who should be making a contribution to the economy through self-help, through the private sector or through the public sector, have simply gone away.
Added to this, the increases in fuel prices are leading to deepening fuel poverty, and the rising cost of motor insurance, particularly in Northern Ireland where it is more acute, prevent many young people from making themselves available to work where a requirement to drive is a pre-requisite on the job application. Levels of youth unemployment have risen, so child poverty has deepened. Levels of deprivation and disadvantage have deepened. We must not let the Government condemn us. We believe in self-help and in collaboration, and we have done that. We have developed our assets to their full potential but still that has not been enough because of the Government policies, which have been an onslaught on our rural economy, particularly in areas such as Northern Ireland where deprivation is at its most acute.
Against that background, we had the Government’s autumn statement yesterday. Although parts of it may be welcome, there are areas that require clarification. They centre on the cap on public sector pay, the rise in state pension age that goes with it, and the need for spending commitments to be fully subject to the Barnett consequentials. There is no doubt that in the face of the mounting economic recession, the 1% cap on public sector pay, following on from the current freeze, is derisory and unacceptable. It will prove highly controversial in a place like Northern Ireland, particularly in the light of today’s strikes.
Nia Griffith: Does the hon. Lady agree that not only will the cutting back on public sector jobs affect young people’s opportunities, but the 3% tax—the £2.8 billion that the Government hope to raise from the increase in pension contributions—will suck money out of the economy across the UK and drive families into poverty?
Ms Ritchie: I do agree. In fact, we were the only party in the Northern Ireland Executive that voted against the hike in pensions, which we found totally unacceptable because it will impact on the most vulnerable in our society.
We would also like to know what the Barnett consequentials for the devolved Administrations will be in relation to the announcements in the autumn statement of the £16 billion youth contract and the £400 million for house construction projects.
I and my party colleagues support this motion because it clearly highlights the deepening problem of poverty right across Northern Ireland and because we support our colleagues in the Labour party in Britain.
4.49 pm
Mr Robert Syms (Poole) (Con):
At the end of the Labour period in office, when the first financial storms hit us in 2007, it was clear that the country was, at that point, living beyond its means. It had a deficit of about 3% of GDP, while at the same time the Germans had a surplus. Then we hit all the problems of the banking collapse. The hon. Member for York Central (Hugh
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Bayley) was right: thank God Britain had a low debt level of gross domestic product because that allowed the Government—
Hugh Bayley: Reduced by Labour.
Mr Syms: Yes, partly because of that. Traditionally in Britain it has been about 40%, so that gave the Government some room for manoeuvre. Any Government in office would have had a large increase in its deficit given what hit them in 2007 and 2008. There is no great argument about that and, as someone sitting on the other side of the Chamber, I think that many of the things that the right hon. Member for Edinburgh South West (Mr Darling) did were beneficial in trying to maintain a fragile economic situation.
Having said that, we cannot continue to increase debt year on year at the rate we were in 2009, 2010 and 2011 or we will overwhelm the British economy. The worst thing for our constituents is not paying tax; it is paying tax to pay interest on money being borrowed from someone else. The Government had to make a judgment, and their judgment was to set out an economic policy gradually to reduce our debt over five to seven years to a level that, once it tops off in 2016-17, can then start to be brought back to the level of more normal years, which is about 40% of GDP. In an environment in which the world was growing rapidly, that would be easier. In an environment in which the eurozone is blowing up, and there are high fuel and food prices, it becomes much more difficult. That is part of the problem for the Government in the short term. It is events—it is what is happening around the world.
There is nothing surprising about where the Government are. Sticking with the policy is perfectly sensible, but things do not go in a straight line in economics, and there will be OBR forecasts and Budgets where the figures for debt increase, and some where they decrease. It will depend to some extent on world events.
Richard Fuller (Bedford) (Con): My hon. Friend is talking about debt levels. Was not one of the issues under the Labour Government the integrity of the public finances? Their estimates of public sector debt did not include the private finance initiative, which was a grossly exaggerated amount of public benefit, and they did not include the burgeoning increase in public sector pension claims on the economy. Does my hon. Friend agree that another aspect of debt in which the Labour Government’s policies were embedded was increasing the costs that people had to pay for their housing through the ever-increasing impression that housing wealth was real wealth? That has had a real impact on people’s well-being and living standards today.
Mr Syms: Clearly, and another problem in the British economy is that there is a lot of private sector borrowing. We have a high level of indebtedness, both of government and of the private sector. In Italy, they save rather more than we do, and as a country we should try to encourage more of our citizens to save and not live on the never-never in the long term.
I support what the Chancellor did in the autumn statement. We are clearly in choppy weather, but that is no reason to change course. We cannot adjust the budget down or raise taxation painlessly. The living
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standards of most of the population will be squeezed. As the IFS and other organisations have said, living standards have fallen by about 7% over the past two to three years. The good news is that next year the projection is for things to be fairly flat, with some modest recovery after that. It may well be that when we get to 2015—the general election year—we have lower living standards than in 2010 as a consequence of the fact that we have inherited a major deficit, very difficult problems and a pretty rotten international environment. That is no reason for going off course, but it is a reason for sticking to a very sensible policy. Labour Members may think that we cannot do things without breaking eggs, but that is not so. We have to raise the tax burden and reduce spending, and I am afraid that that has consequences.
Toby Perkins (Chesterfield) (Lab): The hon. Gentleman said at the beginning that this would have happened under any Government. I congratulate him on his frankness, but the Chancellor is in complete denial about that—he wants to disown the fact that in 2007 and 2008 his policy was to follow Labour’s spending plans. The hon. Gentleman is right and his Chancellor is wrong, and I hope that he will try to get him to be a little more frank in future. No one disagrees about the need to reduce the deficit, but we are cutting more and more and yet the debt is going up way beyond what was predicted because the policy is not working.
Mr Syms: We have been in office for only 18 months. It will take six, seven or eight years to stabilise the debt and probably several more to start reducing debt as a proportion of GDP.
I have said some complimentary things about the right hon. Member for Edinburgh South West. I rather suspect that had Labour won the general election in 2010 and Labour Members were sitting on the Treasury Bench, they would have a policy not dissimilar from that of the current Government. The seriousness of the problem is demonstrated by the fact that we are acting as a coalition Government. For all my political life, we fought the Liberal Democrats like ferrets in a sack, yet we have managed to find some degree of agreement because of the scale of the economic problems that we face.
The Government’s policy is sensible and measured in trying to do things gradually. That means that it will take a long time to implement, but we will ultimately get to a point where we have managed to reduce debt and get the economy into a much better state. In the short term, as I say, it is going to hurt, but I am afraid that that is a consequence of where we are. I see no other way around that. Tough decisions are necessary. I am glad that the Government—Conservative Ministers and even Liberal Democrat Ministers, to my surprise—have taken some pretty tough decisions. They are doing so for the national interest and for the interests of our children and our grandchildren.
4.57 pm
Robert Flello (Stoke-on-Trent South) (Lab): The hon. Member for Poole (Mr Syms) almost had me agreeing with some of his speech, certainly in its early moments, but I am afraid that he blew it at the end when he talked about the Chancellor being sensible and then praised the Liberal Democrats—neither of the main parties in this House should stoop to such a level.
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We have heard the phrase, “We’re all in this together”, many times over the past 18 months. I wonder how the 11,600 families in my constituency who will see their tax credits cut by an average of £680 per annum—on top of the three-year child benefit freeze and all the other cuts that they have seen—will feel about our all being in this together. I think they will be sitting there thinking that we are certainly not all in it together. Around the country, 100,000 more children will be in poverty as a result of this Government’s plans, proposals and policies. Will they think that we are all in it together? I somehow do not think they will. The number of young people in my constituency who are aged between 18 and 24 and have been claiming jobseeker’s allowance for six months or more has increased by 154%. That is a huge increase in the number of young people who find themselves in the position of not having any work. They will not think that we are all in this together, and rightly so, because we are not.
The Minister sneered a few times when the issue of bankers came up. The Government are keen, with their coalition pals, to talk about how hard they have been on the bankers with their levy. They always seem to forget that they offset the hit of the levy with the corporation tax cut and other giveaways to the bankers. The bankers are not sitting there saying “We’ve been really hard hit by this; we’re all in this together”—of course they are not. They are quite happy because on the face of it, they have had this big levy, but the reality is that that is diminished by the corporation tax changes and other benefits.
The pay of FTSE 100 directors has risen by 49% but my constituents can only dream of a 4.9% increase in income. Are we all in this together? I do not think that we are. A pattern is developing. The wealthiest, the bankers and the FTSE 100 all seem to do nicely as against the children and the poorest. The three poorest deciles are being hit three times as hard as the top decile.
Robert Flello: The Minister shakes his head, but I am afraid that the figures do not support his position.
The Opposition are wrong to say that the Government’s policies are hurting, not working, because they are not hurting but murdering our communities. They are so punitive that they are destroying our communities. We are not all in this together by any stretch of the imagination. We heard earlier about a list of areas that were among the most vulnerable to the impact of the cuts. Stoke-on-Trent was high up on that list but the Government’s policies actively take money away from places like Stoke-on-Trent to help all-in-it-together places like Kensington and Chelsea or Westminster, which obviously need the money far more than do the people of Stoke-on-Trent.
Then there is this nonsense, this con––let us get it out on the table––of the freeze on council tax. I am sorry but this 2.5% increase in council tax, which is what this nonsense would amount to––
Sheila Gilmore: Does my hon. Friend know that in Scotland we have had five years of the council tax freeze? For some of the poorest people in the community, it has in effect put up things like charges for home care because the freeze pushes the costs out elsewhere.
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Robert Flello: My hon. Friend makes a sound point, to which I was just coming. Because of the large number of band A properties in Stoke-on-Trent, the tax take is relatively low. Just taking the 2.5% increase instead of the much larger imposition that would be needed to go some way to not having to make the £24 million or so of cuts this year on top of the £36 million or so last year, means that the council will probably be unable to afford not to raise the price of things like respite care or day care centres. The council could not take the 2.5% pay-off to do that but would have to raise council tax by more to get some way to avoiding that.
Day care centres are under threat. There is talk of closing such things in Fenton and in Burslem in the constituency of my hon. Friend the Member for Stoke-on-Trent, North (Joan Walley). These cuts across the board are again hitting the poorest and most vulnerable people in our society who live in Stoke-on-Trent.
I have a long list of things, but in the time I have left, I want to mention something that the Chancellor announced yesterday in respect of what on the face of it appears to be help for energy-intensive users. Stoke-on-Trent has many energy-intensive users in the ceramic industry. As Dr Laura Cohen of the British Ceramic Confederation has said, the thresholds have been set so high and the proposals have been done in such a way that they will not help ceramic producers in Stoke-on-Trent, many of whom have contacted the confederation to say that it is an empty gesture that will not assist them. That is the sort of thing that Government policies are doing. They are hammering communities such as Stoke-on-Trent and, frankly, that is outrageous.
5.3 pm
Charlie Elphicke (Dover) (Con): I want to talk particularly about the importance of getting the country going in order to raise living standards. I pressed the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) on what Labour’s growth plan was and how much it would cost. I will happily accept any intervention from Opposition Members on this, but it seems to me that it would cost billions. How would it be funded? It is clear that it would be funded by debt––more borrowing.
We have narrowly avoided suffering from the debt storm throughout Europe, but were we to give way on the fiscal rectitude that we have shown and to go to the markets and borrow to fund Labour’s extravagant growth plan, we would be at risk of higher interest rates. Let us bear in mind that every one percentage point increase in interest rates means another £1,000 on the average mortgage.
Painful though the programme to cut overspending has been for so many people throughout the country, the most important achievement—the most important tax cut, if we like—has been the reduction in the cost of borrowing. It has helped so many hard-pressed families, including those in my constituency, to muddle through the recession as best they can, in a situation in which global inflation from imported goods, such as petrol and so on, has been higher and has put pressure on living standards, as every constituency MP understands all too well.
These are very difficult times not just for my constituents in Dover and Deal, but for everyone in the country who finds themselves without a large pay rise at work and
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facing rising global food prices. It has been a very difficult year, as the OBR makes clear. This year, average inflation has been 4.5%, yet average earnings have not kept pace. It has been difficult, and it has been a squeeze, but world prices, including in commodities and food, are something over which no Government have any great control. I, like my hon. Friend the Member for Poole (Mr Syms), have not heard from the Opposition any clear plan for what they would do differently to deal with the situation, but it does get better next year as those things work their way through the system.
Lorely Burt (Solihull) (LD): My hon. Friend paints a picture of the difficulties that families throughout the country face, and I fully understand the points that he makes. Will he speculate on how much worse the situation would be if, having entered government with a warning on our triple A credit rating, we had not taken those necessary steps? We would be in the same situation as Italy or even Greece. How many more families would be out of work, and how much smaller would be the amount of money to go round?
Charlie Elphicke: I thank my hon. Friend for that powerful intervention, and she is absolutely right. The point has been made that, when we entered office, we had similar interest rates to Italy, but its rate is now up at about 8% and we are basically parallel with German borrowing. If we were turned by the Opposition into—dare I say it?—an Italian job, we would find that interest rates shot up for the average home owner and small business borrower, and that we faced serious difficulties and serious economic decline. In fact, we are not in recession and we are still growing.
Caroline Nokes (Romsey and Southampton North) (Con): On my hon. Friend’s point about the real difficulties that we would face if our interest rates were the same as those in Italy or Greece, does he agree that the 25,000 home owners in my constituency would face real hardship, real misery, and possibly repossession?
Charlie Elphicke: I could not agree more. If we had pursued such a plan, we would now be in recession, and the fact that we are not in that situation and do not plan to be is a testament to how well the Chancellor has managed the economy since the election, and to how well the coalition Government have done in taking the tough and necessary decisions to steer the right and careful course.
The situation is, of course, difficult for our young people. All Government Members feel painfully how difficult it has been with youth unemployment, and it would be a lie to say otherwise, but we have taken action: we have had an apprenticeship revolution, which has done so much; we have seen the new youth contract, which is going to make such a big difference; and, although we know that the trend had been rising for some time, we now need to reduce it and to turn the oil tanker around. I am confident that this Government are absolutely determined to do that.
Andrew Jones (Harrogate and Knaresborough) (Con):
When the Labour party left government, it left huge debts, and the cost of paying just the interest is running
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at about £44 billion a year. That works out at about £1,800 per household in taxation—just to pay the interest on Labour’s debts. Does my hon. Friend agree that that is having a huge impact on the spending power of families and is one reason why they feel under real pressure?
Charlie Elphicke: I absolutely agree. The saviour has been the low interest rates, which have meant that they are less squeezed than they would have been had Labour been in power.
Hugh Bayley: Will the hon. Gentleman give way?
Charlie Elphicke: No, because I have taken three interventions, which is more than generous.
Finally, it is not the job of Government to create jobs. Jobs, wealth and prosperity are created by business. A Government who want higher living standards and economic growth are a Government who will back business to the hilt and ensure that it has a stable environment in which jobs can be created. I welcome the enterprise zones that have been created, the incentives for business to grow and create job opportunities and the measures to help business announced by the Chancellor in the autumn statement. I welcome all the reductions in corporation tax, the cut in the small companies rate, the extension of loan guarantees, the simplification of health and safety laws, the investment in science and apprenticeships and the promotion of exports through major trade missions. That is what we should be doing. We need an activist Government who are concerned with active growth and making this country this great again after 13 years in which Labour took us back to the edge of bankruptcy, just as it did in the 1970s. We want to take this country forward to better growth and living standards and better prosperity and business success across the world.
5.11 pm
Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I draw attention to my registered interests. I was interested to hear the comments of the hon. Member for Dover (Charlie Elphicke). All I can say is that it would be nice to see some of the growth he talks about, but he must be aware that it is proving stubbornly resistant to the policies the Government have adopted.
I intend to focus my remarks on the housing market and associated benefits, which the Minister will be familiar with as his Department is responsible for them. I will do so for three reasons. First, the availability and affordability of housing is critical to people’s living standards. Secondly, housing and construction have a huge contribution to make to employment and the country’s economic performance, and currently they are underperforming. Thirdly, the Government’s policies in this sector provide in microcosm a rather telling illustration of incoherence, which is why their policies, not just in housing, but across the whole economy, are doomed to failure.
Like the wider economy, the housing market is in a fragile and parlous state. The recovery that was under way in the early months of 2010 has been halted in its tracks, output has plummeted and net additions to the housing stock in the latest 12 months are just 121,000, the lowest ever recorded and only half the level required
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to meet estimated need. New housing starts are even worse. In the latest 12 months new starts fell below 100,000 to just 96,000.
The Government have responded with some measures. The mortgage indemnity scheme announced in the autumn statement addresses one of the factors that are currently inhibiting the market: the availability of mortgage finance to people who cannot raise substantial deposits. I welcome that, with some reservations, but it does not address the other factors discouraging market recovery, particularly the wider economy; the fear of unemployment, which clearly inhibits people from taking the risk of purchasing a new house; and the considerable problems of uncertainty in the planning system, which are the product of the Government’s ill-considered meddling in planning rules. The scheme does not provide the rapid response that is urgently needed, because we do not yet know the full details, how lenders will respond or, critically, what interest rates are likely to apply on mortgages given with the indemnity. If they are high, that will largely undermine the potential benefit, thereby reducing potential take-up. We do not yet know when the scheme will come into operation. We think that it will be in the spring, but that is almost six months away and in the meantime the market is seriously underperforming.
The position in the rented sector is even bleaker. The Government have made huge cuts to the Homes and Communities Agency budget for investment in housing, essentially stopping social housing investment. There has been an overall cut of 60% in investment and in the latest six months only 454 new social and affordable homes were started in England. That is a measure of just what a desperate state the affordable housing market is in.
The Government’s new policy is based on the Orwellian concept of affordable rents. The previous Government’s policy of target rents was based on a formula that took account of earnings, so it generally delivered rents that were affordable to people on low incomes. The new affordable rents, however, are related to market rents, and the concept is 80% of market rent. In areas of high values, such as London and the south-east, that is a recipe for huge rent increases, and in some cases a doubling of rent levels.
The interesting question, to which I hope the Minister will give some thought, is how people on low incomes will meet those vast rent increases. Either they will go elsewhere, and probably the only option is the private rented sector, where rents will be even higher because, by definition, they will be market rents, or they will be dependent on housing benefit. Back in the 1980s and 1990s, the then Conservative Government talked about housing benefit being the solution to coping with higher rents. The problem now is that we have a Department for Work and Pensions that is hellbent on cutting housing benefit at the same time as the Department for Communities and Local Government is making people more dependent on it. That is inherently contradictory, and simply cannot work. It will result either in increased poverty, homelessness and deprivation, or in a huge increase in the housing benefit bill, which will no doubt spark further calls for it to be reduced. The policy is incoherent, and cannot deliver the new homes that are needed. It threatens serious social consequences, and I hope that the Government will reconsider.
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5.16 pm
Anna Soubry (Broxtowe) (Con): I would like to open my remarks by trying to find some consensus in this place. What do we, as parents, all want and hope for our children? I think that each and every one of us agrees that we hope to pass on to our children stuff that is better than we have had as we have lived our lives. For example, we want our children to have a better education than we had, a higher quality and standard of living, and perhaps a happier and more fulfilled life. Essentially, we want them to have more and better things than we have enjoyed. We do not want our children to have to bear the burden of debt from a previous generation—a debt and a deficit in which they played no part. I certainly do not want that for my children, who are 20 and 21. It is not right, and it is not fair that they and the rest of their generation, and arguably the generation that will come from them, should bear the burden of the debt and deficit that my generation—the generation in this House—has ratcheted up, particularly as a consequence of the policies adopted by the last Government.
It is breathtaking to sit in this debate listening to the Opposition. It is as though the last 13 years of their Government did not exist. It is as though they were not here, and as though some of them have landed from planet Zog. They talk about things that bear no resemblance to the reality of the policies that they pursued, and the consequences that we are now living with.
It would be ridiculous to try to argue that it is all the fault of the last Government. We know—others have spoken more eloquently and with greater knowledge than me—about the external factors and forces, but at the heart of this nation’s problem is our deficit. One does not have to be a woman or to run a family budget to know that the matter is simple. One works out how much money is coming in, and how much is going out, and tries to ensure that one spends only as much as is coming in. Someone who gets it wrong and spends more than is coming in runs up debt.
Lilian Greenwood: Will the hon. Lady give way?
Anna Soubry: I am more than happy to give way in a moment to the hon. Lady whose constituency is next to mine in Nottingham.
What people do not do—they recognise this if they are responsible—is to borrow more. If they have reached the maximum on their credit card or their overdraft, they must pull in their horns, live within their means, and cut their expenditure to match their income. Opposition Members struggle with that concept, because they never practised it when in government. That is why we have an appalling level of debt and, worst of all, an appalling level of deficit.
Toby Perkins: The first thing the hon. Lady seems to be suggesting is that the national debt is a brand new concept. The country has always had a national debt. The reality is that until 2008, her party supported our spending plans. The national debt fell between 1997 and 2007 under the Labour Government. She is talking as though the issue is brand new, but the reality is that a global economic crisis caused the scale of the deficit, and she must take that into account.
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Anna Soubry: There we have it: the finest example that we could have expected of an Opposition Member who simply does not get it. Deficit deniers—after 18 months of argument, they still do not understand. It is the structural deficit that is our problem. We are not earning as much as we are paying out. We have this debt, and that is what is causing the economic crisis.
Lilian Greenwood: I do not know what planet the hon. Lady was on yesterday, but here we heard that as a result of the Chancellor’s failed economic plans, more people are out of work and as a result he is having to borrow an extra £158 billion, which is making the deficit worse.
Anna Soubry: Again we have another brilliant example of somebody who just does not get it. They do not understand the problems. Some of the problems are external, as I have explained, but at the heart are the failings of 13 years of Labour Government. Some of us are old enough to remember what happened at the end of the Labour Administration before that. My generation, the ones who did our homework by candlelight, had to pick up the pieces. Who was it who had to sort out the mess that Labour created? A Tory Government—and here we are again, all these years later.
I would like to make another point. We all come from different backgrounds, but we all come here for the same reason: to make change. We all want to make things better for everybody in our society, and I find it deeply offensive when the Labour party claims a monopoly on compassion. No one person, party or side has any such monopoly. Nobody on the Government Benches came to this place to make the life of the poor even worse. In fact, many of us came here because we want to eradicate poverty. How rich it is to hear the comments from the Opposition, who failed to hit all their targets for child poverty—after 13 years of their Labour Government, the difference between rich and poor actually grew. That is their legacy and the indictment of the last Government’s failures.
I believe in fairness as much as I believe in compassion. I would much prefer there not to be any need for regulation, but there must be fairness when it comes to restraint and responsibility among executives over their pay. Other hon. Members have touched on the issue. It is just not on to see the levels of pay and bonuses that we have seen in the financial sector. I urge all those people to exercise restraint and responsibility in difficult times, which affect every other one of us.
I reject the Opposition motion and support the autumn statement so eloquently explained to us yesterday. I do not wish to tread on the toes of the hon. Member for Nottingham South (Lilian Greenwood), but I am sure that, like me, she will welcome one of the proposals in that statement—the widening and improvement of the A453. It does not lie in my constituency, although if the Boundary Commission gets its way, a large part of it will, but that work will have a profound benefit for the people of Greater Nottingham and the whole county.
I commend the Conservative-led county council for their efforts in bringing everybody together to persuade the powers that be that the improvement and widening of the A453 would bring great economic benefit to Greater Nottingham, including my constituency of Broxtowe. Many things are happening, such as the
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extension of the tram, that give people hope for the future—the prospect of more jobs and apprenticeships. I am happy to reject the motion and support the Chancellor in all he does to make a better future for all of us, especially our children.
5.24 pm
Lilian Greenwood (Nottingham South) (Lab): I agree with the hon. Member for Broxtowe (Anna Soubry); I do welcome the work on the A453. However, if her Government had not cancelled it 18 months ago, work would already have been under way.
Families in Nottingham are finding life hard this autumn. They tell me that they are worried about turning up the heating because gas bills have shot up. It costs more and more to do the weekly shop, they pay more for the bus and it costs a fortune to fill up the car. Thousands have found themselves out of work, but even if they have a job, their wages are likely to be frozen or rising by less than inflation. There certainly is not much left over for Christmas presents or occasional treats, let alone holidays or major purchases.
Andrea Leadsom (South Northamptonshire) (Con): What has happened to their mortgage rates?
Lilian Greenwood: Obviously those who are home owners are paying low interest rates, but many who rent their home are having to pay a lot more.
People in my city are angry that the irresponsible behaviour of a small number of people in banks brought our economy to the verge of collapse. They do not feel that those who caused the damage are doing enough to pay for the costs. They are also angry that the Government are making the situation much more difficult by putting up VAT, freezing child benefit, cutting the support families get for child care, taking away their children’s education maintenance allowance, or closing down services they rely on. A year ago, the Chancellor claimed that his £40 billion of extra cuts were necessary to get borrowing down, but now we know that borrowing will be £158 billion higher than he planned—a lot of pain for no gain. It was his decision to cut too far and too fast that choked off growth and led to rising unemployment: more people are claiming benefits and fewer people are paying taxes; people have less money to spend, so businesses struggle and more people lose their jobs. It is a vicious circle that this Government helped to create.
Thousands of people in my constituency face an even bigger hit. Public sector workers are being told that they have to find an extra 3.2% from their pay packets to help the Government pay down the deficit. Teaching assistants, nurses and youth workers are all being asked to pay more. The Government say they need to pour more money into their pensions, but the money is not going to boost their pension scheme; it is going straight to the Treasury. That is why people who have never taken part in a strike in their lives are doing so today. They feel they have no choice. This is the last resort when their employers simply will not listen or negotiate properly.
Let me tell the House about one hard-working family in my constituency that this Government are squeezing. Mark Thomas works for the city council as a neighbourhood enforcement officer. His job is to inspect
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houses in multiple occupation, of which there are thousands in Nottingham, particularly around our universities. Mark does vital work protecting public health and ensuring that young people are not exploited by unscrupulous landlords. In July this year, Mark and his partner Alison bought their first home together, and Mark’s 14-year-old son lives with them every other week. Like most people, they worked out how much they could afford, taking account of all the other bills they would have to pay each month and how much they had coming in through their wages. In addition to the usual utility bills, Mark pays child support to his son’s mother. Alison went to university to improve her career prospects and has student loan payments deducted from her salary. As Mark says,
“We are not a wealthy family. I would class us as average, getting by”.
Mark earns £2,500 less than the national average wage and currently pays £120 a month towards his pension. If the proposals to increase pension contributions go ahead, Mark will be paying half as much again—an extra £60 a month. Perhaps a member of the Cabinet would not notice £60 a month, but ordinary people who are not completely out of touch know that that is a lot extra, especially when their pay has been frozen for two years already. Mark and Alison face a double whammy because Alison also works for the city council, as an environmental health officer. She earns a bit more than Mark and pays £155 a month toward her pension, so her 50% increase will be £77 a month. One Nottingham family, an average family, getting by, is being asked to find an extra £137.50 each month, not to benefit their pension fund, but to help the Treasury pay down the deficit—a deficit caused by bankers; a deficit that this Government are making worse.
Mark and Alison are worried sick about finding that extra money. Mark says,
“£137.50 would pay our council tax, or buy gas and electric credit for the month, or pay for a large amount of grocery shopping. We already have to save over a number of months to buy necessities such as glasses and dental treatment.”
Mark is anxious that he will not be able to give his son the life he wanted to. He is worried that his son might choose to spend more time at his mum’s house because she is able to provide for him better financially. I am pretty sure that Ministers do not lie awake at night worrying about their family like that, and Mark and Alison should not have to either.
Of course pensions have to be sustainable and affordable, but changes have to be fair. They have to be fair to taxpayers—of course, public servants are taxpayers themselves—but also fair to the people who care for us when we are sick, educate our children and keep our streets clean and safe. The Government need to stop attacking the people our communities rely on day in, day out. They need to listen to why people are so angry and they need to try to resolve the dispute by engaging in real negotiations.
5.30 pm
Jessica Lee (Erewash) (Con):
I am delighted to be able to speak about this important subject. I believe that if the country is ever to improve living standards for the long term, three elements will be necessary. We need a Government who have a vision of how such an improvement is to be achieved, who will consider in
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detail how they can empower families and businesses, and who will deal with the cycles of poverty that trap people in the benefits system and work to make those people’s lives better.
I want to suggest some ways in which we can improve the living standards of families and children, especially vulnerable children, and also help businesses. The most vulnerable children, surely, are those who do not have parents. Their lives are troubled from the beginning. They are children of the state, looked-after children. Thousands of people work with those children throughout the country, doing a really good job in children’s services, the voluntary sector and many other areas, but they need support. For many years there has been a disturbing trend towards disproportionately low outcomes for looked-after children. Their educational outcomes are poor, and the number who turn to crime is disproportionately large.
We simply must do better for those vulnerable children. Such changes can never happen overnight, but I believe that the Government have got off to a promising start. We have benefited from the expertise of the right hon. Member for Birkenhead (Mr Field), whose report on child poverty is a fascinating document containing real insights on how we can make progress, and the hon. Member for Nottingham North (Mr Allen), who also happens to sit on the Opposition Benches and who spoke about early intervention during Prime Minister’s questions today. That is a key theme. If we can target and help vulnerable children with early intervention policies, it will be entirely possible to improve their outcomes. That is the most important aspect, but they will also become less of a financial burden—if I may put it that way—on the state and on taxpayers.
Amber Rudd: Does my hon. Friend agree that the Government’s commitment to provide 4,200 new health visitors will help to reinforce that early intervention message?
Jessica Lee: I do agree. Other policies will also be helpful, although sadly I have not enough time to list them all. We have the pupil premium and the reports that have been commissioned, including those dealing with social workers produced by Eileen Munro and other experts.
Andrea Leadsom: Does my hon. Friend also agree that the Government will be able to save money at local council level by promoting infant early intervention programmes? By helping struggling families at the outset, they will save society much more money further down the track, because those families have been supported from the beginning.
Jessica Lee: I entirely agree. I know that my hon. Friend has spent some years examining the issue while running a charity. I think that all Members agree that early intervention will benefit young people, and that we must do all that we can to implement it.
Glenda Jackson: Will the hon. Lady give way?
Jessica Lee: I will give way once more.
Glenda Jackson:
No one would disagree with the hon. Lady’s argument, but unfortunately the Government have made the provision of early intervention virtually impossible by removing the ring fence from Sure Start
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funds, and removing the other support systems that are necessary to produce the results that she and every other Member desires.
Jessica Lee: I disagree completely with the hon. Lady’s comments. That sort of scaremongering about local children’s services is not helpful. [ Interruption. ] This Government have gone out of their way—[ Interruption. ]
Madam Deputy Speaker (Dawn Primarolo): Order. I do not think we need any shouting across the Chamber, either from the Government or the Opposition Benches. We should listen to the debate—although this might be the umpteenth time that that has been said this afternoon.
Jessica Lee: This is a Government who have shown from the outset, within the first few weeks of their formation, a genuine commitment and a refreshing approach to how we deal with the most vulnerable children. I support what they are doing on that.
There are many other aspects that I do not have time to go through in detail. I mentioned empowering people and giving them opportunities. The Secretary of State has spent years in his work for the Centre for Social Justice examining what is wrong and where the difficulties are in society, and pinpointing the problems. He has been coming forward with radical proposals such as universal credit. We in this House may not agree on the outcomes of those policies, but it is that type of bold, progressive move that we must adopt. Such moves help families who have been trapped in cycles and years of poverty to move on, and give them opportunities that they might otherwise never have.
In the brief time that remains, I want to deal with business. Another aspect of this debate is women and how the Government are working to support them. There are many women in businesses in Erewash who are doing a fantastic job. I welcome recent policies such as establishing 5,000 mentors to help existing women entrepreneurs to develop their businesses. We all know that many women will have to struggle with child care and family commitments, but many start-ups begin at home, on laptops or round the coffee table. We need to support women much more, so I welcome those and other policies such as the Women’s Business Council.
Last week, I spoke in the House during the manufacturing debate. I happen to be the only female MP to have made a substantive speech in that debate, but manufacturing is very important to my constituency, so I want to say in conclusion that it is by supporting business, manufacturing and the policies to help families which I have mentioned that we will improve living standards.
5.37 pm
Hugh Bayley (York Central) (Lab):
I am somewhat surprised by how few Members on the Government Benches seem to have realised that the Government’s policy has changed. They have spent 18 months reading out the brief from their Whips Office—or wherever it comes from—and complaining about the legacy of high debt which they inherited when they came to power. However, I say to the hon. Member for Broxtowe (Anna Soubry) that the national debt at the time of the general
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election was £760 billion. In the first year of the coalition Government, it rose to £905 billion. In the middle of a financial crisis, the coalition Government are doing what the Labour Government did in the middle of a financial crisis. When in opposition, they argued against the private finance initiative.
Anna Soubry: Will the hon. Gentleman give way?
Hugh Bayley: No; I will make my case, if I may.
In opposition, the Government argued against the PFI, but their investment stimulus, which was announced yesterday—I was one of those who applauded it—is going to be paid for by the same sort of off-balance-sheet private finance as financed the PFI.
Yesterday, I ran the risk of incurring anger from my colleagues by welcoming the Chancellor’s plan B. It is a small plan B, but it is £5 billion of Government money backed up by further off-balance-sheet money from the private sector to stimulate the economy. The Chancellor does not call it a plan B. That would be embarrassing, as he has spent 18 months telling us that there is no alternative to plan A: savage cuts in public investment and infrastructure. But now it is plain for all to see that there has been a U-turn.
I congratulate the Chancellor on having the courage to start to do what is right and necessary for the economy. We heard about the U-turn in relation to a road in Nottinghamshire that was cancelled by the coalition Government and has now been reinstated. The Access York scheme—a £22 million improvement to the city’s park-and-ride system—is another good illustration. It was approved by the previous Labour Government, stopped by the coalition one month after the general election, and has now been reinstated, and I thank the coalition Government for that. In the short term, that green transport system will create construction jobs in my constituency, and in the longer term it will attract more visitors to York who will spend money in the shops and the visitor economy.
Nobody so far has mentioned the situation of the NHS. The Government promised that they would not cut NHS spending in real terms. I asked the Library to look at the figures for my PCT area, where many services are being cut. Gastric band surgery for the obese is not available on the same terms in North Yorkshire and York as in neighbouring areas. Facet joint injections for back pain are available elsewhere but not in York. Assisted fertility is available in neighbouring health authority areas, but not in York.
In the last year of the Labour Government, the increase to the PCT budget was 5.8%, which, with inflation running at 3.7%, was a net increase of 2.1%. In the first year of the coalition Government, the local PCT budget was increased by 2.2% but, with RPI running at 4%, that was a 1.8% cut in real terms. Nationally, the figures tell a similar story. In 2011-12, the real-terms cut in NHS funding is 0.56% on the previous year, and in 2012-13 it is predicted to be 0.33%. The Government gave a pledge not to cut NHS funding, and with inflation running at higher levels than they were anticipating, it is necessary for the Treasury to increase NHS funding to meet that pledge. I ask the Minister to respond to that point particularly.
Toby Perkins:
What my hon. Friend says about the NHS is absolutely right, but there was also a pledge not to have any major reorganisations of the NHS. In
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Chesterfield, alongside the financial pressures that the NHS would have been under anyway, additional resources are being spent on reorganisation rather than on patient care. That is the other major problem that the NHS is facing.
Hugh Bayley: My hon. Friend is absolutely right. The reason why, under a Labour Government, there was a 2% real-terms increase in the NHS budget is that the cost of an ageing population and the new medical technologies introduced to the NHS is roughly 2% a year. A 2% real-terms increase, therefore, is a standstill in the ability to treat patients, but adding in a costly health service reorganisation and a real-terms cut in the budget means a savage cut in the availability of care for NHS patients.
Damian Hinds (East Hampshire) (Con): At what point was the £20 billion shortfall in NHS financing spotted?
Hugh Bayley: The hon. Gentleman should simply look at the record of the 13 years when Labour was in power. The real budget of the NHS almost doubled, but now we are seeing its real spending power being reduced, which his party promised that it would not cut.
I want to speak briefly about help for small and medium-sized enterprises. Autohorn, a successful York business, runs the Europcar franchise and other car leasing and care hire businesses in my constituency, employing 60 staff. A couple of months ago, one of the high street banks withdrew a credit line worth £750,000, which financed roughly a sixth of the company’s fleet. I wrote to the Minister with responsibility for small businesses and asked what he could do to help. He was sympathetic, but offered no practical help. I went to the bank, and I am pleased to say that it has renegotiated with the company and reinstated the credit line. The jobs in that business are now safe, and I hope that it will expand and take on more people. None the less, I say to the Government, “The rhetoric is right, but please, you must do more to back up your rhetoric.” They should make the banks do what they say they are doing and extend credit to successful businesses.
There is no time for me to say what I intended to say about the debt, but let me just say this: there is no argument between our parties about the need to reduce the deficit, but there is a sharp difference about how to do it. The Government’s plan A has made a difficult situation worse over the past 18 months. By cutting growth they have cut tax revenues, and by driving up unemployment they have increased spending. It is time for them to change their policy.
Madam Deputy Speaker (Dawn Primarolo): Order. I am going to reduce the time limit again. There are still 21 Members who wish to contribute to the debate, and the wind-ups are due to start in 55 minutes. Starting with the next speaker, the time limit will be four minutes.
5.45 pm
Andrew Jones (Harrogate and Knaresborough) (Con):
Conscious of the time, I will scamper through what I had written down. I am grateful for the opportunity to speak today, because I want to disagree with the motion.
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At the heart of it is the idea that household living standards are being squeezed only by the effects of Government policies. Such an idea fails to recognise the economic challenges that this country and other countries are facing. Those problems are debt and what we do with it, combined with the impact of rising prices.
The average household is now paying £1,800 per year in tax just to cover the interest on the debts that the last Government left. That is a huge sum, and because it is combined with big rises in prices and with incomes that are often static, I have no doubt that everyone is indeed feeling squeezed. That is certainly the message that I am hearing from my constituency—but I think that my constituents know where the squeeze is coming from. They see it in the salaries that they earn, which are not increasing; indeed, their salaries may be falling, as hours may be cut or overtime reduced. They see it in the supermarket, with food prices going up, and they see it when they fill their car with petrol or buy domestic fuel.
My constituents also see huge uncertainty every time they tune in to the news and see, across the economies of Europe and the United States—countries that have traditionally been seen as stable and affluent—enormous challenges. People know that this country and others have been living way beyond our means, and that correcting that will be a necessary but unpleasant task—a task made more difficult by the international turmoil.
The key reason why the motion is wrong is that the Government have taken clear and decisive action on the issues that my constituents have raised with me. The Government cannot be accused of being out of touch when they have made so many efforts. We should remember what would happen if we stopped making those efforts to reduce our deficit and protect living standards, and if we ignored the financial reality, as Labour Members seem to.
The impact would be higher interest rates. As has already been said, a 1% increase in interest rates would add £10 billion to mortgage bills. That equates to £1,000 per household. It would also add £7 billion to the cost of interest paid by business, taking away more money that should be directed into business investment.
That is the big picture. Keep interest rates down to protect jobs and living standards.
Amber Rudd: Does my hon. Friend agree that that situation was particularly highlighted by the fact that this country could have been in danger of having its debt downgraded? Before the general election, Moody’s and Fitch were watching the previous Government, and had threatened to downgrade.
Andrew Jones: My hon. Friend makes a wise point, as ever. Protecting mortgage rates and the rates that businesses pay, and the rates at which our Government can borrow, is critical to our longer-term financial success.
It is fair to say that while we are going through this corrective process, the Government are taking action to protect the living standards of people in this country. I would highlight the 1 million people who are being taken out of tax altogether, and the protection of the state pension by the triple lock. I know that the increase of £5.30 in the basic state pension announced yesterday will be particularly welcome in my constituency, which has quite a high average age profile. People often assume
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that the community in my constituency is uniformly affluent. That is not the case; there are pockets of real poverty, particularly among pensioners living on fixed incomes.
My constituency is in North Yorkshire, one of the most rural counties in the country. People have to travel long distances to reach work or to access services. I therefore welcome the initiatives on fuel duty, especially the cancellation of January’s increase. Opposition Members are wrong not to recognise the impact the fuel duty escalator had on prices, and I hope they will support the actions being taken by this Government, as a result of which fuel duty will be 10p lower than it would otherwise have been. That amounts to an average saving of £144 a year, and I suspect the figure will be higher for those in rural areas.
These are concrete examples of the action this Government are taking to protect living standards. They are taking action on the issues my constituents raise with me. It is therefore wrong to claim that the Government are out of touch or are not taking action. The motion fails to recognise how much is being done and, astonishingly, maintains the pretence that there is no financial problem to tackle.
5.51 pm
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): This Government are having a big impact on poorer people. We see that particularly clearly in my constituency, where 21% of households have an income of less than £15,000 per annum. Indeed, we have the dubious honour of being beaten in that regard by only one other London borough. As of March this year the majority of young people in my constituency—just over 58% of those aged up to 19 years—lived in households in receipt of means-tested benefits. In Hackney, 39% of adults live in households receiving benefit, and that proportion rises to a staggeringly high 71% when we combine those in social housing and lone parents with two or more children.
I would therefore be very concerned about the impacts on real people of the policies of any Government. In this House, we often hear esoteric debate about the impacts of quantitative easing and the big economic arguments. However, although it is important that we deal with the deficit, we are not accountants. Rather, we are politicians, and we need to challenge Government about such impacts on people and we need to bring people with us.
I want to tell Members a little about some of the people in my constituency, therefore. Many Members have spoken about the many financial pressures facing people, and I might add that businesses in Hackney central, my area’s main shopping centre, tell me that footfall is down by about 40%. Things are hard for them too, therefore, as greater pressure on household incomes means people have less money to spend.
Some families facing financial pressures in my constituency will also face a shortfall in housing benefit from next year, and they will have to cover that by finding some money from their other income. Where will they find that money, however, given all the other price increases, such as for food and energy?
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This week, I met a young mother who works at McDonald’s. She does the 5 am to 9 am shift so that her husband can look after the children, and she works 16 hours so that she can get help in the form of tax credits, but the Chancellor’s announcements of this week will have an impact on that.
My constituency may have higher than average deprivation figures, but there is no lack of aspiration. In the last week alone, I have met two middle-aged women who used to work in schools before losing their jobs, but who are keen to get new jobs—to do any job in order to work—and I met a young African woman, immaculately turned out and at a good school, who is keen to go on to university, but her home is minimally furnished, with clothes stored in suitcases and the household investing only in necessities, as their income does not stretch to purchasing items that Members of this House would expect to be able to have.
We need to focus on the impacts on real people, and I therefore welcome the Government’s support for disadvantaged two-year-olds. All Members regardless of party allegiance agree that early intervention is crucial, but the key question is how we do that. Other Government measures are having a disproportionately great impact on poorer households, of which I represent many.
Andrea Leadsom: Is the hon. Lady aware that an all-party group inquiry into Sure Start found that fewer than 10 children’s centres had closed? Local councils have shown huge commitment to the ongoing success of this important matter.
Meg Hillier: It is easy for the Government to talk in figures, but many centres have been run down to the bare minimum and are helping just a few families, whereas before it was a universal service, which was one of the benefits.
The children in my constituency who turn up at school without breakfast because of their alcoholic or drug-addicted parents—the same children who turn up malnourished at the end of the school holidays—are the young people whom we should be helping to have a better future. All the Government’s actions—all the talk as though the Government are accountants—do not help those families. Whatever our party, we should not be hoodwinked by academic and esoteric debate but should govern for the people we represent and remember that not all of them enjoy the same advantages as we in this place do.
5.55 pm
Claire Perry (Devizes) (Con): May I start by saying that I completely agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier)? When we politicians talk about billions, deciles and quantitative easing it does not resonate in my constituency. It is 25 days to Christmas and 61% of people say that they are cutting their Christmas spending this year, but we often fail to recognise that.
In my short speech I shall therefore try to concentrate on what happens to the pound in someone’s pocket when it enters a household in my constituency, where the average income is £23,000—well below the national average—and where public sector employment is about 35%.
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The top slice is taxation. The Government have done a huge amount, especially at the lower end of the tax scales, to lift the poorest people out of taxation. I am incredibly proud of the fact that from next April more than 1 million people will be lifted out of taxation altogether, 60% of whom will be women. That is a far more efficient way of delivering benefits through the tax system than dealing with tax credits, which though a laudable idea are expensive and difficult to manage and result in huge fraud and complexity amounting to billions of pounds a year.
There has been a council tax freeze across the country. We have given councils money to renew that, which is worth £72 a year to my working families in Devizes.
According to the family spending survey, families’ second highest expense is housing, about which we have heard much today. There are families who are struggling to get any housing. In Wiltshire, more than 12,000 families are waiting for affordable housing. My constituents, Nicky and Lee of Pewsey, who are expecting a child, are living in hugely overcrowded, damp conditions, which I have seen and in which I would not house an animal, let alone a young family. The Government’s radical housing reform is designed to help exactly such people. We must get Britain building again, and we must build sufficient affordable housing, which we have failed to do for the past 13 years.
We have heard much about mortgages. Significantly, mortgage payers across all income deciles, to use that hideous term, are saving £10 billion a year as a result of low interest rates—an important benefit to families across the country.
Given the preponderance of service families in my constituency, the Government’s work to put service families at the top of housing allocations, where possible, is hugely valuable.
Families’ next highest expense is fuel and transport. Like many Members, I live in a rural constituency where we have to use our cars. I welcome the fact that by next April fuel will be 10p cheaper and that, by the end of the year, we will save ordinary working families £144 a year in filling up their cars.
We have focused massively on energy consumption. Through the green deal, we are working on greening the most vulnerable households, which is very important.
I welcome this debate and the chance to talk about those whose voices are often the quietest—pensioners and children in care, for example—and it is our job to speak up for them.
Let us be clear: the tough decisions facing this Government would have faced any Government. We must be fair to the next generation—the children of today who will be the workers and taxpayers of tomorrow and who will pay for our pensions and meet our NHS expenditure. Let us have less ideology and more common sense.
5.59 pm
Jonathan Ashworth (Leicester South) (Lab):
We have heard many Members on the Government Benches, including the Secretary of State, complain about the level of the structural deficit. However, I recall that up until the financial crash the Prime Minister and the Chancellor supported every penny piece of our expenditure. It was only when the crash hit that they changed their position. To be fair, the Secretary of State, in the period
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when he was Leader of the Opposition, did not support our spending, but the current Prime Minister certainly did.
I shall make a few comments about the rising cost of living. I think it was the Governor of the Bank of England who said earlier this year that households in 2011 would experience the toughest squeeze in living standards since the 1920s. That has been endorsed by the OBR, which stated yesterday that
“household disposable income is forecast to have fallen by 2.3 per cent this year, a post-war record.”
The OBR went on to predict that it will not be until 2014 that earnings will rise faster than prices. That means, in effect, that over the course of 2010 to 2015 the average growth in real household disposable income will be just 0.5% per annum. It is no wonder that household spending has been so weak and that in the run-up to Christmas we had an extraordinary report from the CBI this week showing that shops are laying off workers at the fastest rate for two years.
Although there were some measures in the autumn statement to help people, such as the fuel duty change, the Chancellor is paying for the changes that he introduced by means of a public sector pay freeze and hitting low- paid workers who rely on tax credits. As I understand it, the changes to tax credits amount to a cut of £1.3 billion to families, affecting 5.5 million families.
I read today in The Times that Tory sources are baffled that Liberal Democrats agreed to this. My constituents will not be baffled when they find out about it. They will be livid when they see what the tax credit cut will be for them. I am particularly concerned because that will lead to an increase in child poverty. The Treasury’s own figures show an increase of 100,000. In Leicester child poverty is a particular issue, and the cut will only make matters worse.
We are plainly not in this together. The Chancellor is not in this together with the young mother on the Saffron Lane estate in Leicester who is seeing her tax credit cut. The Chancellor is not in this together with the young people in Highfields who are still unemployed. Members on the Opposition Benches have been calling for a youth unemployment scheme. I hope that the youth contract announced by the Deputy Prime Minister is a success, but as my right hon. Friend the Member for South Shields (David Miliband) so eloquently explained, a similar scheme introduced by the Lord Chancellor when he was Chancellor in the mid-1990s was an utter failure. I hope the scheme succeeds, but we on the Opposition Benches will scrutinise it carefully. Many constituents ask me whether it would have been better to keep the future jobs fund. They also ask why on earth young people in Leicester have to wait until next April for the scheme to be introduced.
I want to say a few words about the industrial dispute going on today. Many of my constituents are on strike. They take industrial action reluctantly and with a heavy heart. Earlier today the Paymaster General said that he is prepared to consider suggestions on the 3%. I want him to go further, and perhaps the Minister might respond to this. Will he think about going further and look at entering meaningful negotiations on that 3%?
When we left office, the economy was growing, unemployment was falling and inflation was under control. We now have next to no growth, record unemployment and one of the highest inflation levels in Europe.
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6.3 pm
Amber Rudd (Hastings and Rye) (Con): There has been much talk this afternoon about real people. Thinking about the incredibly important subject of living standards, I thought about a real person I met in 2007. In my constituency, in an extremely poor ward, I met a woman who had just come back from work. She said to me, speaking about the then Government, “Why do they bother giving me a pay packet at all? All I get is the leftovers. Why don’t they just give me the pocket money?” She had just been affected by the 10p tax cut, which famously affected 60% of women and was so damaging to the lowest paid.
Living standards is the overriding important issue that politicians try to work on to improve quality of life for everybody. It is the practical application of the famous phrase, “It’s the economy, stupid”, because it is the private economy, the budget, of individuals and families. There are so many levers that politicians try to move to work on living standards, and in the time allowed to me I will focus on two: taxation and jobs.
I mentioned the lady from Hastings, who lives in Bevan court in Hollington. As a low earner, she will now be approaching being taken out of tax. This has been referred to many times this afternoon, and I repeat that taking people out of tax is one of the most important things the Government can do to combat poverty and raise living standards. I urge the Government, however choppy the economic waters get, to ensure that they stick to the commitment to increase the level to £10,000. Aligned to increasing the level is tax simplification, which really would be welcomed.
Undoubtedly the best way to raise living standards is to help people who do not have a job to get one. I welcome the Government’s initiatives in relation to the youth contract and apprentices, because poverty really becomes entrenched where families follow each other into unemployment. I hope that the universal credit will mitigate some of that, with its associated reforms to help make work pay, such as introducing free child care for when mothers go out to work for one hour rather than their having to work a minimum of 16 hours. The best way to improve living standards is to create jobs and the best way to do that is to stimulate the private sector. I thought that the new president of the CBI, Sir Roger Carr, put it very well when he said:
“Government can set the climate, but it is business that must deliver the goods.”
Yes, we can set the climate, but we cannot produce the jobs. We must encourage the private sector to do that. This Government are doing their best to set that climate fair, despite what is going on in the eurozone and despite the inheritance we had. That is the best way to raise living standards.
Heather Wheeler (South Derbyshire) (Con): Would my hon. Friend like to congratulate the great people of South Derbyshire on bringing forward 1,500 jobs in the Toyota factory and 300 jobs at the Nestlé factory?
Amber Rudd:
It is great to hear about that marvellous triumph of the private sector. There is another example in Hastings: a year ago Saga moved into the town with up to 800 new jobs. Only 350 have been filled so far, but I hope that they will continue to build on that number.
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We have high public sector employment in Hastings, so with these changes and cuts, we are delighted to have a major private sector employer able to provide jobs.
Claire Perry: Does my hon. Friend agree that, while we must not forget about the public sector, which is so very valuable to so many families, the best way to protect jobs in the public sector is for pay restraint and pension reform?
Amber Rudd: I thank my hon. Friend for that intervention, and I would like to take the opportunity to say how much I respect the people who work in the public sector. I value the important work that they do. I and my family have used our local hospital in Hastings and they do an excellent job. It is important that we recognise the enormous value that the public sector provides, but we need more job creation in the private sector.
Damian Hinds: With employers talking more than ever about work-readiness and employability skills among the young work force, and with the danger of so many young people not being able to get into work quickly, does my hon. Friend agree that work experience placements are a great way of increasing those young people’s value to employers compared with not having had any experience of formal work?
Amber Rudd: I agree with my hon. Friend. The Government’s initiative to bring in work experience is valuable and I understand that the scheme is going well, with people picking up jobs after their work experience.
Sheila Gilmore: Last year we were told that squeezing down the public sector would cause more private sector jobs to appear. That has not happened. Why should we expect it to get any better?
Amber Rudd: Has not the hon. Lady heard the comments from my colleagues and me about growth in the private sector? Five hundred thousand new private sector jobs have been created in the past year. I dispute her statement that these jobs are not being created in the private sector—they are. But I am in no way complacent. I know that we are in difficult times and that people’s living standards are being squeezed.
The Government are doing an incredibly important job. They are doing their best in difficult times to keep up living standards. Above all, they need to get out of the way of job creation, which is the best way of helping people out of poverty.
6.9 pm
Lisa Nandy (Wigan) (Lab): I want to talk about the living standards of women in my constituency who work in the public sector, who are deeply concerned about their prospects for a decent and dignified retirement, and who are today trying to make the Government listen. A third of my constituents are employed in the public sector. All of us in Wigan have friends or family who are affected by the changes to public sector pensions. To them—and to me, having met so many of these workers over the past six months—the Government’s attempt to characterise this as a strike whipped up by a group of self-interested officials not only does not ring true but is, frankly, offensive.
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I want to explain to Ministers why so many hard-working, decent people are out on strike today. I have never met a teacher or a nurse who wants to go out on strike; for them, it is a vocation and not just a job. However, like me, they believe strongly in the right of people who have, for very many years, served this country so well, often on very low pay, to retire with dignity. Like me, they do not believe that the interests of the public will be served by running down the professions of which they are so proud to such an extent that nobody in their right mind would go into them. They are as baffled as I am that their Government are describing their pensions—which are, on average, less than £5,000 a year—as gold-plated. Government Members are keen on quoting Lord Hutton; well, I agree with him that we cannot say, in any sense, that public sector pensions are gold-plated.
People pay high premiums for their pensions, and for many women the return is low. My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) outlined that convincingly. How many of us in this House face that prospect? I am genuinely grateful that Ministers listened and revised their offer for people who are to retire imminently. That will have a particular impact on women, and I thank them for it. However, I am deeply concerned about the situation for part-time workers whose full-time pay may be over £15,000 but whose real pay is far less. What will their Government do for them?
I want to set out what my constituents would like to happen. First, I will address the problem of affordability. Public sector workers are being hit from all directions. Thanks to the Secretary of State, teachers in academies face a pay freeze, and possibly a pay cut. Women are also having to face cuts to child care, tax credits and family support. I put it to Ministers that a scheme that is not affordable is also not sustainable. Young people are saying to me that they will not be opting into these schemes. They are willing to pay into them, but they want to know where the money is going—to know that it is going into the pension scheme. They are not willing to make sacrifices through their pay—
Lisa Nandy: We have heard enough from Government Members—it is time they listened.
People are willing to make sacrifices but not to pay for the deficit while bankers continue to receive huge bonuses and executive pay in the City continues to rise. I urge Ministers to understand that in some professions, such as teaching and policing, it is unrealistic to ask people to work until they are in their late 60s. Will they please look at the situation of people who do hard, front-line work day in, day out, and recognise that it is unrealistic to ask them to work for that long?
My constituents and I want the Government to set an example. It is not good enough to say that because low-paid private sector workers receive appallingly low pensions their public sector counterparts should receive the same. The Government should be setting an example to employers by taking a lead on tackling the grossly unfair pay and pensions gap between high-paid and low-paid private sector workers, not pushing their own employees into the most appalling poverty after a lifetime of service.
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6.13 pm
Nick de Bois (Enfield North) (Con): Given the constraints on time and the number of people who wish to speak, which shows how seriously Members on both sides of the House take this issue, I will try to limit my remarks.
The obvious route to improving living standards is to help as many people back into work as possible. Instead of focusing on the points that have been made about some of the very good schemes that have been introduced, I should like to start with structural issues to do with employment. There is no question but that the Government are introducing measures that will help to increase employment. For example, they are looking at rebalancing out-of-work incentives. We are trying to make work pay through the very welcome introduction of higher personal allowances, which will help people at the lower end of the scale. We are also, as the Secretary of State outlined, looking at the bigger picture of welfare reform.
However, we have to consider matters beyond that. As a former employer who started a business with one or two people and ended up with 100 people, I saw, and shared, the intense pleasure of recruiting someone into a new job or their first job. I also understood, and felt, the enormous pain, and sometimes shame, of people who underwent redundancy through no fault of their own. In the last two years of my working time before I came into Parliament, I was very worried by the level of the CVs that were being produced and the failure of candidates to articulate themselves with even basic English or a basic education. That was a clear sign that some people were being failed by their education. I am sure we all agree on the common goal to improve education and raise standards, but there is no question but that the structural changes that we are introducing will improve people’s chances and lead to a fundamental generational change for the future. If those changes fail, we may be back here in 10 years, still talking about the problem.
Mr Stewart Jackson (Peterborough) (Con): Has my hon. Friend, like me, noted the lack of contrition from the Labour party in its failure to apologise for driving many people into welfare dependency through its policy of unrestricted immigration over the last 13 years?
Nick de Bois: I welcome my hon. Friend’s comments on the complex issues that he raised. We have to consider the consequences of both those issues, but I shall continue to examine the structural changes I was discussing.
The welcome sign for the future is that we have rightly shifted the emphasis from a purely academic route and are now pushing vocational routes, whether through apprenticeships or through further skills and training, giving people a choice from the age of 14 or 16 that will meet the skill needs of employers. Otherwise, we could be back here in 10 years discussing many of the same issues.
With the changes that are being introduced, we need to look at the tactical areas where we can help people get into Work that will meet the immediate challenges of improving both their life chances and their living standards. I have met Work programme providers and witnessed how they are determined to provide long-term jobs for those who are unemployed and going through the new system. These programmes are to be welcomed because they seek to provide a long-term, rather than a short-term, solution.
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I am particularly impressed by the early results of the work experience programmes, working with the jobcentres, where people who had little chance of breaking the dependency culture and moving to independence are put into a work environment and employers are encouraged to take them on. As a result, over half of those who have been in such employment for three months are getting full-time work. I do not subscribe to the theory that so many people just wish to sit on benefits. The road to work is through breaking the cycle of dependency and putting people into an environment where they relish the challenge and want to work. That is the very life chance that they will be able to see, given the chance to improve their opportunities, shaped around the proposals of my right hon. Friend the Secretary of State.
Much has been said about the debt interest. It is shocking that this country pays about £46 billion a year to service debt in return for nothing. The worst thing is that that money is going to our competitors. The people who are lending us money are the people who will make it harder to help people in this country improve their life chances.
6.18 pm
Glenda Jackson (Hampstead and Kilburn) (Lab): Yesterday, the Chancellor of the Exchequer, as for the last 18 months and assiduously supported by his Back-Bench colleagues, blamed our flatlining economy, constantly rising unemployment and failure of small businesses to obtain loans from banks on the enormous debts that this country was left by the previous Labour Government. His other argument was that the Labour Government had failed to mend the roof when the sun was shining. Those of us who had lived through 18 years of Conservative Government knew that it was not only the roof that needed mending, but also the foundations: our schools, our hospitals, our infrastructure, our social services.
The interesting point that the Chancellor of the Exchequer made yesterday was that our flatlining economy, constantly rising unemployment and consistent failure of small businesses to obtain loans was because, actually, the debt was even greater. What puzzles me is why the Chancellor of the Exchequer, after 18 months and with all the services that the Treasury provides to him, has clearly failed to make the numbers add up. Are we really left with the realisation that we have a Chancellor of the Exchequer who cannot count? I rather worry that we probably are.
The Chancellor then went on with the other canard that his Government have floated ever since they entered office—that this particular crisis is one in which we are all in it together, and that his economic polices will protect our state from the storm. His idea of protecting our state from the storm reminds me of the old Grecian city of Sparta, where the state was protected by exposing the most vulnerable on the harshest, coldest, stormiest mountain that could be found. That seems to be the example that his Government are following, because we simply are not all in this together.
The Secretary of State for Work and Pensions seemed today to state, with great sang froid, that the lowest three deciles in our society carry three times the burden of the top decile, and Government Members throughout
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the afternoon have stated that all our children must be protected from the terrible debt burden that they will have to face if we do not continue with an economy in which there is almost no growth—because we are all in this together.
It is highly unlikely that any child whose parent and/or parents sit on the Government Benches is in the situation facing many children in families in my constituency, where there is a strong possibility that, owing to the changes that the Government have introduced, most markedly to housing benefit, they will lose their homes. Indeed, they will lose not only their homes, but their schools—that is, those who are fortunate enough to have a place at a school in their area, because in my constituency, although apparently we are all in this together, there is a terrible dearth of school places. The dearth used to be in secondary schools; now it is in junior schools.
We hear from the Government all these wonderful stories about the free schools that will come in down the road, and about the academies that will be built, but they have not been built yet. It is simply not true, as we have heard. The Government’s changes—in relation to the abolition of the ring-fence around children’s centres and the supposed protection of Sure Start—are taking place throughout the country. I have mothers in my constituency who simply cannot find adequate child care—
Madam Deputy Speaker (Dawn Primarolo): Order.