3.59 pm
Mr David Anderson (Blaydon) (Lab): Follow that!
Eleven hundred days into the fruitcake Parliament, we have the mid-term report. How did we get here? Everybody knows that the cost of living is going through the roof, while the standard of living is going backwards. The Government obviously have a narrative; they say it is all the Labour party’s fault. I agree with them to some extent. I agree that my party, when in power, was far too lax with the banks. Its light-touch regulation was far too light. The Conservative party then said that we were too severe, so how can they now say we got it wrong?
The truth is that it was working. In 2007, the net debt in the UK was only 38% of GDP—the second lowest in the G7 and almost the lowest in our history. Obviously the whirlwind that hit the world when Lehman’s collapsed affected everybody, but the Labour Government at the time did not become paralysed in the way that the current Government have. We went for growth. We cut VAT to 15%. We introduced the car scrappage scheme. We brought forward capital schemes, some of which were still going after the election only to be stopped by the Government, including £80 million-worth of new school building in my constituency which could have put people into work and given kids better schools.
We have gone from growth at 1.8% when we left power, to the Government breathing a huge sigh of relief over the past three years just because we have not gone into a triple-dip recession; they were even happier with only a double-dip recession. The best that we have had is stagnation. It is clear that the programme put forward by the Government has not helped this country and we need to see changes. Why do we need change? Who is paying? It is the same people who always pay: the poor, the weak and the vulnerable.
Let us look at what has happened in the past three years to affect the poor, the weak and the vulnerable. VAT has gone up. The child trust fund has been taken away. The education maintenance allowance has been taken away. Working tax credits have been frozen or cut. Pensions and benefits have been changed from RPI to CPI. Child tax credit has been cut and child benefit frozen. The sure start maternity grant has gone. The health in pregnancy grant has gone. Child benefit has been cut for better-off earners. We now have the bedroom tax and cuts in council tax benefit. There is lots and lots more. This is not about scroungers; it is about working people who are trying to get on in the world and who are struggling.
On top of that, almost 750,000 public sector workers have been sacked. They have been taken out of income tax all right: they have been sacked and are not paying it. They have been taken out of good, strong and stable jobs. People have been put into 1.25 million poor-quality jobs where they are underemployed and underpaid. Pensions have been cut, wages frozen and increments stopped. Why is it right to incentivise the rich but not the workers?
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The worst thing is that the strategy has failed; it has flatlined. Even worse, the Government knew that it would fail, because it has always failed. It has been tried before and has always failed. Martin Wolf said last year:
“What is clear from UK history is that growth is a necessary condition for successful management of public debt. The...cuts of the early 1920s failed to lower the debt…the economy then collapsed.”
Nobel prize winner Paul Krugman said that the infuriating thing was that, half a century ago, any economist could have told policy makers
“that austerity in the face of depression was a very bad idea”,
and millions of workers are paying the price for that mistake.
Barack Obama, the absentee Prime Minister’s new friend, said that some people would say that
“The market will take care of everything…if we just cut more regulations and cut more taxes…our economy will grow stronger…And that theory fits well on a bumper sticker. But here’s the problem: it doesn’t work. It has never worked.”
Another Nobel prize winner, Joseph Stiglitz, said that
“austerity as the solution is just wrong. There won’t be a return to confidence—quite the contrary. So the direction Europe is going is…I think the wrong direction.”
There we have it: three Nobel prize winners—but they are wrong, aren’t they, because our Chancellor thinks that he is right? He ignores what happened in this country the last time we had a major recession. Keynes proved that you could not win with austerity and Roosevelt proved it in the United States. But we have a Government whose arrogance is matched only by their ignorance and now, as a result of his posturing, the Chancellor—even if he thought he was wrong—cannot back off. He has painted himself into a corner and he knows that if he puts in place plan B, he will be skewered by the shadow Chancellor. Pig-headed obstinacy, pride and ideology have combined to the detriment of this country. The job is far too big for the Chancellor. Now the Government are paralysed not only by their ideology and obstinacy, but by their internal fighting yet again about Europe.
We are seeing the people of this country struggling to get by, with tax cuts for the wealthy and tax hits for the poor. The poor are getting poorer and the rich are getting richer. It is, sadly, the same old Tories.
4.5 pm
Andrew Selous (South West Bedfordshire) (Con): I think that all of us on the Government Benches absolutely recognise the increase in people’s bills, whether it is their gas bill, their electricity bill, the bill to fill up their car with petrol or diesel when they go to a garage, or their weekly food bill. We absolutely recognise the squeeze that our constituents are experiencing and the fact that wages have not gone up to compensate, and in many cases we have been extremely clear about that.
Nevertheless, because of the decisions that the Government have taken, it now costs people £7 less to fill up their cars than it would if we had gone ahead with all the price increases that Labour legislated to introduce before they left office. Also, we heard from the Secretary of State for Energy and Climate Change that our energy bills are 5% lower than they would have been, again because of the decisions we have taken. We know that Labour would have added £193 a year to our
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energy bills, because they would have funded the renewable heat incentive and carbon capture and storage through levies on people’s energy bills, whereas we are funding those things from general taxation.
Council tax is another area where the Government have done fantastic work to reduce the impact of the cost of living. Under the previous Government, council tax more than doubled—it went up by 109%. Thanks to the excellent stewardship of my right hon. Friend the Secretary of State for Communities and Local Government, we have managed to freeze council tax—certainly for principal authorities—for three years in a row. I remember that pensioners regularly came to see me in my surgeries, and some would complain that they were spending up to a third of their income on their council tax. I have not had pensioners coming to see me about that in the last three years, because in real terms we have cut council tax by 10%. In fact, my own council tax bill has gone down in cash terms in the last two years, thanks to the excellent stewardship of Central Bedfordshire council and Studham parish council. We are talking about a council that has taken £52 million out of its budget and improved services. We now have a better leisure centre in Houghton Regis, the gutters are sprayed three times a year rather than twice a year and more potholes are being filled, despite £52 million being taken out of the budget, which shows that it can be done.
We have an immigration Bill in the Queen’s Speech, which is absolutely necessary. I am sorry that the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) is no longer in his place, because I would have liked to remind him that the Migration Advisory Committee—an independent body from the UK Border Agency that advises the Government—has pointed out that the 2 million extra net migrants who came to this country under the previous Government decreased wages for working people and meant that fewer UK citizens went into jobs. That is something that we need to be mindful of when many of our constituents are looking for work. Only two days ago, one of my constituents wrote to tell me that on the construction site he was on in London he was virtually the only British worker; all the others were Albanian. I am not sure why they were there, given that Albania is not a member of the European Union. These are genuine issues for our constituents. The people of this country are speaking to us loud and clear, and we would do well to heed what they are saying.
I hugely welcome the national insurance contributions Bill. We are talking about a tax off jobs. Up to 2.5 million employers will benefit and 450,000 of our smallest businesses will no longer pay national insurance contributions. That means that every business could take on one extra employee on a salary of up to £22,400 or four more on the minimum wage without paying any more national insurance contributions. That is just the thing that we should be doing.
Sheila Gilmore (Edinburgh East) (Lab): How many businesses benefited from the Government’s previous attempt to use national insurance to stimulate the economy? My understanding is that very few did so. Why does the hon. Gentleman think that the current proposal will be any more successful? He is talking about the future, but what about the past three years?
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Andrew Selous: All I know is that employers and employers’ organisations up and down the country have strongly welcomed the employment allowance. It is a tax off jobs. I remind the hon. Lady that the Labour Government were going to increase national insurance, had they got back into power. We believe in trying to get more people into work by taking costs off employers.
The Pensions Bill will help savers by ensuring that they get the benefit from everything that they save for their pension. That has not been the case in the past. The Care Bill will also help people by ensuring that they do not have to sell their homes to fund their care in old age.
The Opposition have said that this is a thin Queen’s Speech, but it is not; it contains 19 Bills. Labour Members need to be careful not to confuse legislative activity with the real business of government. A by-pass in my constituency was announced by the right hon. Member for Edinburgh South West (Mr Darling) when he was Transport Secretary in 2003. In the following seven years of the Labour Government, however, not a shovel hit the ground. Nothing was done. All Governments like to announce things, but the delivery mechanisms and speeding up the ability to get things done are what matter. The planning system takes far too long to achieve finality and get results in this country. We also need to look into the matter of judicial reviews. In 1998, there were 4,500 judicial reviews, but the number trebled over the following decade. It is absolutely right that the Prime Minister and the Secretary of State are looking at those issues to ensure that we can get things done more quickly.
What we are doing on training and apprenticeships is absolutely right: 520,000 apprenticeships have been brought into being by this Government. I am particularly pleased by what is happening on the higher apprenticeship route and by the technical baccalaureate announced by the Secretary of State for Education, which will be a type of vocational A-level. Those are very welcome indeed, as are the university technical colleges. It is also vital that we export more. We have increased our exports outside the European Union by 33% since the 2007 peak. We have done well in that regard, but there is clearly much more for us to do in those growing world markets.
4.12 pm
Catherine McKinnell (Newcastle upon Tyne North) (Lab): Without doubt, the rising cost of living, combined with stagnating—or worse, falling—income, has to be one of the biggest worries for many people up and down the country. There is little sign of light at the end of the tunnel. People rightly feel that they are working hard and putting in the hours, but they are at best standing still and some are going backwards. Others have found themselves out of work, and the little support that they get when that happens is dwindling every day.
I find my constituency surgeries ever more heart-wrenching, given the number of people coming to see me not only because they have become unemployed, which is clearly a tragedy for those affected, but because they need help with the situation that they find themselves in after that. Some might be looking for help to start up on their own but are unable to get past first base. Others might be hoping for a more reasonable approach by the
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jobcentre that insists they pay the £3.60 return fare to travel to town rather than go to the centre that they could walk to in an hour. They would rather do that than spend £3.60 of their dwindling weekly budget. Others may fear that they are being discriminated against because they are over 50 and, having worked all their life, now find themselves unemployed and having to compete with graduates for jobs. Others might fear bankruptcy because of the loss of their home; they have been out of work for a year and the support they have received is now drying up. Those people are the victims of this Government’s economic mismanagement.
That is why it is even more galling that the only people who seem to have been given a break by this Government are those fortunate enough to earn more than £150,000 a year. They will benefit from the 50p tax cut. They are the very last people who should be getting such a break right now.
Andrew Selous: Does the hon. Lady not recognise that the rich are going to pay more in tax in every single year of this Government than they did in any year under the last Labour Government?
Catherine McKinnell: That is a spurious statistic. We know that the deficit needs to be paid down, but this Government have made a choice to give a tax cut to those on the highest incomes while leaving other people to pay. It is not just me who thinks that. Conservative voters and, indeed, Conservative party members up and down the country are frustrated by the choices this Government have made.
Debbie Abrahams: Does my hon. Friend agree that it is an absolute disgrace that while there are commitments to fairness in the Queen’s Speech, the 40% lowest-income households will be worse off, with an average of £891 lost by each household?
Catherine McKinnell: My hon. Friend makes a powerful point. Another point to remember is the disproportionate impact that this Government’s tax and benefit changes have had on the lowest earners—and on the middle earners, too.
Let me get back to members of the Conservative party. Linda Pailing, for example, the deputy chair of Harlow Conservative party—I see the hon. Member for Harlow (Robert Halfon) in his place—put it very starkly, targeting her criticism squarely at the Prime Minister. She said:
“The national swing took us down and that is purely to do with what Cameron and his cronies are doing with the national party. The voters are disillusioned with Cameron himself. They don’t like the fact that he didn’t keep the 50p tax. This has really grated and people feel here that he is not working for them, he is working for his friends.”
I could not have put it better myself.
There could have been some acceptance of the Government’s approach—at least among their own supporters—if the 50p tax cut policy had boosted confidence and stimulated economic growth, which is the only thing that could turn the situation round for those feeling the squeeze, yet it has done precisely the opposite. The approach has not only failed to address the lack of confidence in the economy but compounded the lack of confidence in this Government. What kind
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of right-minded Chancellor or Prime Minister would turn a blind eye to the suffering of the vulnerable and those struggling to make ends meet, slap on a VAT hike and impose a bedroom tax, cuts to tax credits and in-work support while dishing out tax cuts to those who need them least.
Robert Halfon (Harlow) (Con): Will the hon. Lady acknowledge that this Government have taken 3,000 low- income people in Harlow out of tax altogether and cut taxes for 40,000 low-income Harlow residents? Why did she and her party vote against those tax cuts for lower earners?
Catherine McKinnell: I anticipated Members raising the issue of personal allowances, but the fact is that the Institute for Fiscal Studies has clearly shown that the overall impact of the Government’s changes to tax, credits and benefits has left the very people for whom the change to personal allowances was supposed to help worse off. People will be worse off under this Government in 2015, too.
Then comes the ultimate betrayer of the Government’s true intentions. First, someone claims Britons have never had it so good, completely downplaying the impact of the recession on those hard hit. Then, after resigning on the back of it, this person is reinstated and can now be heard extolling the virtues of starting a business in a recession on the basis that
“labour can be cheaper and higher quality, meaning that return on investment can be greater”.
I was both alarmed and enlightened to read the report in The Daily Telegraph of a leaked discussion between pollsters and the Government’s key advisers. When asked what kept them awake at night, those advisers replied “Nothing” at first, and then admitted that it was their kids’ school fees that bothered them most. If that is the main issue affecting the lives of the Government’s key advisers, that is quite indicative. Lord Young’s comments, cited above, are quite startling, showing him to be revelling in the strain that the jobs and wages squeeze is putting on people’s finances. There are 2.5 million people out of work at the moment, and nearly 1 million young people out of work, with 500,000 out of work for two years or more. That is the highest number since the end of the last Tory Government in May 1997. Since 2010, the number of unemployed people has risen. Lord Young should reflect more on that.
Mr Anderson: Will my hon. Friend give way?
Catherine McKinnell: I am afraid that I cannot. If I do, I will run out of time.
Living standards have come under increasing pressure. Average earnings are rising at the lowest rate since the end of 2009. More worryingly, according to recent analysis of figures from the Office for Budget Responsibility by the Resolution Foundation, that squeeze on average incomes is set to continue for many years. The foundation estimates that, given the OBR’s projections, the gap between what people earn and what they would have been earning had their wages risen in line with inflation will have risen to £3,200 by 2017.
The squeeze on living standards has had a disproportionate impact in my region in the north-east. Analysis carried out recently by the northern branch of
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the TUC drew attention to the pay gap in the north-east in particular. It showed that since 2010, real wages had fallen by £23 per week and £1,196 per year in 10 out of 12 north-east local authority areas, and that the north-east is the poorest region in the United Kingdom. Some households have been squeezed by £4,000 more than was the case a year ago, given wage freezes, below-inflation pay rises and public sector job losses throughout the region.
What hope did the Queen’s Speech offer to the millions of people across the country who have been affected by the Government’s policies? We needed a Queen’s Speech that would create jobs and growth and give people enough confidence in the economy to invest, but the Government offered nothing. The British people deserve more.
4.20 pm
Jacob Rees-Mogg (North East Somerset) (Con): This aspect of the Queen’s Speech—the issue of the cost of living—is essential to the Government’s fortunes, and, in my view, goes to the heart of what they are trying to do. I am in a good deal of agreement with what was said earlier by my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell). It is what brought the coalition together in the first place.
The essence of dealing with the cost of living is, first of all, getting fiscal and monetary policy right, and I have every confidence that we are doing that. Bearing down on the deficit is the key to ensuring that we have low interest rates, and it is low interest rates that allow people to pay their mortgages, remain in their homes, and cope with the financial difficulties that they face. Many hon. Members have raised housing issues, but the key to affordable housing is for people to be able to afford their mortgages, and that is dependent on interest rates. The singular success of this Government lies in ensuring that there is confidence in the fiscal plan laid out by my right hon. Friend the Chancellor, which has ensured that interest rates have remained low and stable.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) attacked the change in the highest tax rate payable, but that was, without question, the right thing for the Government to do. It is not a question of tokenism. It is not a question of saying “We will have high rates in order to punish the rich, because we disapprove of their lifestyle.” It is a question of deciding what rate of tax will raise the most revenue for the Exchequer.
Let us look back at the history from 1979 onwards. When the highest rate of income tax was 83% and the highest marginal rate on unearned income was 98%, we saw that the top 1% of taxpayers contributed only 11% of the total income tax revenue. When the rate was cut, the income generated for the Government increased. Exactly the same happened following the further cut introduced by Lord Lawson in 1988.
Debbie Abrahams: Is it not also the case that families with low incomes are more likely to spend their money in the local economy and thus to stimulate it? There is strong evidence to that effect.
Jacob Rees-Mogg:
I entirely accept the evidence that people with low incomes are more likely to spend the money that they receive. However, money flows within
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the economy are not limited to expenditure. The saving of money increases deposits at banks and eases their loan-to-deposit ratios. It therefore ensures that the banks can lend more money both to prospective home owners and to businesses.
There is a view among Labour Members, which was also expressed during the Budget debates, of a very closed financial system, but that is quite wrong. There are flows within the financial system. There is a rule of money, that money must find a home. [Interruption.] It is very welcome to come to my home. If hon. Members would like to send it in that direction, I shall not say no. That is the sort of tax I could do with. However, money does find a home, and that is in generating economic activity.
Katy Clark (North Ayrshire and Arran) (Lab): Does the hon. Gentleman believe it is right that the rich are getting richer while the living standards of the vast majority of the people in this country are going down?
Jacob Rees-Mogg: The important thing for the Government to do is to lift the living standards of everybody, but we do not improve the standard of living of the poor by impoverishing the rich. That is what Labour tried when in government before and it singularly failed. If everybody gets richer, the whole standard of living of this country improves, and Government revenues increase when rates of taxation are reduced. It is thought that the ideal rate to maximise the amount of revenue for the Treasury would be 37%, so I would be keen for the Government to do this. It is a great error, for those on all sides, to put short-term political advantage or debating points above the economic benefit of this country. Therefore, we should be bold about rates to make sure that we get the revenue we need for the Government to be able to afford to do what they want to do, to keep taxation overall as low as possible, to pay down the deficit and, ultimately, to reduce the national debt. So on the fiscal side, the Government have got it right.
The other aspect of prices is the monetary side, primarily handed over to the Bank of England, but none the less with a Government target set in relation to inflation. If the monetary side were to get out of control, as we have seen historically that it can, the cost of living increases because of the monetary effect on prices. So there is a careful balance for the Government to have. This Government, unlike our continental partners, have got it right by having a tight fiscal policy and a loose monetary policy, so that liquidity is available within the economic system, but the Government part of it is bearing down on the Government’s deficit and, ultimately, on the debt. That is the right balance, and it will encourage price stability. If we did things the other way around—with tight fiscal and monetary policies—we would have a degree of austerity that is unsustainable, as our continental friends have. If we have both loose money and loose fiscal policy, we will end up with inflation that has pretty much disastrous consequences for the cost of living.
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Jacob Rees-Mogg: I will not give way any more because I do not get any more bonus points, so I must plough on, with apologies to the two hon. Ladies.
That deals with the fiscal and monetary side. The other part of keeping prices down is regulation, and we have heard a good deal about energy price regulation and how it affects households across the country today. My view is that the priority for my constituents is that they should have cheap energy, not that we should insist on large subsidies for theories that some people find attractive and others do not. I am more with my hon. Friend the Member for Monmouth (David T. C. Davies) than I am with the hon. Member for Brighton, Pavilion (Caroline Lucas), even before I have heard her speak, although I look forward to that. So the issue of regulation is key and, of course, that ultimately comes down to Europe.
On Europe, I will make one aside, which is that we are negotiating a free trade agreement with the EU and the United States of America. Singapore, not the largest country in the world, managed a free trade agreement with the United States in 2004. The United Kingdom would have managed to do it a good deal quicker had we not been tied in to the negotiating sloth of the European Union. Had we been doing it for ourselves, that would also have helped to bring down the cost of living, because free trade ensures that there is more competition in this nation.
Finally, on the constitutional issue of some amendments that have been proposed, I am fascinated by the idea that there is to be a free vote on the Queen’s Speech. Previously, a Queen’s Speech not being carried has effectively been a confidence vote in the Government. These constitutional innovations are extremely dubious—it would have been better if they had not happened—but as that free vote has been made available, I shall of course vote a Eurosceptic ticket.
4.29 pm
Caroline Lucas (Brighton, Pavilion) (Green): I should like to concentrate on the final two words of the Gracious Speech, which, unfortunately, give the impression of having been tagged on the end, almost as an afterthought. Those words are “climate change”; I am sure that I will not disappoint the hon. Member for North East Somerset (Jacob Rees-Mogg) in what I am about to say.
The forthcoming legislative programme shows that the Government are failing in their first duty—to protect citizens—precisely by failing to address the causes of the worsening climate crisis. They are ignoring warnings, even from conservative bodies such as the World Bank, that without far more urgent and radical cuts in emissions, global temperatures will rise by an average 4° or more by the end of the century, with devastating impacts as a result.
If the throwaway line at the end of the Gracious Speech really does mean that progress on climate change will genuinely be part of the UK’s G8 presidency, then of course I welcome it, not least following reports that the Government have been blocking the attempts of the French and German Governments to give the issue a high priority.
However, for the Prime Minister to suggest that the Government are successfully taking sufficient action to deal with climate change is simply dishonest. I do not
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use that word lightly, but if we are to have a chance of avoiding the worst of climate change, politicians of all parties and countries will have to get a lot more honest—honest about the scale of the threat that we face and the scope of the changes that we need to make.
Just last week, for the first time in human history, the concentration of carbon dioxide in the atmosphere passed the milestone level of 400 parts per million. The last time so much greenhouse gas was in the air was several million years ago, when the Arctic was ice-free, savannahs spread across the Sahara desert and the sea level was up to 40 metres higher.
The difference between 399 and 400 parts per million may be small in its impact on the world’s living system, but it is overwhelming in its symbolism of our collective failure to put the future of the natural world and its people above immediate self-interest and to tell the truth and admit that reliance on fossil fuels is not compatible with the urgent action needed on climate change. Given the role that fossil fuel lobbyists play in influencing policy, including being seconded into Departments to draft it in the first place, I am also deeply disappointed that the Bill to introduce a register of lobbyists has been dropped from the Government’s plans.
If coalition Ministers are comfortable in their state of denial about the climate crisis and their cosy relationships with the fossil fuel industry, whose core business models are incompatible with keeping global warming below 2°, let it be on the record that young people in particular certainly are not. We can see that in the reaction to the Education Secretary’s attempts to remove climate change from the curriculum for the under-14s and we saw it last week when the fossil fuel divestment movement came in the shape of huge opposition to a new partnership between Oxford university and Shell—a partnership that would have been about getting yet more fossil fuels out of the ground. We see it, too, in the concern that I am sure is manifest in many hon. Members’ inboxes from people still lobbying for there to be a clear decarbonisation target in the Energy Bill, not just promises that that might be looked at in 2016.
If I am disappointed that we heard only one mention of climate change in the Gracious Speech, I am even more disappointed by the lack of meaningful action on fossil fuels. Ministers must be honest with themselves and the public and admit that, if we are serious about avoiding the worst impacts of climate change, the vast majority of fossil fuel reserves must be left in the ground.
David T. C. Davies: Is the hon. Lady going to address the issue of why environmental groups will not support methods of generating electricity that do not produce carbon dioxide emissions, such as nuclear power?
Caroline Lucas:
If the options were either nuclear or more and more fossil fuels, obviously nuclear would be the least worst option. But that is a false choice that we are not facing. There are plenty of technologies out there that need further support—solar, wind, geothermal and many others that are now coming to be equal in terms of price parity. We do not need to go down the nuclear route, which is hugely expensive as well as dangerous. We do not need to go there, so why would
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we? Why not use the technologies that we know will get our emissions down and keep the lights on much more cheaply, effectively and safely?
I turn to a report published last month by Carbon Tracker. It makes the point that we cannot go on using more and more fossil fuels. As Lord Stern explains in the foreword,
“most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement”
to keep temperatures below 2° warming. That 2° warming is the first critical number in the Carbon Tracker report. Governments around the world have agreed that we should not exceed that level of warming. There is already an increase of 0.8° in the atmosphere, so we are getting close to 2°, and 0.6° is locked into the atmosphere. If we are not careful, we will get to 2° very fast, and many people believe that 0.5° would be a safer threshold.
The second number is the 2,795 gigatonnes of carbon dioxide that industry figures indicate are locked up in the known, proven coal, oil and gas reserves around the world. Finally, the figure of 565 gigatonnes is the amount of CO2 that research by the Potsdam Institute for Climate Impact Research identifies as remaining in our carbon budget for the period 2011 to 2015. In other words, we can safely burn only one fifth of known fossil fuel reserves and still keep within the global carbon budget, as the International Energy Agency confirmed in its recent report.
Many people will suggest that carbon capture and storage is the way out of this problem. However, even if CCS were deployed in line with an idealised scenario by 2050, that would extend fossil fuel carbon budgets by only about 125 gigatonnes, which is equivalent to only 4% of the total global budget. CCS is not likely to come online in any serious way until at least 2030, by which point the carbon budget may well have been used up.
The implications of all this are clear. First, the decarbonisation target needs to be in place. We need to make sure that we do not have a second dash for gas. Most crucially, Ministers must require extractive companies to include the greenhouse gas emissions potential of fossil fuel reserves as part of an update on company reporting regulations. If they do not, there is a real risk that our financial markets will have a carbon bubble worth an estimated $16 trillion globally. Because we are so over-exposed in the UK given the global role played by London, our financial centre, in raising capital, there is great concern that companies are inflating their worth because of these reserves.
4.36 pm
Alec Shelbrooke (Elmet and Rothwell) (Con): I rise to support the Gracious Speech.
Without any shadow of a doubt, we live in a global economy. We have heard many speeches about the cost of living based on the domestic policies that are set nationally, and there is indeed an important debate to be had about that. However, like my hon. Friend the Member for New Forest East (Dr Lewis), I regret the fact that we will not discuss international affairs during the debate on the Gracious Speech.
An escalation of issues in the middle east would have a very detrimental effect on the cost of living in this country. Many hon. Members have talked about the cost of energy—oil and gas—in this country and the
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increase in fuel poverty. The stark truth is that that could increase only if we were to move towards a more militarised conflict across the middle east. There are serious concerns about Iran’s nuclear ambitions, but that does not mean that we should take a unilateral decision, or a decision with any other nation, to take military action against that country. The mere suggestion of moving forward there could result in oil price rises across the world that would have a deep impact on the people of this nation, without a single bullet being fired.
We do not get any oil from Iran; we got only 2% before the EU embargo came in. However, a vast majority of the oil coming into this country comes through the Straits of Hormuz, and if the oil traders believe that there is a threat to those shipping lanes, oil prices will inexorably rise. We must remember that oil is bought three months in advance of when it is sold. If the oil traders believe that there may be difficulty in getting that oil out of the Gulf and into our country, oil prices will increase, and that will affect every aspect of the cost of living in this country. It is not just about the straightforward issue of fuel prices. If we are on a bus we have to get a bus ticket, or if we are on a train the electricity has to be generated to run it. The price of oil affects the price of food in our shops, which has to be transported there using fossil fuels. That shows why we should have discussed the effects of international affairs on this nation during our debates on the Gracious Speech.
I do not think I am the only Government Member who seriously questions the wisdom of relaxing the EU arms agreement on Syria. If history has taught us anything over the past 10 years, it is that picking a side and arming it will rarely lead to a useful outcome for world stability. If we side with the opposition in Syria, who are we actually siding with? Many companies in this country that employ many people are now banking with Israeli banks, and that has a direct influence on their strategic fiscal capability. Do we seriously want to empower an opposition that has some, let us say, interesting people on the Islamic fundamentalist side who are right next door to a country that the vast majority of Arab countries would like to see removed from the face of the map? That instability, linked with Iran talking to Hezbollah and a change in the dynamic in Syria, could have a direct consequence on the ability of companies to operate in this country.
Dr Julian Lewis: Would my hon. Friend also like to make an observation on whether the task of humanitarian intervention has been made that much more difficult by the way we went about it in Libya? We said that it would be a very limited, no-fly-zone-type intervention, but we ended up intervening much more directly on one side, and in a strictly military way, in a civil war?
Alec Shelbrooke: I am grateful to my hon. Friend for raising that point. That is a recent example of a country that we helped to liberate, but it led to issues for our embassy and that of the US. That paints a picture. However good the intentions to solve a crisis may be, the question is: what comes next?
That is not to say that we should shirk our responsibilities towards humanitarian aid. More than 1 million refugees are flooding out of Syria into Jordan alone, a country
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that is ill-equipped to deal with that number. We will eventually be called upon to help with that humanitarian crisis and it is important that we will, again, be there for our fellow man. I come back to the point that, when we debate the cost of living in this country and the Government’s programme over the next year, we should also discuss international issues, because, importantly, they are interlinked with everything we do.
In 1983, when I was a child of just six or seven years of age, the film “Threads” was made. I watched it recently and am sure that a number of other Members have also seen it. It is set in Sheffield in the 1980s in the aftermath of a nuclear holocaust. It is a sobering film and it should be watched. What struck me about it is that those who made the decisions that caused the wars to take place did not feature in the film. Indeed, given that it was set in Sheffield, the decisions were being made 190 miles away in London and elsewhere in the world. That is the point I am trying to make: we have to take notice of the innocent people on the ground and of the impact of our decisions.
We live in a highly volatile world and have to be very careful about how we move forward, and it is regrettable that the debate on the Gracious Speech has not given us the opportunity to address these issues, which could have such a fundamental impact on our cost of living.
4.44 pm
Geraint Davies (Swansea West) (Lab/Co-op): It is a pleasure to follow the hon. Member for Elmet and Rothwell (Alec Shelbrooke), although I do not think that the spot price of oil should be the determining factor in whether we intervene in a country where 70,000 people have been slaughtered and 1 million more have been made into refugees. That should not have been a consideration in Libya either.
The centrepiece of the Queen’s Speech, with respect to the cost of living, should have been a strategy for growth. That was sadly missing from the rag-bag of old ideas that we have seen before. Contrary to what was said by the hon. Member for North East Somerset (Jacob Rees-Mogg), who is no longer in his seat, under this Government, the debt to GDP ratio will have gone up from 55% in 2010 to 85% in 2015, debt is rising by £245 billion and we have lost our triple A rating. The idea that all is rosy in the garden is farcical.
What we need is growth. To his credit, the Prime Minister is in Washington trying to negotiate an EU free trade deal with the United States. At the very same moment, the Eurosceptics—or should I say Euroseptics—are busy undermining that prospective agreement with a great trading partner. That is very sad.
Catherine McKinnell: My hon. Friend is making a powerful point about our international position. Does he share my concern over the figures from the Office for National Statistics that came out today, which show that the UK has plummeted to 12th in the league table of household incomes? That shows that not only are people suffering, but we are falling behind our international neighbours and competitors.
Geraint Davies: That is a key point.
We are always hearing that everything is all right in the UK and the problems are someone else’s fault. The EU does have problems, but there are emerging opportunities in China, India, Brazil and elsewhere. The
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Queen’s Speech should have provided a strategic platform for international trade to help us access the newly emergent and massive middle classes who want to take our consumer goods and who form the basis of inward capital investment. But no, we are busy being the one nation, fish and chip shop, Eurosceptic Britain—the nation of shopkeepers that Napoleon described us as. It is frankly pathetic. The Conservatives are not fit to be in government.
Between 1997 and 2008, we saw growth of 40%. Not enough Labour Members stand up and defend that. If our debt to GDP ratio is going from 55% to 85%, how can we sort it out? One way is to cut debt and to stamp on the poor for the recklessness of the bankers, which is what the Tories are doing. The other is to increase GDP so that the ratio goes down. Under Labour, GDP went up by 40% up to 2008. In 2008, my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and President Obama put together the fiscal stimulus. The EU’s fiscal stimulus was 2% of GDP. In the United States, it was 5% of GDP. Indeed, the United States put in $2 trillion of quantitative easing, whereas the EU put in nothing. Britain did put in something, but we still have the economics of austerity here and in Europe. In the United States, where the economy was stimulated, growth is projected to be 3% in the next year. In the EU, it is projected to be 1%. Why was nothing done about that in the Queen’s Speech?
We have seen the emergence of massive youth unemployment. In Greece, the rate is more than 60% and in Italy it is 38%. In Greece, people are moving towards the Nazis and extreme communists. In Italy, 25% of people voted for a comedian. I notice that that is the same percentage of people who are voting for UKIP here. The British National party’s support has gone up fourfold from 1% to 4%. The response of the Tories is to run for the hills and emulate UKIP.
Why has support for UKIP gone up? The first reason is that the Prime Minister has given it credibility by saying that he will hold a referendum. People who used to say to me when I knocked on their doors, “You must be joking. We’ve got millions of jobs involved in trade with Europe. It’s the platform into China, India and the United States”, are now thinking, “Hold on. Cameron’s offering us this option, so it must be a credible choice.” That gives oxygen to UKIP.
Alec Shelbrooke: What is the hon. Gentleman’s reaction to the hon. Member for Lewisham West and Penge (Jim Dowd), who said that their party should support a referendum on Europe?
Geraint Davies: Obviously, I disagree with that. I do not agree with a referendum, but if the overwhelming majority of people in Britain want one, I accept that we should have one. I am simply saying that the case for a referendum has been whipped up because of the Conservatives’ fear of UKIP. They have fed it red meat, and it is coming back for more.
It is the same with immigration. Everyone is going, “Oh no, there’s too much immigration. It’s terrible, isn’t it?” However, immigration was part of the reason for our economic growth. We prematurely let in some of the people from Poland who would have been able to come here anyway, and meanwhile Germany is saying that it needs more immigrants to pay for the generation
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that is growing old. We obviously need to manage immigration properly and carefully, but we should consider that 6% of immigrants are on benefits compared with 16% of indigenous people.
We are providing ammunition for people to blame immigrants, and what was in the Queen’s Speech? Private landlords and health providers will have to find out whether someone is an immigrant and whether they are legal. What will be the easiest test of that? “Are you white or are you black?” It is institutional racism. We are feeding the UKIP voters by saying, “The austerity problems aren’t Tory austerity problems, they’re because of all the immigrants.” Is that helping anyone and creating a united and strong Britain with a one nation future? No, it is creating a weak, divided nation of people who are being crushed by the Tories, and the poorest are blaming the immigrants. It stinks.
Geraint Davies: I had better give way to the hon. Member for Monmouth (David T. C. Davies), because he is likely to say something more ridiculous, as a fruitcake.
David T. C. Davies: I am grateful to the hon. Gentleman, not least because I am married to an immigrant and fully support the Government’s policies.
The hon. Gentleman mentioned a statistic, but 100% of indigenous people in Britain are entitled to receive benefits. What percentages of those who have emigrated here are entitled to receive them? I do not know, but it is much lower than 100%, so the statistic that he gave is inaccurate.
Geraint Davies: I certainly do not accept that. My basic point about the cost of living, which is what we are talking about, is that the bottom 10% of people in Britain spend 37% of their money on food, energy and housing costs, whereas for the top 10% it is less than half that proportion at 17%. As basic costs escalate, benefits are squeezed and the overall amount of money that people have is crushed, including their working tax credit and the like, and the people right at the bottom can barely survive while the people at the top are laughing. It is all very well saying that the rich are paying more, but the wages of the top 10% have gone up by 11% in the past two years.
I am not even talking about the 5% tax giveaway, but what a laugh that is, with the Government saying, “Oh, we’ll raise more from a 45p rate than a 50p rate.” People on the top incomes can move their income between tax years, so that is why there will be a lower take. There will be a behavioural change. If the 50p rate was ongoing, we would raise more. Indeed, some people already pay 50%, because those who pay 40% also pay 12% in national insurance, so their marginal rate is already 52%. The only difference is that they do not have accountants. It stinks. The reckless bankers, who were two-thirds responsible for the deficit in 2010, are being rewarded in their pay packets while the poorest are being squeezed and we are giving a bit to the squeezed middle.
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4.53 pm
James Morris (Halesowen and Rowley Regis) (Con): As I have knocked on doors around Halesowen and Rowley Regis over the past five years, a common theme has come up time and again. My constituents, and I suspect those around the country, have been looking for reassurance that the Government are on their side as they go out to work and try to do the right thing and take responsibility for themselves and their families.
Many families in my constituency are starting to see things get better. There are now 3,000 more of my constituents in work than there were before the general election. For many, however, things are still a struggle. They want to see evidence that the Government understand that things are tough for them and their families. They want action to make things a little easier, and they want to have confidence that, at the very least, their Government will not make things unnecessarily difficult.
I am pleased that the Energy Bill has been carried over. It will give legislative force to the requirement on energy companies to put customers on the cheapest tariff to meet their needs. When the Prime Minister announced that the Government would ensure that energy consumers were put on the cheapest available tariff, the Opposition’s reaction was that it could not be done, presumably because they knew that when they were in government they had lacked the political will to make it possible. They then changed to arguing that it would not be done—presumably because they knew they would not have done it—and they now seem to argue that it is not worth doing. The truth is that it could be done, it is being done, and it will benefit many of our constituents, particularly the most vulnerable.
As a humble Back Bencher, I hesitate to pick faults in the way Ministers choose to communicate the Government’s achievements, but the message that a series of freezes in fuel duty represents help for drivers tells only half the story. Motorists will, of course, be the most obvious direct beneficiaries of getting fuel costs under control, and drivers in my constituency will, on average, be £170 better off than they would have been had the Government gone ahead with the increase in fuel duty planned by the Labour party. However, I cannot help but think that that message sells the Government short. Transport costs are a significant part of the cost that families pay in shops, particularly for food, and they have a real impact on the cost of living for motorists and non-motorists alike. Poor grain and fruit harvests last autumn have created significant pressures on food prices globally, and the Government’s action to prevent fuel costs from needlessly rising and adding to those pressures will help to stop spiralling food prices that could hit hard-working families hard.
Huw Irranca-Davies: What does the hon. Gentleman make of the National Farmers Union’s repeated call over the past few months for an extension to allow seasonal agricultural workers from beyond EU borders—places such as Moldova and Bulgaria—to come to the UK and pick the crops in the fields because of that issue of affordable food? How does that tie in with the Government’s thinking on immigration?
James Morris:
I thank the hon. Gentleman for his intervention but my constituency contains, I think, half a farm, so I am not qualified to speak on the matter he
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raises. Like the measures contained in the Budget, the action the Government are taking will provide significant help for families in my constituency, and I shall be proud to support them.
I understand that it is this year’s fashion to talk about matters that we wish had been included in the legislative programme, and if I may make one plea to Ministers, it would be to add my voice to those of right hon. and hon. Members—led by my hon. Friend the Member for Harlow (Robert Halfon)—who are calling for measures to stabilise fuel prices to be taken further. With wholesale prices having fallen from their peak, it would be a good time to revisit the idea of a fuel duty stabiliser to protect families and businesses from some of the damaging effects of volatile fuel prices. Should the Government return with such plans, I am sure they would enjoy not only the support of the House but—more importantly—they would make a real difference to our constituents.
The positive action that the Government are taking to address the cost of living stands in stark contrast to the record of the previous Government, although that is hardly surprising. Why would a party that had convinced itself that it had abolished boom and bust worry about rising prices? A Government who believed that the benefits of boom would not be followed by the crisis of bust were happy to assume that they could go on handing out enough in benefits and tax credits, and that a policy of uncontrolled immigration would provide enough cheap labour to keep service costs low. The Leader of the Opposition may have started to talk about energy costs, but he cannot hide from the fact that when he was the Cabinet Minister responsible for such matters, he stood by while the margins of energy suppliers soared.
I am pleased to support the Government’s legislative programme, and in particular actions to keep the cost of living under control. People in Halesowen and Rowley Regis who work hard and want to get on but who have been finding things tough can see that these measures will help to make things a little easier. They can see that this Government are on their side.
4.59 pm
Sheila Gilmore (Edinburgh East) (Lab): I should like to address housing, which hon. Members on both sides of the House must start to take seriously. In 2012, the Institute for Public Policy Research showed that, in the current spending review, nearly £95 billion will be spent on housing benefit compared with just £4.5 billion on building affordable housing. That means that for every £1 spent on affordable housing, £19 will be spent on housing benefit. We should therefore not be surprised that the housing benefit bill has been rising. We accept that, but the problem is that the Government have not analysed the reasons for it, and have decided to address housing benefit spending by trimming bits of money off recipients of housing benefit here and there. For those individuals, those bits of money are not insubstantial. For somebody on £71.70 a week, losing £12 a week because they have to pay it towards their rent is extremely significant in their cost of living. The policy does not make sense for the country or for those individuals.
In the 1970s, 80% of housing expenditure was for building houses—very little was spent on rent subsidy. As a result, many working people, including people in
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relatively low-waged jobs, had affordable housing in which to live. They therefore did not need to claim benefits. No wonder people say, “Too much goes on benefits.” The money is going in at the wrong end.
The previous Labour Government did not address the problem in the way that I, as a councillor active in housing, would have liked. Many Labour Members have said that for some time. I was pleased that the shadow Secretary of State for Work and Pensions said recently in an article in the Evening Standard that one principle of the next Labour Government would be to redress that.
Geraint Davies: My hon. Friend will know that the cost of housing benefit has doubled in the past 10 years to about £20 billion, but is she aware that 70% of the increase is because of private sector rent increases? Does that not make her case for building more affordable housing, not just crushing the poor?
Sheila Gilmore: As recently as February 2009, about 1 million private rented tenants claimed housing benefit. By October 2012, that number had risen to 1.7 million. Far more people in the sector need to claim housing benefit, largely because they are on lower wages or have lost working hours because they are on poor contracts.
Damian Collins (Folkestone and Hythe) (Con): Does the hon. Lady believe that mass immigration has contributed to the massive increase in demand for social rents and housing benefit?
Sheila Gilmore: No, I do not believe that. In fact, the number of recent immigrants who are housed by councils and housing associations is very small. The problem is the lack of building of affordable housing.
Government policy is about to stoke that problem further. They have decided to say that affordable housing is housing built at 80% of market value. They can therefore say, “We have replaced housing. We have built affordable housing.” However, that will stoke the problem further, because more people in that form of housing will have to claim benefit to afford it. The policy does not make sense. In 10 years’ time or even five years’ time, if that continues—hopefully it will not continue, because there will be a change of Government—people will turn around and say, “Why did the Government do that? Why did they yet again put all the onus on revenue and give us an even bigger benefit bill?”
As it turns out, the problem is happening not just in England. There is also a cut in the amount going for affordable housing in Scotland. We are building far more mid-rent housing, as it is called in Scotland. It is about 80% of market value. That is the only way in which housing is being built. I do not see any reason for not having some mid-market rented housing as a supplement to what is there already, but when it becomes a substitute for truly affordable housing, we are storing up problems with the balance of what we are spending.
Much has been made by this Government and the previous Government about the importance of making work pay. The cost of housing is one of the essential determinants of whether work pays or not. People get trapped by the lack of cheap, affordable housing. As my city is so short of housing, we introduced a scheme which solved the crisis for some people. I recently met a
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constituent who had separated from her husband two years ago. She had two children and no home to go to, so she applied to the council as homeless. She was in a crisis—the relationship had been violent—so she accepted a property under a private sector leasing scheme, in which the council leases properties from the private sector. It was a relief to her at the time, because she had a safe home for herself and her daughters. She was not working at the time; her life was in such a crisis that she had had to give up her job as well as her home, so she was receiving housing benefit to pay the very high rent.
Two years on, my constituent is ready and anxious to get on with her life. She wants to get a job, but she is stuck with a rent that is more than double the rent of a council or housing association house. She has been advised that if she got a job she would still get some housing benefit to help pay the rent, but she would still have to pay as much rent—from a fairly average wage—as she would have to pay on a council property. Everybody would lose out. My constituent would lose out, because it might not be worth her while to get a job, and taxpayers would lose out because they would still have to pay half the rent for her to live in a property that she does not now particularly need or want to live in.
We have to solve this problem and we have to do so quickly. The best way is to start investing directly in the building of affordable housing. If we do not do that, we will never be able to tackle the housing benefit bill. If that had been in the Queen’s Speech, we could have made some real progress for many people. My constituent is not alone, she is just a recent example of how people can get stuck. In fact, that is her word—she is stuck and she would have welcomed some progress from the Government in the Queen’s Speech.
5.7 pm
Damian Collins (Folkestone and Hythe) (Con): Several hon. Members have touched on the initiatives that the Government have put in place to try to address the cost of living. I am pleased that my local authority, Shepway district council, has frozen council tax for three years in a row—as Kent county council did this year too. Measures to stop increases in fuel duty have had a direct impact on the lives on millions of people in this country, and I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on his campaign on that issue. The Government have also taken the first steps any Government have taken to bring in measures to guarantee that consumers receive the lowest energy prices. I welcome all those measures.
One issue that has not been addressed in this debate is the Labour party’s commitment to increase borrowing—it says in the short term—as part of its programme for government. It is very reluctant to be drawn on this, but it should be drawn on it, especially in a debate on the cost of living, because of the consequences it would have. The country direly needs to live within its means and reduce its debts and deficit. If it deviates from that track because of the Labour party’s desire to spend more money—money that it does not have—we have to wonder how the money will be raised. Will it be raised in taxation—by asking people to pay higher taxes—or by higher borrowing, which will be passed on to consumers in higher mortgage rates? We have been down this track before and we have seen the consequences, which is why
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the Opposition are so reluctant to be drawn on the consequences of their policies and what they will mean for people’s lives.
Huw Irranca-Davies: This morning I was at a breakfast meeting with a contingent from the Civil Engineering Contractors Association, which has published a report that advocates increasing expenditure on infrastructure, not necessarily through the public sector but through imaginative use of private sector investment, including being underwritten by the Government at a time when interest rates are at a record low. Does the hon. Gentleman approve of that?
Damian Collins: I am grateful to the hon. Gentleman for his point, because it provides a neat segue into what I want to talk about next. Of course, the Government welcome investment in major infrastructure projects that improve the competitiveness and underlying strength of the economy, and there are numerous schemes where that is taking place. If I look at investment in jobs in my own area through the work of the regional growth funds, I see that £35 million is being spent in east Kent to create new jobs. Businesses such as Wooding in Hythe in my constituency have already received £1 million and they are hiring people on the basis of that investment. Of course we welcome that type of investment, but we are hearing from the Labour party a desire for a short-term, temporary cut in tax to act as a stimulus to the economy, with no real sense of where that money will come from or how it will be costed and paid for. My concern in this debate on the cost of living is that the people who will end up paying for those policies will be the consumers. People will pay through higher taxes, and higher interest rates on their mortgages if they are homeowners.
I will come back to the point made by the hon. Member for Ogmore (Huw Irranca-Davies) on imaginative partnership with the private sector to increase investment, which also touches on the speech made by the hon. Member for Edinburgh East (Sheila Gilmore) on the housing sector. One of the biggest elements of the cost of living is housing. Rent, servicing a mortgage or finding the money in the household budget to try to save and buy one’s first home are all significant costs. I am attracted to schemes where local authorities seek to work with institutional investors to fund the building of new homes that will be run by arm’s length management associations and councils, effectively producing a private partnership with a local authority to build new council houses and to borrow money from an institution over a 40-year to 50-year period. That is a sensible thing to do, and is what any organisation would do. If it is ultimately responsible for paying the rent through housing benefit, why would it not seek to control the end product too? That will give us more opportunities not only to provide people with lower cost homes to rent, but, in time, for even more people to benefit from the right to buy scheme, and for the money to be reinvested into providing new, high-quality homes. That would a good thing: it would reduce some of the costs of renting and be a good thing for the housing market as a whole.
Such a policy would also help to do something to address the scandal of the poor quality of many homes in the private rented sector which are offered to tenants
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claiming housing benefit but are not fit for habitation. Local authorities should use powers, which they already have, to take action against those landlords. I welcome, in part, the measure in the Queen’s Speech that will create an obligation for private landlords to ask whether people seeking accommodation are qualified to receive it. That will ensure that they are in the country legally and not in breach of the law. That is a good thing, because we will probably find that it is the rogue landlords who are happy to take the money and not ask any questions, and who are making money not out of people who are here illegally, but from some of the poorest people in our society. We should clamp down on that, because it is public money, paid out through housing benefit, that they are profiting from, and we should take firm action against it.
Geraint Davies: Does the hon. Gentleman agree that most landlords have a single property and rent it out themselves? They simply do not have the resources to verify whether a prospective tenant is an illegal immigrant. Making those landlords illegal is outrageous, quite apart from promoting racism.
Damian Collins: I disagree with the hon. Gentleman. I think it is very easy to ask those questions and for those checks to be made. Most landlords will probably say that they are paying very large sums to agents to act on their behalf to make these checks. Hundreds of pounds are paid on every transaction by both the tenant and the landlord in managing the private rented sector, so I do not see why those questions would not be asked. Legitimate landlords have nothing to fear. It will be the rogue landlords, who rip people off and exploit the illegal status of some of the people they give accommodation to by keeping them in cramped and unpleasant accommodation, who will have something to fear. It is good for the country that those people fear such intervention.
Many people, particularly young people saving to buy their first home, find the size of the deposit required prohibitively large, and the attempt to save that extra money undoubtedly bears on their cost of living. The Help to Buy scheme, which will support people’s deposits when they buy a new home, must be welcomed as a measure to help many people on to the housing ladder and to give them a far better standard of living and accommodation. This positive initiative will also have a beneficial legacy for the construction sector, giving people greater confidence to build on the property sites currently held in land banks that have planning permission, but which are not being built on because people are concerned that there are not enough people to buy. This scheme will give them the confidence to build, knowing that people will be able to afford the homes because their deposits will be covered.
Finally, on a subject linked to housing towards the end of people’s lives, the Care Bill will end the requirement on people to sell the property for which they have worked and saved all their life in order to meet their care costs in later life. It is unfair that people who have made sacrifices throughout their lives are asked to make the final sacrifice of selling their home to pay for some of their care costs, when others are not put in that position. It is right to cap those contributions: it will reward people’s hard work and aspiration and send out
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a positive message about the sort of country we are and how we want people to make those sacrifices, work hard and put something by for themselves and their family to have and use later in life. The Care Bill is a positive step in that direction.
I welcome and commend the Queen’s Speech and today’s debate.
5.16 pm
Ms Margaret Ritchie (South Down) (SDLP): At the heart of this debate are two fundamental questions: what is the economy delivering for people and why does it seem to be delivering more for some than for others? A functioning economy needs to work not just for those at the top but for all those who contribute to our businesses, industries and public services. We should all be concerned by the income gap and the disparity between those at the bottom and those at the top, and we have a responsibility towards those who put in so much but currently get little of the reward. Since the 1970s, wages have grown twice as fast for the top 10% as for those earning medium incomes.
Such inequality is not just an abstract economic problem; it fosters division and can be linked to several serious social problems. This should elicit not some glib response about the politics of envy, but a realisation of interdependence in our economy. The Government’s proposed consumer rights Bill is to be welcomed, and I await the details with interest, but there is little in this sparse legislative agenda to tackle the fundamental economic problems we are facing. What message is being sent out when remuneration is clearly no longer tethered to economic worth and input, and what message are the Government sending out when they cut the top rate of tax while introducing a 1% cap on benefits that will hurt children and families?
Currently people are having to work longer hours, pay more at the pump, pay more for their weekly shopping and struggle to budget for the increased cost of keeping the heating on. Every day can become a struggle. We have an economy with high inflation and record fuel, food and energy prices, combined with high unemployment and wage stagnation. That is the real pain that people are feeling in Northern Ireland. Growth has been non-existent under the coalition Government, which again is not an abstract consideration, but is being felt by people on a daily basis. A recent poll by the Consumer Council for Northern Ireland found that nearly 50% of people were extremely concerned about their ability to make ends meet and that people in their 30s and 40s were most concerned that they might lose their job, while those in their 20s were concerned that they could not find one. This paints a picture of a population that has lost faith in the economy and no longer believes that it will meet their aspirations.
Many Members have today discussed the pressing problems of rising fuel, food and heating costs, and this is especially the case in Northern Ireland where we have experienced the highest fuel prices in the UK and Ireland every month in 2013. The latest AA report for April 2013 indicates that Northern Ireland is the second most expensive place to buy diesel in the EU. The cost of filling up an average saloon car with a 50 litre engine is now £75, and 90% of customers report that they are spending more than they did two years ago, despite consciously trying to use their cars less.
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It is a similar with energy costs. The cost of gas has risen by 38% and the cost of heating oil by over 68% since 2009, meaning that consumers face annual bills that are over £600 more expensive than five years ago. Many of those people are also facing deepening levels of fuel poverty. In the supermarket, consumers are faced with a £20 rise in their weekly food shop. These factors—filling a car to drive to work, paying energy bills and feeding a family for a week—are all compounded, leaving people constantly feeling under pressure.
I see very little evidence from the Queen’s Speech that the Government grasp the fundamental challenges that they face to restore growth and confidence to the economy. The Government should be creating investment, not insecurity. There needs to be an economy to which everyone feels connected, one that is grounded in a degree of fairness.
More specifically and more immediately, I support measures such as the sectorally targeted VAT reduction on tourism and hospitality products, which has been successful in other European countries. I also call on the Government to deliver on the peace dividend that was promised for Northern Ireland back in 2007 in order to pump-prime devolutionary measures, as well as to ensure that our standard of living and rising unemployment no longer create those social divisions that have been relevant for some time. In that regard, I urge Cabinet Ministers to sit down with the Northern Ireland Executive to put a proper long-term economic deal in place.
5.22pm
Robert Halfon (Harlow) (Con): I welcome this debate because I believe that the Government’s record should be welcomed for a number of reasons. First, despite a number of factors outside their control, they have taken measures to help families—for example, with the cost of fuel and utilities. Secondly, the Government have recognised that tax is the biggest brake on the cost of living and have cut tax for low earners. Thirdly, the Government have realised that, besides tax, the best way to reduce the cost of living is to encourage people to move from welfare to work by increasing their skills.
Before I look at these things, however, we should look at how Labour has undermined the cost of living. As some Members have commented, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has said that the wages of our constituents have fallen by £1,700 a year since the election and that our constituents are getting poorer. But as the Resolution Foundation made clear, median real wages stopped rising in 2003, a full seven years before the coalition came to power. We should not forget that Labour left office with 2.5 million people unemployed.
I believe that the Government are listening and I welcome the action they have taken to ease the cost of living, particularly the cost of fuel: they have frozen fuel duty for three years and cut it by 1%. All these measures were opposed by Labour. Yet 800,000 families still lose a quarter of their income at the petrol pump, and the average cost of unleaded petrol has risen by 60% since January 2009. Fuel duty is not just a tax on fuel; it is a tax on everything. It pushes up the cost of public transport and of food. With 71% of us still driving to work, fuel is an essential.
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It is also right that we should have transparency. I have argued that the Government should make it compulsory for receipts to display how much of what the customer pays for fuel is tax. That would show that, despite the fuel duty freezes and the decrease in the cost of oil internationally, oil companies continue to increase the cost of fuel. News is emerging today to suggest that major oil companies have rigged the oil market. This is being investigated by the European Commission, and if it is true, I believe—I argued this last year in a debate in this House—the Government should not only fine the oil companies but consider imposing a windfall tax on them and passing those tax receipts back to the consumer through lower fuel duty.
I am pleased that there is a water Bill in the Queen’s Speech. Water companies are making big profits. In 2011, they paid out £28 million in bonuses, yet for families feeling the squeeze, water bills have risen by 82% over the last 10 years. I asked the Government to take further action to break the monopolies and to increase competition between water companies, which would allow for reinvestment in the water system that would keep bills low in the long term. A windfall tax should also be considered so that money could be handed back to consumers.
I welcome the fact that the Government recognise that the biggest brake on the cost of living is taxation. I am pleased that they are making progress in reducing taxation, including taking 3,000 lower earners out of tax altogether in my constituency of Harlow. I have urged the Government to reintroduce the 10p tax band that Labour scrapped in 2008 for those earning up to £12,500, which is the level of the minimum wage. That would give a cash boost to minimum wage workers of £250 a year.
One of the biggest problems in meeting the cost of living is the bill for the taxpayer from the welfare state. The average taxpayer on lower earnings pays £1,220 a year on welfare from the tax they pay. The Government are right to build an economy in which those who work are rewarded. It is right that the welfare bill is reduced. The reality of Labour’s policy to increase the welfare bill is that it would increase the tax bills of millions of lower earners across the country.
The final way to address the cost of living is to deal with the skills problem. It is no accident that those with the lowest skills are those with the lowest pay. The Government are tackling that by investing in half a million apprentices—the number of apprentices in Harlow has increased by 78% in the past year alone—and the building of 24 university technical colleges. We have also talked about the technical baccalaureate and other measures that the Government are making to improve vocational training. These are all the kind of things that will help with the cost of living in the long term.
I end with a quotation from a former Labour Prime Minister, Jim Callaghan, who understood that to reduce the cost of living the deficit had to be brought under control. He said:
“We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that option no longer exists.”
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5.28 pm
Alison McGovern (Wirral South) (Lab): I want to raise two matters in this debate on the Queen’s Speech that are of serious concern to my constituents: food prices and the price of public transport.
However, although we are talking about the cost of living today, it is important first to recognise that people are facing a significant amount of insecurity in their working lives. The Department for Work and Pensions has recently been rapped for the way it uses statistics. Nowhere is that happening more than in its communication about what is going on in our labour market, as people face the prospect not only of employment but underemployment. To be frank, many people in my constituency face a perfect storm of not getting enough hours to get money coming in and prices increasing at the shops.
Global food price inflation is serious and significant; we have seen two large price spikes recently, in 2008 and 2011. These high, volatile prices are causing serious problems at home and around the world. As a global issue in countries without systems of social protection for the poorest people, they are a total, unmitigated disaster, but the problem of food prices is also troubling every community in Britain—not only the classic poor areas, however we might define them, but every town in our country.
I pay tribute to the people who volunteer their time and effort, and their own cash, to help the charities that are trying to put a sticking plaster on the wound. Their efforts are welcome, but the long-term solution must be to support small agricultural producers to help them to grow, and to ensure that we have a system of social protection that works well to support people’s incomes, so that they can afford the food in the shops. I would also add that, from a global perspective, we need to support measures such as fair trade. Locally in Wirral, we are not going to stand by and let people face those rising food prices on their own, even if the Government are adding insult to injury with their economic management. Wirral council is coming up with a food plan, which will help farmers and producers as well as helping people to access nutritious, affordable meals. I look forward to adopting that approach on my patch.
On transport prices, bus prices are high in Merseyside. This particularly hurts young people trying to get to college or to work. Whenever I meet groups of young people in schools, at youth clubs or at scouts or guides, I consistently hear about the difficulties they face in getting to work, to college or to after-school activities because of the price of public transport.
As we have seen in recent years, cities offer a real chance for growth. Places such as Liverpool and Manchester are progressing and their populations have risen as they have successfully built themselves up as part of our new economy. Connections within and between our cities must improve, however. We need to look not only at capital infrastructure costs but at the day-to-day costs for people who are just trying to get around. Labour’s policy, which we have put forward as an alternative to the Queen’s Speech, involves bus deregulation exclusion zones and represents the right approach to getting more accountability in the provision of public transport. Such a policy would ensure that my constituents could afford to get around.
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We know that, when people are thinking about their job options, they factor in not only the length of time it will take to get to work but the cost involved. I find that people on the lowest incomes who are thinking about moving into work or changing to a better job are often rightly risk-averse on account of the transport costs involved. That is why it is incumbent on all of us here to ensure that people can get around.
The hon. Member for Harlow (Robert Halfon) has just quoted James Callaghan, in a kind of parody of what Keynesian economics is all about. I would say to the hon. Gentleman that, although it has occasionally been a challenge for me as a progressive politician to get the paradox of thrift on to leaflets, I think that everyone now understands that this Government have gone too far and too fast.
5.34 pm
Graham Evans (Weaver Vale) (Con): It is a pleasure to follow the hon. Member for Wirral South (Alison McGovern). It was interesting to hear what she had to say about James Callaghan. Growing up on a south Manchester council estate during the Labour years is one reason why I am on the Government Benches and not on the Opposition Benches. Callaghan’s was a complacent Government who were totally out of touch; as we all know, he was replaced by a certain Margaret Thatcher.
I rise to support the Gracious Speech, and I am pleased to be able to make a short speech on the cost of living and people’s ability to save for their retirement. When we consider the nature of our roles in this place, it is extraordinary to look at our society now and in the future, as no real reform to pensions has been made in generations. The world around us has changed so much and our expectations of living standards and life expectancy exceed anything that could have been imagined when the first state pension of five shillings for those over 70 was introduced in 1909—in the famous “People’s Budget” introduced by the then Liberal Government. The pension age remained at 70 until 1928, when the Conservative Government under Stanley Baldwin reduced it to 65. Conservative Governments have always been reforming Governments, particularly when it comes to pensions. Back then, there were limits on what one’s private income could be and having too much furniture could prevent people from being eligible for the state pension.
This House has tried time and again to keep pace with changes to the average person’s working life, but instead of there being a clear, logical plan to make sure that every person in this country can look to a retirement where there is certainty and continuity, the issue has become complicated and confusing. As the relative worth of the basic state pension has dropped, additional payments have been tacked on, which have led to a generation heading to retirement age without knowing what to expect from their pensions, how they need to save or what the cost of living will be.
The increased dependence on means testing, with all the complications that result from it, has meant that a third of pensioners do not claim the pension credit to which they are entitled because they have not received the information they need. That is not to say that Governments have not tried to take steps to reach them,
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but the confusing nature of eligibility means that many people simply have no idea of what they are entitled to receive. Some of the criteria for eligibility may seem just as odd as the furniture requirement of the 1909 state pension. What is clear, however, is that when the safety net fails to support the most vulnerable, we know something must be done.
Equally, there is no such thing as a job for life. I remember growing up in a south Manchester council estate in the 1970s. My neighbourhood had three industries—the textile industry, the aerospace industry and the growing pharmaceutical industry—and most people worked within them. Forty years later, there is no textile industry, there is no aerospace industry and the pharmaceutical industry is consolidating by moving abroad. That means communities have to reinvent themselves, just as we as individuals have to reinvent ourselves and just as our country has to reinvent itself to compete in a highly competitive 21st century world.
With the rise of new technologies, we should be encouraging entrepreneurs to take their own initiative and build their own businesses. That is why I welcome the inclusion of the self-employed in these reforms, based on national insurance contributions. We can thus encourage business and growth, while guaranteeing a pension for those young entrepreneurs as well.
These reforms are not about our future, but are about our children’s future—and, indeed, our children’s children’s future. We are setting up a system whereby this country’s under-25s will have the security of knowing exactly what to expect from their state pension. They are safe in the knowledge that the new, single-tier pension will be uprated in accordance with higher earnings and will always be above the escalating cost of living. Government Members are safe in the knowledge that we acted in the national interest, took the long-term view and are making the big changes necessary to secure our children’s future. That is why I welcome the Queen’s Speech and the underpinning objective of this Government—that it always pays to work and it always pays to save.
5.39 pm
Huw Irranca-Davies (Ogmore) (Lab): It is a delight to speak in this Queen’s Speech debate, focusing on the cost of living. It is also a delight to follow the hon. Member for Weaver Vale (Graham Evans), who referred back to sunny Jim Callaghan, who was a Cardiff MP. I would like to pick up on the hon. Gentleman’s theme of pensions. He says that what happened under sunny Jim and subsequently made him end up on the Conservative side of the House. One of the reasons for my ending up on the Labour Benches was the fact that before I came here in 1997, the state pension was £64 and there were searing, scandalous levels of pensioner poverty. I say to the hon. Gentleman, with all due respect, that it was clear that something had gone horrendously wrong when people were literally dying of hypothermia in their homes. We do not see that nowadays, and it is something to which we cannot return.
As my right hon. Friend the Leader of the Opposition has said, the pension reforms that will introduce a more contributory basis are very welcome. It is good that it will be possible to lift everyone out of means-testing so that people can have what should be theirs as of right,
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including carers, and mothers can stay at home and contribute to family life. However, when Labour came to office we responded to a very real crisis in the country.
Earlier today, a Member asked my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) what Nye Bevan would say about something. Everyone goes back to Nye Bevan quotations: what would Nye Bevan be saying if he were speaking here today? There is a tremendous panoply of such quotations, but I recall that when his party was in opposition he said, facing the then Prime Minister across the Dispatch Box,
“The Prime Minister has an absolute genius for putting flamboyant labels on empty luggage.”—[Official Report, 3 November 1959; Vol. 612, c. 870.]
That is what this Queen’s Speech is. It is indeed a flamboyant label—it is the Queen’s Speech—but the Queen is travelling very light indeed in the new parliamentary Session.
Alison McGovern: While we are wondering what the great Nye Bevan might have said, may I ask my hon. Friend whether he thinks that, if Nye Bevan were around today, he might have said “Vote Labour”?
Huw Irranca-Davies: Nothing but, and never anything else!
I should have liked to see, in the rather light luggage that we are carrying, a consumers Bill to tackle rising energy costs, train fares and so forth. I should have liked to see a housing Bill that would take action against the real scandal in housing: rogue landlords and extortionate fees and charges in the private rented sector. At present, when people come to my constituency office and complain about that, I have to say that we can do little about it.
The Bill that I should really have liked to see, however, is a jobs Bill that would have given the long-term unemployed a duty to go to work, but would also have guaranteed that jobs would be there for them. That would have been a good way to tackle an unemployment rate of 2.56 million—or whatever the figure is now—and the massive youth unemployment that we see in my local communities.
Let me make a point that I suspect Nye Bevan would have made if he were here today. Let me give the House a reality check. For many people in my constituency—not all of them, because some are weathering the storm very well—the main problem is under-employment. They cannot secure the hours of work that they want so that they can put food on the table. Wage reductions are forced on them, or they have to accept them because of the economic climate.
I had thought that the scandal of zero-hour contracts had disappeared a decade ago, but they are back. People are being told “We will pay you when you are on the till; but then you must go home and sit in a corner, and we will pay you when a customer comes through the door again.” It is an utter scandal. We did not crack down sufficiently on the abuse of the national minimum wage ourselves when we were in government, but my goodness, we need to crack down on it now. Yes, we are seeing jobs being created, but my goodness, we are seeing jobs being lost.
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A Government Member of the House of Lords, who claims that he was misreported, recently said, in effect—in the context of that long litany of problems, such as the driving down of pay and conditions—that this was a good time for someone to take the opportunity presented by those problems and set up a business, because it could now be done on the cheap. Let me say this to Government Members as well as those on the Opposition Benches: yes, let us encourage start-up enterprises—we rely on small and medium-sized enterprises in this country—but let us not do it on the backs of others. Let us ensure that people are properly rewarded. Let us consider those who, if they had the right jobs and the right pay in their hands, would be spending money like there was no tomorrow, because they would actually have to.
Andrew Gwynne: Is it not an absolute scandal that since the Work programme was introduced long-term youth unemployment in this country has risen by 355%? That is disgraceful, is it not?
Huw Irranca-Davies: It is an absolute scandal, and if we had a Labour Government now, that would be on the front page of the papers every single day—and it should be, because that is the real scandal. We all want to see people in jobs, so let us get them those jobs and put them into those jobs. We can attach conditionality to welfare to ensure that they take those jobs if they have been unemployed, but give them the jobs, for goodness’ sake.
A Welsh Government study published in February estimates that the benefits changes—and two thirds of the people affected are in work—will suck nearly £600 million out of the Welsh economy in 2014-15. The impact will be felt not only on wages and standards of living, but on public health, on levels of debt—thousands of people must now be flooding through MPs’ constituency offices every week—and on overcrowding and housing; there will also be an increased demand for emergency bail-outs and emergency services. It really is a tragedy.
Although we were not on track—we were slightly slipping—Labour in government lifted 1 million children out of poverty. Unsurprisingly, the Child Poverty Action Group has already forecast that 1 million children will be put back into poverty because of the benefits changes. Not only are Labour Members giving this message, but the Institute for Fiscal Studies, the Rowntree Trust and others are repeating it. Everyone is saying that we are going backwards at a rate of knots.
In debates in this Chamber, Members of Parliament have a duty to stand up not only for people in their constituencies who are managing, but for those who are suffering. I will finish with a quote, because what we should be doing today is discussing the cost of living and what is missing from this very light Queen’s Speech; Nye Bevan said:
“This is my truth, tell me yours.”
This is my truth, and it is the truth for my constituents. In all of this debate, all the good things being applauded by the Government Members are not being seen by my constituents, who are struggling. They are struggling in food banks and struggling to pay the bills—it is not everyone, but it is a large and growing proportion. Can
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we not work together to deal with that, as well as with all the good things that the Government Members have been applauding?
5.47 pm
Richard Graham (Gloucester) (Con): It is always a pleasure to follow the hon. Member for Ogmore (Huw Irranca-Davies), who reminds us of the quality of rhetoric from Wales.
I welcome the Queen’s Speech because, above all, it focuses on the core issues that will make a real difference to the cost of living for my constituents. Let me quickly highlight four key points. First, the National Insurance Contributions Bill will, through the employment allowance, provide £2,000 and should therefore eliminate entirely national insurance bills for 450,000 small businesses throughout the country, encouraging them, and, above all, small employers in my city, to take on more employees. The hon. Members for Ogmore and for Denton and Reddish (Andrew Gwynne) commented on the absence of jobs, but let us not forget that 750,000 more people are in work today than there were at the time of the last general election. Let us hope that there will be more after the National Insurance Contributions Bill takes effect.
Secondly, the Immigration Bill will ensure the deportation of dangerous foreign-national criminals, with appeals only after they have been deported, and will prevent immigrants from having access to public services to which they are not entitled. As Lord Mandelson said yesterday, Labour’s overseas search parties for immigrants meant that
“the entry to the labour market of many people of non-British origin is hard for people who are finding it very difficult to find jobs”.
The hon. Members for Ogmore and for Denton and Reddish should reflect on those comments.
Thirdly, we are all agreed that the cost of energy has risen significantly and is a hard burden for many poor and older constituents especially, and the Energy Bill will enable all our constituents to have clearer information and get on to the best energy tariff. That will be a significant and necessary achievement to help them combat the rising costs of living.
Fourthly, I turn to pensions; I declare an interest as chair of the all-party group on pensions. I absolutely support the Pensions Bill’s new flat rate from April 2016. Above all, it will reward women who took time out of the workplace to look after their children and will now, rightly, get a full state pension at a much higher rate than the basic state pension today.
Lastly, there is the Care Bill, which will guarantee that none our constituents will have to sell their homes during their lifetimes and puts a cap for the first time on the cost of care. Many of us who have had parents with dementia, for example, realise how difficult that situation can be.
I now give way to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).
Debbie Abrahams: I want to ask the hon. Gentleman whether he is aware that the employment rate is lower now than in 2008; that relates to a remark he made earlier.
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Richard Graham: I am afraid that I do not share that view at all. The statistics are clear—there is less unemployment now than there was.
Jobs, immigration, energy, pensions and care—those are the core themes of the Queen’s Speech and they address issues that need to be addressed in tough times for all our constituents.
Let me now share with the House some of the journey that my city has gone through in the past few years. During new Labour’s time in government, 6,000 business jobs were wiped out in my city of Gloucester. The symbol of the city’s failure were the many hectares of wasteland at its entrance, known as the railway triangle. Cheltenham and Gloucester, a well known and respected former building society, was a casualty of the disastrous Lloyds-HBOS merger, which was encouraged, if not engineered, by the previous Government. One of our secondary schools, Bishops college, sunk to having the second worst GCSE results in the country. Our specialist engineering training company was on its knees, with only 25 apprentices a year. Perhaps saddest of all was the closure of the profitable Kingsholm post office, which meant that 500 pensioners had to walk one and a half miles to collect their pensions.
Today, our businesses are in much better shape. The independent Dupont survey shows that in 2012 Gloucester was having its fastest ever growth in new businesses. Our manufacturers are thriving and expanding. Gloucestershire Engineering Training is in new premises, with four times as many apprentices, and the new railway triangle light industrial park is on schedule to provide up to 1,000 new jobs, with half starting later this year.
Most important of all, perhaps, is the new Gloucester academy, a merger of two underperforming schools improving every term and later this year moving into new buildings funded by a £15 million Government grant. That demonstrates what investment in education, our young and aspiration, and giving everyone the chance to succeed, can achieve.
Let me not pretend that everything in the country or my city of Gloucester is rosy. There is much regeneration left to carry out, especially in the city centre and Blackfriars. However, we have exciting plans and ideas to take forward. I would like our social housing manager, Gloucester City Homes, to play a role in housing regeneration and to fund new social housing. The help of the Department for Communities and Local Government and the Treasury in debt write-off is critical. We have traffic issues at the C and G roundabout off Barnett way and our application to the Department for Transport for pinch-point funding is vital. Above all, we have to continue to help people get into jobs. That is the crucial task that we are focused on. As I mentioned earlier, I will host my seventh jobs fair this Thursday.
It is true that some good things happened under new Labour. But one that was disastrous for many of my constituents was the doubling of council tax. They are now paying more than £700 more than in 1997. We have frozen council tax for three years, yet at the end of the process the Leader of the Opposition has said simply that freezing council tax involves a small amount of money that will not make a huge amount of difference. A £700 increase represents a huge amount of money to my constituents.
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The right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) said that we needed welfare reform, but what welfare reform do the Opposition believe in? They have opposed every welfare reform that the Government have proposed. By contrast, the Government are focused on rebuilding the economy, stimulating businesses to create jobs, cutting back Labour’s fuel duty by £5 a tank, lowering income tax for 44,000 of my constituents and taking almost 4,000 out of tax altogether. They are introducing free care for 1,200 two-year-olds in my city later this year.
We are tackling living costs in difficult times, rebuilding public finances, mending the economy, raising skill levels and encouraging more apprenticeships. That is the right way forward. We must keep the focus on helping our constituents and strengthening our country. I welcome the measures in the Queen’s Speech.
Madam Deputy Speaker (Dawn Primarolo): Order. I inform the House that eight Members still wish to speak in this debate and we have to start the wind-ups at 20 minutes to 7. That means that people should speak for six minutes or less, which includes any interventions they take. Otherwise some Members will be unable to speak despite the fact that they have sat in the Chamber all afternoon.
5.55 pm
Nic Dakin (Scunthorpe) (Lab): It is a real pleasure to follow the hon. Member for Gloucester (Richard Graham), whose optimism I greatly admire. I respect him for recognising that not everything in the garden is as rosy as he sometimes sees it.
Many people in my area are struggling to make ends meet as the economy continues to flatline. Having inherited an economy with slow but steady growth, the Government immediately took action to depress demand and deepen the recession by hiking VAT, cutting services and taking spend out of the economy. Sadly, I see nothing in this Queen’s Speech to put more demand back into the economy. MPs in all parts of the House are saying, like my hon. Friend the Member for Lewisham West and Penge (Jim Dowd), that it is a thin Queen’s Speech, the thinnest they can remember—light luggage, as my hon. Friend the Member for Ogmore (Huw Irranca-Davies) put it. It certainly looks pretty anorexic to me. There is nothing on tackling the crisis in youth unemployment, nothing on housing when new home completions are now at their lowest level since the 1920s, nothing to stop the undercutting of wages by tackling the exploitation of immigrant labour, nothing to back small businesses struggling to get credit, and nothing on living standards while families see the costs of energy bills and train fares rise out of their reach.
The Children’s Society draws attention to the Government’s own impact assessment estimating that as a result of not uprating benefits in line with inflation, 200,000 more children will be pushed into poverty, including 100,000 in working families. This should not be happening in one of the richest countries in the world in the 21st century.
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Lindsay Roy (Glenrothes) (Lab): Would my hon. Friend like to add that there is nothing to tackle the mushrooming of food banks, which is calamitous in a society such as ours?
Nic Dakin: I was about to come to food banks. My hon. Friend is exactly right. There were no food banks in the Scunthorpe area when I was elected, and now three have opened up across north Lincolnshire. That illustrates the needs of people locally, and it is matched across the country. Although we recognise the excellent work that volunteers and trusts do, it is a shame on us that it is necessary in the 21st century in one of the richest countries in the world.
Some 1.2 million young people living in poverty do not receive free school meals because their parents are in work. The Queen’s Speech should have taken the opportunity to ensure that everybody who needs a free school meal can have one, including 16 to 18-year-olds who attend colleges and are not eligible for free school meals even though they would otherwise meet the criteria. That is a huge shame, especially when the scrapping of education maintenance allowance has made life so much more difficult for those 16 to 18-year-olds in continuing their education.
This year, according to the debt charity StepChange, there has been a dramatic rise in the number of families seeking help with their utility bills, council tax and rent arrears. Over a third of those seeking help from the charity are in arrears on at least one household bill. That is staggering. At the same time, the charity has seen the number of people seeking help with payday loans double. In 2012, it helped 36,413 people with payday loan debts, almost 20,000 more than in 2011. The payday loan debts of those seeking help from StepChange were, on average, £1,657, up from £1,267 the previous year. One hopes that the consumer rights Bill announced in the Queen’s Speech will take action to tackle the outrage caused by the payday loan industry. It should also provide an opportunity to tackle energy prices, rail fares and unsolicited phone calls and text messages from companies up and down the land. All those measures should be included in the Bill, and I hope they will be.
In the meantime, the capacity of trading standards bodies throughout the country to tackle such things locally has been decimated, which is a cause of real concern. There is also chaos as a result of how the Government have dealt with Consumer Focus: they scrapped it three times before appearing to rebadge it recently as Consumer Future. I hope that the consumer rights Bill will tackle the issues raised by Which? and other organisations that know what they are talking about, such as competition abuses and damages.
I will finish now because, despite what Madam Deputy Speaker said, I appear to have been given an extra minute after taking an intervention. All in all, the consumer rights Bill gives us an opportunity to make much needed changes as soon as possible.
6.1 pm
Pat Glass (North West Durham) (Lab):
I have sat through the entire debate and have been increasingly frustrated by the contrast between the contributions made by Members from opposing sides of the House. I
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am genuinely delighted at what the hon. Member for Gloucester (Richard Graham) had to say about how well things are going in his constituency, but that contrasts starkly with what is happening in constituencies such as mine. Surely a Government should govern for all the people, not just some, and improvements in one area should not be made at the expense of others.
I want to discuss the impact of the Government’s failure to get growth moving and to create jobs. In particular, I want to discuss the impact of the rising cost of energy on people’s lives. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) referred to a report in last week’s Observer which said that Lord Young, a former Cabinet Minister and now the Prime Minister’s adviser on enterprise, has told the Cabinet that the current economic downturn, which is causing so much pain and damage to people in this country, is an excellent time for businesses to boost profits, because labour is cheap and can be driven down further.
Nigel Adams (Selby and Ainsty) (Con): Will the hon. Lady give way?
Pat Glass: No, I am not going to take interventions.
Those comments came from a man who has already been forced to resign once for downplaying the impact of the recession on people and who, it appears, only opens his mouth to change feet. I want to tell Lord Young and his ilk about the reality of a recession and the effect that it and the policy of driving down wages has on the lives of real people.
The gap in wages in the north-east is growing. Weekly wages have fallen on average by £23 a week and by almost £2,000 a year at a time when all other costs are increasing. I have spoken many times in this Chamber about energy prices and their impact on people’s lives and about how the Government are systematically failing to put in place safeguards to prevent the big six energy companies from manipulating the market to achieve massive profits at the expense of the consumer and at virtually no risk to themselves.
Last October, the Prime Minister, under pressure, promised that the Energy Bill would force energy companies to offer the lowest tariff to all their customers, but I have looked carefully at the Bill and cannot see that it delivers anything like that. I was amazed to hear the hon. Member for Halesowen and Rowley Regis (James Morris) speak positively about it. We have clearly not been reading the same Bill.
The Energy Bill was hailed by the Government as a new way forward that would reform the market, deliver a better deal for customers and curb energy company profits, but my reading of it is that it fails on all those objectives. It fails to put in place safeguards to prevent energy companies from manipulating the market to achieve massive profits at the expense of consumers. In fact, the Bill’s proposed energy auction gives yet more opportunities for energy companies to manipulate the market by decommissioning and mothballing stock, holding it back to create shortages and then demanding greater prices at future auctions. That is happening now; we just have to look at Scottish and Southern Energy to see it mothballing stock for those purposes.
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It is wrong, it is blackmail and it will hit consumers desperately hard. The Government know that it is happening and are doing nothing to prevent it.
The Bill will fail to prevent situations such as the one that occurred last year, when the big six companies followed one another in announcing huge increases in energy prices. British Gas went first, increasing its gas prices by 18% and its electricity prices by 16%. It was quickly followed by Scottish and Southern and the other four. British Gas attempted to defend its massive price increases by saying that the bills were driven up because 50% of its energy is bought on the international wholesale market and it had been selling it at a loss to consumers in this country. That is simply not true. We all accept that capital has to make a fair return on its investment, but this is not a fair return; it is daylight robbery of the British consumer while the Government stand back and do less than nothing. Some even argue that the Energy Bill will make it easier for energy companies to rip off customers.
I will finish because others want to speak. I simply want to say that the Government’s record on energy is not good and the Energy Bill will make the situation worse. It will make energy companies richer and consumers poorer. I ask the Government to look at it again while they have the opportunity. Energy companies are using blackmail and the Government have the ability to stop it.
6.6 pm
Mr Iain McKenzie (Inverclyde) (Lab): As we have heard throughout this debate, times are hard and the cost of living across the country seems to keep rising. The Queen’s Speech is further evidence, as if we needed it, that the Government are increasingly incapable of making positive changes to the cost of living for hard-pressed families.
Prices are still going up faster than wages for those who are fortunate enough to be employed and we are all aware of the unacceptable levels of unemployment across the UK. Yet we continue to witness banks paying out bonuses while families struggle. It is therefore not surprising that most people feel that nothing is changing for them, and the Government seem intent on following a failing economic plan—a plan that, bizarrely, asks millions of families and pensioners to pay more, while 14,000 millionaires are given a tax cut of more than £40,000 each. Many of my constituents find that quite unbelievable in the face of plummeting living standards for most people in the country.
Across my constituency, families, pensioners and businesses are struggling. They have told me so time and again. People tell me of their shock during their weekly visit to the supermarket, when they find less in their basket and more money going into the till. I witness more and more families having to go to greater lengths to keep within their budget for food, desperately shopping around to track down bargains on the most basic of food items. Those who cannot make it from week to week have the food banks. Frighteningly, the number of people going to food banks continues to rise.
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Families are losing their tax credits. Some 84,000 families in Scotland are set to lose an average of £511 a year. That is money that they would have spent in the local economy on essentials such as food and clothing. Families across Scotland will lose £43 million a year from cuts to tax credits. That is an enormous amount to take out of the Scottish economy. Fuel bills are horrendous. An increasing number of people are having to choose between food and fuel because they cannot afford both. Families in this country are facing an unprecedented assault on their living standards.
The granny tax will hit hundreds of thousands of pensioners in the UK and 400,000 pensioners in Scotland. Pensioners will face an average income tax hike of £83 a year by 2015-16. We all know the impact that will have.
To date, there is little in the Government’s programme that will help those who need it most. It has been pain all the way, hurting working people, families, pensioners and even the disabled. They are all finding it difficult to make ends meet. Since the last election, average energy bills have gone up by £300 a year, and the Government need to address the soaring cost of living, particularly rising electricity prices. Families are under severe pressure to afford the basics in life, such as heating their home. During the past year most bills have ballooned, such as gas, which is up by 17%, electricity, which is up by 10%, and food, which is up by 3%, and it is still too expensive to fill up a car with fuel.
If the Government do not take action, what is the alternative? It is debt. Debt experts warn that many families are facing extreme difficulty in managing their finances, and that they have seen an increase in the number of people coming to citizens advice bureau on the subject of debt. As I have said before, the Government should help families immediately by taking measures that would address the cost of living crisis and stop rip-off prices for power and fuel.
Labour supports measures that would help families and offer practical, affordable ways to help people right now and get our economy moving again. The country needs a Government who are in touch with families during the recession, and the Government clearly need to make different choices and set different priorities. A start would be to stop handing over £40,000 tax cuts to millionaires and to stop the raid on families’ tax credits by reversing the pension tax break for those earning more than £150,000. They should help pensioners by forcing energy firms to cut gas and electricity bills for the 4 million over-75s, and they should use the money raised by a tax on bank bonuses to create real jobs with a living wage, which would provide young people with a decent standard of living.
This country needs a change in economic direction now if it is to raise the living standards of hard-working families. For many people in the UK, things have got worse, not better in the past three years. Last Wednesday, the Government set out their programme for the coming year and told us what we already knew: that they are a tired Government who have run out of ideas for working people, young people, families, pensioners and even the disabled—in fact, it would seem, for everyone except millionaires.
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6.12 pm
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Last week’s Queen’s Speech was delivered at a time when most people’s wages are being frozen or cut and both measures of inflation—the consumer prices index and the retail prices index—are above the Bank of England’s target of 2%. The sad fact is that many people, in work as well as out of work, are struggling. We have heard examples from my colleagues, and I have regularly had people in my surgeries in tears at their plight. Last week, I had somebody who had just had a heart bypass operation and had been made homeless. She had been living on her in-laws’ couch for the past three months. Such is the plight of many people across the country.
With energy prices increasing by 20% since 2010, nearly 8,000 households in my constituency—nearly one in four—live in fuel poverty. Given that there was no change in economic and social policy in the Queen’s Speech, the situation is set to get worse. Nationally, it is estimated that by 2016, 9 million households will be living in fuel poverty. The knock-on effects will be felt particularly by our health service and social carers.
My local Oldham council is doing all that it can to address the problem, through the fair energy campaign. It is getting households to sign up to a collective energy deal, using people power to negotiate with energy companies for the cheapest energy tariff for consumers. That contrasts starkly with what the Government are doing. We know that the Warm Front initiative, which we introduced many years ago, closed in January, and the new scheme that the Government have introduced provides less than half the support that Labour provided. On top of that, the Government have cut the winter fuel payment for older people by £50 for the over-60s and £100 for the over-80s, in the full knowledge that every winter tens of thousands of older people become seriously ill or die as a result of the cold. In 2010-11, there were 25,000 excess winter deaths just as a result of cold, and there are fears that the number will be larger as energy prices rise.
The warm home discount scheme, which is meant to help households at risk of fuel poverty, has been shown to help only a fraction of those intended—25,000 families, instead of the 800,000 it was supposed to help. As some of my constituents have already discovered, the Government’s green deal is another white elephant because the interest payments alone are set to exceed the cost of the energy efficiency measures they are meant to support.
I wish to raise a couple of other points in the few minutes remaining, the first of which is food banks. A number of colleagues have already mentioned increased demand for food banks, and the Trussell Trust recently reported that demand has exceeded its estimations by 170% since last year. My constituency of Oldham has had a food bank for the first time in its history. In the past three months, demand exceeded that of all the previous year, and it is set to get worse. Figures I have just received indicate that the number of people accessing food banks has increased by nearly 100 times in the past two years. When I visited my food bank recently, I was told that it is desperately in need of people to contribute, and that is the sort of thing we have to contend with in different ways.
David T. C. Davies: Will the hon. Lady give way?
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Debbie Abrahams: I am sorry but I cannot.
A week or so ago I took up Oxfam’s Live Below the Line challenge, living on £1 of food a day. From my experience, that makes it incredibly tough not only to get the necessary nutrition, but to get food that will sustain someone for the day—I certainly will not be eating baked beans for a while.
With the benefit changes introduced last month the situation is expected to get much worse. In addition to the bedroom tax, the abolition of crisis loans for living expenses and other so-called reforms of social security are driven by the Government’s ideologically led cuts. Ministers are fond of making unsubstantiated and misleading claims about the effects of their so-called welfare reforms or the level of health spending, but they are far more reticent about data that reveal the cumulative effect of their changes to tax, tax credits and benefits, and which mean—as I mentioned earlier—that the 40% lowest-income households are worse off. The average household is estimated to lose £891 per year, with millionaires gaining an average of £100,000. There is nothing fair about that.
The Queen’s Speech mentions the need to ensure that every child has the best start in life, but how can increasing absolute child poverty by 55% between 2010 and 2020, and relative child poverty by 34%, be said in any way to give children the best start in life? More than 1.1 million children are set to be living in poverty by 2020, which is completely unfair—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
6.18 pm
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): As a new Member in my first Queen’s Speech debate, I was naively looking forward to having a busy and meaty legislative programme to discuss. How wrong I was. Instead, we have a Queen’s Speech that clearly demonstrates the disagreement, division, lack of vision and lack of ambition of this sorry Government. Not only are they running out of business, they are running out of reasons to exist.
Many of my constituents will be looking at the chaos over Europe this week and asking why the Government are having to spend so much time fixing divisions on their own Benches, instead of fixing the stagnating economy and taking action on jobs, prices, and the concerns of small businesses. They will be asking why the Government are not taking action over the increasing squeeze, not only on the poorest and most vulnerable in our society, but on hard-working families across my constituency and the country, who are increasingly struggling to get by.
Figures from the House of Commons Library show that wages in Wales have fallen by £1,700 since 2010—the biggest fall among the UK nations and equivalent to an 8% cut. Real wages are forecast to decline even further due to rising inflation over the coming months. The consequence, as Office for National Statistics figures show, is that Wales has the lowest household disposable income of any UK nation.
That is why my constituents will be amazed to have heard Lord Freud’s evidence to the Select Committee on Welsh Affairs this morning. When asked how my constituents and people throughout Wales should pay
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the bedroom tax, he said they should go out and make some money. How out of touch can he be? People in my constituency work hard, but many find well-paid work or any work at all difficult to find, thanks to the Government’s stagnating economy and the slowest recovery for 100 years.
People are not only struggling with low wages; many find it extremely difficult to cope with rising transport, food, fuel and energy bills. Some 420,000 families are in fuel poverty in Wales—I am sorry to say that the proportion is higher than in any English region—and yet the Minister of State, Department for Environment, Food and Rural Affairs told a Committee a few months ago that food poverty was not a useful concept, which was extraordinary.
The Secretary of State for Energy and Climate Change was unwilling to make a causal link between Government policies and food banks, but I will make that case and underpin it with evidence. Food banks in Wales trebled in the past year, and their use has increased by 118%. A survey by the Trussell Trust, which asked people why they accessed food banks, revealed that 45% did so because of benefit changes and delays; nearly 20% did so because they were on a low income; and one in 10 did so because they were in debt. My hon. Friend the Member for Swansea West (Geraint Davies) spoke earlier of the terrible increase in the use of payday loans. In Wales, from 2007 to 2012, payday loans rose from 17,000 to 30,000. What a sorry indictment.
Those statistics are reflected in the stories of constituents who come to see me in my surgeries and whom I meet on the streets of Cardiff and Penarth every week. One constituent was subjected to a break-in the other night. I asked her about security lighting and putting on lights to deter would-be burglars. She told me that she often had to sit in the dark to save on her electricity bills. A middle-aged man hit by the bedroom tax told me he would consider stealing food from the shops. Another constituent was looking hard for work, but had to cut back on their travel, fuel and internet usage at exactly the wrong moment in their job search.
The tragedy is that we could have had an alternative Queen’s Speech—one with a jobs Bill featuring a jobs guarantee; tough measures on energy prices; and measures properly to enforce the minimum wage and stop the undercutting of wages. The Government could have focused on the concerns of people throughout the country, and not on divisions on the Government Benches.
I shall conclude on one other disappointment with the Queen’s Speech. In 2010, the Prime Minister promised that he would not balance the books on the backs of the poor. Thousands of campaigners up and down the country are looking to him to hold to that promise. Rob Green, from my constituency, works with Results. He makes the case forcefully for the Government continuing their investment in tackling hunger and under-nutrition in the poorest countries of our world. Where is the 0.7% Bill in the Queen’s Speech? Why has the Department for International Development underspent by 8% this year? Why is No. 10 briefing sweet words to disgruntled Back Benchers via the Daily Mail that the aid promise will be met, but only through a cash-grab by other Departments? What do the Liberal Democrats have to say for themselves? They back the Government, but that was a key promise of theirs. Hollow promises, smoke and illusions are just not good enough. Like the rest of the Queen’s Speech,
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that failure is symptomatic of a weak Prime Minister, a weak Deputy Prime Minister and a weak and discredited Government.
6.23 pm
Katy Clark (North Ayrshire and Arran) (Lab): It is a pleasure to follow my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty). Oppositions often say that the Queen’s Speech is a missed opportunity. As has been said many times in the debate, there is not a huge amount, or a huge amount of legislation, in the Queen’s Speech. My view is that there is a huge need for Government action, whether by legislation or other means.
Many Government Members are resistant to the state having a role in solving the challenges we face. They often say that they wish to roll back the state, but the challenges that we face are so massive that only state intervention can get us out of our economic predicament. Anyone listening to speeches by Government Members would think that we do not have many problems, but the Office for Budget Responsibility has downgraded the growth figures in every Budget that the Chancellor has given, and we have appalling growth figures—if we have any growth at all. We are seeing real cuts in living standards, with real wages down £1,700 since the election. We are living through the longest lasting slump since the 19th century. The economy is flatlining and we have a real problem, particularly in constituencies such as the one I represent, with youth unemployment and long-term unemployment.
In the past year, pay has gone up by 1.2% while prices have increased by 2.8%. I am pleased that so many speeches by my hon. Friends have focused on the real challenges that ordinary people face. For example, over the past five years the cost of food has increased by 30%. Energy bills have increased by more than £300 since the Government came to power—and I use the words “came to power” rather than elected, because neither coalition party was elected with a mandate to do what the coalition Government have been doing over the past three years. Bus fares have gone up by 32% in the past five years, while the operating profits of bus companies have increased by more than 7% each year. I wish the Queen’s Speech had contained legislation to address some of those issues. We should regulate bus services and bring them back under public ownership, because the current model simply is not working. Train fares have also risen nearly three times faster than wages since the recession. All those factors are having a major effect on the economy.
Britain has the second largest share of low-paid workers in the developed world. Only the United States is ahead of us. The Resolution Foundation estimates that if employers paid their work force the living wage, the Government would save £3.6 billion a year. The number of people sleeping rough has gone up by more than 30% in the past two years and 75,000 children were homeless last Christmas. The Queen’s Speech addresses none of those issues.
I am on the Business, Innovation and Skills Committee, and there is a cross-party consensus that we want to see our banks lending to business, but we all know that
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local businesses in our communities cannot get loans. Lending to business is still falling, when we all know that unless we invest, we will not get growth. The Financial Services (Banking Reform) Bill will do nothing to address those issues. Companies in Ayrshire, of all places, are now going abroad to bank, because our banks will not respond to the need.
The Queen’s Speech should have been about jobs and growth. Instead, the political debate is dominated by an internal political squabble in the Tory party about a referendum on Europe, and no doubt we will hear more about that tomorrow. Many of us will remember stock markets tumbling and the near collapse of the banking system in 2008. Few in this country would have thought at that time that the response to that challenge, and the real predicament we face now, would be to make the rich richer and to attack the living standards of the poorest in the country. These policies of austerity are not restricted to the UK, but wherever they are being implemented they are not working. We are seeing real cuts in the living standards of ordinary people in this country.
There has been much discussion in this Chamber about public sector cuts and the Government’s so-called welfare reforms. There is no doubt that those policies are having a big effect on the unemployed and those who stay at home, but they are also having a massive effect on those who work, and living standards are plummeting. Government Members say that they want to see people stand on their own two feet, but to do that people have to have jobs to go to, with pay that they can live on. If we pursue the policies outlined in the Queen’s Speech, that will not happen; the rich will continue to get richer and the poor will get poorer.
Mr Deputy Speaker (Mr Lindsay Hoyle): I now have to bring in a five-minute limit so that I am able to call those on the Front Bench at 6.40 pm.
6.29 pm
Chi Onwurah (Newcastle upon Tyne Central) (Lab): It is a pleasure to follow my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) in this important debate on the Gracious Speech. You will of course keep me in order, Mr Deputy Speaker, if it is not appropriate to call it the Government’s Queen’s Speech, given that so many Government Members seem already to be regretting it. They say that success has many parents, but failure is an orphan. Given the number of Government Members who are distancing themselves from it, it seems that the continued failure of the Government to deliver on living standards is absolutely certain, and it is about living standards that I wish to speak.