(11 years ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
18:58 - The House divided: - Ayes: 245 / Noes: 297 - Question accordingly negatived.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House notes that the Government has failed to meet its own economic goals over the last three years with prices rising faster than wages for 40 out of 41 months, average earnings for working people £1,600 a year lower in real terms than in May 2010, economic growth far slower than expected, the Government’s pledge to balance the books by 2015 set to be broken and the UK’s credit rating downgraded; further notes that growth of 1.5 per cent is needed in every quarter between now and May 2015 in order to catch up the lost ground from three damaging years of flat-lining growth; believes the Chancellor of the Exchequer’s Autumn Statement should take action to tackle the cost-of-living crisis which means that for most families there is still no economic recovery and to ensure recovery delivers rising living standards for all, is balanced and built to last; and calls on the Government to bring forward measures including an energy price freeze and long-term reforms to the energy market, an extension of free childcare for working parents of three and four year olds, action to boost long-term housing supply and a compulsory jobs guarantee for young people and the long-term unemployed.
On Thursday next week the Chancellor of the Exchequer will address this House in his autumn statement. My hon. Friends will know that we have come to expect a tin ear from this Chancellor, who in last year’s autumn statement cut tax credits and child benefit in the face of millions of people struggling to make ends meet while sticking firmly by his decision to deliver a millionaires’ tax cut for the richest 1%. This year, the time has surely come for the Chancellor to wake up to the chronic and unremitting cost of living crisis facing millions of households across the country. Never before have so many worked so hard for so little, working week after week only to find that their pay packet has shrunk in real terms and that they are unable to buy as much as the month before, with wages failing to keep up with prices and the pound in their pocket diminishing in value as everyday costs—rent, the weekly shop, child care, and gas and electricity bills—get higher and higher.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Does the hon. Gentleman welcome the fact that the Government have taken many people out of income tax, such that next April 4,041 people in Suffolk Coastal will no longer pay income tax, alongside the freeze in council tax that they have enjoyed for the past few years?
Chris Leslie
The hon. Lady makes her point. Unfortunately, a lot of Conservatives like to pretend that they are giving with one hand, yet they are taking away so much more with the other—not just the tax rises that they pretend never happened but the unremitting rise in the costs that people face daily.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend is right to say that the Government give with one hand and take with another. Does he agree that of the £14 billion of tax adjustments last year, £11 billion was inflicted on women and their cost of living?
Chris Leslie
Absolutely. In last week’s Opposition day debate, my hon. Friend the Member for Ashfield (Gloria De Piero) correctly highlighted not only the impact of the cost of living crisis on households up and down the country but how it is particularly hitting women.
Christopher Pincher (Tamworth) (Con)
On the subject of giving and taking, is the hon. Gentleman aware that in 20-odd years of Labour control of Staffordshire county council, Labour hiked council tax time after time, whereas this year the Conservative-controlled county council has cut the tax? Does that not show that Tories give money back and Labour takes it away?
Chris Leslie
The trouble for the hon. Gentleman is that an awful lot of Conservative councils have metaphorically stuck two fingers up to the Secretary of State for Communities and Local Government and, indeed, the Chancellor by deciding to increase council tax because the Government’s approach to local government finance has squeezed services. Even Conservative councils and authorities are finding themselves in a position where they are raising council tax.
Sheila Gilmore (Edinburgh East) (Lab)
The Social Mobility and Child Poverty Commission has stated that the fiscal consolidation has been regressive. Does my hon. Friend think that that should be taken into account?
Chris Leslie
My hon. Friend is correct. The fiscal consolidation is not only regressive but entirely the opposite of what the hon. Member for Spelthorne (Kwasi Kwarteng) shouted from a sedentary position, because it has not worked. I will be talking about him in a moment as I have given him a special place in my speech; several hon. Members will know why. The notion that fiscal consolidation has been successful is disproved by the fact that we now have an inordinate level of borrowing thanks to the lack of economic growth.
Kwasi Kwarteng
I am very grateful to the hon. Gentleman and touched that he specially mentions me in his opening remarks. If the fiscal consolidation has not worked, why is the UK currently growing faster than any other country in the G7 and in the OECD?
Chris Leslie
The hon. Gentleman should be shamefaced even to mention economic growth when for the vast majority of his esteemed time as a Member of Parliament growth has flatlined and he has failed to deliver. He needs to recognise that unless we get some serious and sustained economic growth, we will never deal with the deficit issues we have in this country.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Is my hon. Friend as surprised as I am by the amnesia among Government Members, bearing in mind that we were coming out of recession in 2010 but have since been flatlining and that they have failed to explain why prices have risen faster than wages for 40 out of 41 months?
Chris Leslie
This is the problem that Government Members, who seem to think it is funny that we have not had any growth for such a long time, do not understand. They think, “Oh, the cost of living—that’s nothing to do with the economy, it’s a completely separate issue.” Not only my hon. Friends but my right hon. Friend the Leader of the Opposition have relentlessly called on Ministers to act now to alleviate the pressures that are facing many families’ household budgets. They do not just need to make the case for a living wage and a 10p starting tax rate; they need to act now to stand up to the large corporations who know that customers have little choice but to cough up and pay higher prices for life’s essentials.
Robert Flello (Stoke-on-Trent South) (Lab)
My hon. Friend is being extremely kind and generous with his time. Returning to Staffordshire, is he aware that a Money Advice Service report shows that in Stoke-on-Trent the number of people in debt has now reached the 35% mark? More than a third of people in Stoke-on-Trent are now suffering in debt because of this Government’s policies.
Chris Leslie
The report published by the Money Advice Service, which the Government trumpeted as an organisation that was set up some while ago, is very startling. Certainly, the number of people in my hon. Friend’s constituency who are suffering from indebtedness is exceptionally high. In my constituency, over 40% of people are struggling to make ends meet when faced with these crippling burdens and debts.
Robert Halfon (Harlow) (Con)
Whenever the Government introduce fundamental measures to help with the cost of living, such as freezing council tax, freezing fuel duty and cutting it in 2011, and cutting taxes for lower earners, why do you vote against them?
Chris Leslie
I do not know whether you voted against those measures, Mr Deputy Speaker, but we appreciate any efforts to help alleviate the cost of living. Does the hon. Gentleman believe that when people fill up their tank at the petrol station, they think, “How grateful we are to the Conservatives for the cost of petrol today”? When it comes to the cost of living—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman has been very generous so far, but he cannot give way to six people at once. Let us get our act together and try to get through the debate. There are 21 Members who want to speak, and I am sure that other Members will want to hear them.
Chris Leslie
Thank you, Mr Deputy Speaker. I am still on the first page of my speech. I remind Government Members that the profits of the energy companies, which in many ways are the drivers hurting many of our constituents, have risen astronomically in recent years. Since the general election, energy company profits are up from £2 billion to £3.7 billion. Members will have read in The Independent yesterday that profits were £30 per household at the time of the general election, that they rose to £53 per household in 2012 and that they are now expected to be £105 per household this year, and yet the Government continually cower in trepidation of the big six gas and electricity corporations. They are not just recoiling from any willingness to challenge their behaviour, but in their cowardice the Government defend the status quo as though nothing can be done.
Labour says that energy bills can and should be frozen while Parliament legislates to reset the energy market to one that provides true competition, reduces scope for excessive profiteering and offers reductions for customers when wholesale prices fall.
Chris Leslie
I will give way to Government Members if they can answer this point: what was the Government’s reaction to our call to take action on energy prices? They dithered and argued among themselves, frozen like rabbits in headlights, flailed around and attacked us for daring to stand up to excessive profiteering and then, finally, No. 10 Downing street said, “Wear a jumper.”
Chris Leslie
I will give way to one of the woollier Members on the Government Benches.
Mr Newmark
Fuel prices would be 13p a litre higher if Labour were in power. Consumers have saved £170 on average, which is a saving on the cost of living. That is one area in which the Government have done a lot to help motorists.
Chris Leslie
When the public faced difficulties, the previous Government took action to freeze prices and duty for petrol and diesel. The hon. Gentleman mentions a fictional 13p and seems to think that when people fill up their petrol tanks they say, “Thanks goodness these prices are so low; I must thank the hon. Gentleman.” He is living in cloud cuckoo land. The Government are not just out of touch; they are out of ideas and they are running out of time.
Mr Deputy Speaker
Order. Everybody else has sat down, but somehow the hon. Member for Vale of Glamorgan (Alun Cairns) feels he can hang around for another five minutes. I assure him that he cannot. The Minister will give way when he wishes to, not when the hon. Gentleman demands. [Interruption.] I do not need help from others, either.
Chris Leslie
I think that shows that we have touched a nerve. We know that the best we can expect from the autumn statement—[Interruption.]
Mr Deputy Speaker
Order. Did somebody shout out something about cowardice? No; okay, carry on.
Chris Leslie
I did not catch what was said, but we will see what Hansard records.
We know what will be in the autumn statement next week. The best we can expect is that the Chancellor will probably transfer about £100 or so off people’s energy bill and on to their tax bill instead. That is a ruse.
Robert Halfon
On a point of order, Mr Deputy Speaker. The hon. Gentleman has said that his Government tried to help motorists, but he inadvertently forgot to mention that they raised fuel duty 12 times.
Mr Deputy Speaker
I assure the hon. Gentleman that that is not a point of order. He has made that point on many occasions and I did not need reminding.
Toby Perkins (Chesterfield) (Lab)
My hon. Friend is being incredibly generous in taking interventions. May I encourage him to continue taking them, because every time he does so he utterly destroys the weak arguments made by Government Members? Does my hon. Friend recognise, like the 5,000 people who signed the “freeze that bill” petition in Chesterfield, that the Conservative party has nothing to say on energy prices because it is utterly beholden to the very energy companies that are impoverishing my constituents?
Chris Leslie
My hon. Friend is correct. The Government are afraid of the energy companies. We are not yet sure why they are so afraid to stand up to the big six, but it is clear that the Chancellor’s solution of simply shifting £100 or so off an energy bill and on to the taxes of all our constituents will not convince people that they have the answers. The switch is so obvious it can be seen in the dark. It is a palliative that merely shunts the costs from a bill payer to a taxpayer. It fails to tackle the root cause of the problem, which, as my hon. Friend has said, is the excessive profiteering of the utility companies. Government Members are going to have to try a lot better than that next week.
Alun Cairns (Vale of Glamorgan) (Con)
I am grateful to the hon. Gentleman for giving way. He makes an extremely important point on the need to freeze bills, which is largely what has happened over recent years to council taxes in England. In Wales, however, where the Labour party runs the Welsh Government, there have been council tax increases of nearly 9% over recent years. That is a bill that can genuinely be frozen by politicians. Will the hon. Gentleman stand up to the Labour party in Wales to ensure that my constituents are not forced to pay 9% increases in council taxes?
Mr Deputy Speaker
Order. We can all make a judgment about that, but it might be helpful to remind Members that there are many speakers to come, so if we are going to have interventions they have to be short and not speeches. I will be honest with Members: anyone on my list of speakers who makes a long intervention will go down the list accordingly.
Chris Leslie
The hon. Member for Vale of Glamorgan (Alun Cairns) is short in his contributions on most occasions. I note that he wanted to change the subject from energy prices. The problem is that, time after time, the Conservative party has no answers for the public, who want politicians—their elected representatives—to take action on the cost of living, particularly on energy prices. As long as the hon. Gentleman and all his colleagues let the rip-off merchants and unfair profiteers continue with business as usual, the public will take exception to the deceitful claim that we are all in it together.
Chris Leslie
I want to make some progress.
For most people life is getting harder and for most people there is still no economic recovery, but that is not what they were promised. Before the election, the Prime Minister said:
“Our plans don’t involve an increase in VAT”
and
“I wouldn’t change child benefit”.
He also said that tax credits would be cut only “for families on £50,000” and that his party would
“not scrap the Education Maintenance Allowances”.
Those are the promises the Conservatives made before the general election. They famously airbrushed a poster of the Prime Minister and in their efforts to cover up their website pledges they are trying to airbrush the past.
Mr Ellwood
I urge the hon. Gentleman to be cautious about questioning whether this subject is being taken seriously by Government Members, because the record should note that there are more Government Members than Opposition Members present to debate this important issue. On energy, will he now concede that Labour failed to ensure that the lights will be kept on in this country by failing to invest in nuclear energy? More than six nuclear power stations have closed down. That is why energy prices have gone up—because we are not making our own energy.
Mr Deputy Speaker
Order. I asked for short interventions. Please shorten them, Mr Ellwood, or we will not take any more from you. I am sure you will want to get another one in later.
Chris Leslie
There are only another 18 months during which there will be more Conservative Members than Labour ones in this Chamber. I hope that the hon. Member for Bournemouth East (Mr Ellwood) is watching the clock, because they are running out of time.
The Prime Minister has broken not only that list of promises, but more records than most Prime Ministers over the decades, and not in a good way. How has he been a record breaker? Since entering No. 10 Downing street, he has delivered a record-breaking cost of living crisis, with wages failing to keep pace with prices for an unprecedented 40 out of his 41 months in office. That is the longest period of diminishing real wage values since records began.
A record-breaking number of people now rely on food banks just to get by—it has tripled in the past year alone—with more than 350,000 families requiring food parcels in the past six months.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
On the cost of living crisis that is driving people to food banks, does my hon. Friend share my shock at the hon. Member for Vale of Glamorgan (Alun Cairns) saying that people use food banks because they are drug addicts and cannot manage their money, rather than because of the cost of living crisis?
Chris Leslie
I am happy to give way to the hon. Member for Vale of Glamorgan if he wants to explain.
Alun Cairns
On a point of order, Mr Deputy Speaker. The hon. Member for Cardiff South and Penarth (Stephen Doughty) has inadvertently misled the House in that the quotes attributed to me are wholly inaccurate. I ask him to withdraw what he said.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I do not know whether what was said is true or false, but the hon. Gentleman has put the facts on the record. I am sure that that point can be sorted out later, no doubt over a cup of tea.
Chris Leslie
I will happily give way to my hon. Friend in a moment, so that he can relay the quote that he has to the House. Perhaps a journalist wrote it down incorrectly, but I am sure that there is an explanation.
The point about food banks is that the crisis is so bad that the Red Cross has launched an emergency food appeal right here in the United Kingdom, something that has not happened since the second world war.
The Prime Minister’s broken records include real-term wage levels plunging to a new low and average weekly earnings at their lowest level since the Office for National Statistics started to record the figures in 2001. Not only has he hit record lows on incomes, but he has delivered record fuel bills and average household energy costs—
Stephen Doughty
On a point of order, Mr Deputy Speaker. I am sorry to raise another point of order, but the hon. Member for Vale of Glamorgan suggested that I may have misled the House—
Mr Deputy Speaker
Order. Let me reassure both hon. Gentlemen that I am not going to decide who is right. You have each claimed that you are right and that the other is wrong. It is on the record, and people can make up their minds tomorrow. I want to continue with this debate.
Chris Leslie
My hon. Friend the Member for Cardiff South and Penarth may have time later to elaborate on the quote. It may be incorrect, and we will see whether journalists want to look into that.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is absolutely right to list this Government’s catalogue of broken promises on the cost of living crisis, but the crisis is far worse than the spiralling energy bills and the rising cost of living. He was moving on to make the serious point that, at the same time as prices are increasing, people’s wages have plummeted since 2010 by about £1,600. Is that not the real cause of this cost of living crisis?
Chris Leslie
Absolutely. This is an unprecedented period—we can characterise it as record breaking—during which wages have not been able to keep pace with the costs our constituents are facing.
James Morris (Halesowen and Rowley Regis) (Con)
Will the hon. Gentleman give way?
Chris Leslie
In a moment.
Let me give another example, private sector rents are at a record high. Average rent rises across England and Wales have just hit the highest level ever recorded, at £757 a month.
Chris Leslie
Will my hon. Friend allow me to make a little more progress on housing? The Prime Minister is also a record breaker because he is presiding over the lowest net supply of housing since records began. The Government’s own figures show that the number of dwellings added to our housing stock fell by 8% last year, which is the lowest level since such statistics were first collected. That is quite some achievement. It does not bode well for the affordability needed by many first-time buyers in this country. By the way, a record number of people are seeking help from the housing charity Shelter, which has reported an all-time high of almost 175,000 calls in the past year, up 10% on the previous year.
Government Members even like to portray the jobs market as wholly positive, but a record number of people are working part time because they cannot find full-time jobs. Nearly 1.5 million people say that they need to find full-time work, but cannot, which is the highest figure since records began.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I have done some work on this subject. Is not a consequence of the number of part-time jobs advertised not just in my constituency but across the country that wages have dropped to today’s level?
Chris Leslie
That is precisely what baffles Government Members so much: they cannot understand the ingratitude of the British people, who somehow seem not to recognise the work that the Government are supposedly doing. The reality is that these are the pressure points—the points of stress and anxiety—faced by so many people up and down this country.
Chris Leslie
The hon. Gentleman has been very persistent, so I will give way.
James Morris
It has taken the hon. Gentleman 20-odd minutes to talk about one of the keys to solving the cost of living crisis, which is the creation of new jobs. I presume he welcomes the 11% fall in unemployment in his constituency during the past year, with a 15% fall in youth unemployment. Is that not absolutely key to our recovery and to solving the cost of living crisis that he has taken so long to talk about?
Chris Leslie
The hon. Gentleman, whose name is sometimes mixed up with that of others, should do better than to pick on my constituency of Nottingham East, where unemployment has been a persistent and long-running problem. Of course there have been fluctuations in the past few months, but I must tell him that the number of young people out of work for more than a year on jobseeker’s allowance has rocketed astronomically in this country: it is up 127% since the last general election. The number of long-term unemployed, who have been out of work for two years or more—we must turn our attention to that persistent problem—has gone up 374% since the last general election.
Chris Leslie
I just want the House to hear a few more record-breaking facts about the Prime Minister. Do my hon. Friends remember, from a Budget some time ago, the Chancellor of the Exchequer’s poetic declaration that he would create
“a Britain carried aloft by the march of the makers”?—[Official Report, 23 March 2011; Vol. 525, c. 966.]
We now have a record-breaking trade deficit with the European Union of £6 billion, which is a sign that the rebalancing of our economy has tilted in the wrong direction. The “Guinness Book of Records” is already familiar with the Prime Minister’s achievement in delivering the slowest ever, snail’s pace recovery out of an economic downturn since records began, taking Britain longer to claw our way back than after the great depression. That record-breaking performance is thanks to the drag anchor policies that have held back growth for the past three years.
The record-breaking let-down on growth has of course led to the Prime Minister’s biggest failure of all—more borrowing than any peacetime Government in history. The Prime Minister and the Chancellor have added £430 billion to our national debt in the three years since May 2010, which is more than the last Labour Government did in 13 years and more than any previous Government have done in peacetime. They are record-breaking borrowers, because no Government have ever neglected economic growth quite like this one.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Is it not a fact that the economy will have to grow by 1.5% every quarter to make up for the lack of growth since 2010?
Chris Leslie
Government Members see what they regard as green shoots for our economy. They hope that the public will just forget what has happened for the past three and a half years, but the public have long memories and will remember the harm and anxiety that the cost of living crisis is now causing them. Perhaps those record-breaking extremes from this Prime Minister and Government reflect the new extremism in the Conservative party and the drift away from the centre ground of British politics.
Chris Leslie
I will come to the Liberal Democrats in a moment. I am talking about the Conservative party.
The Conservatives and the Prime Minister like to pretend that they understand the concerns of hard-working people. When they finally realise the strength of public opinion, they will grudgingly come up with a half-baked effort on energy bills, just as they finally caved in with a long overdue cap on payday loans. The trouble is that they just don’t get it, because their hearts aren’t in it. As with the action on payday loans and banking reform in this week alone, why does the Chancellor always have to be pushed into doing the right thing?
The forces of moderation in the Conservative party—I am looking around desperately to see them; perhaps there are a couple of them here—complain that they are seen as the party of the rich and that voters do not trust their motives. Twenty-five of the dwindling number of those anxious Conservative Members of Parliament had a meeting with the Prime Minister to express their concerns, although that was before some of them announced that they were standing down from Parliament.
The moderates—there is one opposite me—are right to worry, because the Prime Minister’s pretence that he represents the middle of British politics has finally stretched beyond belief, as time and again his true instincts shine through. In the lord mayor’s banquet speech a fortnight ago, the mask slipped as the Prime Minister proclaimed the need for permanent austerity and the shrinking of public investment in perpetuity. The true ideological intentions of the Conservatives are there for all to see. Perhaps that is why the party’s Free Enterprise Group published its plans—
Chris Leslie
I will give way to the hon. Gentleman because he is in the Conservative Free Market Group. He wrote the pamphlet. Will he tell us what it was about his pamphlet that hit the headlines?
Kwasi Kwarteng
I have no idea what the hon. Gentleman is talking about. I am very pleased and somewhat flattered that he should be referring to the Free Enterprise Group on the Floor of the House. What was the size of the deficit when his party left government in 2010? What was the absolute size of the deficit and what was the proportion of the deficit—
Chris Leslie
The national debt was about £800 million. The national debt—[Hon. Members: “The deficit.”] I know what the hon. Gentleman said. I could hear what he said. I am giving him the figures. The national debt—[Interruption.] It seems that Government Members do not want to talk about the national debt. The national debt was about £800 million. It is now £1.2 trillion. As Brucie might say, “Higher, higher!”
Mr Deputy Speaker
It had better be a point of order, Mr Newmark, if you want to get in early. I do not want to have to put you near the bottom, because I know that this matter is important to you.
Mr Deputy Speaker
Order. I was not taking a point of clarification, but a point of order.
Mr Newmark
It is a point of order, Mr Deputy Speaker. The hon. Member for Nottingham East (Chris Leslie) was asked a question about the deficit. Unfortunately, his answer was about debt. Rather like Rev. Paul Flowers, he does not know basic economics. [Interruption.]
Mr Deputy Speaker
Order. I will let that go. It is up to the shadow Minister how he wishes to answer the question. It is not for you, Mr Newmark, to waste the House’s time on an irrelevant—[Interruption.] Order. On an irrelevant point of order. If you do not mind, we will have no more.
Chris Leslie
I have not even said a word in response to the point of order. I will do so if the hon. Gentleman will allow me. It just goes to show that the Conservatives will do everything they can to distract attention from the cost of living crisis that is facing this country. As Corporal Jones might have put it, “They don’t like it up ’em!”
The hon. Member for Spelthorne (Kwasi Kwarteng)—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. You also want to speak, Mr Davies. You are constantly on your feet. I want to hear Mr Leslie. I also want to hear what the Government have to say. I will not hear either of them with the amount of time we have taken so far.
Chris Leslie
That is a good point, Mr Deputy Speaker, so I will be brief in talking about the hon. Member for Spelthorne and the Free Enterprise Group. The Free Enterprise Group published plans to slap a 15% increase on essentials such as food and children’s clothes through VAT and to triple the tax on heating bills. A number of hon. Members who are in the Chamber today are members of the Free Enterprise Group. They might be shuffling away from the hon. Member for Spelthorne now.
Chris Leslie
Perhaps the hon. Gentleman wants to account for that plan. Does he agree with charging VAT at 15% on food and children’s clothes and increasing the tax on heating bills—yes or no?
Charlie Elphicke
What was the size of the deficit at the time of the general election in 2010? Was it £150 billion-plus—yes or no?
Chris Leslie
There is no answer to my question from the hon. Gentleman. I have given him the figures for the national debt.
The extremism and rightwards shift in the Conservative party are visible for all to see. As we can tell from the tactics that they are using, the Prime Minister, the Chancellor and all the Conservative Back Benchers are scraping the barnacles off the 1992 election strategy. They have a barely disguised plan to fight the next election in the gutter. Their tactics are visible for all to see.
The Prime Minister once spoke fondly of environmentalism while hugging the huskies. Perhaps I should ask this on a point of order, Mr Deputy Speaker, but is it using unparliamentary language to quote No. 10 when it allegedly said that it wanted to cut out all of the “green crap”? I know that that is appalling language, but it is a quotation from No. 10 Downing street. The Government are certainly cutting some things out: 578 Sure Start children’s centres have been cut, 76 NHS walk-in centres have been cut, 48 accident and emergency departments have been shut, 200 ambulance stations have been axed and 6,000 nurses have gone from the NHS, but 707 food banks have opened. Perhaps Government Members regard that as a success.
Helen Jones (Warrington North) (Lab)
Does my hon. Friend realise that the reason why some of us worry about the proposals of the Free Enterprise Group is that they are all of a piece with what the Tories have done already, including a drop of £35 a week in real wages in my constituency, the imposition of the bedroom tax on the poorest people and, contrary to what they say, increases in council tax for the poorest people? The reason Tory Back Benchers worry about being seen as the party of the rich is that they are the party of the rich.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I am concerned because the debate has been going for 36 minutes already. The time limit on Back-Bench speeches is due to be five minutes. I do not want it to go below that. At this rate, a lot of Members will drop off the list.
Chris Leslie
I want to draw my remarks to a close, so I will not take any more interventions.
In a moment, my hon. Friends will be subjected to the Minister claiming that the Government alone are responsible for the long overdue return of economic growth. What he cannot grasp is that growth is appearing despite his policies, not because of them. As the Nobel prize-winning economist, Paul Krugman, said of the Government’s attitude just the other day,
“It’s like hitting yourself over the head with a baseball bat for years. Then, you stop hitting yourself with the baseball bat and say, ‘See? I feel much better now—hitting myself with a baseball bat was clearly the right thing to do’.”
That sums up their view perfectly. They do not understand that only the return of strong economic growth will tackle the deficit in any meaningful way. Three years on, they still have not cottoned on.
The reason we have a cost of living crisis is that the historic connection between economic growth and household wealth has been severed. Even though it looks like we are finally seeing some growth in some parts of the economy, that growth is not being shared fairly. Indeed, GDP per capita remains flat. I pay tribute to the companies and households that have managed to keep it together despite the Chancellor’s inaction. What we need now is help for those who are trying to do their best—the people who never complain, who never say that they should be at the front of the queue, who go to work and who manage as best they can. Those people need real help with their energy bills and child care costs. They need us to tackle low pay and to freeze business rates for small firms.
The challenge for the autumn statement is to take action now on the cost of living, not to use sleight of hand to pile more burdens on the taxpayer. We need long-term reforms that ensure that there is a balanced recovery that is built to last, not short-term, knee-jerk flip-flopping. We need fairness for the many, not tax cuts for the few. The Government are out of touch with the mood of the public—the wealthy elite are looking after the wealthy elite and are all in it together. They are timid in the face of excessive profiteering from big energy companies, while the rest get broken promises on the economy and the deficit from a Government who are lurching to the right and reverting to type. The British people cannot afford this Government any longer. Britain deserves better.
The Financial Secretary to the Treasury (Sajid Javid)
When the Opposition first tabled this motion, the title referred to the Government’s “economic failure”. The word “failure” has been mysteriously removed and replaced with “policy”. Perhaps the Opposition originally asked the Rev. Paul Flowers, who was their economic adviser, to help draft the motion. Now that they have been forced to sack him, they have had to amend the deluded original title of the motion. Even before the debate started, the Opposition have had to back down.
The Government recognise that many people up and down the country are facing living standards challenges. Each and every week I speak to many hard-working people in my constituency who are still suffering from Labour’s recession, and whose businesses or employers were hit hard in 2008 and 2009 and are still feeling the impact. Of course we all want the situation to improve.
Geraint Davies
On failure, does the hon. Gentleman accept that the movement of debt to GDP from 55% when he came into office, to 75% now and 85% by 2015, is a sign of failure both in increasing debt to a higher level than we borrowed throughout our term, and through not getting any growth?
Sajid Javid
I accept that the sharpest move in debt to GDP that this country has seen in recent times was under 13 years of Labour rule when national debt more than doubled. We will take no lectures from the Labour party about growing public debt. Allow me to remind the House, especially Labour Members, why people are facing such challenges.
Helen Jones
On a point of order, Mr Deputy Speaker. I note that the Chief Secretary to the Treasury is not present. Can you investigate whether that is because the Lib Dem part of the coalition no longer takes responsibility for economic policy?
Mr Deputy Speaker (Mr Lindsay Hoyle)
As the hon. Lady well knows, that is not a point of order. It is certainly not a matter for the Chair and does not want to be. I call the Financial Secretary.
Sajid Javid
I give way to my hon. Friend the Member for Bedford (Richard Fuller).
Richard Fuller (Bedford) (Con)
I was concerned that the shadow Chief Secretary to the Treasury did not seem to understand the difference between deficit and debt, which I thought would be a prerequisite for talking about economics. Will my hon. Friend explain to the House what the circumstances were when this Government came to office?
Sajid Javid
My hon. Friend tempts me and I will do just that in a moment, after I have given way to my hon. Friend the Member for Burnley (Gordon Birtwistle).
Gordon Birtwistle
The shadow Chief Secretary to the Treasury did not want to take an intervention from a Liberal Democrat, perhaps because it used to be a Labour Member who sat here and now it is a Liberal Democrat. Will my hon. Friend comment on the fact that in 2009 Burnley was classed as a basket case under the Labour Government with a Labour MP, but it has now won an award for the most enterprising town in the UK? Unemployment has collapsed under this Government.
Sajid Javid
I will comment on that because it reflects the hard work of the people of Burnley and their local MP. Why are people facing challenges up and down the country? The reason is simple and can be summed up in just three words: the Labour party.
Toby Perkins
The Minister asks why people are suffering a cost of living crisis, and he referred previously to Labour’s recession. Labour’s recession was over by the time he became a Member of Parliament, and it was a recession caused by the bankers. Will he remind the House what he was doing when Labour’s recession finished?
Sajid Javid
What I can do is remind the hon. Gentleman what was going on in his constituency during Labour’s recession. During Labour’s last term, unemployment in his constituency increased by 56%. So far, under this Government it has declined by 26%, which I think he would welcome.
Sajid Javid
I will give way to my hon. Friends in a moment. The Opposition spokesman talked about breaking records, so let us take a quick look at Labour’s record breakers—they are enough to make Roy Castle jump up and down with excitement. Labour gave this country the deepest recession in living memory, and the biggest budget deficit in our post-war history, and the largest in the G20. To answer the question from my hon. Friend the Member for Bedford (Richard Fuller), Labour was borrowing almost £160 billion—£300,000 a minute, or £5,000 every second. Labour gave this country the largest bail-out the world has ever seen. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I find it strange that I cannot hear the Financial Secretary because Government Members are making so much noise. I would have thought they ought to listen to him, just as I wish to hear him.
Sajid Javid
I think the House missed hearing about another record breaker that Labour gave this country, which was the largest bank bail-out the world has ever seen. That is Labour’s legacy, and if the Opposition spokesman wants to apologise, he is welcome to do so.
Chris Leslie
The Minister, who worked for Deutsche Bank before the general election, might wish to explain and answer a specific question on borrowing, the deficit and national debt. Can he tell the House how much the Chancellor has borrowed and added to the national debt since the last general election? What is that amount of money in cash terms?
Sajid Javid
We know that if we had continued the plans recommended by the Labour party, the country would be borrowing a lot more. According to the independent Institute for Fiscal Studies, Labour plans to borrow at least £200 billion more, which would push up borrowing costs for many hard-working families up and down the country.
Guy Opperman (Hexham) (Con)
Does the Minister agree with the North East chamber of commerce, which said that the most important factor in raising living standards is to increase skills levels with an increase in skills funding and a doubling of apprenticeships? Is that not the true foundation of a long-term recovery?
Sajid Javid
I agree wholeheartedly with my hon. Friend, and I am sure he agrees that the Government were right to increase funding for apprenticeships, which are up by more than 1.5 million since the start of 2010.
Mr Donohoe
Will the Minister accept that a number of the jobs brought into the economy are part time? Would it be better for the Government to calculate the number of jobs in terms of hours worked by individuals, and would they find that the number of jobs has actually dropped in real terms if those hours are taken into account?
Sajid Javid
The hon. Gentleman tempts me and I will come to jobs shortly as there is plenty to tell. He should recognise that employment is at its highest level since records began, and that most jobs created are full time. Also, there is nothing wrong with part-time work.
Andrew Selous (South West Bedfordshire) (Con)
Because the Government have taken the difficult decisions necessary and stuck to a long-term plan, the claimant count has fallen by more than a third in my constituency, where 730 more people are in work than when the other lot were in power.
Sajid Javid
The information my hon. Friend provides is true of almost every constituency in the country.
Debbie Abrahams
The Government consistently make that point, but it is totally misleading. The employment rate is lower now than it was in 2008. Absolute figures mean nothing; the Minister must quote a rate to make them mean something.
Sajid Javid
The hon. Lady is still fairly new to the House, but she will know that the Government changed hands in 2010. There is no point making comparisons with 2008. She will be interested to hear that unemployment in her constituency increased by a shocking 119% during Labour’s last term. I will say that again, because Labour Members have a hard time believing it: unemployment increased in her constituency by 119%. Under this Government, unemployment in her constituency is down by 24%.
Neil Carmichael (Stroud) (Con)
The Government have increased the number of private sector jobs by 1.4 million, and 88% of those jobs in the past six months were full time. Does that not illustrate that we are rebalancing the economy towards manufacturing and engineering, which we definitely need to do? That is part of an economic plan to recover this country from the disastrous situation in which we found ourselves in 2010.
Sajid Javid
I agree completely with my hon. Friend—I shall make further remarks on that in a moment.
In short, Labour left our country a lot poorer, and it still has not apologised for the damage it did, despite many opportunities, including this afternoon. The Labour Government destroyed the aspirations of millions of hard-working people up and down the country. Instead, Labour Members sneer over the Dispatch Box and oppose every single measure the Government take to clean up the mess they left behind.
Robert Flello
I say in all sincerity that it would have been nice to see the Minister’s boss in the Chamber—where is he?—but will he answer this question? A moment ago—[Interruption.] Conservative Members should listen for a moment. A moment ago at the Dispatch Box—Hansard will show this—the Minister criticised the Labour Government for bailing out the banks. Is he saying we should not have done that?
Sajid Javid
The hon. Gentleman needs to listen more closely to my remarks. He will be interested to know that unemployment increased by 104% in his constituency during Labour’s last term. The bail-outs and the other action the previous Government took did not help unemployment in his constituency but, thankfully, under this Government, unemployment there is down by 24%.
It is good to remind ourselves that office and government are a privilege given to us by the people of the United Kingdom. We are the tenants; the British public are our landlord. The Labour party was the tenant who trashed the house. It is left to this Government to clean up its mess.
We need to treat the public with the respect they deserve. We know that times are tough. Labour left our country a lot poorer, and families are feeling it. That is why we had to put in place a long-term, sustainable economic plan to fix things.
Yasmin Qureshi (Bolton South East) (Lab)
The Minister says that Labour left the economy in difficulties or a mess, but does he accept that, in 2006, the GDP to national debt ratio was about 42%, whereas it is now 91%? How is that responsible?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Lady has made her intervention. She cannot keep going.
Sajid Javid
The hon. Lady needs to check her figures. She will see that, as I have said, the sharpest rise in the debt-to-GDP ratio took place during the last 10 years of the Labour Government.
Kwasi Kwarteng
With regard to the deficit, why, for nine years, and for seven years of economic growth, did the Labour Government run persistent deficits?
Sajid Javid
My hon. Friend makes a good point. He reminds the House that the previous Government began running a deficit from 2001, way before any financial crisis. They ran a structural deficit from 2006 onwards. Hon. Members will remember that the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), tried to deny that until he was corrected by the International Monetary Fund.
Without a credible economic plan, we cannot have a plan for helping families with living standards challenges. Anyone, including the Labour party, can come up with a list of interventions, but they are completely meaningless and unsustainable if there is no long-term economic plan to back them up. Labour’s only plan is for more spending, more borrowing and more debt, which is exactly what got us into this mess in the first place.
Charlie Elphicke
I have a deep concern that many hard-working people lost earnings when interest was suspended on Co-op bonds in March. I am concerned that, 11 days later, it lent substantial amounts of money to the Labour party. Will the inquiry cover the bank’s relationship with the Co-operative party and whether the bank was unduly influenced by the national executive committee?
Sajid Javid
My hon. Friend raises a good point, but he will know that I am not in the best position to answer his question in detail. Perhaps the shadow Chief Secretary will rise to his feet to do so. I understand that he is a Labour and Co-operative Member and receives money from the Co-op. I am happy to give way if he would like to answer the question.
Chris Leslie
I am proud to be a Co-operative Member and a supporter of mutuality—I thought Conservative Members supported that, too. Will the Minister tell us the number of occasions on which his Treasury had meetings to discuss the Co-op Verde deal and the takeover of those Lloyds branches? How many times did Treasury Ministers have those meetings after the general election? Can he give us that fact now?
Sajid Javid
I am sure that question will be looked at further during the Co-op inquiry. The number and nature of meetings between the Leader of the Opposition, the shadow Chancellor and Co-op representatives will also be looked at—[Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The House cannot hear the Minister. If hon. Members want to argue with him, they must hear what he has to say first.
Richard Graham
I am very grateful to the Minister for giving way—he has been gracious throughout the debate. It is appropriate that we follow Madam Deputy Speaker’s advice and listen to him carefully. I would reinforce his point from my experience in Gloucester. Under the previous Government, 6,000 people in business lost their jobs, but since the last election, 3,000 new business jobs have been created and four times the number of apprentices have been employed, and unemployment and youth unemployment are lower. Does the Minister agree that this debate should not be about the cost of living, but be about the cost of having a Labour Government to people with jobs in my constituency?
Sajid Javid
My hon. Friend is right. Hon. Members know—I am highlighting this as much as I can in the debate—just how many lives and aspirations the Labour Government destroyed in their time in office.
The House has just heard the shadow Treasury Minister. His speech was more interesting for what was not in it than for what was. There is no talk today of plan B—[Interruption.] What the shadow Treasury did not mention was predictable. Let me say what it was, because four or five months ago, we heard what he did not say today in virtually every single speech from Labour Front Benchers. We heard no talk today of plan B. I did not hear anyone say, “Too far, too fast.” There was no mention of a double-dip, let alone of a triple-dip, because Labour Members know that there has been only one dip in recent times: Labour’s dip. They have comprehensively lost the economic argument. They have no plan and no answers for the problems they helped to create.
Sajid Javid
Does the hon. Gentleman have any answers to the problems Labour helped to create?
Tom Blenkinsop
I have no answer to the fact that we saw more growth in the last quarter of 2010 under the Labour Government than we did in the whole of 2011.
Sajid Javid
Let us talk about the growth in Middlesbrough South and East Cleveland. Is the hon. Gentleman referring to the record 92% increase in unemployment in his constituency in Labour’s last term? I notice that he did not refer to the 18% decline under this Government.
James Morris
My hon. Friend refers to what the Labour Front-Bench team will not mention. In the past two years, export growth in the west midlands has gone up by 30%—the best performance of any region. Is that not further evidence that the Government are on track with a sustainable, long-term plan to rebalance the British economy?
Sajid Javid
My hon. Friend is right. As a fellow west midlands MP, I have seen at first hand record growth, particularly in manufacturing and in the car industry.
Enough on the mistakes of the past. This Government are working hard to secure the country’s future. The only way we can deliver a sustained improvement in living standards is to continue to tackle the economy’s problems head-on and to deliver a recovery that works for all.
Guto Bebb (Aberconwy) (Con)
My hon. Friend talks about the future. How does he respond to the approval, given by the Labour party yesterday, of a 5% increase in council tax in my constituency—a decision made with no consideration of the cost of living for my constituents?
Sajid Javid
My hon. Friend makes an excellent point. What goes on in Wales is an excellent example of what a Labour Government would do, if they had the chance, in the United Kingdom. As well as increases in council tax, there has been a 10% cut in the NHS budget in Wales. That tells us exactly what Labour’s priorities are.
Stewart Hosie (Dundee East) (SNP)
On exports, in 2011 the deficit for trading goods was £100 billion. In 2012, that rose to £110 billion in the red, and has been running at about £20 billion in the red every quarter this year. I am not sure if I am seeing the green shoots of export recovery that the Minister is seeing.
Sajid Javid
I will speak on exports in more detail shortly. I am not sure that Scottish independence would help the record on exports.
Under this Government, Labour’s record budget deficit is down by a third, confidence and investment is on the rise, and the economy has turned a corner. The UK is growing faster than any other developed economy, including the US, Germany and Japan. Just last week, while downgrading global growth the OECD revised up UK growth by more than any other developed country. That growth is spread broadly across all sectors of the economy. Recent survey data show that construction is at its strongest level in six years and that activity in the services sector has not been this strong since 1997. New orders in manufacturing have risen to their highest level since 1995, according to the CBI.
Mr Gordon Marsden (Blackpool South) (Lab)
The Financial Secretary is taking pains to show that there is a long-term economic plan. What sort of plan is it when the number of young people on jobseeker’s allowance has gone up by 174% in a year? He and his colleagues have failed to provide 19 to 24-year-olds in traineeships with any funding to continue, JSA or otherwise.
Sajid Javid
I can tell the hon. Gentleman how our plan is panning out. Under the previous Government, he saw a 91% increase in unemployment in his constituency. Unemployment in his constituency is down by 7% under this Government. Youth unemployment is down by 24%. Rather than making cheap political points, he would do well to welcome the economic improvement in his constituency.
Debbie Abrahams
The Minister was making an international comparison with the UK economy. I remind him that the UK economy remains 2.5% below its pre-crisis peak, and the US economy is now 4.6% above its pre-crisis peak.
Sajid Javid
The US did not have a Government as incompetent as the one we had in Britain, who boasted the sharpest decline in GDP in this country in living memory and in our post-war history. When I said earlier that Labour left this country poorer, I am sure the hon. Lady realised—if she did not, I am happy to repeat it—that we saw the sharpest decline in GDP of any major developed country during Labour’s term in office.
Our economic plan is pulling in growing inward investment, with inflows into the UK in the first half of this year greater than any other country in the world except China. As I mentioned earlier, we are increasing exports to growing economies. From 2009 to 2012, exports to Brazil were up by 49%, to India by 59%, to China by 96%, and to Russia by 133%. We have become a net exporter of cars for the first time since 1976.
Tom Blenkinsop
Will the Minister please explain why, since 2011, lending to small and medium-sized enterprises has gone down by £30 billion? Long-term female unemployment in my constituency has increased by 144% since his Government came to power.
Sajid Javid
The hon. Gentleman will know that SME lending was hit from 2010 to 2011 because of Labour’s banking crisis. We had the deepest banking crisis and the largest bank bail-out the world has ever seen. What did he think the impact was going to be? He should welcome the Government’s action to help SME lending, including the funding for lending scheme, which has helped thousands of companies.
The Opposition claim that economic growth is not felt by people across the UK and that living standards are falling. The truth is that the previous Labour Government left the country a lot poorer and, as a result, many hard-working families are finding it difficult. Our long-term plan for the economy, the plan that has put our country on a path to prosperity, will help those families. What better way to increase standards of living than by making sure that as many Britons as possible can take home a steady wage at the end of each month? With more than 1.4 million private sector jobs created in the past three years—more private sector jobs created in three years of this Government than in 13 years of the previous Labour Government—we now have more people employed than at any time in our history.
We are also taking measures that help to keep more cash in the pockets of hard-working people up and down the country, while economic confidence has helped to keep mortgage bills low. If mortgage rates rose by just 1%, the average mortgage bill would increase by about £1,000 a year. We are also letting people keep more of their hard-earned income. Our increases in the personal allowance are worth £700 each year to every average taxpayer—a tax cut for more than 25 million people—while 2.7 million people on low incomes have been taken out of income tax altogether.
Simon Kirby (Brighton, Kemptown) (Con)
Does the Minister realise that from next April 36,000 people in my constituency will be better off because of this policy?
Sajid Javid
My hon. Friend is right to make that point. I think every MP in this illustrious House could share similar numbers. Indeed, in the shadow Chief Secretary to the Treasury’s constituency, 4,000 people have been taken out of income tax altogether and more than 38,000 have had an income tax cut.
Our changes to the personal allowance mean that someone working full time on the minimum wage has seen their income tax bill more than halved under this Government. It also means that for any income on which people would pay Labour’s 10p tax rate, which it previously abolished, they pay a 0% tax rate under this Government.
Stephen Doughty
Is the Minister still a member of the Free Enterprise Group of Conservative MPs and does he agree with that group and the hon. Member for Spelthorne (Kwasi Kwarteng) that VAT could be increased to 15% on food and children’s clothes, which are currently zero-rated? How would that help with the cost of living crisis for my constituents?
Sajid Javid
I am pleased that the hon. Gentleman is so interested in tax, because he will be sure to welcome the news that 38,000 people in his constituency have had an income tax cut and 4,500 have been taken out of income tax altogether.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I am grateful to the Opposition for pointing out earlier that before the election the Minister worked for a bank that the British Government did not need to bail out, whereas the shadow Chief Secretary to the Treasury ran the campaign of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). Nevertheless, does my hon. Friend agree that the Prime Minister made it absolutely clear at the Dispatch Box only last Wednesday that he did not agree with putting VAT on children’s clothes and food?
Sajid Javid
My hon. Friend makes a good point. [Hon. Members: “Answer the question!”] The Prime Minister answered it. The Government have absolutely no plans to increase VAT.
Kwasi Kwarteng
This proposal has been ripped out of context and completely distorted by the Daily Mirror and some of Labour’s other friends in the media. Let me be clear: this proposal was designed as a tax simplification measure that would cut the VAT rate and allow the savings to be targeted at people who really needed the money. It was a complex proposal whose details, I am afraid, got lost in the Labour spin machine.
Sajid Javid
My hon. Friend has made his point well, and I will not dwell on it further, in the interests of time.
We have also frozen fuel duty. Petrol is now 13p per litre lower than under Labour’s plans. Each time the average motorist fills up their car, they are saving £7 because we have refused to implement Labour’s fuel duty escalator. We are also helping local authorities to freeze council tax, and our tax-free child care plan will mean savings for parents of up to £1,200 per child.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman is making a brief intervention, and he must be heard.
Alun Cairns
My hon. Friend makes an extremely important point about council tax, highlighting the freezing of council tax here in England. Sadly, in Labour-run Wales, council tax has risen by nearly 9% over recent years, in the same time as it has been nearly frozen here. Will he join me in calling on the Labour Front-Bench team to pressure their colleagues in Cardiff Bay to freeze council tax for my constituents in the same way that he is doing for constituents in England?
Sajid Javid
My hon. Friend has made his point very well, and the shadow Front-Bench team will have heard it. If they really cared about citizens in Wales, they would pressure their Government in Wales to take action on council tax.
We are also making it easier for hard-working people to put some of their savings towards buying their own home. Our Help to Buy mortgage guarantee and equity loans are making home ownership a real possibility for aspiring people. Just one month since its launch, more than 2,000 people have put in offers for homes under the mortgage guarantee scheme. More than three quarters of the applicants were first-time buyers, many of them in their early 30s. Since the launch of the equity loan scheme in April, 92% of the 5,000 new homes built have been bought by first-time buyers. This is how we are helping to raise living standards: we create a business environment in which more people can go to work every day; we create a tax environment in which people can keep more of the money they earn every month; and we work with the banks so that every year more people can secure the dream of their own home.
Our plans are improving living standards, but what is the Labour party’s solution? I am sure it will tell the public that the only way is up—and they would be right: under Labour, taxes would go up; mortgage rates would go up; inflation would go up; and unemployment would go up. That is what economic failure looks like.
As I said at the outset, the shadow Minister needs to give the British public more credit. They are a lot smarter than he realises. They recognise that it was the Labour party that got the country into this mess, and that it will take time and difficult decisions to clear up that mess. We, the coalition Govt, have put our faith in the British public, and because of their hard work over the past three and a half years, jobs are being created at a record rate, the economy is growing faster than in any other developed country, and as Governor Carney said just last week, the recovery has finally taken hold. There was never going to be a magical short-term fix, but our sensible, sustainable economic strategy will raise living standards, so let us not lose ground on the progress we have made; let us not allow Labour to take Britain back towards economic ruin. I beg the House to oppose this motion.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before I call the next speaker, the House will be aware of the high demand for time to speak and the lack of supply of it before we reach the end of the debate. I therefore impose with immediate effect a limit of eight minutes on speeches from Back Benchers.
Yvonne Fovargue (Makerfield) (Lab)
No subject impacts more on my constituents than the cost of living. Wages are dropping—in the north-west by 7.8%, a loss in spending power of nearly £1,700 a year—while more people are being given part-time hours or zero-hours contracts. That is not their choice, yet food and fuel prices continue to rise.
People in my Makerfield constituency are “doing the right thing”: they are working or looking for work. For those looking for work, a quick glance at the universal jobmatch site will superficially show that many jobs are available after searching for retail jobs in Wigan. Let us look a bit deeper at these “jobs”, however. In the three pages I checked at random, 67 of the 75 jobs available were for self-employed catalogue distributors—jobs that the site stated it had been assured “may” enable people to earn a wage equivalent to the national minimum wage. Really? How many people have tried these jobs, paid up front for their catalogues—about £150—and found that they consistently earned the national minimum wage after paying all their contributions? It certainly does not include the people who have been to my surgeries after trying these non-jobs and finding that they could make very little—not even enough to heat and eat.
Domestic energy bills have risen by an eye-watering average of 37% over the last three years. In 2012-13, citizens advice bureaux received 92,000 inquiries about fuel debt alone, while Which? estimates that flaws in the market have left consumers paying £3.9 billion over the odds since 2010. We intend to stand up for consumers in this failing market and break the stranglehold of the big six. What have this Government proposed? Nothing. It is no wonder that citizens advice bureaux saw a 78% increase in the number of people having to use food banks last year. Many of those people were in work, yet were unable to pay their bills and could not afford to eat.
Mr Newmark
As the hon. Lady has mentioned jobs, I thought that it would be useful to give her a little information and a few facts. Is she aware that unemployment in her constituency has fallen by 26% in the past year, and that youth unemployment has fallen by 40%?
Yvonne Fovargue
I am grateful to the hon. Gentleman for mentioning the unemployment figures in my constituency. I recently received an e-mail from the Audit Office telling me that the figures were not reliable because the constituency was a pilot area and people were coming off the register.
Admitting that you cannot feed your family is not easy or comfortable. For many people, going to a food bank is a last resort and a source of shame, although it is not their fault but is due to an accumulation of Tory-led policies that are punishing, not rewarding, hard-working people.
I would not be doing justice to my constituency postbag, or to the people who attend my surgeries, if I did not mention the economically unsound bedroom tax. As I have often said before, in Wigan we have a shortage of one and two-bedroom properties and a surplus of three-bedroom properties. People are being forced either to move to the more expensive private rented sector, uprooting their families and incurring further expense, or to pay the difference. Given that 4,200 people in my constituency are affected by reductions in housing benefit ranging from £517 to £1,273, it is no surprise that in October, 2,500 people contacted Wigan and Leigh Housing about rent arrears and debt. That represents an increase of 50% in the last three months.
The bedroom tax means yet another cut in the available income of many of my constituents, forcing them to make stark choices about how they spend their money. Far from being a case of what luxury item they must do without, it is a case of “Can we afford to have the heating on, or should we shiver and buy food—and what about that new pair of school shoes? Heaven forbid that the washing machine or the fridge should break down!” There is certainly no money to save for a rainy day. In fact, many of my constituents are already swamped and drowning in debt.
No wonder the payday lenders, the home credit providers, the log book loan companies and the rest are proliferating. According to a recent report, 48% of people who go to payday lenders are female, and the majority of females have borrowed for everyday necessities. They have borrowed to buy food for the family, or to pay the heating bills. Capping the cost of credit constitutes a welcome recognition that these companies are making profit from despair, but there is much more to be done. The root cause of rising prices and low incomes needs to be addressed if people are to be saved from being dragged into a spiral of debt.
The people I represent are hard-working people who want the best for their families and who are doing the right thing, but they are being let down by this Tory-led Government in so many ways. Every time they go to the supermarket, every time they receive a fuel bill, and every time they turn on the television or walk down the high street and see more advertisements for payday lenders, they are reminded of the Government’s failure to address the issue that is most important to them: the cost of living.
Robert Halfon (Harlow) (Con)
Thank you for calling me, Madam Deputy Speaker. This is the first time I have spoken in front of you, and it is an honour to do so.
I am delighted that the Labour party has initiated this debate. I say to Labour Members “Bring it on!” I am glad that they have at last woken up to the cost of living crisis. While many of us were going on about it for a number of years, they were talking about predistributions or other “chattering classes” subjects that no one understood. While we were cutting and freezing fuel duty, cutting taxes and raising thresholds for lower earners, and increasing taxes for the rich by, for instance, increasing capital gains tax, they were voting against all those measures. They created a handout society, whereas we want to create a “hand back” society, and to give people back their own money through lower taxes. They created a society of dependency: a society of high tax, high debt and high borrowing.
David Rutley
My hon. Friend is making a very passionate speech. I know that he feels strongly about these matters, and has campaigned strongly on them in the past. Does he agree that, although our hon. Friend the Financial Secretary made an outstanding speech, what was omitted from it was a reference to the importance of the employment allowances that will allow a first-time employer to take on a new employee, thus helping even more people into the workplace?
Robert Halfon
My hon. Friend is absolutely right. That is another example of why we are the party of small business. Labour showed during its years in office that it was, as Peter Mandelson said, the party of the filthy rich and of big business, sucking up to bankers in the City—Fred the Shred, Flowers and all those kinds of people.
The main elements of the cost of living are jobs, pay and energy. Let us look at the Labour Government’s record. They scrapped the 10p rate of tax under Gordon Brown in 2008. They talk about wages, but median wages stopped rising in 2003, in times of plenty, and hourly pay rose at only a quarter of the rate of economic growth. They increased fuel duty 12 times while in office, and the cost of bus travel increased by 59%. Council tax increased by 67%, and energy bills doubled. That is the record of the Labour party, which says that it wants to help with the cost of living. Sadly, it has nothing to show for it at all.
Energy and fuel prices are among the key indicators of the cost of living. As we have heard from the Minister, this Government have cut fuel duty and said that they will freeze it for the lifetime of this Parliament—an historic move. Of course, I would like the Government to do more and to cut fuel duty further, and I hope that when economic conditions allow, that will be the No. 1 tax cut. We need to continue to help hard-pressed motorists.
On energy, let us remember that there were about 17 energy companies under Labour; now, there are only six. Labour decreased competition, but we are doing things to increase it. I believe that the Government should do more on VAT, particularly through renegotiating our VAT rates with the European Union. They should also consider imposing windfall taxes—de facto fines—on some of the energy companies and passing the money back to the consumer. They should also cut Labour’s green taxes, which make up 17% of the average energy bill.
Mr Ellwood
My hon. Friend is making a powerful speech. I understand that Labour intends to make energy its focus in the forthcoming EU elections. I intervened on the hon. Member for Nottingham East (Chris Leslie), but he declined to answer my question. Does my hon. Friend agree that we should look not only at the six energy companies but at how we make energy in this country? We now need to import it, and we are over-reliant on expensive energy imports because the previous Government failed to replace the nuclear fleet in time. They did nothing during their 13 years, and that energy offering went down from 25% to 15%. That is why we now have to pay more for expensive oil and gas from abroad.
Robert Halfon
As always, my hon. Friend hits the nail on the head. It is funny how we hear in the media that energy prices fell under the right hon. Member for Doncaster North (Edward Miliband), because they actually doubled during Labour’s time in office.
There were 2.5 million people, including 1 million young people, unemployed when Labour left office. That did not happen over 18 months solely as a result of the recession; it was happening even in times of plenty. Under this Government, youth unemployment in my constituency has gone down by 7.6%, long-term unemployment by 4.3% and overall unemployment by 4.4% over the past 12 months. This Government are helping with the cost of living and helping people to get back into work. I met a chap who was helping me with my car at Halfords, and he told me that he was going to vote Conservative for the first time in his life. When I asked him why, he said it was because the Conservatives helped people who work. That is what this party is all about. We are the party of hard-working people. We are the party that helps people with the cost of living.
Pay and taxes are another indicator of the cost of living. There are 3,749 people in my constituency who have been taken out of tax altogether. They are on low earnings. A total of 36,861 lower earners have had a tax cut. I want the Government to do more, however. I want them to raise the threshold at which people pay national insurance, because that would make a huge difference. Let us take people on low earnings out of all tax altogether, not just out of income tax. Nevertheless, the Government have made huge progress, which has been opposed massively and has been voted against by the Labour party. We have to remind our constituents that Labour voted against people on lower earnings getting lower taxes. As I said, median wages stopped rising in 2003, so the previous Government’s record on wages is nothing to shout about. We need to improve the minimum wage; we should have a regional minimum wage top-up, on top of the national minimum wage. We need to reform national insurance as I have described, but at least this Government have started doing the things that are helping to address the cost of living most; we have taken action on energy, jobs and national insurance.
A thing that gets my goat is that the Labour party claims to have the monopoly on compassion. As my constituents found out, the reality is that Labour had a monopoly on failure—on the cost of living, on taxes and on the economy. Through our history, the Conservative party has always been on the side of hard-working people; we have always helped lower earners. Despite the very difficult economic conditions that the Labour party left us, this Government have done everything possible. The Conservatives do not have a monopoly on compassion, but we are the party of aspiration. We give people ladders of opportunity; we give them skills and apprenticeships, the number of which has increased by more than 80% in my constituency. We are giving people jobs, and we are creating a new nation of property owners through the right to buy and the Help to Buy scheme. We recognise that the best way to help the poor and lower earners is not through the dependency culture and welfare society so beloved of Labour Members, but by cutting taxes, cutting fuel duty, freezing council tax, restoring the link between pensions and earnings, and helping hard-working people.
Stewart Hosie (Dundee East) (SNP)
I wish to say a little about the motion before I start my speech proper. The motion is in two parts, the first of which describes the failure of the Conservative Government—I intend to say most about that—and the second calls for action to mitigate the cost of living crisis. Although the Scottish National party does not agree with the Labour party on the precise mechanism of its fuel price freeze—we would prefer to see a cut—the principle of taking action on fuel is important in tackling the cost of living, so we will certainly be able to support this tonight.
I wish to start by discussing tax, because that clearly has as much of a bearing on people’s ability to cope with rising prices as do earnings or the prices themselves. The Government are right to try to take as many people on low and modest wages out of tax as possible. The saving of £595 a year for basic rate taxpayers through the change in the basic allowance from £6,500 in 2010 to £9,440 this year makes sense. However, a saving of £595 for basic rate taxpayers makes rather less sense when the same Government are embarked on a £40,000 tax give-away for millionaires.
The people I really want to talk about are those in the middle, who are paying some of the heaviest price for the mistakes this Government have made. These people have seen the tax relief before they pay the 40% band fall from £37,500 in 2010 to £34,700 last year and to £32,000 this year. So for every £595 saved as a result of changes to the basic rate, they have had to shell out an extra £2,000 at 40p in the pound. That does not make people better off; it exacerbates the crisis faced by people, particularly hard-working people on middle incomes. I am not talking about the very poorest and I am certainly not talking about the very wealthy; I am discussing those on genuinely middle incomes. It means that this Government have taken the number of people paying 40% tax to a whopping 4.3 million; whereas barely 5% of taxpayers did so 25 years ago, the figure has rocketed and 16% of all taxpayers now pay a 40% tax rate—even a quarter of a century ago this was a band only for the rich. They are not paying that because they are wealthier or even because the economy has come out of the austerity period. Indeed, people feel poorer because they are poorer.
Last year, the Office for Budget Responsibility changed its forecast—I think this contradicts what the Minister said—by reducing household disposable income every year from 2013 onwards in the forecast period. In the March economic and fiscal outlook, it marked down real disposable income again to be negative or zero every year until 2017. People will not simply be not wealthier but will feel the burden of higher costs and stagnating real disposable income year after year after year of this Government.
It is no surprise that households should feel poorer given that since the Government came to power inflation has constantly exceeded targets, pay has been frozen and benefits have been cut. Even the calculation of pensions, notwithstanding the much-vaunted triple lock, has changed from the retail prices index to the consumer prices index. People need to understand that the actions of this Chancellor have caused untold damage to, and put pressure on, families throughout the UK, and much of that is because, as the motion says, he has failed to meet any of the economic targets that he set himself.
When the Government came to power in 2010, they told us that the current account deficit for this year would be a mere £40 billion. This year, in the Budget, the Chancellor told that it would be £84 billion, which is more than double the original figure. In 2010, the Chancellor told us that public sector net borrowing for this year would be barely £60 billion. This year, he told us that it was £108 billion, but when we add on the fiddled stuff with the pension funds, we find that it was actually £120 billion—again, more than double the figure.
Kwasi Kwarteng
Is the hon. Gentleman suggesting that it would have been a better plan to borrow more money to reduce those deficits?
Stewart Hosie
I am suggesting that to try to remove the structural deficit and fail over a fixed time scale, taking no cognisance of external shocks, was a stupid thing to do and a daft economic and political decision, which the Government were warned about in advance. The warnings failed precisely because this Chancellor promised that national debt would peak at 85% of GDP on the treaty calculation, or at £1.162 trillion on the normal calculation. However, we were then told this year that it would not peak until 2015-16 at over 100% of GDP on the treaty calculation, or at more than £1.5 trillion on the normal calculation.
Mr Ellwood
There is a comparison here with what those on the Labour Front Bench are saying. The hon. Gentleman said his speech was in two halves, but his argument is in two halves. He has just said that he is upset that the Government are taxing people too much, and now he is complaining that targets have not been met. Will he at least join me in welcoming the IMF’s upgraded forecast, which suggests that for this year growth will move from 0.9% to 1.4%, and next year from 1.5% to 1.9%? That must be welcome news.
Stewart Hosie
I always welcome growth in the economy, but the error that the hon. Gentleman and his Government have made is that by increasing tax and cutting to the extent that they have—the ratio of cuts to tax increases is four to one—they will have sucked out of the economy by 2016-17 roughly £155 billion a year. That is the equivalent of sucking 7.5% of GDP in terms of consumption out of the economy.
Stewart Hosie
I will not give way, because we only get two minutes’ stoppage time, and I have had my two minutes.
This Government are also borrowing more and we are all paying the cost of failure. The Government’s main failure is on the fiscal rules they set themselves: that the structural current account deficit should be in balance in the final year of a future five-year programme—it will not be; and that debt should be falling as a share of GDP by the end of that period—it is not. Both objectives, were, and remain, highly dependent on GDP growth, which, as we have noted in previous Budgets, is massively dependent, at least according to the OBR, on extraordinary unmet and unmeetable levels of business investment. Let us remember that in 2010 the Government suggested, with a straight face, that business investment would have to grow between 8% and 11% a year between 2011 and 2015. By the time of the OBR fiscal outlook in November 2011, growth in business investment had turned negative again and the forecast had to be changed to show future projections of growth of up to 12%.
The Chancellor was at it again this year. Having failed to get the growth in business investment we needed, he is now suggesting growth in business investment of 8.6% in three out of the next four years. I hope that that happens, but based on the evidence we have seen so far and the inability of the banks to take their share in providing credit and liquidity to businesses, I fear that is a forlorn hope.
We have also been told—this point was mentioned earlier—that we will see the benefits to GDP growth of exports from the UK. In 2011, however, we had a deficit in trade in goods of £100 billion, which rose to £110 billion the following year. The deficit in trade in goods has been sitting at about £20 billion for every quarter of this year. The balance of goods and services was £23 billion in the red in 2011, and that figure worsened to £35 billion last year after four and a half years of depreciation in sterling. I would hope that at the very least the Government recognised that that part of the plan simply has not worked.
I hope that the Government will be less stubborn about recognising where they have failed and that their optimistic Budgets have simply collapsed into dust when faced with the stark reality of austerity economics, which strips consumption out of the economy in the way I have described.
Stewart Hosie
I will not.
The pain of all that, as always, is felt by ordinary people, because, as I said earlier, we know this much from the Red Book: the Government intend to take £155 billion a year out of the economy in discretionary consolidation by 2016-17. They will do that for that year and every year, the equivalent of stripping consumption worth about 7.5% of GDP from the economy. Given that they have increased the ratio of discretionary consolidation to four to one—four cuts for every one tax rise—we can see where the Government’s priorities lie: not with jobs, not with growth, not with recovery and not with lifting the burden of the cost of living crisis off the backs of ordinary people, but with balancing the books on the backs of ordinary people in this country. If nothing else, they should recognise that it is not working. The pain is intense for communities throughout the UK and they should think again when we get to the autumn statement.
The Leader of the House of Commons (Mr Andrew Lansley)
On a point of order, Madam Deputy Speaker. I am sorry to interrupt the debate, but have you have had any indication from Mr Speaker whether he intends to make any statement to the House about his speech to the Hansard Society this evening, in which he proposes to announce the establishment of a Speaker’s commission on digital democracy? Furthermore, briefing of the media on the speech and the announcement within it has been taking place for some four hours already without any announcement being made to the House.
Madam Deputy Speaker (Mrs Eleanor Laing)
I am not aware of any such plans for any such statement and, as the right hon. Gentleman knows, that is not a matter for the Chair.
Mr Brooks Newmark (Braintree) (Con)
It is always a pleasure to speak after the hon. Member for Dundee East (Stewart Hosie), for whom I have great respect. Unfortunately, he can sometimes be a little dour and sees a glass of water as half empty rather than half full. I would rather talk about a glass of water being half full than half empty, so my speech might have a more positive tone than his.
The Government have made huge strides to clean up the economic mess created in 2010. As the Governor of the Bank of England, Mark Carney, said on Wednesday 13 November:
“Inflation is now as low as it has been since 2009. Jobs are being created at a rate of 60,000 per month. The economy is growing at its fastest pace in 6 years. For the first time in a long time you don’t have to be an optimist to see the glass as half full.”
Ian Paisley (North Antrim) (DUP)
Will the hon. Gentleman give way on that point?
Mr Newmark
No.
“The recovery”,
the Governor of the Bank of England says,
“has finally taken hold.”
If I may, I would like to begin by highlighting some of the economic achievements of this Government since 2010. The Government have cut the budget deficit by a third. The Government have helped the private sector create 1.4 million new jobs, offsetting any jobs lost in the public sector by 3:1. The Government have ensured that borrowing costs have fallen to record lows, saving money for taxpayers, businesses and families alike. The Government have helped bring inflation down to 2.2% as of October 2013. That is important because of the damaging effect that rising prices can have on the cost of living. The Government have helped bring back growth to the UK economy, with growth now projected to be 2.9% by year end 2014. The Government have ensured that the UK has more men and more women in work than ever before. The Government have seen the number of people claiming unemployment benefit fall at the fastest rate since 1997. Indeed, in my constituency of Braintree, both unemployment and youth unemployment are down 20% in the past year alone.
David Rutley
My hon. Friend sets out an impressive track record of achievement in the economy. Does he also recognise that our economic growth in the UK is projected to be the fastest in any country in Europe?
Mr Newmark
I thank my hon. Friend for that intervention. I am just getting to that point.
Mr Newmark
Furthermore, British manufacturing recently reported the strongest growth on record, exceeding that in every quarter since 1989, and Reuters recently reported that growth in UK services is the strongest in 16 years. The Government have indeed achieved much to rebalance our economy.
Finally on economic performance, as my hon. Friend the Member for Macclesfield (David Rutley) just mentioned, according to the OECD the UK has the fastest growth in the developed world, beating the US, Germany and Japan. So by almost every benchmark, the UK has made huge strides in turning around the UK economy, and the Chancellor and his team at the Treasury should be congratulated on sticking with plan A and ensuring that the UK is on the path to recovery.
The Government also have much to be proud of on the cost of living. The 2013 Budget raised the personal tax allowance to £10,000 from April 2014. That ensured a tax cut for 25 million people, with individuals paying an average of £705 less in income tax than they did in 2010. Indeed, 2.7 million people have been taken out of tax altogether, thereby reducing the cost of living.
Mr Newmark
The Government have already reduced energy bills by £193 by removing the green levies imposed by the Leader of the Opposition and are ensuring that energy companies offer the lowest tariffs to customers, thereby reducing the cost of living.
The Government have frozen fuel duty for the longest period in more than 20 years, with pump prices 13p per litre lower than when Labour was in power. Indeed, the average motorist will save at least £170, the average van driver will save £340 and the average haulier will save £5,200 each year as a result, thereby reducing the cost of living.
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman and his party must be greatly relieved to be able to report an increase in GDP, given that in June 2010 the Office for Budget Responsibility was predicting that it would be 2.5%, 2.5% and 2.6% in the three years coming. So it must be a big relief to have at last turned the corner.
Mr Newmark
Yes, it is a big relief, but as anyone in business knows—I had been in business for 20 years before I came to this place—turning around a business, particularly in an economy that was as messed up as that created by the Labour Government, takes a while. Progress is not necessarily linear. What we do have is growth returning. That is recognised by the Governor of the Bank of England, the OECD and the International Monetary Fund.
Mr Newmark
I cannot give way; I have allowed the two interventions I am permitted.
Furthermore, the Government froze council tax in 2013-14 for the third year in a row. The combined effect of the Government’s actions means that council tax bills, which doubled under the previous Government, have fallen by 9.5% since 2010, thereby again reducing the cost of living. The Government have increased child care support for low-income working families on universal credit, thereby reducing the cost of living. In 2011, child tax credit increased by £225—the largest increase ever—and in April this year, it went up by 5.2%, a further increase of £135, thereby reducing the cost of living. The Government introduced the triple lock, which means that pensions increase every year by price inflation, earnings growth or 2.5%, whichever is highest. Over the course of their retirement, the average pensioner will be about £12,000 better off under the triple lock, which helps with the cost of living.
Furthermore, the Government introduced the warm home discount scheme, which gives pensioners a £120 rebate on their electricity bill, thereby reducing the cost of living. The Government have increased cold weather payments permanently from a measly £8.50 under the previous Government to £25, thereby reducing the cost of living.
In conclusion, the Government have much to be proud of. The Chancellor made some difficult decisions in 2010 to ensure that the country could have a long-term sustainable economic recovery. As the Governor of the Bank of England reiterated in the Treasury Committee yesterday, the economic recovery has finally taken hold. We should not jeopardise all this by returning to Labour’s tax and spend policies, which created the financial mess that we have finally begun to clear up. The Government must stick with their long-term economic plan, as that is the only sustainable way to raise living standards. I therefore oppose the motion.
Roberta Blackman-Woods (City of Durham) (Lab)
It is always a pleasure to follow the hon. Member for Braintree (Mr Newmark), but rather than him being positive, I think that he looks at the world through extremely strong rose-tinted spectacles. The Government’s record is failing the country, and nowhere is that failure felt harder than the north-east, which is where my constituency of City of Durham is located.
Last month, the Office for National Statistics confirmed that the north-east had the highest regional unemployment rate in 2013. It said that the unemployment rate in the region was the highest in the UK at 10.3% in the second quarter of 2013, compared with 7.8% for the UK. The employment rate stood at 66.5%, lower than the UK rate of 71.5% for the same period. Almost a fifth of children in the north-east lived in workless households in the second quarter of 2013. At 18.7%, that was the highest proportion in the regions, compared with an average of 13.6% for England.
Mr Newmark
Given that the hon. Lady is discussing employment and unemployment I thought it would be useful to remind her that in the past year alone in her constituency, unemployment has dropped by 26% and youth unemployment has dropped by 29.5%.
Roberta Blackman-Woods
I do not know where the hon. Gentleman got his figures, because I looked at the drop in unemployment and the numbers for youth unemployment in Durham showed a reduction of 19 in the last quarter. Although we welcome any increase in employment, he must pay attention to the quality of jobs that have been created. In Durham, a lot of people have lost good, stable, well-paid jobs in the public sector, and have taken insecure, low-paid, zero-hours-contract jobs in the private sector, if any employment at all.
As I was saying, the Government’s failure on living standards is impacting on people in the north-east. I shall go briefly through some of the issues that we are facing. With the current cost of living crisis, people are working longer hours for lower incomes, and despite being in work, many people find themselves in poverty. Government Members seem unable to grasp that.
Julie Elliott (Sunderland Central) (Lab)
As a fellow north-east MP, does my hon. Friend agree that for young people in particular, the often unsuitable and unstable employment that is out there if they manage to get a job—as she said, they are probably on zero-hours contracts—means that in many cases they have to do a variety of small jobs to make up some kind of income. That is not a long-term way to plan their future careers, is it?
Roberta Blackman-Woods
My hon. Friend makes an excellent point. We need to see much more action from the Government on securing decent employment and career paths for our young people, as we all want.
Roberta Blackman-Woods
I am sorry, but I will run out of time if I give way. I apologise to the hon. Gentleman.
The north-east has the highest proportion of people paid below the living wage—32% of workers are paid less—and research published by the Resolution Foundation has further confirmed that the north-east was the region where workers were most likely to be trapped in low earnings. The Office for National Statistics said:
“In April 2012, median gross weekly earnings for full-time adult employees in the North East were £455, joint lowest with Wales and lower than the UK median of £506.”
So people in the area that I represent are having to contend with lower wages, but they are also having to deal with rising prices. They are being burdened with not only increasing energy costs, but increasing costs for child care, for example. Energy prices have angered people throughout the country and all we have heard from the Government is excuses for the actions of the big six. When npower recently announced an eye-watering rise in electricity costs of 9.3% and in gas of 11.1%, The Journal, our local newspaper, reported that Dorothy Bowman, a campaigner for elderly people from County Durham, said that the price hike would leave householders with a stark choice. She said:
“They will have to choose food or heat, it will be too expensive for both. This is at the wrong time for people”.
She went on to say that npower did not care at all
“about their customers and the dire misery they are subjecting them to, they just care about their profits. If they were going to do this why not do it in spring, now people have no choice.”
She said the elderly would suffer, but so would young families living on a tight budget. I think she makes the point very strongly indeed.
In addition, The Journal reported on 25 October that an official at thinkmoney said:
“Regionally, problems with utility bills appear most severe in Northern Ireland, London and the North East.”
That is why we need Labour’s energy price freeze and long-term reforms to the energy market.
Jim Shannon
As an example of how dire things are in the high street and the household, Citizens Advice reported that 92,000 people had made inquiries about fuel debt, 81,000 people had made inquiries about water debt, and that there had been a 77% increase in child care costs over 10 years and a 78% increase in the use of food banks. Surely that is the reality of the high street and what is happening at present.
Roberta Blackman-Woods
The hon. Gentleman makes an excellent point and I hope to be able to come to some of those issues myself.
On child care, the cost of nursery places has risen by 30%—five times faster than pay for people on average wages. I opened a new nursery in my constituency a couple of weeks ago—Do Re Mi nursery—but without action from the Government many families will not able to take up places there. It is not good enough for Government Members to say that there is help for people and that there is universal credit. No one is on that at present and many are not getting any help with child care.
As the hon. Member for Strangford (Jim Shannon) said, there are huge problems with debt. The charity StepChange in my constituency said that almost 2,000 people in the Durham area had been referred to it with debt problems from January to June this year. R3, the insolvency trade body in the north-east, found that almost a quarter of survey respondents were extremely worried or very worried about their debts, while 56% were worried about their credit card payments.
For some time, Labour Members have been raising issues about payday lenders and the extortionate rates of interest they have been charging. We obviously welcome the Government’s announcement on this, but as yet there has been absolutely no information about what will be in place to help people who have already taken out loans that they are unable to pay back. That situation is seriously compounding the problems that many families are facing.
Moreover, food poverty is increasing in Durham. The website of Durham food bank states:
“Durham foodbank has now completed two years of distributing food to local people in crisis. In our first year we fed 3686 people, our second year total is now in excess of 10,600.”
It thanks the army of volunteers who are helping it to meet this need, but makes the point, as I do, that that demonstrates a huge increase in the number of people requiring food banks. Indeed, the local citizens advice bureau has reported a 78% increase in the number of inquiries about the use of food banks. This flies in the face of the Government’s claims that they are turning the corner. Lots and lots of families in my constituency have a genuine cost of living crisis, and things are getting worse for them because of increasing prices and, at best, flatlining wages. They simply cannot afford to make ends meet.
Labour is calling for the Government to take real action to make a difference to families in Durham and across the country. We want a list of measures to be included in the autumn statement, including an energy price freeze, an extension of free child care, action to boost long-term housing supply, and a compulsory jobs guarantee—real action that would help people who are struggling out there in our communities. The Government are standing by and doing nothing to tackle the serious pressures on families right across the country, and we cannot let them go on and on doing the same thing. We need real action from the Government to support hard-pressed families. I support the motion.
Kwasi Kwarteng (Spelthorne) (Con)
I am grateful to you, Madam Deputy Speaker, for calling me to speak in this important debate. We have had such debates on a number of occasions, but it is important that we have this one now, when the economy is growing. All the indicators from the IMF, the OECD and other estimable bodies suggest that the worst is over in the British economy and that we are encountering some sort of recovery.
More important than recovery in itself is understanding how we got into this position in the first place. The economy will be a very important issue in the next election. I was interested to hear the hon. Member for Dundee East (Stewart Hosie) criticise the Chancellor and the Government for not reducing the deficit fast enough. When I asked what his solution was to this conundrum—whether he wanted to borrow more—he failed to answer. I still do not know what his answer is; perhaps he will care to enlighten us in the course of my speech.
It is true that the UK economy has faced a difficult few years given our reliance on financial services and, more importantly, the appalling fiscal legacy of the previous Labour Government. It was insane for them to borrow money in every fiscal year from 2001, even when the economy was growing. I have never heard of an economy growing at 3% while running a deficit of 3% of GDP. Not even Lord Keynes would have advocated such a policy. Yet we lived through a period in which we had year after year of deficit even when the economy was growing.
Alec Shelbrooke
Does my hon. Friend share my deep concern that the most shocking thing that has emerged during this debate is that the shadow Chief Secretary does not appear to know the difference between deficit and debt?
Kwasi Kwarteng
That is absolutely right. I was as shocked and appalled as my hon. Friend that, when I asked the shadow Chief Secretary what the absolute level of the British deficit is—it was a very simple, general knowledge-type question—he did not seem to know. I then asked him whether he knew what the deficit-to-GDP ratio is, but he flannelled away that supplementary question and did not even pay me the courtesy of answering it.
We have to look very carefully at the legacy of the previous Labour Government, because it has a direct impact on living costs and this cost of living debate. People in Britain—people in my constituency and, I am sure, in other constituencies across the country—intuitively understand that after a period of excessive spending in which, to borrow a metaphor, the national credit card went way beyond its limit, it is necessary to have a period in which spending is reduced. Nearly everyone understands that and, as a consequence, any poll that Members may care to look at shows that the Government and coalition parties have a considerably better rating on the issue than that of the Labour party.
Stephen Doughty
What do the polls say about the attitude of the hon. Gentleman’s constituents to his proposals to put VAT at 15% on children’s clothes and food?
Kwasi Kwarteng
I have mentioned my specific proposal and not the Mickey Mouse, cartoon version offered by the Daily Mirror. [Interruption.] I am not sure which rag it was, but I will not return to that point.
The cost of living debate cannot be conducted without reference to the actual economic conditions or the economic legacy of the previous Government. It is a sleight of hand—I admire Labour’s political skill in that regard—and dishonest not to recognise that the cost of living debate cannot be conducted without reference to the economy. It is also not very open handed or reasonable to suggest that the previous Government’s legacy and appalling record have nothing to do with the difficulties that families up and down this country face.
Ian Paisley
On the cost of living, does the hon. Gentleman accept that the further north we travel in this great nation of ours, the bigger the burden of debt and cost on individuals in society? Over the past four years in Northern Ireland, everything—from utility bills to transport costs—is up 30% and more for the average household. That is a dire burden on the community.
Kwasi Kwarteng
People in this country understand that any Government who came in after the 2010 election, amid the appalling wreckage of the economy bequeathed to us by the previous Government, would face a difficult proposition and have a difficult time. In fact, the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), outlined a plan—the newspapers dubbed it the Darling plan—that advocated spending cuts and a 22% rate of VAT. As Members will know, I advocated a much lower rate. The Darling plan was an adult, mature recognition of the appalling legacies that his Government had given us. It recognised that we needed to reduce spending and that what was then dubbed austerity was absolutely necessary for this country’s financial future.
Despite Labour’s worst predictions, the Government’s plan is now beginning to work. We have not heard anything about plan B for several months. We have not heard anyone say, “Too far, too fast.” One esteemed Labour economist said that unemployment would hit 5 million, but none of those dire predictions actually happened. Labour persists, however, in peddling the socialist, never-never land idea that borrowing more money will somehow reduce the deficit. That is absolutely insane. I understand why the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) is banging her head as a symbol of her frustration, because some of her colleagues’ ideas are remarkably foolish.
Kwasi Kwarteng
No, I will not. I tried to intervene on the hon. Gentleman, but he quite rightly wanted to use his full allocation of time.
What do the Opposition actually propose? They have no plans on the economy. Their economic credibility is severely questioned by the British public. All their prophecies and predictions have proved to be completely false. They are now left with the notion that the Government have somehow failed and that the very difficult time through which we have passed is a direct consequence of Government policies, when it has in fact been the direct consequence of the Government trying to get us out of the mess bequeathed by the Opposition.
Let us look at the Darling plan. When the Labour Chancellor was in government, he said that spending would have to be reduced, which is exactly what this Government have done and achieved. As I have mentioned, under the Darling plan the VAT rate would have been 22%. It is lower than that, so we have managed to achieve a degree of fiscal consolidation without some of the punitive tax rates suggested by the right hon. Member for Edinburgh South West.
All of this debate has a direct bearing on living standards and the difficulties that people are facing. Once again, under difficult fiscal constraints, this Government have managed to lift hundreds of thousands of people out of tax altogether. They have raised the personal allowance, which is a significant achievement in a time of relative austerity when we have not had the largesse that the previous Government enjoyed and abused. It is absolutely to the Government’s credit that we have managed to raise the personal allowance—taking people out of tax—which has alleviated living conditions and made them slightly easier for many of the poorest in this country.
Before I finish, I want to mention some of the gimmicks and wheezes that the Labour party has offered as serious policies. Government give-aways will still have to be paid for by the taxpayer. It is madness to try to freeze energy prices. Anyone who has looked at the economic history of this country knows that the price and wage controls of the 1960s and 1970s completely failed. We have abandoned such policies. Opposition Members will remember that beer duty was frozen in the 1960s for two years, and in the third year the price of beer went up by 41%. That is no way to conduct an economic policy.
Mr Iain McKenzie (Inverclyde) (Lab)
It has become evident from today’s debate that the Government are incapable of making any real changes to improve the cost of living for our hard-pressed families up and down the country. Nothing seems to be changing for those people who, as they have told me, see the Government putting the wrong people first. The only growth people have seen on the high street has been in prices and in pawnbrokers, payday loans, cash-for-gold companies and betting shops.
As has been said, prices are still going up faster than wages. That has been compounded by the fact that many of my constituents have experienced wage freezes over the past couple of years and/or have been moved to reduced hours or part-time working.
Jim Shannon
The hon. Gentleman mentioned payday loans, which are a scourge if ever there was one. Some 33% of people borrowing payday loans do so just to pay their basic household bills—just to live and get through the day—while 44% are borrowing to pay for their gas and electricity. Is that an indication of our society?
Mr McKenzie
Absolutely. The hon. Gentleman is spot on about that indicator of what is happening in society. I will develop that theme further.
Last April’s increase in the personal allowance does not make up for what families have already lost through tax and benefit changes. The cost of living is rising four times faster than earnings, on the back of a fall in real wages since this Chancellor took office. People are getting worse off, and the cost of living crisis is hitting hard-working families up and down this country. Families in Britain have taken a pay cut of £1,200 a year.
What do families face week in, week out as they struggle to overcome the cost of living crisis? I will give some examples to highlight the severity of the squeeze on living standards. On the basic weekly shop for food and clothing at the supermarket, families are seeing less go into the shopping trolley and more go into the till. Some families no longer do such a one-stop shop, but flit from supermarket to supermarket to cash in on the bargains and stretch their pound even further. There are growing crowds around the mark-down shelves, buying food that must be consumed that day. That is surely an indication that people are living from hand to mouth. Citizens Advice has also produced evidence on food shopping:
“On average UK households purchased 4.2 per cent less food in 2011 than in 2007 while spending 12 per cent more.”
Families are facing record energy bills, while energy companies are enjoying huge profits. Only Labour is committed to freezing prices, not freezing families. At my surgery last week, many constituents came to me with their power bills, concerned about how they would pay them. That is at the start of winter. Goodness only knows how they will pay their bills at the end of winter. Again, I will quote Citizens Advice:
“Over the last three years the average domestic dual fuel energy bill has increased by 37 per cent.”
That is a massive hit on family budgets.
Fuel prices are about 5p or 6p higher in Inverclyde than just 20 miles away. The pricing in my neck of the woods is unbelievable. There are different prices even within the boundaries of the town. The prices for one company vary from one end of the town to the other. The higher prices are predominantly in the areas where people can least manage the rising price of fuel.
A big indicator of the cost of living crisis is the increase in the number of people who are turning up at the doors of food banks. It is a national disgrace that there is food poverty in one of the world’s largest economies. In Britain today, some 13 million people live below the poverty line. The number of Scottish families that attend food banks has risen by 100%. In my constituency of Inverclyde, the number of people using food banks has increased dramatically and shows no sign of falling. The fact that 50% of those who go to food banks are in work is shocking.
What can I say about the impact of the welfare changes on my community? They have taken some £2 million out of the local economy. That money was spent on essentials such as food and clothing. That is having an impact not only on the families affected, but on high streets and shops because it threatens the survival of small businesses.
Where will the squeeze on living standards lead? It leads either in the direction of debt or towards desperate acts, of which I see more and more. In Inverclyde, one recent act—a metal theft, which we see up and down the country—sums up the desperation of families to get money to subsidise their income. Some copper cabling, worth a mere £30, was stolen from a substation in my constituency, plunging dozens of homes into darkness, leaving many people without heating and causing one home to burn to the ground—all that for £30! It was a senseless act, but for what reason? Struggling—that is why I believe that crime took place and put in danger not only the lives of those who perpetrated it, but those of the people living on that estate. Only the kind-heartedness and community spirit of the people of Inverclyde will ensure that the family who have lost their home and possessions will have a Christmas and a roof over their heads.
I know that many other Members wish to contribute to the debate, so I will conclude by saying that times are hard, living standards are definitely falling, and the Government’s economics are failing.
Christopher Pincher (Tamworth) (Con)
It is a pleasure to follow the hon. Member for Inverclyde (Mr McKenzie) and to speak in this debate. It gives me an opportunity to relate to the House the good news happening in Tamworth, which is not some leafy suburb but a no-nonsense, hard-working, gritty, midlands town. In Tamworth in the past 12 months, unemployment has fallen by 31%, youth unemployment by 35%, and long-term unemployment by nearly 40%.
Last month I held a jobs fair at which there were more jobs than jobseekers. There were some 400 jobs, including apprenticeships at Jaguar Land Rover and Spline Gauges, 50 jobs at Marston’s brewery, and jobs at Toys R Us. That demonstrates in a small but significant way how we have turned a corner and are creating real, sustainable jobs and growth for our constituents. It is our job to do that, and a story that Labour Members do not like to tell, just as they do not like to be reminded of their last miserable years in government, when in my town jobs were lost across the board. One could walk down the Glascote road and see repossession notices in window after window, as banks foreclosed on people’s homes. People were not just losing their jobs under Labour, they were losing their homes as well. We will not listen to lectures from Opposition Members when we remember the grisly legacy of Labour’s years, and we will not let them forget it either.
Alec Shelbrooke
Does my hon. Friend agree that in order to receive a lecture, someone actually has to have some information given to them?
Christopher Pincher
My hon. Friend is, as ever, apposite in his point, and we look forward to hearing Labour’s plan—plan A, plan B, plan Z? One day perhaps we will hear what it might be.
We have heard something from the Leader of the Opposition, whose latest stunt is to announce an energy price freeze. We should beware geeks bearing gifts, because that announcement is pretty hollow for three reasons. First, if a price freeze is imposed, companies will simply hike their prices before the freeze and afterwards, and people will be paying artificially high energy prices. That is what Professor Dieter Helm says, as well as Adam Scorer from Consumer Focus. Even the hon. Member for Southampton, Test (Dr Whitehead) has raised that concern. He is a Labour member of the Energy and Climate Change Committee and says that Labour’s plans for an energy freeze are somewhat sketchy.
The second reason a freeze will not work is that rather than break up the big six oligopoly, it will entrench it. Stephen Fitzpatrick of Ovo and the First Utility company—the company of choice for the Leader of the Opposition—say that a price freeze will make it more difficult for them to break into the market and operate, and that it will entrench the position of the big six, rather than break it up. The third reason the freeze will not work is that it will jeopardise £125 billion-worth of investment that we must make in short order in our energy infrastructure—£25 billion of that in the pipes and pylons that keep our lights switched on.
Angie Bray (Ealing Central and Acton) (Con)
Is there not a fourth problem? It would be a brave Government indeed who called an end to the so-called 20-month freeze precisely because, as they would know, prices would be likely to increase. Therefore, the chances are that prices would be frozen at that level.
Christopher Pincher
My hon. Friend makes a valid point. I suspect that, were we, heaven forfend, to have a Labour Government, they would show a great deal of pusillanimity in the face of the energy companies—the big six that they created. We need to ensure that we get that infrastructure funding flowing from private enterprise. Unless we get that money from the private sector, the poor old taxpayer must foot the bill.
We do not need an artificial, high price freeze in future; we need price cuts now. That is what will help our constituents, and that is what they want. That is what the Energy Bill will deliver. We need to make it easier for people to switch: 24-hour switching could save people up to £200 on their energy bills. We need to get rid of the array of tariffs—under Labour, there were more than 400—and put people on the lowest tariff available. That could save people £158. If we also roll back those green levies and do not impose the £125 carbon tax that Labour tried to impose through the Energy Bill in the other place just two weeks ago, that will save our constituents money. That is real help for real people now, not the conjuring trick that the Leader of the Opposition, like some street magician, wants to undertake.
We will remember at all times and in all circumstances that the Labour Government, like a bunch of boy racers behind the political wheel, wrapped our economy around a lamppost. Never, ever will we let it happen again.
Geraint Davies (Swansea West) (Lab/Co-op)
Today at Prime Minister’s Question Time, I accused the Prime Minister, in essence, of knowingly moving the economy forward in a way that means that real wages continually fall and house prices go up. He knows as well as all of us that we are moving towards the rocks of rising interest rates and a sub-prime debt crisis. He is a man looking to the future, walking backwards.
There is a question over whether the Prime Minister is doing that completely unwittingly—is he sleepwalking towards disaster or knowingly walking towards it? I put it to the House that he is knowingly doing so. He is inflating the housing market when he knows that people cannot afford higher interest rates. He is willing to take those risks in the knowledge that, if and when the Labour party takes office, there will be a sub-prime debt disaster, and he will be able to say, “It is old Labour messing things up.” He is willing to pay that price, because he believes that the feel-good factor from inflated house prices in London and the south-east—his core area—where he is investing 80% of Britain’s new infrastructure to buoy his vote, will be enough, alongside the media spin, to get him back into power. I put it to the House that it will not be enough, and that we should be alerting the British public to it and to what we should do about it.
The Minister loosely referred to the funding for lending scheme used by our banks, but he would not take an intervention from me. The scheme provides easy lending, underpinned by the Bank of England. Lending to households for mortgages is now at the 2008 level, but lending to business is 32% lower than it was in 2008. What does that mean? It means that British money is not investing in productivity and growth for jobs, which means that wages are not growing and will not be strong enough to sustain the cost of higher house prices when interest rates go up.
Interest rates will go up. Mark Carney, the Governor of the Bank of England, has clearly said that, when unemployment goes down to 7%, interest rates can be let free. That is great, is it not? Obviously, unemployment going down must be good—I can see Government Members nodding their heads—but, if overall production has not grown, average productivity will have gone down. Since 2010, productivity, in the main, has been flatlining and there is no growth in the economy. There is growth in the number of people in work because we are sharing the production around, which is why real wages are falling. We do not have the investment in training and in research and development. On investment as a proportion of GDP, we are 159th in the world. On R and D investment, we are at the bottom of the developed world. We are a basket case and it is no surprise that our triple A rating was taken away.
We hear the same old Tory story that we always hear: “Labour messed it up and we have made the recovery.” The reality is that GDP grew by 40% between 1997 and 2008. We then had the international financial disaster. My right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and President Obama stepped in with a fiscal stimulus to get us back to growth by 2010. Hey presto, the Tories arrived and announced that half a million people were going to be sacked, and people in the public sector stopped spending because they did not know when they were going to be sacked. So the Tories deflated consumer demand and growth has been flatlining ever since.
What has happened to our debt-to-GDP ratio? It has gone up from 55% to 75%, and will go up to 85% by 2015, because GDP has been flatlining. Debt to GDP has gone up, because debt has gone up as well. This Government have borrowed more in three and a half years than the Labour Government borrowed in 13 years. The clowns spin the story again and again in this Chamber and in the media, and the marketing campaign is working well. The Prime Minister and the Chancellor are knowingly sending us down the track towards more sub-prime debt. They hope the propaganda war will be won if Labour gets in and it blows up in its face.
This Government, and any future Labour Government, should, through the Bank of England, change the funding for lending scheme so that it focuses on business investment, not mortgage investment. Prior to the onset of the funding for lending scheme in July 2012, the mortgage market had already recovered, so we do not need the money that is going in. The scheme means that if you, Madam Deputy Speaker, were a bank, for every pound you lent to SMEs, you would have another £10 to lend elsewhere. At the moment that is going to mortgages, not SMEs. That will be changed to a ratio of 5:1. If that were to be rebalanced, the Bank of England and the Government could finance business loans—existing loans, as well as future loans—and give more money to SMEs. The financial markets are already servicing the rest of it. In addition, we have the Help to Buy scheme. All the money is therefore being channelled into a fixed stock of houses and prices will go through the roof. Would it not be better to invest in business and construction? That would increase the number of houses, reduce prices and create work.
We want a rational and sustainable economic strategy. Instead, we have a political trick that is sending us towards the abyss and the Government do not seem to care. They say that everything is recovering, but the essence of the debate is that everybody out there looks in their pockets and in their cupboards and knows that they are worse off. That will continue unless something is done to invest in business, productivity and growth.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
If the Help to Buy scheme is such an unattractive prospect, why are the Labour Administration in Cardiff adopting it?
Geraint Davies
I am not quite with the hon. Gentleman. I do not know if my analysis is lost on Conservative Members who are just repeating things without understanding the economic debate, but I am saying that we should work with Mark Carney to rebalance the funding for lending scheme in favour of business, instead of supporting the mortgage market which is already on track. That would take some of the heat out of the housing market, and help to build more houses, grow productivity, increase wages and create sustainable growth. That has nothing to do with what is happening in Cardiff.
A few references have been made to Wales, and I might as well respond to them, now that we have heard another Tory intervention. The reality is that 80% of all infrastructure investment in the UK goes to London and the south-east. Wales is one of the poorest areas of the United Kingdom; a quarter of the people live in poverty, the majority of them in work. The hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) will know, because he is a member of the Welsh Affairs Committee, that what is being put in place in Wales, the future jobs fund and so on, works much more effectively than the UK Government’s Work programme. Wales is doing its best in difficult times, but the Government will not even reduce the tolls on the Severn bridge to provide further stimulus, because they do not care. All they care about is sustaining their own backyard. We have this weakened economy when there are enormous opportunities to make us strong. It is a disgrace.
I will continue to make those points about the Government, because it is becoming ever clearer that they are knowingly heading towards a sub-prime debt crisis. They should be ashamed.
Guy Opperman (Hexham) (Con)
The cost of living is a legitimate subject for debate. I was interested to hear Ross Smith of the North East chamber of commerce comment on the solution:
“My answer to this is ‘it’s skills, stupid’—alas that doesn’t fit with easy election messages or election cycles.”
To be fair, that was a tweet, playing on Bill Clinton’s famous line in 1992 that, “It’s the economy, stupid”, so I asked Ross to expand on it yesterday as part of my consultation in preparation for this speech. He said that
“the most important factor in raising living standards in the long term is to increase skill levels so that people can play a more productive part in a stronger economy and be rewarded accordingly.”
I could not agree more.
To that end, we must look at apprenticeships, which surely can play a key part in any skills regeneration. The north-east is clearly leading the way. The number of apprenticeship starts in the north-east has increased by 11% since 2010-11, to 38,340. That was up from 18,510 in 2009-10 and 13,500 in 2005-06. In other words, it has trebled since the Blair Government. In my constituency, the number of apprenticeship programme starts has gone from 430 in 2009-10 to 690 in 2012-13.
Of course, it is not just about the number of apprenticeships; it is also about their quality. To that end, I am delighted that the Government have decided that one of the skills pilots will be in the north-east. In fact, it was the North East local enterprise partnership and the Adonis review that suggested the skills pilots that will go ahead. It is to be joined by the Stoke-on-Trent and Staffordshire LEP and the West of England LEP. It is a chance for businesses to engage with their skills and apprenticeship needs so that there is a focus on the particular parts of the economy where growth in jobs is needed in the long term.
There is ample evidence of the successes, whether the opening of the engineering academy in Hexham by Egger, with 40 jobs created, the work done by Nissan, the 38 new jobs in the IT sector, the new apprenticeship jobs in Accenture, whose managing director came to see me yesterday, or the work done by Siemens, particularly in relation to the university technical college in Durham. I strongly hope that the LEP will carry that forward in such a way that the Adonis report will have a true impact.
One cannot address the economy, certainly in my region, which has 2.4 million people, without looking at the Adonis report. No other region in the country has addressed its strengths and weaknesses as the north-east has with that report. It was business led, written by experts, apolitical, hard hitting and realistic. It assessed both the strengths of the local area and the weaknesses. It celebrated assets but acknowledged that there have been successive failures, by successive Governments, to improve job numbers, address skills deficits, increase university starts and generally grow the economy. I am profoundly grateful to all its authors.
At the report’s heart lay a desire for more and better jobs, as it identified the crucial lack of private sector employment. However, as it states:
“More jobs alone will not re-balance the economy. The North East needs higher skilled and higher paid jobs to produce an economy which matches others and provides the quality of opportunities that its residents and young people need to prosper.”
How do we proceed to do that? We must support the necessary investment in apprenticeships, build on the skills pilots and consider the recommendations in the Adonis report—I will not repeat its 24 pages, Madam Deputy Speaker, despite the Irn-Bru you saw me have at the Scotland Better Together event earlier. The seven local authorities must be allowed to go forward. They are coming together and driving forward with a regional voice to match the likes of Manchester which has led the way so well in these matters in the past.
I cannot finish without addressing the motion. On the proposed energy price freeze, I entirely endorse the comment from my hon. Friend the Member for Tamworth (Christopher Pincher) that one should always be wary of geeks bearing gifts. I accept that there is a need for long-term housing supply, but it is a shame that my two Labour authorities are keen to build on the green belt, rather than on the other available sites. I would certainly support action for young people, but it is this Government who have trebled the number of apprenticeships and set up the welcome north-east skills pilot. I find it very easy, therefore, to reject the motion.
Graham Jones (Hyndburn) (Lab)
The hon. Gentleman referred a moment ago to brownfield sites in urban areas, but does he accept that not every brownfield site is economically viable, and is he aware of his local authority’s assessment of brownfield sites and their economic viability? Perhaps he could give some figures on the viability of the sites in that area.
Guy Opperman
I could speak for an hour, and have done so on several previous occasions in the House, on Labour-run Northumberland county council’s failure to provide brownfield sites and its proposal to build on the green belt, whether around Ponteland, Hexham or other sites in Northumberland. Alternatively, there is Newcastle—again a Labour council—which is proposing massive building on green-belt land. We campaigned extensively against the building of more than 10,000 houses on that land.
Graham Jones
Does the hon. Gentleman also accept that building on greenfield sites is sometime cheaper and so provides for affordable accommodation, and that brownfield sites, particularly contaminated brownfield sites, can be comparatively very expensive?
Guy Opperman
I have no doubt that building on contaminated brownfield sites can be difficult, but in my constituency, for example, the police authority has sold the site of a former police station that could be built on perfectly properly. For 20 years, taxpayers—that includes the hon. Gentleman and me—paid more than £1 million to keep the former Stannington hospital site secure, yet nothing was built on it. We now have former government sites being built on and providing homes, but of course that is not green belt. He was keen to make his point about brownfield sites, but he also spoke about greenfield sites. We have huge difficulties in the north-east with investment in and building on greenbelt sites by local authorities.
I have gone on too long and been distracted—
Guy Opperman
The Opposition spokesperson chunters from a sedentary position. On jobs figures and the economy, she will doubtless be addressing the fact that in her constituency unemployment has fallen by 12.5% in the last year, that youth unemployment has fallen by 16.5% and that the number of apprenticeship has risen from 620 in 2009-10 to 1,170 according to the most recent statistics. That is real action to help people in the north-east.
Guy Opperman
I will not give way to my hon. Friend. I have great respect for her, but it would not be fair on those who have yet to speak.
Mr Michael Meacher (Oldham West and Royton) (Lab)
The cost of living crisis has had a fairly good airing in this debate and has been poignantly described in some detail, so I intend to concentrate on the second part of the motion, which concerns the Government’s economic policy and, on the cost of living crisis, to ask the obvious question: was it all necessary? The Government’s answer, as provided by the Financial Secretary in a rather frivolous and distinctly provocative knockabout, was, predictably, yes. He simply repeated the well-worn Tory mantra that we all know: Labour left behind a huge economic mess; there was no other way to deal with it other than through massive cuts in public expenditure; we were “all in it together”; and now the Chancellor’s policies have been vindicated as it has all come right. All four of those statements are flat wrong.
Mr Meacher
I would prefer to respond to those four statements before giving way to my hon. Friend.
First, Labour did not leave an economic mess. The budget deficit in 2007-08, just before the crash, was 2.6% of gross domestic product—one of the lowest in the OECD and about the same as Germany’s. It rose to 11.6% in 2010 only as a result of the bankers’ bail-out. I noted that the Financial Secretary did not even mention the banks today, so I was beginning to wonder whether he had even heard of the bankers’ bail-out. [Interruption.] I am prepared to give way at this point, before going on to answer in some detail.
Graham Jones
Perhaps the Financial Secretary did not mention the bail-out because he was working in financial services as a banker himself?
Mr Meacher
That may well have had something to do with it, but it happened also because the Tories decided to blank out the bankers’ bail-out and put the whole blame on the Labour party. For any objective economist or objective observer of any kind, that is obviously absurd.
Secondly, there was another and much better way to deal with the budget deficit than through semi-permanent austerity. It is costing the country £19 billion a year to keep 2.5 million people unemployed. I simply say that it would have been far better to get these people off benefit and into work through public investment, so that they could earn and contribute to the Exchequer through taxes and national insurance contributions. I well know that the question will come, “How do we pay for that?”, so I shall answer it. This can still be done—and it could have been done three years ago—without any increase in public borrowing at all, despite the Chancellor’s continuous jibes to the contrary, by a further tranche of quantitative easing targeted not on the banks but directly on industry, or by instructing the publicly owned banks RBS and Lloyds to prioritise lending to industry, or by taxing the ultra-rich.
Alec Shelbrooke
Let me remind the right hon. Gentleman of the fact that it was his Government who did the deals with RBS, yet they did absolutely nothing in those deals to force the banks to do things that they had decided they did not want to do.
Mr Meacher
There has been a great deal of partisanship in this debate, and I am prepared to recognise that the problems did not start with the present Government. I agree that we should have taken a much tougher line with the banks before 2010, but let us concentrate on where we are now, because the country is in a very serious position.
That brings me to the third point. We never were “all in it together”—quite the opposite, and to a stunning degree. In The Sunday Times rich list, the richest 1,000 of the UK’s citizens—a tiny 0.003% of the population—have increased their wealth in the five years since the crash by a staggering £190 billion, while 90% of the population over exactly the same period have had to take a real-terms cut of about 9%, and their wages are still falling. So much for social solidarity! If that £190 billion were charged to capital gains tax, it could technically raise £53 billion. I do not think it would for a moment, but it could realistically raise roughly £30 billion to £35 billion—quite enough to generate 1 million to 1.5 million jobs within two or three years. That would be a far quicker way of reducing the budget deficit—which is supposed to be the aim of the exercise—than spending cuts could ever be.
The Government’s fourth point is that we have a recovery. Well, we do have a recovery of sorts, but one that has been generated in exactly the wrong way. It has been generated by consumer borrowing and an incipient bubble, and it is not—I repeat, not—a real, sustainable recovery. As my hon. Friend the Member for Swansea West (Geraint Davies) pointed out, such a recovery can come about only as a result of rising investment, increasing productivity, growing wages and healthy exports, and none of those is present now.
Over the last five years, Britain’s business investment has dropped in real terms by a devastating 25%, well below the global average. UK productivity is now almost the lowest among the OECD countries. As we were told by my hon. Friend the Member for Nottingham East (Chris Leslie), UK wages are undergoing the biggest fall since the 1870s, and are still falling. As for exports, Britain’s deficit on traded goods is still running at a mountainous rate of over £100 billion a year. If that is a recovery, God help us if we ever experience a downturn.
So has the Government’s economic policy failed? Not necessarily. It all depends on what we think the Government’s objectives really were. If the objective was to cut the budget deficit, as they claim, then yes: I think that the last three years of unending misery and austerity have involved a momentous waste of resources in return for almost nothing. According to the Government’s own figures, the budget deficit was £118 billion in 2011 and £115 billion in 2012. Like those who engaged in trench warfare during the first world war, we have advanced a few dozen yards, and have taken enormous casualties in order to do so. No sane person would continue with such a policy at such expense in blood and treasure, yet here we have a Government who are determined to slog on with exactly the same policies, and—as with the generals in the first world war—the cost is not to them, but only to the poor squaddies who are sent over the top.
My last point relates to a recent speech by the Prime Minister, which I am amazed he gave, and which I think will come back to haunt him. He said that even when the deficit was paid off—and I think that that time could be nearer to 2030 than 2020, given the direction in which we are going—there would be no restoration of spending that had been cut. The Tories, he proclaimed, believed in
“a leaner, more efficient state”.
What he really meant, of course, was a fully privatised state in which you had better succeed in the market, because otherwise there will be precious little help from public sources when you need it.
As for “efficient”, was that G4S at the Olympics? Was it Serco charging for tagging prisoners who had already died or left prison? Was it the big six energy companies ruthlessly profiteering at customers’ expense? Was it the water companies indulging in a profit bonanza for top executives and shareholders, but trying still to charge taxpayers? Was it outsourcing in the NHS, which has led to longer waiting lists and an inability to cope? Was it the free schools that have been set up in areas where there is an abundance of places, while areas where there is a shortage of places are abandoned? Lean and efficient? Come on!
I really do not believe that the Tory leadership sees the prolonged austerity and the economic disaster that have been visited on the country over the last five years as a failure at all. The Tories see that as merely the price to be paid—although not, of course, by them—for attaining the real objective, which is a permanent squeezing of the public sector and a shrinking of the state. That is what they want to do if they win the next election, and that is why I believe they will not win it.
Ian Swales (Redcar) (LD)
The Opposition do not have a monopoly on understanding the pressures on people or on wanting to do something about the cost of living. I represent the fourth poorest ward in the country, and I am well aware of the pressures that my constituents face. They know that they will not cut their cost of living by borrowing money and running up interest costs. They also know that shutting their eyes, going into denial and spending £4 for every £3 of their income will lead to tears. Sadly, the Labour Government did not understand those things, and everything did end in tears. This Government are now having to clear up the mess.
As we have heard, the way to deal with the cost of living crisis is to get the economy moving and to get manufacturing going again, and I welcome all the steps that the Government are taking in that direction after the catastrophic halving of our manufacturing industries under Labour. The Government can do two things about the cost of living: they can take tax and spend measures and they can interfere in industry and business. On tax and spend, I am proud of the Government’s action to scrap Labour’s fuel duty escalator, saving £7 on a tank of fuel, to scrap Labour’s beer duty escalator and to give free child care to 260,000 two-year-olds and, from next year, to three and four-year-olds.
Graham Jones
The hon. Gentleman mentioned the fuel duty escalator, but I wonder why he omitted to mention the rise in VAT from 17.5% to 20%, which also affected the price of fuel.
Ian Swales
The £7 that I mentioned is net of the £1.50 VAT increase.
Interest rates are being kept down, and council tax has been frozen for three years in many areas. Sadly, my Labour council has preferred to take money out of people’s pockets rather than taking Government money to keep the council tax down.
Tom Blenkinsop
As a fellow MP in the Redcar and Cleveland borough council area, the hon. Gentleman will know that, between 2003 and 2007, the coalition Lib Dem, Conservative and independent council raised council tax by more than 25%, which was more than during the previous four years or the following four years under Labour.
Ian Swales
The hon. Gentleman has an excellent memory. I think that people will judge the council on how it is spending the money that it raises.
This Government have also scrapped Labour’s national insurance hike and, above all, implemented the Lib Dem policy of raising the tax threshold to £10,000.
Ian Swales
I am sorry; I have taken two interventions already.
We hear a lot from Labour about wages, but it is what ends up in people’s pay packets that really counts. When Labour left office, people on the minimum wage were paying a massive £35 a week in tax and national insurance. Since then, the minimum wage has gone up by £20 a week, but the national insurance bill for those people has gone down by £9 a week, with a further cut to come in April.
Angie Bray
In my constituency, there are fewer people unemployed, and employers welcome the cut in national insurance contributions because it helps to create more jobs. Also, nearly 5,000 people there are now paying no tax at all. That is the way to help people who are finding life tough: more jobs and less tax.
Ian Swales
I certainly agree with that. I wish that my area was as fortunate with employment, but my hon. Friend makes an excellent point. That is the direction we should be taking.
I helped to launch an event for the Living Wage Foundation two weeks ago. It has stated that it
“supports moves to increase the personal allowance for the low-paid”—
because they—
“could make the Living Wage easier to attain.”
The living wage is about net pay, not gross pay.
I have talked about tax and spend measures. I also mentioned interfering in industry. I welcome today’s announcement on payday lending, following an amendment tabled by a Lib Dem peer the other day. The Government have stepped in quickly to do something about the problem. We interfere in industry at our peril, however. The Opposition motion mentions an “energy price freeze”. I worked at a senior level in business, finance and industry for more than 25 years, five of which were spent working as an accountant in the electricity industry. I could scarcely believe Labour’s proposal for a price freeze. In three and a half years in this place, I have never heard a policy announcement so guaranteed to achieve the opposite effect to the one intended.
It has been obvious from the start that any business faced with having its prices fixed but its costs varying dramatically, as they do in the electricity industry, would have real problems. Prices would increase before the freeze and after it. Prices that had been frozen could not decrease if the costs reduced. Above all, less investment will take place, especially from new players. So what has happened since Labour’s announcement? We have seen huge price hikes, which I am sure include hedging just in case the public are stupid enough to elect a Labour Government.
Ian Swales
I have already given way and I am in my own time now. Two weeks ago, National Grid said that half of proposed investment in energy was now on hold because of political uncertainty. This week, RWE abandoned the Atlantic array. This is what is happening in the real world of business as a result of the irresponsible announcement from Labour. At Dod’s energy lunch a Cross-Bench peer described how this policy was disastrous for commercial confidence, and he is absolutely right.
As the hon. Member for Tamworth (Christopher Pincher) said, the irony is that the policy protects the big six. When I mentioned that before, the shadow Energy Secretary, the right hon. Member for Don Valley (Caroline Flint), said from a sedentary position that we were protecting the big six by challenging the policy, but that is not true. In my constituency, three new energy investors want to invest—two in fossil fuels and one in renewables. There are US, Japanese and Korean investors behind these projects, but the projects are now in danger because their bankers are wondering what on earth is going to happen to this country’s electricity industry. So this irresponsible announcement by Labour threatens investment and security of supply, and, above all, it will raise prices, both in the short term and the long term. So I urge the Opposition to withdraw the policy as soon as possible to avoid more damage to consumers and to the electricity industry.
We do need to do things about our energy future. One key thing that must happen is that we must have genuine competition, based on more players. The fact that pay levels are too high in many industries, including the electricity industry, is clear. However, at least this Government are taxing capital gains at a higher rate, taxing pension contributions at a much higher rate and taxing income at a rate 5% higher than under the previous Government.
A few weeks ago, the shadow Health Secretary made a point about Front Benchers of all parties—I think he was thinking partly of his own. He said that we now see policies developed by people who have been trained—this is about career politicians—to write press releases rubbishing the opposition. We can tell the lack of strategic thinking behind that announcement. The Opposition have shown that they know how to write headlines, but they do not understand business and finance. As always is the case, we cannot trust Labour with the economy.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I am grateful for the opportunity to speak in this important debate. Over the past few months, we have seen the spectre of the Chancellor and the Prime Minister on repeated occasions suggesting that everything is rosy and that hundreds of thousands of jobs are sloshing around. It is the old attitude of, “Crisis, what crisis?” Unfortunately, such a view is completely out of touch with the daily, lived experience of many of my constituents and thousands of others across Wales, who have seen one of the greatest falls in real average earnings—a staggering drop of £1,669, or 8%, since the general election, when this Government came to power. They see this Government as out of touch, patronising and complacent; they see a Government on the side of the rich, of millionaires and of banking and energy bosses, as we heard aptly demonstrated by the hon. Member for Redcar (Ian Swales). It is Labour Members who are on the side of the British people, with solutions such as capping the cost of credit and payday loans, and freezing energy prices. These real measures would help the real lives that many on the Treasury Bench seem to have little understanding of.
Sheila Gilmore
Does my hon. Friend share my incredulity that the price rises that the energy companies started to announce are being blamed on us because we announced our policy on an energy freeze?
Stephen Doughty
My hon. Friend is right to point out that the energy price scandal has been going on for some time, and that the Government have done nothing to deal with it.
I welcome any growth and any new jobs in the economy, and I hope that any positive movement in the economy will help people in my area address the massive drop in earnings since this Government came to power. However, I caution that illusions are simply not good enough. The Government repeatedly fail to answer questions about how many new jobs are part-time and, of those, how many are on zero-hours contracts. They also do not say in what sectors those jobs are being created. The truth is that half the new jobs are in low-paid sectors, and that the minimum wage is not always being enforced.
When I hear the Chancellor crowing about recovery, I am always tempted to ask, whose recovery and what sort of recovery. Is it a recovery benefiting my constituents who are struggling to find well-paid jobs, to pay those soaring energy bills and to put food on the table for their children? Is it helping those who are struggling to cope with the bedroom tax? One well-known local Liberal Democrat member in Cardiff recently said in a tweet that she knew that it was difficult for some people, yet many Liberal Democrats proudly voted for the bedroom tax in this House the other night. It is not just difficult but increasingly impossible for many families across my constituency.
Let me share with the House three stories that I have come across recently. First—I hope that the hon. Member for Redcar is listening—one of my constituents came to me saying that his monthly direct debit to npower had been increased from £197 to £254 just after he had been reimbursed an overpayment. I contacted npower and found that that was on top of the price rise of 10.4%. For him, the rise is 28.9%, which is extraordinary. That is the sort of issue that is affecting people in the country. How will that man make ends meet over the next few months? [Interruption.] The hon. Member for Redcar is chuntering from a sedentary position. As he does not seem to be interested, perhaps he would like to intervene and respond to that sort of example.
Ian Swales
Does the hon. Gentleman think that the likelihood of a price freeze in 20 months’ time will make prices go down or up between now and then?
Stephen Doughty
The hon. Gentleman will know that we called for a price freeze now, but it was the Government who voted against it. He should look at what is happening on his own Benches before making such comments. How is the recovery helping constituents who are being slammed by energy prices?
Let me give another example. A single father in the east of Cardiff with a 12-year-old daughter who lives with him full-time has just been sanctioned for two weeks for not providing enough evidence of his job search. He has actually provided a lot of evidence. He has been applying for multiple jobs, even in the bar and restaurant industry, despite having a history of alcohol abuse and being advised not to work in that sector. He has always worked and has never claimed social security before. He is not computer literate and has only been given limited assistance with his job search and he is not allowed to submit handwritten evidence of his job search. He is not in receipt of any other social security benefits, so the only money that is coming in is child benefit and tax credits. He has been struggling to manage over the past few weeks. After paying all of his bills, he was left with £3 to feed himself and his daughter. The real tragedy is that his daughter is trying to help the family by bringing home her school lunch because she is worried that she will not get fed at home. He is absolutely distressed and mortified to be in that position. Where is the recovery for him and his daughter?
My last example is of a gentleman who came to see me at my surgery the other week. He was being sanctioned for being unwilling to travel far away from home. He does not have a car and it was extortionately expensive to travel to the area to which he was asked to go and it would have left him out of pocket. As a result, he did not take that job, but he is willing to take any other job that he is offered. None the less, he was sanctioned and his money was put down to just £40 a week. I am fighting on his behalf with the jobcentre. The reality is that he has very little on which to live. He told me that he was not able to put on the heating and electricity. He said that it was not that cold, despite the fact that the weather outside was freezing. He was putting on extra jumpers just to try to cope and to get by—he was in an absolutely awful position. He has worked all his life and now he is not putting on the heating or the electric, so where is the recovery for him?
Those are the real stories of people living under this Government. They simply do not recognise the rosy picture that the Prime Minister, the Chancellor and other Ministers have been telling us about over the past few days. The story across Wales as a whole is equally concerning. More people are hit by the bedroom tax in Wales than in any other area in the UK. Even the hon. Member for Monmouth (David T. C. Davies), despite some of his more outrageous comments the other day, has admitted, as Chair of the Select Committee on Welsh Affairs, that significant challenges are caused by its impact in Wales.
We have some of the highest energy prices in the country and 1 million households would benefit from Labour’s price freeze. Wales has the biggest increase in those in energy debt compared with anywhere in the UK, up by 24% in the past two years. People are now consistently falling into arrears with the energy companies as a result of those price rises. We have seen one of the biggest falls in real wages across the UK and one of the largest increases in under-employment—that is, people who want to work more hours but are unable to do so because of the types of jobs that are available. They do not recognise the fantasy of the 1 million or so jobs that the Government keep citing.
I have described some heart-rending cases, but we also heard earlier about food banks. The use of food banks in Wales has trebled in recent times and in every part of my constituency, from Penarth to Splott to Llanrumney, I am seeing increasing numbers of people accessing those food banks. That is why I was so disappointed to hear the remarks of the hon. Member for Vale of Glamorgan (Alun Cairns), who is no longer in his seat. He attempted to suggest earlier that I had somehow misled the House on his views about food banks. Let me put on the record the reasons for people using food banks that he gave to his local paper, the Barry & District News, on 5 September. He said, and I quote directly, that the reasons were
“inability to manage money and to budget, addiction to alcohol or substance misuse, bullying at home, neglect by the benefit recipient and a range of other reasons.”
He did not recognise or comment on the real reasons people are going to food banks: energy prices, low wages, the social security changes or delays that the Trussell Trust says are the biggest reason for people going to food banks, the low incomes that the trust also points to as another such reason, and the debt that many people are getting into with payday lenders, loan sharks and others. I believe that it was right for him to be criticised by local Labour councillors for a local Labour council that is doing an immense amount to help people in very difficult times, including working with Cardiff on a collective energy buying scheme to help reduce the pressure from the energy companies, which are ripping off consumers across the country.
The figures for the whole of Wales tell an even greater story. Some 400,000 people have been hit by the Government’s squeeze on tax credits and social security overall; that can be compared with the 4,000 richest in the country, who got a handout from the Government with the tax cut for millionaires.
My constituents and people across Wales are asking again and again: whose side are the Government on, who is benefiting from this so-called recovery and who will stand up for them? Time and again, they are left wanting by Tory and Lib Dem Members. They will get a much better deal if they vote for Labour at the next general election.
Alec Shelbrooke (Elmet and Rothwell) (Con)
This is indeed a very important debate. We can hear stories from any part of the House about the struggles that our constituents are going through. Indeed, constituents who one might deem to be on very good salaries are struggling, too. Whether someone is on a good salary or unemployed, if they are on a fixed income—including even those on good salaries who have had them frozen—a rise in the cost of living has a direct impact on their lives.
We must recognise the things we have to try to do to change the situation for the long term. Unemployment in my constituency has reduced by 32% since the Government came to power. We should welcome not only that reduction but the transfer of jobs from the public to the private sector, as quite a few small industrial bases in my constituency are supplying those jobs. As the economy is now turning a corner, growth in the economy and in the productivity of companies will allow wages to go up in line. What I do not support is a false rise in wages.
The minimum wage is very important; it ensures that people are not exploited, and as the Prime Minister outlined earlier today, if companies are found to have broken the minimum wage legislation, they will be fined a huge amount of money. We hope that will crack down on some of the more ruthless employers. We talk about a living wage—we would all hope to achieve a living wage—but it should not be specified in statute. By increasing wages falsely—in London, by 40%—we ensure that a living wage is always just out of reach.
Sheila Gilmore
I wonder whether the hon. Gentleman remembers that exactly the same arguments were advanced, mainly by members of his party, before the minimum wage was introduced. We were told that jobs would be lost—that it would be a terrible thing—but those predictions did not come true, so perhaps the hon. Gentleman is exaggerating his case.
Alec Shelbrooke
I am most grateful for the hon. Lady’s intervention because she makes the point that I wanted to make. I did not say that the living wage would cost jobs; I said that it would inflate wages. Many would argue that a lot of people already earn the living wage, and that a statutory living wage would benefit all those underneath. But we are all well aware how many people, especially our friends in the unions, would demand a 40% pay rise if it was to go through.
Ultimately, there is nothing to be gained by inflating wages artificially, as we did in the 1970s. I remember my parents telling me that when they were teachers in the 1970s, they got a 25% pay rise when Harold Wilson came to power in 1975 but it was worthless the following year. The goal is always slightly out of reach. We must tackle the cost of living, and ensure that people’s real wages and real net income can advance to meet it.
Anas Sarwar (Glasgow Central) (Lab)
The hon. Gentleman’s Government have said that work must always pay, but we still have people who are in work living in severe poverty. More important than just having a job is the level of income, and that is why wages are so important, and that is why the living wage is so important. Does he not recognise that point?
Alec Shelbrooke
I could not agree more. What I am saying is that we need to grow an economy to ensure that we can get to a living wage, and that at the same time we should be looking at how we reduce the cost of living.
Why is the cost of living so high today? That is the fundamental question. Fundamentally, the cost of living comes down to one very important point—energy. We have had a lot of debate in the House this afternoon about whether to have an energy freeze, but if we freeze energy prices for a fixed period, prices will get ramped up before and after the freeze, as happened with the beer price freeze in the 1960s. We must take a more long-term view.
How did we end up where we are? It is my personal view—I support what was in our manifesto, and I wish we had moved further on it—that we need to start replacing our power stations, and at the moment nuclear power stations are by far the best way forward. It has taken a lot of effort and lengthy negotiations to get to one nuclear power station; we should be building five or six. But at the same time the world oil price is rising, and will not go down despite what anyone thinks. To put it in context, in 1998 a barrel of oil was $5 a barrel, and yesterday Brent crude was $100 a barrel—I am sure the hon. Member for Dundee East (Stewart Hosie) will correct me if I am wrong. I believe that if oil reaches $140 a barrel, there is more economically recoverable oil in the North sea than has already been extracted. That is the reality of the situation.
Energy prices will not come down, so it is no good having a freeze for a period, because energy prices permeate every aspect of the cost of living—the price of food in the shops, the price of getting to work. We always talk about the petrol price, which has a big impact on getting to work, but we must do everything that we can to reduce the cost of getting goods to the shops, because that hits people’s wages. Since the start of this recession we have been on a wage freeze, if not a wage reduction, to prevent the runaway unemployment that we saw in the past.
What frustrates me in debates such as the one we are having today is not just the barrage of criticism from the Opposition of the way in which the Government have implemented their policies. That is fine; that is what we are in the House for. We are here to say that we have a route, we are sticking to it, and we think that it is working, and the Opposition are here to say, “We don’t agree.” But I have not heard any real alternative in the Chamber today. The closest we got—one of the more sensible speeches today—was the contribution by the right hon. Member for Oldham West and Royton (Mr Meacher), who is no longer in his seat. He actually came up with some suggestions. I did not agree with them—I thought they were pie-in-the-sky thinking—but at least he stood there and put forward some policies.
Sadly, proposals were completely lacking in the shadow Chief Secretary’s speech. There was a constant barrage on what the Government had, he thought, got wrong, but no recognition of the fact that if we are going to tackle the cost of living crisis, we must tackle its root causes. The cost of living is going up because energy prices are high, and that has nothing to do with the six energy companies—there were 14 when the Leader of the Opposition was Secretary of State for Energy and Climate Change, but there were only six by the time he left that office, so it is a bit rich of him to come across saying that it is terrible. The inescapable truth is that the price of oil is not going to come down.
Stewart Hosie
The hon. Gentleman is making an interesting speech. He talks about having more oil and it being economically extractable, but he will accept that part of the equation is tax? Does he not regret the massive hike in the North sea supplementary charge that resulted in project after project being cancelled, and made certain fields less viable?
Alec Shelbrooke
The hon. Gentleman will agree that the hundreds of millions of pounds of tax credits that the Government have made available to the oil and gas industry will help make that resource more exploitable in future and keep the supplies on. It comes down to a fundamental issue: what do we need to do to tackle the cost of living crisis? What we do not need, and what my constituents do not want to hear, is “It’s your fault for going down the austerity route” or “The collapse of the banks is your fault.” They want to say, “Look, we know all that—we know what’s going on.” That is why in most opinion polls, a majority of people still blame the Labour Government for the economic mess we are in. [Interruption.] It is all very well the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) shaking his head—that is what my constituents tell me, and I am out on the doorstep all the time.
Alec Shelbrooke
I have given way enough. I am sorry—I am running out of time.
We have to tackle the core issue, and we have to do two things at the same time. The Government are achieving the first one. We have put the economy on the road to recovery following the deepest recession in the history of the nation caused by lack of fiscal control of the banking system—a tripartite system that allowed the banking industry to run wild. Even today, as we see with the Co-op bank, the Labour party is unwilling to take tough decisions with regard to banking. The only public inquiry that the Leader of the Opposition does not want to call for is into the Co-op—I wonder why, but we will find out when it takes place.
We have to grow the economy, which will lead to wage rises, but we must also have a much longer strategic look at how we supply energy in this country. I agree with the Prime Minister—whether or not what was reported in the newspapers was true, green taxes are regressive, and it is amazing that the Labour party, which has always opposed regressive taxation, says that we should keep a regressive tax and not push it into a progressive tax. At the end of the day, energy prices have gone up. [Interruption.] These are luxuries from the boom time that people can ill afford. It is a disgrace that, despite the fact that we are doing everything that we can to grow the economy, and create real jobs that will last and, I hope, be better proofed against the ups and downs of Government spending in future, people are struggling to deal with the cost of heating and the cost of food. The fundamental cause is the high price of energy. It is absolutely vital that the energy reforms and fiscal reforms introduced by the Government carry on and should only be changed as we move forward with energy policies for the long term, not short-term gimmicks. That is what people need.
Mrs Emma Lewell-Buck (South Shields) (Lab)
The time that I have is nowhere near enough to address the magnitude of the cost of living crisis and the spectacular economic failure of the Government’s policies, but I will try my best.
The average wage in my constituency, after income tax and national insurance contributions, is £1,319 a month. That budget faces extraordinary pressure as every aspect of the cost of living is on the rise. The average energy bill is £110 per month, which over the course of the year amounts to nearly an entire month’s pay.
Mel Stride (Central Devon) (Con)
The hon. Lady has just stated that every aspect of the cost of living is on the rise under this Government. Does she recognise that council tax, a very important component of the cost of living, has decreased by 9.5% on average during the period of this Government, yet it doubled under the Labour party when it was in office?
Mrs Lewell-Buck
I thank the hon. Gentleman for that intervention, but he needs to look at the bigger picture, which is what I will go on to talk about—the cost of everyday living in general.
Water costs a further £30 per month to my constituents. Rent makes another significant impact. A single bedroom property costs £395 a month in the private rented sector. Social properties are, of course, cheaper, but as my hon. Friends have explained on numerous occasions, there are few such properties to go around. Council tax starts at £80, so we need to take that off the overall budget. We are talking about working people who, if they have children, will also need to cover the cost of child care. As Labour highlighted in last week’s debate, the cost of child care is rising five times faster than pay and now amounts to more than £100 per child per week for 25 hours. That is around £460 per month.
All this leaves the average individual in my constituency with just £244 to live on per month. That needs to cover food, transport, other bills as well as a multitude of other costs that are part of daily life. I admit that this is rather a crude calculation, but the fact is that people in South Shields living on this meagre income are the lucky ones. Despite everything, they have managed to hang on to their homes and provide for their families through sheer tenacity and the hard work ethic that permeates my constituency. But what about those who fall below the average? What about those on zero-hours contracts, the 3,592 unemployed, the elderly and frail, the homeless and the rough sleepers? And there are those who are affected by the Government’s bedroom tax, who will lose an extra £450 a year.
Five thousand children in my constituency live in poverty, and many of them live in households with a parent in work. Some 4,260 of my constituents live in fuel poverty, and 1,440 of them are affected by the bedroom tax. We have a rise in homelessness and a rise in rough sleepers, yet still this Government fail them. This is a Government led by a Prime Minister who said prior to the 2010 elections that the Conservatives
“are best placed to fight poverty in our country.”
This is an astonishing claim when we know that over a million people have fallen into poverty on his watch, including 300,000 children.
Mrs Lewell-Buck
I do not have time. I am sorry.
My local citizens advice bureau, despite taking on extra staff, is struggling to cope with the volume of inquiries it has had about debt. The once monthly requests for emergency food aid are now almost a daily occurrence. My local food bank and soup kitchen have seen demand for their service rise to unprecedented levels. Increasingly, the people coming to these agencies, I am told, are in work. This is no surprise, as we now have 1.4 million more people being paid below the living wage than in 2009.
When I was unemployed, when members of my family and I fell on hard times, I was proud to live in a country where I and they would be able to get help. This is no longer the case. I am still proud of my country, just not of the people who are running it.
People are turning to payday loans to deal with the hardship they face. Last year in my constituency the average borrowing constituent had debt to the tune of £1,610. We all know how quickly this debt can become unmanageable, with dire consequences for those who owe. But these are not people after easy money. They are working people who no longer have the ability to save for a rainy day.
As bad as things are for working people, they are worse for the unemployed. In my constituency more than 3,500 people are out of work. The Chancellor said that
“every job lost in the public sector has been offset by three new jobs in the private sector.”—[Official Report, 26 June 2013; Vol. 565, c. 305.]
This has not happened in South Shields. I recently held a jobs fair in my constituency, and had great co-operation from local employers, but the total number of jobs that these organisations were able to offer was just over 1,000, well short of filling our employment gap.
The situation is worse for our young. A constituent of mine told me how his daughter was offered a job interview and forced to travel to Leeds at short notice. She did not have the money to pay for the train ticket. When she asked the DWP for help, she was refused it. She is now on a zero-hours contract, and some weeks her pay is lower than when she was claiming benefit—but I suppose this Government do not mind about that, as long as she is no longer contributing to the unemployment statistics.
In my constituency people come together every day to help those who are struggling, but they find their task harder and harder as levels of need are rising to an unprecedented degree. Organisations such as Citizens Advice, the Key project, Hospitality and Hope, St Aidan’s, Supported Living and St Hilda’s church are all making a difference, but without the Government taking action their task will continue to be a heavy one.
To sum up, my constituents are great, hard-working, big-hearted people who show every day the ethos of hard work and social responsibility, despite the onslaught of misery caused by this Government.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I have listened with interest to my hon. Friend and to the previous speaker, the hon. Member for Elmet and Rothwell (Alec Shelbrooke). If there is no cost of living crisis, or no one is responsible for it, why will this Government go down in history as the Government of zero-hours contracts, payday loans, food banks and the bedroom tax? Does not that tell us all we need to know about the cost of living crisis?
Mrs Lewell-Buck
My hon. Friend is spot on. This Government are to blame for the cost of living crisis and economic failure in our country.
In the past, the values of my constituents were rewarded and people could be confident that hard work would bring them security and fulfilment. Now that link is broken. They are made to work for their poverty and the Government fail to uphold their responsibility towards them. We need a Labour Government to restore the link.
Richard Fuller (Bedford) (Con)
I listened with great interest to the hon. Member for South Shields (Mrs Lewell-Buck), as I have to many Opposition Members, but on the question of what we should do, I have not heard much. The honourable exception was the right hon. Member for Oldham West and Royton (Mr Meacher), whose speech had some coherence, but I guess he is far too moderate to be included in the Labour party’s Government-in-waiting, assuming that position remains—we hold out that hope.
The motion is a listing of some of the pain points that many of our constituents are feeling as they look to balance their budgets each week. “I feel your pain” is an important expression of empathy. Empathy is important for politicians of all parties; we have to be empathetic with the constituents we represent. However, empathy is no substitute for policy, and Opposition Members have shown a complete absence of policy in dealing with the points of pain that they can so lucidly set down in their motions. That is why I shall support the Government in the Division later.
When we have seen a policy from the Opposition, it has often been about ways in which they would seek to intervene in markets. I suggest to Opposition Members that Government intervention should always be used sparingly and where it can be effective. The Leader of the Opposition has chosen as his flagship intervention policy one where he cannot be effective, and nor does it make economic sense. As the hon. Member for Redcar (Ian Swales) pointed out, the consequence of the Labour party’s position on an energy price freeze has been to crater the willingness of energy companies to invest in effective energy in the long term. It is very sad that just a few weeks after the Chancellor had been to China to secure investment in our energy sector—something that the Labour Government sadly missed out on year after year—the Labour party came up with another policy designed to make our energy more inefficient, rather than efficient, in the long term. If we are going to address some of the issues about the cost of living for members of the public, we have to be honest about what the Government can and cannot do.
Mr Stewart Jackson (Peterborough) (Con)
On the subject of honesty and admitting the failures of the past, is it not strange that last week the shadow Chancellor told a National House Building Council lunch that a future Labour Government would deliver 200,000 new homes a year when, in their last year in office, the previous Labour Government presided over the lowest number of homes built since 1923? Is there not a huge chasm between Labour’s promises and its record in office?
Richard Fuller
My hon. Friend is absolutely right to point out the chasm between reality and certain things promised by Labour. There is also an absence of a basic understanding of economics. It is nice to see the shadow Chief Secretary in his place again. It was not clear from his opening speech whether he understood the difference between deficit and debt, which is quite an important thing to know for someone who wishes one day to hold an important Treasury position.
Richard Fuller
I am very happy to give way. I recognise that the shadow Chief Secretary has been for his economic tutorial, so perhaps he can enlighten us.
Chris Leslie
That is very funny and droll, but does the hon. Gentleman know that borrowing accumulates and forms at the stock of national debt? Has he figured that much out? If he has, will he tell us whether it is true that, during his time in Parliament, his party has presided over the accumulation of £430 billion of borrowing? Is that not right?
Richard Fuller
Boy, has the hon. Gentleman picked the wrong person with whom to have an argument about debt and the Labour party’s record on debt. Let me enlighten the hon. Gentleman on that record. He will never be Chancellor of the Exchequer, but were he ever to achieve that position—
Richard Fuller
I am answering the question. I know it is hard for the hon. Gentleman to follow the argument, but I will put it in bite-sized pieces so that he can keep up. It is important for a Chancellor of the Exchequer to look at not just the indebtedness of the Government, but at the way in which the entire economy is accumulating debt, which is one of the things that the previous Labour Government signally failed to understand.
If we look at the United Kingdom’s debt in the mid-1990s and take into consideration Government debt, household debt and corporate debt, we will see that that total indebtedness was, like that of many other OECD countries, two times the size of our national economy. Over the intervening 15 years—which in this country were spent mostly under a Labour Government—other OECD countries saw their total debt go from about two times to about three times the size of their economy, and that includes all of the impact of the financial crisis. One country in the G8—and only one—increased its total debt from two times to five times the size of its economy, and that was the United Kingdom under the previous Labour Government. It is the consequence of that pervasive debt in the economy that is the real cost of living crisis in this country.
Every family knows that when they have significant debts that they cannot avoid and that they have to pay, their monthly income will be less because they will have to pay back the debt of the past. They are paying the consequences of the Labour party’s failure when in office.
Alec Shelbrooke
Does my hon. Friend agree that, against that backdrop, it is commendable that under this Government and this Chancellor of the Exchequer, the gap between the richest and the poorest in society is the smallest it has been for 30 years? [Interruption.]
Richard Fuller
I see that the shadow Chief Secretary has left for more education on economics. My hon. Friend raises a point about income levels. There is an issue about how we increase the incomes of people at the low end of our economy. How do we make sure that work pays for those people who go out and work very hard?
Over the past 10 years, the United Kingdom has created a massive level of state intervention to support wages at the low end of the income spectrum. In order to try to improve living standards for people at the low end, we have to encourage employers to somehow pay higher wages. References have been made to the living wage. One of the issues about changing people’s income from the minimum wage to the living wage is that the change to their take-home pay, including any benefits they receive, becomes a very small change in their net income level, because the tapering of benefits takes away nearly all the impact of the increase in wage rates. A change to the living wage is therefore a transaction involving additional cost to the employer and additional benefit for the Exchequer; it does not result in additional pay to the employee.
We have to be clear about what we are truly promising people as we seek certain changes. It would be good to hear from my hon. Friend the Economic Secretary, who I presume will wind up the debate, what answer the Government can give people about their income and about making work pay. What are we doing about their tax and their benefits? For people in work who wish to take on additional hours or to increase their responsibilities and get more pay per hour, what are we doing to ensure that their benefits are not taken away so rapidly? If we do that, in the next period of Conservative Government we can continue the battle to make sure that work pays, which is the true answer to any cost of living crisis.
Lyn Brown (West Ham) (Lab)
I am grateful for the opportunity to speak in a debate that goes to the heart of the concerns of the majority in my constituency. Despite some improvement in recent times, Newham is the third most deprived local authority area in London, and the seventh most deprived in the country. It has been there or thereabouts for many decades. People from West Ham are at the sharp end of the Government’s failing economic policy, and are suffering as prices rise and wages stagnate.
As we have heard over and over again since this Tory-led coalition came to power, working people are now £1,600 per year worse off. While George Osborne—
Lyn Brown
I can only apologise, Mr Speaker. I have spent a long time in the Whips Office.
While the right hon. Member for Tatton (Mr Osborne) is victoriously proclaiming that his plan is working, people in my constituency are really struggling. They are struggling to pay bills, to eat and to provide for their family. This Government have shamelessly failed to offer any support to hard-working people in this country, but have provided tax breaks for their friends and let ordinary families bear the brunt of their policies.
Instead of ensuring that our economy recovered, we have had three years of flatlining. This Government have borrowed more in three years than the previous one did in 13 years, and for what? Was it to help hard-working people and to protect the vulnerable, or to oversee the slowest recovery for more than 100 years and to instigate a cost of living crisis?
Lyn Brown
I will not give way. Two hon. Members still want to speak, and I promised that I would not give way.
I recently surveyed my constituents—[Interruption.] Government Members may want to chunter, but I would like them to listen, because it is about time that they educated themselves on how difficult this is for real people. I asked my constituents how they are managing their energy costs, which we know have risen by almost £300, thanks to the inactivity of this Government. I was absolutely appalled to discover that 41% of respondents are spending more than 10% of their household income on heating their homes. That is fuel poverty.
The Prime Minister and his colleagues tell us that the answer is to switch suppliers. Well, 34% of my respondents told me that they had switched, but then found themselves paying more for their heating than they were saving. Most of the 66% who had not switched suppliers told me that that was not because they were happy with their current supplier, but because, “They’re all the same. I would end up paying more.” As for the Prime Minister’s advice on whether to wear a jumper, the response of 97% of my constituents was, “Wow, patronising or what?” I agree with them. His remarks encapsulate just how out of touch he is with the everyday lives of ordinary people in this country.
Many people told me how the rising cost of living is having a detrimental impact on their lives and those of their children. I was told, “In my household, we have to choose a room to heat and we all spend our time in that room.” How on earth do we expect young people to thrive academically in that environment, or even simply get the space to do their homework? I was told, “I don’t have the heating on as long as I’d like to, to save money”, and “We don’t heat our home until it’s nearly freezing inside.” Premature winter deaths soar in cold weather when people are not able to heat their homes. The most recent statistics show that Newham is ninth out of the 32 London boroughs for the number of excess winter deaths, despite it having the youngest population in the UK.
Paying the heating bills is only one part of the cost of living crisis. In the year to March 2013, rents increased by 2.7% on average across the country. In Newham, rents increased by 15% in the same period. That is an average of £135 more per month. Let us also put into the mix the lack of affordable child care, the difficulty in finding and holding on to employment, and the impact of zero-hours contracts on people’s ability to pay the rent. All those issues have become weekly or even daily concerns for people who live in Newham.
Under this Government, the cost of nursery places has risen by 30%—five times faster than pay. How do the Government think hard-working people in my constituency and in the other constituencies we have heard about, who are often on the minimum wage and are living in expensive private sector accommodation, can afford that hike? What advice would they offer my constituents who are working long hours just to make ends meet and who are worried about decent, affordable child care for their families? How would they advise people in my constituency who are struggling to pay exorbitant rents, but are living in overcrowded and often substandard private sector housing? What would they tell the young person who is struggling to find a decent, full-time job? I will tell you, Mr Speaker.
This Government offer empty platitudes. They are out of touch and have no clue what life is like for ordinary working families. They have allowed prices to rise faster than wages in 39 out of 40 months. And when was that halcyon month when wages rose more than prices? It was the month in which the bankers received their bonuses. Does that not tell us all we need to know about the Government? This Government put the wishes of the privileged before the needs of working people. Trust me, Mr Speaker, I could go on and on talking about the abhorrent impact that the cost of living crisis is having in my constituency. The only people who seem to be completely oblivious are the Members on the Government Benches. They care not about the consequences of their cavalier ignorance on the lives of ordinary people. Britain deserves better.
Sheila Gilmore (Edinburgh East) (Lab)
I am not at all surprised that the Government Members who have spoken in this debate on the cost of living—all of whom, interestingly, are men, with the exception of the Minister who will respond—seem so delighted and thrilled that they can come here and talk about a recovery, because something very strange has happened over the past three and a half years.
In June 2010, the Office for Budget Responsibility made its first pre-Budget forecast before the emergency Budget that we were rushed into because we had to do something about the economy. It predicted that GDP growth would be 2.1% in 2010-11, 2.6% in 2011-12, 2.9% in 2012-13 and 2.7% in 2013-14. It was assumed that inflation would be at its highest at 4.1%. I seem to remember that it hit 5.2% or thereabouts. Of course, the higher-than-predicted inflation was the only reason why the Government were able to boast about record increases in pensions.
Something happened between June 2010 and now. The thing that happened was the Government’s economic policy. Instead of improving the economy over the past two and a half years—
Sheila Gilmore
Time is very limited, so I will not take any interventions. During that period, economic growth has gone backwards and we have found ourselves in a position of stagnation—[Interruption.]
Mr Speaker
Order. The hon. Member for Braintree (Mr Newmark) should calm down, relax, and lower the temperature. He should not get too excited; there is no need.
Sheila Gilmore
That stagnation is why so many of our constituents are suffering so much. I was astonished by some of the comments made this afternoon. The hon. Member for Harlow (Robert Halfon) managed to suggest that unemployment was not down to the recession but down to the entire period of the Labour Government. In fact, when the global financial crisis hit in 2008, unemployment was a little over 5% at 1.6 million, but by the end of 2009 it had risen by 1 million to 2.5 million. The cause of that rising unemployment, so suddenly and over such a short period, was the economic recession, not the Labour Government. Such rewriting of history is constantly going on. Recently, however, that rewriting seems not just to be about what caused the recession, but tries to read back to the Labour Government and put things into that period that were not the case.
The stock answer from the Government on what they have done to help people in the cost of living crisis is to talk about the increase in the tax threshold. The problem with that policy is that it unduly helps those who are already better off, and does not help those with the lowest income levels in our communities. Two thirds of the billions of pounds that have been spent on raising the tax threshold has gone to people in the top half of the income scale, because the policy benefits people on higher incomes as much—if not more—as those on lower incomes.
What has been the quid pro quo? There have been cuts to benefit payments and tax credits, which has cancelled out the rise in the tax threshold for those at the lower end of the income scale. Not only have those paying no tax not benefited, but those at the bottom end who have apparently benefited a little have had that cancelled out. That is what we must all remember. Those with the lowest earnings have not benefited from the policy. Both Government parties constantly say that the tax threshold is being raised because they want to help the lowest earners. In fact, that policy has not benefited the lowest earners, because in order to pay for it—it is very expensive—there have been constant cuts to people’s benefits.
At the extreme end, those who say there has been no change should look around their towns and cities. I have never seen so many quick lenders, payday lenders, and companies such as BrightHouse spring up in such a short period. It was not happening before. Food banks are new in my lifetime—they were something I read about in the history books of the 1930s. One of the Prime Minister’s favourite statements about food banks is, “But usage of food banks went up tenfold under a Labour Government.” The problem with that arithmetic is that 10 times a very small number is still a very small number—from 4,000 in 2005 when the Trussell Trust started up, to 40,000 in 2010. Last year, that figure rose to 347,000, and in the first six months of this year, it has risen to 350,000. That very big number is down to the policies of this Government.
David Simpson (Upper Bann) (DUP)
I will be brief, because time is short.
I listened to the debate with interest. Hon. Members can throw punches from now until Christmas eve about who is to blame, but the reality is that hundreds of thousands of people in the United Kingdom—men, women and children—are in poverty. It is estimated that 31,000 senior citizens will die because of the lack of heat or food in their homes. That is a tragedy for any country and for this modern-day United Kingdom.
Electricity and gas prices, and water charges, are increasing. People are finding it hard to repay their mortgages and, as we heard, interest rates could go up. People are being hit by the bedroom tax—others will use different terminology. The banks are, and have been, ripping them off. Food banks are increasing. In my constituency, which, at 200 square miles, is not the biggest in the UK, food banks are starting to increase, which never happened before. We are sending millions of pounds per year to fill Strasbourg’s coffers so that people there can waste it on some outlandish project and prop up other countries that have gone into bankruptcy.
Whenever the general public look at today’s debate, they will wonder what it is all about and ask, “Why should we bother to vote at all? We don’t seem to be getting much out of it.” I believe that, as elected Members, we should get closer to the general public and those who are going through serious poverty. It is a tragedy that people in this country have to choose between heating their homes or going out to buy their normal groceries.
A major problem we will have in future is personal debt. How that will be solved or dealt with we do not know, but it must be addressed. Millions of people will be in that difficulty.
Yes, vehicles are being exported to other countries. That is brilliant. Exports in general seem to be fairly good and moving forward, and business is looking fairly good, but the ordinary working-class general public currently do not see the benefit of any of it.
We talk about rebalancing the economy. I agree that we need to do that—it is imperative—but hon. Members have been sent to the House to represent the people of the United Kingdom. It is important that we look at rebalancing the lives of the people who sent us here.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The most recent GDP figures suggest that our economy might finally have started to turn a corner, which everybody, especially the Opposition, welcomes. We have had three years of flatlining growth under this Government. How much damage has that economic stagnation done? How long will it take the country, families and businesses to recover from a starting point that is so much lower than was promised back in 2010?
The Opposition motion states that
“growth of 1.5% is needed in every quarter between now and May 2015”
just to catch up on the ground that has been lost. Stagnation and no-to-low growth means that the Chancellor’s much hailed deficit reduction plan has been a failure, with borrowing rising—the coalition is set to borrow £200 billion more than it planned in autumn 2010. Will we get an explanation for that? That failure—the slowest recovery in 100 years—means that the Prime Minister and the Chancellor do not have a chance of meeting their promises to balance the books by 2015.
Catherine McKinnell
I would be interested if the hon. Gentleman answered a question. Does erasing those promises from the Conservative party website mean that people will forget they were made?
Mr Jackson
The hon. Lady was doing so well. She is airbrushing the previous Labour Government’s record. If Labour is elected in 2015 and the economy is growing, does she recommend running a structural deficit, as the previous Labour Government did?
Catherine McKinnell
It is time for Government Members to take responsibility for the economy: three wasted years, lost opportunities and the loss of jobs and growth as a result of this Government’s failing economic policies.
Mr Newmark
It is an inconvenient truth for the hon. Lady that in the previous Parliament unemployment in her constituency went up by a whopping 88%. Under this Government, it has gone down 12%.
Catherine McKinnell
There are some inconvenient truths for Government Members. Personal debt has increased on their watch by 33% in my constituency and by a significant number in the hon. Gentleman’s constituency.
Hon. Members are keen to refer to the previous Government’s borrowing figures. As of last week, the coalition Government have borrowed more in three years than the Labour Government did in 13 years of government—that is the reality. On every economic test, and on the test the Prime Minister and the Chancellor set for themselves, they have failed palpably. It is clear from the many contributions to the debate that the recovery, which appears to be taking place, has yet to touch the lives of millions of people, contrary to the impression given by Government Members. My concern is that things will get a whole lot worse before people see any signs of them getting better.
Any economic recovery needs to deliver rising standards for all, not just for the Prime Minister, the Chancellor and their friends at the top. We need a recovery that is balanced and built to last. Critically, it needs to benefit every corner and community in the country. Instead, the Government, and the Government Members who support them, continue to bury their heads in the sand. They remain oblivious to the living crisis experienced by millions of families, or, worse, they deny what they hear and see with their own eyes. It is the same old Tory party, aided and abetted by the Liberal Democrats. They are totally out of touch with the reality of life for so many in Britain today who find themselves increasingly out of pocket and increasingly in debt.
Kwasi Kwarteng
I will ask the hon. Lady the same question I asked her colleague, the hon. Member for Nottingham East (Chris Leslie). What was the absolute level of the deficit in 2010 when this Government took over?
Catherine McKinnell
The hon. Gentleman is obsessed with statistics and keen to detract from the truth, which is that it is this Government who are borrowing £200 billion more than they planned. They have failed to reduce the deficit in the past three years to even a fraction of what they promised back in 2010. It is his Government’s plans that have failed. He should wake up to that fact.
I go back to the people who are paying the price. There is the single dad in my constituency who, to pay for the bedroom tax for the room he keeps for his children to stay in, eats barely anything all week and saves the money to buy food for his children at the weekend. The Chancellor would probably call that thrift. There is the GP and his staff who hand out, from their own pockets, the money for patients to get the bus to the local food bank. The Prime Minister would probably call that the big society in action. There is the branch of a well-known bank on the outskirts of Newcastle, where 80% of customers have only the most basic bank account. It has young mums coming in on a daily basis in tears because they cannot manage to feed their children and heat their homes. Citizens advice bureaux across the country saw a 78% increase in the number of people inquiring about food banks between February and June this year alone—little wonder, when gas and electricity bills have risen by an average of £300 a year on the Prime Minister’s watch. Households are spending 12% more on food bills than they were in 2007, despite purchasing 4.2% less food, as my hon. Friend the Member for Inverclyde (Mr McKenzie) pointed out.
Catherine McKinnell
I would like to give way, but I really must make progress.
Let us cast our minds back briefly to 2010 and the Conservatives’ general election manifesto. They have attempted to wipe many previous pledges from their website and from the public’s memory, but I am afraid they cannot hide the blatant pledges printed in their manifesto. On page 8 it stated:
“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”
What about the Liberal Democrats? We know that their manifesto needs to be taken with a very large handful of salt. They stated:
“Liberal Democrats want to make the tax and benefits system fair, so that everyone, be they young or old, can afford to get by.”
They said that Britain was
“one of the most unequal societies in the developed world, where ordinary people struggle to make ends meet while the richest benefit from tax breaks.”
Well, we know who voted through the biggest tax break for top earners as soon as they got into power.
On the back of those election promises, what is the coalition’s record on living standards three and a half years into government? Under this Government, this Prime Minister, this Chancellor, this Deputy Prime Minister and this Chief Secretary, who is not here today, prices have risen faster than wages for 40 of the last 41 months. According to a report published by the TUC over the summer, of all the jobs created since June 2010, four out of five—80%—have been in low-paid industries. The stark reality is that average earnings have fallen in every region and nation of the UK on this Government’s watch. Indeed, the Prime Minister already has the worst record on living standards—none of his predecessors comes close to matching his singular failure on the issue. He is a record-breaking Prime Minister with a record-breaking Chancellor, as my hon. Friend the Member for Nottingham East (Chris Leslie) put it so eloquently.
Let us just remind ourselves, particularly the Liberal Democrat Members previously so concerned about ordinary people struggling
“to make ends meet while the richest benefit from tax breaks”,
when the one blip in the Prime Minister’s dismal 40-month record was. In which one month of the last 41 did we see average wages rise faster than prices? Yes, it was April this year, when financial services firms deferred paying up to £1.7 billion in bonuses so that their staff could benefit from the 50p tax cut. At a time when average earnings for working people have fallen by £1,600 in real terms since May 2010, we have a Government who believed that it was right to prioritise giving a whopping tax cut to the highest earners in the country. At a time when almost 1 million young people are out of work, when long-term unemployment remains dangerously high and when the number of part-time workers wanting full-time hours stands at a record 1.5 million—another record for this Government—we have a Chancellor devoting his time and attention to taking legal action against the EU’s attempts to limit bankers’ bonuses to just one year’s salary. At a time when people are facing a genuine cost of living crisis, in the face of ever-increasing household bills and diminishing earnings, we have a Prime Minister who seems happy to sit on his hands and do nothing.
Only today, figures released by the Money Advice Service show that nearly 9 million people across the UK are living with serious debt problems. Staggeringly, 18% of Britons—8.8 million people—consider themselves to have “serious” financial issues. Many hon. Friends raised those issues on behalf of their constituents, including my hon. Friends the Members for Makerfield (Yvonne Fovargue), for City of Durham (Roberta Blackman-Woods) and for Inverclyde, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) and my hon. Friends the Members for Cardiff South and Penarth (Stephen Doughty), for South Shields (Mrs Lewell-Buck), for West Ham (Lyn Brown) and for Edinburgh East (Sheila Gilmore). We heard none of that concern from those on the Government Benches. We have a Prime Minister who is clearly happy to let ordinary people pay the price for his economic failure and that of his Chancellor. They are the people who, in the words of my right hon. Friend the Leader of the Opposition, the Prime Minister will never meet and whose lives he will never understand.
What could the Government be doing about this crisis? It is all about priorities. With the cold winter months now upon us, it is time to stand up for hard-pressed families by supporting our energy prize freeze. It is time to do something about the staggering rise in the cost of child care—up 30% under this Government—which is preventing people from getting to work. It is time to do something about housing and to ensure that as well as helping people to buy we help people to build. We also need to do something about unemployment and bring forward the compulsory jobs guarantee.
It is clear that the Government’s policies have failed on their own terms. On living standards, economic growth and the deficit, the Government have completely failed to meet the goals they set themselves in 2010. The Opposition believe that there are specific, urgent and costed measures that the Chancellor could take in the autumn statement next week to help hard-pressed families and small businesses. The Opposition call on the Government and the Chancellor to wake up to reality and do just that. I recommend our motion to the House.
The Economic Secretary to the Treasury (Nicky Morgan)
I thank the 19 hon. Members, on both sides of the House, who have taken part in this afternoon’s debate.
It is said that the first step to recovery is admitting you have a problem, and the Opposition had a chance to admit they had a problem this afternoon. This debate has revealed the lack of an economic plan from Labour and the cost of a potential Labour Government. It is clear from what he said that the shadow Chief Secretary to the Treasury does not know the difference between a debt and a deficit. The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) talked about household debt. She might like to know that household debt, as a proportion of income, was 100% in 1997, grew to 150% by 2007 and was 170% by the first quarter of 2008, but has now fallen by 30 percentage points to 141%, as of the first quarter of 2013.
Another falsehood spread this afternoon was that the Government had borrowed more in three years than the last Government borrowed in 13 years. Labour increased public sector net debt by £488 billion during their term in office, but the debt this Parliament has increased by £360 billion. The shadow Chief Secretary to the Treasury talked about record breaking. If he wants to talk about record breaking, how about talking about the record-breaking deficit that his Government left us? What about the broken promise of no more boom and bust. Remember that one? We do not hear that any more. The only honest statement we have heard from a Labour MP was from the former Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who left a note saying, “There’s no money left”. He could not have been more right.
So what is missing from the motion today? There is no mention of the jobs created by this Government, of the 2.7 million people taken out of income tax, of the council tax freeze, of fuel duty cuts, of the deficit falling by a third, of inflation falling or of employment being at an all-time high.
Robert Halfon
Does my hon. Friend not think it strange that the Opposition, who say they care about the cost of living crisis, voted against cutting taxes for lower earners and raising the threshold? Far from paying for those tax cuts for lower earners through other cuts, as the hon. Member for Edinburgh East (Sheila Gilmore) said, have we not raised taxes on the rich by increasing the capital allowance from 18% to 28%?
Nicky Morgan
My hon. Friend is indeed right. I wanted to come to his speech, because he started by talking rightly about fuel duty and the wonderful campaign he has launched to ensure that households are not spending as much as planned under the last Labour Government. I heard his plea for a further cut. I take note, but I make no promises.
We then heard from my hon. Friend the Member for Braintree (Mr Newmark), who gave a characteristically positive speech. I note that unemployment in his constituency, including youth unemployment, is down by 20%, which is definitely something to be recognised. My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) rightly talked about the recovering economy and about how debt had become endemic under the last Government. He is, of course, absolutely right.
My hon. Friend the Member for Tamworth (Christopher Pincher) coined a new phrase that I hope will spread across the Twittersphere and beyond about geeks bearing gifts. I wonder whether he would agree with Charles Clarke, the former Home Secretary, who said of Labour’s energy policy: “My criticism of that particular proposal is I think it is a one-off effort that does not deal with the overall comprehensive issue we have to address. I think there is even a case that some of the recent price rises we have seen might have been a response to the suggestion of a freeze”. That is absolutely correct.
We heard a wonderful speech from my hon. Friend the Member for Hexham (Guy Opperman), who talked about apprenticeships, noting the move from 430 to 690 apprentices in his constituency over the last year. He is absolutely right that for 13 years the last Labour Government failed to tackle the lack of skills necessary for our economy.
Mr Newmark
Is the Minister aware that every single Labour Government have left power with more people unemployed than when they arrived in power, while this Government are bringing unemployment down?
Nicky Morgan
My hon. Friend is absolutely right. Unsurprisingly, we did not hear that from Labour Members.
We heard an excellent speech, too, from the hon. Member for Redcar (Ian Swales), and I would like to thank him for his remarks, particularly his comments about energy investment and support for manufacturing.
Nicky Morgan
I am not going to give way to the hon. Lady, because she did not give way to anyone during her speech.
My hon. Friends the Members for Elmet and Rothwell (Alec Shelbrooke) and for Bedford (Richard Fuller) talked about work being the key to recovery, the need to create more jobs and making work pay, which is a critical part of our welfare reforms.
We heard from the hon. Member for Makerfield (Yvonne Fovargue), who talked about breaking the stranglehold of the big six. It was the last Labour Government who left us with the big six; we started with more and ended up with six.
I listened carefully to the speeches of the hon. Members for Dundee East (Stewart Hosie) and for Swansea West (Geraint Davies), of the right hon. Member for Oldham West and Royton (Mr Meacher), and of the hon. Members for Edinburgh East (Sheila Gilmore), for West Ham (Lyn Brown) and for South Shields (Mrs Lewell-Buck). What struck me most—I have referred to it before in this place—was the collective amnesia and total lack of understanding among Labour Members of how we ended up with the largest deficit since the second world war, which this Government have tackled by taking tough and difficult decisions.
Alec Shelbrooke
I may be able to help out the Treasury team by suggesting that if the Minister were to visit a scrap metal dealer, she might be able to solve the deficit with all the brass neck from Labour Members this afternoon.
Nicky Morgan
My hon. Friend makes a characteristically colourful intervention and speaks wonderfully, as always.
The hon. Member for City of Durham (Roberta Blackman-Woods) made a point about child care and called for action from this Government. This Government are taking action on that matter, with tax-free child care, increased provision for two-year-olds and increased provision for three and four-year-olds. I would have thought that the hon. Lady welcomed that. I noted her welcome of this week’s announcement on payday lenders by my right hon. Friend the Chancellor.
I noted the confession from the right hon. Member for Oldham West and Royton when he said that the problems did not start with this Government. He is absolutely right about that, but that was the only thing with which I could agree in his speech.
The hon. Member for Cardiff South and Penarth (Stephen Doughty) talked about being on the side of Welsh people. In that case, I am sure he would welcome the 4,560 people in his constituency who have been taken out of income tax entirely since this Government’s changes.
The only way to deliver sustained improvement in living standards is to take the difficult decisions that this Government have taken to tackle the economy’s problems head-on, delivering a sustainable, long-term recovery for all. The Labour party has demonstrated comprehensively today that it is not up to taking those decisions. I therefore ask the House to reject this motion.
Question put.