Autumn Statement

Baroness Donaghy Excerpts

Thursday 4th December 2014 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, one phrase that, for me, leapt off the page in the Chancellor’s Statement was:

“In fact, the net contribution of the richest 20% will be larger than that of the remaining 80% put together, proving that we are all in this together”.—[Official Report, Commons, 3/12/14; col. 311.]

I thought that that took some brass neck—and then the Minister repeated it in his Statement yesterday. I assume that the Government are adopting the Boris Johnson approach to wealth and poverty: to paraphrase him, “The top 1% keep you lot in shoe leather and Sky television”. I can only hope that that strap line is played in the streets of Peckham, where I live, during the general election—and incidentally, I hope that the Lib Dems will be too ashamed to use it. To make a virtue of the country’s inequality points to a new school of PR, which I have not come across before. A report by economists at the LSE and Essex University has found that in the past four years there has been a significant transfer of income from the least well-off half of the population to the more affluent. If I had time I would deal with that in more detail.

On a different subject, why is there no mention of local government? I presume that it will suffer disproportionate cuts, similar to those in defence and the Foreign Office. No doubt any news will slip out quietly over Christmas. Local government is important, and we should be standing up for local government and its workers, not consigning them to the ranks of the disappeared. The same applies to the Civil Service. It is the lower-paid who need and use our public services. The Government pay lip service to the national minimum wage, but fail to enforce it. A quarter of a million people are paid less than the national minimum wage, and the Government have had four and a half years to deal with that. Putting £3 million into enforcement in their very last Autumn Statement does not impress.

As we have already been told, the Chancellor’s target to see debt falling as a share of GDP by 2015-16 was abandoned two years ago. Now the structural deficit will almost certainly grow, which means that borrowing could increase by a further £2 billion. The economics editor of the Times, Philip Aldrick, said this week:

“Having softened austerity in this pre-election year, breached his golden rules, taken three years longer than expected to eliminate the structural deficit and doubled the length of the austerity programme to a decade, questions should be asked about the chancellor’s credibility”.

The measures announced to crack down on tax avoidance by such companies as Google and Amazon may be welcome, but the revenues are difficult to estimate. My question is: if the Chancellor is relying on this income to balance his books, what are his estimated odds for achieving it?

The Government have promised to deal with the banks, yet despite government sweeteners, there is no evidence that they are changing their behaviour. RBS has had to apologise for misleading the Treasury Select Committee on profiteering from winding up companies, and the scandal of mis-selling payment protection insurance still haunts the financial sector. Banks have paid out £16 billion to people after 13 million complaints in seven years. A further £23 billion has been set aside for further claims. Time and time again we hear that most of these problems are caused by rogue juniors. Even if that were true—which I doubt—what does it say about the corporate governance of the banks? How much will it take to have a system which prevents these massive scams in the first place and saves the individual or small business money, time and unnecessary stress? Claims management firms have charged £155 million in commission in the past year to people applying for compensation. One company has made £40 million through its 39% commission on payments. Why is that not illegal?

Finally, we need to put a spotlight on the Government’s assertion that the gender gap is closing and poverty levels are falling. When the tide goes out, nearly everyone is paid less and it goes without saying that the relativities narrow. This is being touted as an example of government success. As I said earlier, the Government really do have a brass neck.