Finance (No. 2) Bill

Ian Mearns Excerpts

Tuesday 1st April 2014 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

It is always a pleasure to follow the hon. Member for Dover (Charlie Elphicke), who offers such insight and entertainment value to the House. He called for optimism, and I hope to paint him a picture of the sunlit uplands of a Britain changing under the next Labour Government, elected next year.

Today is a day of anniversaries that demonstrate the difference in values between this coalition Government and the previous Labour Government—and, indeed, the different values of the next Labour Government. Fifteen years ago today, the national minimum wage came into effect. We had seen people in this country paid less than £1 an hour, with some of the most disgraceful poverty pay to be found in a large developed European country. But of course, last year, this day was the day on which the iniquitous and vile bedroom tax came into force. Anyone who has dealt with constituents—anyone who, as I did last year, has held the hand of a disabled lady with tears in her eyes, who was wondering how any Government could visit such an iniquitous tax on people like her—will recognise the differences in those values and the significance of those two anniversaries.

Those different values are written throughout this Finance Bill. This is not the Finance Bill that this country needed or with which it should have been presented. It is a damp squib of a Finance Bill—a no-change Finance Bill from a bedraggled Government who are increasingly all at sea.

[Ian Mearns (Gateshead) (Lab)]

It is appropriate to remember the anniversary of the minimum wage today of all days, because let us not forget that its introduction was opposed absolutely by the Conservative party. Some people were being paid less than £1 an hour—people living on my street were being paid 70p an hour for doing jobs in the security industry 15 years ago.

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[Mr Jones]

I disagree. Were we to build a new motorway or railway line, such as HS2—I am sure that the hon. Gentleman is a great advocate of that vanity project—the increased speed with which people would be able to move around and do business would have an impact, so it cannot be said that that will not have an effect. We come back to the idea that somehow Governments cannot have an impact on what is happening.

Last week my hon. Friend the Member for Middlesbrough (Andy McDonald) raised with the Prime Minister the disproportionate amount of money spent on transport in London, compared with the north-east. Interestingly, the Prime Minister rattled off four transport projects that he claimed this Government had delivered for the north-east. He was very confident about his facts, which did not surprise me, because his public school background means that he can be very confident even when talking complete nonsense—it does not really bother him, because that is the way he has been brought up. He mentioned the Tyne and Wear Metro and the Tyne tunnel—I cannot remember what the third and fourth projects were. They were all agreed by the previous Labour Government. In fact, the Tyne tunnel was finished before this Government came to office. The idea that this Government are somehow leading on those big infrastructure projects, which are desperately needed in the north-east, is ridiculous, because clearly they are not.

Housing is an issue that could be completely missed in the Budget. The way forward is clearly to encourage people to buy their own homes, and I have no problem with that, but if someone is in low-paid work on a zero-hours contract, and possibly having to work two part-time jobs, as many people do, the idea that they will ever get the credit worthiness to own their own home is complete nonsense. What we need, certainly in the north-east and in my constituency, is affordable housing for rent. The easy thing that the Government could do—it would not cost them any money—is give housing associations the borrowing requirements they need against their assets to build houses. The Government could do that, but they are not. Instead, they are creating an artificial bubble in the housing market. Look at the difference between the north-east and the south. Prices in the north-east are still £5,000 lower than in 2008; in London and the south-east, they are 77% higher. Ridiculously, housing is completely unaffordable for most people in London and parts of the south-east, with average house prices of £400,000. Even people with reasonable standards of living find it hard to buy a house.

I turn to youth unemployment, one of the great tragedies of the Government. I fear that there will be a repeat of what we saw in the 1980s—a completely lost generation of young people. They have no opportunity for a job, not only in the short term but in the longer term. Why is that important? If someone meets us for the first time, they usually ask us two things: our name and what we do for a living. Some people cannot answer the second question about a fundamental part of who they are. Some say that there are lazy people, but I am sorry—there are hard-working people struggling to make ends meet.

I will give two examples from my constituency. I met someone on a zero-hours contract working in a store, which I will not name, in the Metrocentre—that great cathedral to Thatcherite free market enterprise.

[Ian Mearns]

In Gateshead.

[Mr Jones]

In Gateshead. This 17-year-old on a zero-hours contract, who lives in Stanley, told me that he turned up at the Metrocentre one morning only to be told that there was no work and he should go away. He had paid his bus fare to get there, went back home and was then rung up to be asked back for two hours that afternoon. If he said that he could not do that, he would be sanctioned as one who was not trying hard enough. As was said eloquently earlier, for the Government the issue is a job at any cost. That man was getting out of bed every morning to try to work.

I met another young lad in Stanley last week. He had applied for well over 150 jobs and been on umpteen courses. The scandal about the Work programme is that the Government are lining the pockets of private sector suppliers. This lad was desperate. He said he wanted to set up his own business. I am sure that Government Members would think, “Brilliant! This great entrepreneur needs to go forward.” He went to the jobcentre to ask for assistance in getting his driving licence. They told him no, although they could send him on a course to do everything else. That is the trap for some of these young people. There is no hope for them and they feel neglected.

The issue goes further than that. The older generation look at their grandsons and granddaughters and see no hope. We needed hope in the Budget for those young people, but there was none. We need to give them hope. Labour has a commitment to get people into work. The hon. Member for Dover was disparaging about the previous Government’s attempts to do that, but it is important to get people into the ethos of work, because not having that place in the world is difficult. People can get into a cycle and give up hope.

The young people I meet in my constituency are working hard and trying. As I said, some are treated like hired help—paying out of their own pockets to get to work and being told to come back later when there might be hours. That may be the type of society that the Liberal Democrats and Conservatives want, but I do not. The next election must be about a very clear message not only about standards of living but what type of society we want to live in. Do we want to live in a society where people are on zero-hours contracts with uncertainty about whether they are going to get work, and youngsters are not going to improve their life chances as others did? The hon. Member for Macclesfield talked about a global race—well, it is. This Government have a clear policy: a global race to the bottom. This is not the high-skilled and forward-looking country that I want to live in.

As my hon. Friend the Member for Bolton West (Julie Hilling) said, if we are the sixth richest country in the world, it is a scandal that people who are not sat idle but going out to work are reliant on charity to live and put food on the table for their children. That makes me very angry. This is not the society I want to live in. The Budget does nothing for those people. In areas such as the north-east—my hon. Friend the Member for South Down (Ms Ritchie) mentioned Northern Ireland—there needs to be a clear plan for getting those regions working again: a new deal that has real investment behind it as regards infrastructure and making sure that young people have the opportunities they need.

Next May, I will make sure that I always remind people of one thing: that not a single one of this coalition Government’s horrendous, horrible policies, with the torture they have inflicted on many thousands of our citizens, as we expect from Tories, could have been introduced without individuals such as the hon. Member for Redcar and other Liberal Democrats who have voted for them all.

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[Ian Mearns (Gateshead) (Lab)]

It is a pleasure to follow my near neighbour, the hon. Member for Hexham (Guy Opperman). There has been a north-east persuasion to the debate today: we have heard from North East Somerset and Glasgow North East—as well as Edinburgh East—and I represent the central, northern and eastern parts of Gateshead, which is in the heart of the north-east of England. I have to say, however, that my part of the north-east of England is quite different from that of the hon. Member for Hexham. From my perspective, he is way out west.

From the perspective of many of my constituents, the Budget and the Finance Bill come across as complacent, smug and somewhat self-serving. The Chancellor painted a rosy picture of recovery in his Budget statement, but for those who represent many of the constituencies outside London and the south-east, the picture is very different. I have to defend my region and my constituency, where real incomes for most are falling not rising, where living standards for most will be lower in 2015 than in 2010, and where the number of working poor is rising, with many in insecure work now being paid a low hourly rate for part-time or combinations of part-time jobs. There has also been slower growth and a higher continuing deficit than expected, and the overall debt has grown dramatically.

We are a diverse country. We have regions of relative prosperity with pockets of poverty, but we also have regions of relative poverty with pockets of prosperity. The north-east of England is a region of relative poverty with pockets of prosperity, and the north-east economy is still in recession. In my own constituency of Gateshead, the pace of economic recovery is painfully slow, if not non-existent. The negative impact of welfare reforms, the lack of central Government investment and the cuts to local government are having a profound and damaging impact on our economy and on people’s lives. They are also having a profoundly negative impact on the business community in parts of the north-east. The policies and priorities of this Government show a total disregard for the people and the region of the north-east.

This Finance Bill is another missed opportunity. The Chancellor has made it clear that public sector cuts and austerity will continue for the foreseeable future, but local government budget cuts are sucking the spending power from local economies. Since 2010, my local authority in Gateshead has suffered cuts of £75 million, with the loss of over 1,200 employees. That is 1,200 people who no longer have the wherewithal to spend money in their local shops and communities or to support local businesses. In 2014-15, we will suffer a further reduction of over £15 million, with a reduction of a further £24 million in 2015-16. In total, by the end of 2015-16, Gateshead will have suffered a 37% reduction in its grant from central Government. That figure is in line with that for all 12 local authorities in the north-east, all of which have suffered cuts of more than 30%.

Such cuts are 10 times the figure suffered by authorities serving affluent areas in the south-east and the south, where average cuts in grant support have been less than 3%. Needless to say, we top the league not only in cuts for local government, but in cuts for welfare benefits—it is a shame our football teams are not topping the league. When the current welfare reforms have come into full effect, they will have taken nearly £19 billion a year out of local economies, which is equivalent to about £470 a year for every adult of working age in the country. Of course the impact on the poorest—on those in most need—will be greatest, and the impact varies greatly across the country. At the extremes, the worst-hit local authority areas lose about four times as much per adult of working age—as much as £910 per working adult—as the authorities least affected. The three regions of the north of England alone can be expected to lose about £5.2 billion in welfare benefit income. That money is being sucked out of the spending power in local economies.

[Mr Kevan Jones]

Does my hon. Friend agree that this is about not just cuts in local authorities, but cuts in welfare? For example, in Wokingham the number of people affected by the bedroom tax is only 237, whereas I am sure the figure for his constituency is much higher.

[Ian Mearns]

I could not agree more.

Again, on employment, we have to wonder whether the Prime Minister and Chancellor are on the same planet as we inhabit in the north-east of England. Whereas unemployment figures for the UK are hovering around the 7% mark, unemployment in the north-east has only just dipped below 10%. That is the claimant count figure; it is not the count of people who are economically inactive, which is a much greater figure for a region such as the north-east of England. I baulk at the complacency from Government Members in the face of that, because it is having a dramatic impact on people’s lives.

[Guy Opperman]

I accept that there is a difference between the two types of job measurement, but let me give the hon. Gentleman the figures for Gateshead: the number of jobseeker’s allowance claimants is down by 21%, the total change over 12 months in the number of claimants aged 50 and over is a reduction of 13.5%; and the 12-month change in the number of claimants aged 18 to 24 is a decrease of 26.8%.

[Ian Mearns]

Those figures are interesting. It has to be said that economies such as the north-east of England look at the JSA figures and see that they have removed from them people sanctioned because of their benefits. The last estimate I saw was that almost 1 million people on JSA were in receipt of a sanction in the last counting period. In addition, some 600,000 people, on a conservative estimate, are now employed on zero-hours contracts. Our regional economy suffers from not only unemployment, but significant amounts of under-employment.

Despite the Government pledge to ensure that it is always worth working, it will be those in work who will most feel the squeeze of this Government’s policies. Average weekly earnings and gross disposable income in the north-east are the lowest of any English region. According to the latest Real Life Reform report, which has been conducted by the Northern Housing Consortium, the average spend on fuel among the study subjects has risen by 8.5% since only December and by more than 30% just since last September, and is now at an average of £32.62 per household per week in that study, which is of people on very low and modest incomes.

The Chancellor has made much of his personal allowance increase, but the Government continue to ignore the negative impact of their 24 tax rises between 2010 and 2015. I am not a natural bedfellow of the TaxPayers Alliance, but it believes that there have been 254 tax rises, particularly the hike in VAT in January 2011 from 17.5% to 20%. Even the Prime Minister accepts that VAT rises impact on the poorest, and he always knew that they would. On 5 January 2011, he said:

“If you look at the effect”—

of VAT—

“as compared with people’s income then, yes, it is regressive.”

In Exeter in 2009, the right hon. Gentleman, as the then leader of the Opposition, said of VAT:

“You could try, as you say, to put it on VAT, sales tax, but again if you look at the effect of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you.”

[Mr Kevan Jones]

Like me, was my hon. Friend shocked when the “Conservative” Member for Redcar (Ian Swales) said that VAT was not a regressive tax?

[Ian Mearns]

Given the statements that I have just read out, which are attributed to the current Prime Minister, I am flabbergasted by the attitude of the “Conservative” Member for Redcar.

In his Budget statement, the Chancellor proudly championed the rise in the minimum wage to £6.50. However, given that his entire experience revolves around his coterie of millionaires—including the majority of his Cabinet colleagues—it is little wonder that he has absolutely no idea how difficult it is to raise a family on £6.50 an hour. How can one invest £15,000 a year in an ISA on a salary of £6.50 per hour? The Finance Bill does nothing to help my region and nothing to reverse any of the damage inflicted by this Government over the past four years.

The Government’s proposed cuts to the public sector—the Institute for Fiscal Studies estimates that, outside of the NHS and schools, they could result in a 40% cut in the public sector workforce—will disproportionately affect my region. Cuts to local government expenditure will also have the heaviest impact on the most vulnerable who rely on the provision of services by their local councils. We are letting down the most vulnerable in our society.

The Chancellor’s much-heralded recovery is, to be honest, little more than a rise in consumer spending, fuelled by a false confidence based on rising house prices in the south-east of England, which have been stoked by the Government’s Help to Buy scheme.

When the Chancellor of the Exchequer announced the pension pot release scheme, I am sure that he was not actually expecting the vast majority of recipients to buy a Lamborghini, but I am pretty sure that he was hoping that enough pensioners would spend their lump sums—even if it is only 10% or 15% of it—on things such as cars and home improvements, and thus help fuel a consumer-led recovery.

The Government’s stated aim was to “rebalance the economy”. So far, I see little evidence that the massive losses to public sector jobs in the north-east are being offset by private sector job creation. That needs to be addressed urgently.

A representative of the Federation of Small Businesses told me that the north-east has some 136,000 private sector businesses, which sounds very positive, but he went on to say that only 1,000 of them had more than 50 employees, and 100,000 of those businesses are sole traders. When we are sucking out money from people’s pockets and from their spending power, we are bound to impact on the private sector in an economy that has so many small businesses.

The north-east is very different from London and the south-east. Having suffered savage and disproportionate cuts, the region has experienced severe impacts on its small business sector as the Government have deliberately gone about the business of shedding jobs and sucking out spending power and disposable income from the region’s economy.

Let me highlight the difference in investment in different parts of the country. I do not understand how Government Members who represent our region can be so complacent about this matter. We all know the facts about how much has been invested on transport infrastructure in London and the south-east per head of population in comparison with the north-east. It is in the order of magnitude of 500:1—£500 more spent in London and the south-east per head of population than in the north-east. That is severely affecting travel to work mobility in the north-east. According to the Institute for Public Policy Research, it is quite unsustainable from a regional economic perspective.

High Speed 2 will not help us in the short to medium term. It will take until 2033 for HS2 to reach the north-east, seven years after it reaches the west midlands. As I have said on several occasions, 20 years ago I could travel from Newcastle to London in two hours and 38 minutes. After £50 billion of investment and 40 years, our journey time will have reduced by 20 minutes. From the perspective of the people of the north-east of England, is that a good and sound investment? Even the chairman of HS2 believes that it is a bad deal for the north-east and has said in the press today that if people in the south-east of England had the transport infrastructure and trains that we have in the north-east, there would be riots in the streets. That is the chairman of HS2.

This is a complacent Budget that does nothing to rebalance the economy. I urge Members on the Government Benches to think again, because I can tell them that the hon. Members for Redcar and for Hexham will be severely tested come the next general election.

Budget Resolutions and Economic Situation

Ian Mearns Excerpts

Wednesday 19th March 2014 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

Following on from the comments of the hon. Member for Vale of Glamorgan (Alun Cairns), may I gently remind him that we have had three wasted years before the recovery kicked in? I am sorry if he thinks that is a partisan or a party political point, but it is factually correct. The majority of my constituents in Hull North are certainly not feeling better off under this recovery, and I think the Budget will do very little to make them feel that things are going to get better for them and their families.

Few people in Hull will be taken in by the Tories rebranding themselves as the “workers’ party.” Some changes, such as the cut to bingo tax, are very welcome after some of the shambolic proposals we had in previous Budgets, like the caravan tax and the pasty tax in the infamous omnishambles Budget.

I listened very carefully to what the Chancellor said about building a resilient economy and delivering security for people in this country. Hull and the Humber should be at the forefront of fighting many of the challenges facing this country, such as climate change, generating green energy and developing the science of flood prevention. I believe we could turn issues that are seen as problems and costs into a positive opportunity for growth in the economy, but looking at this Budget in relation to Hull and the Humber, my constituents will be asking the following questions. Does this Budget help the real wealth creators and invest in the modern public services an efficient, growing economy needs? Does it help, for example, the part-time women workers I recently met in a Tesco in Hull who told me about the problems they were having in getting extra hours to make ends meet and pay their bills?

Hull has the 19th highest unemployment level in the country. Will this Budget help the 4,265 people still out of work in Hull North, according to today’s figures? Will it do anything for the long-term young unemployed in particular? Will it deal with the problem of those not in education, employment or training? It will not do any of those things. As the TUC said today, this is a

“short-term Budget…to shrink the state and help the rich.”

Thanks to the coalition’s confusion over energy policy, we are still awaiting good news from Siemens. If Siemens does not come to Hull, the jobs building wind turbines will in effect be exported out of the UK. Climate change deniers in UKIP might welcome that, but it would be a disaster for the economic regeneration of my city. The Budget also failed to announce rail electrification to Hull, but I hope that the Government will have some good news for us shortly.

We heard in the autumn statement that London is to get two new tube stations and a garden bridge, and there is talk of rebuilding Euston station. However, some bright civil servant thought it a good idea, when announcing the electrification of the trans-Pennine route, to stop in Selby, 20 miles short of the end of the line, which is Hull. Yet again, the people of Hull have said, “If the Government aren’t going to help us, we will help ourselves.” A proposal has been put together to bring in private sector money to electrify the line. If the Government put in some £2 million of public money, it will unlock approximately £96 million of private investment. I hope they will make that announcement shortly, and certainly in time for 2017, when Hull will be the city of culture.

[Ian Mearns (Gateshead) (Lab)]

My hon. Friend is highlighting a very important point about Government investment in electrification programmes in the north of England. I recently attended a meeting of the all-party group on rail in the north, and the map of the investment programme we were looking at had a line heading north-east that said “York”, and then an arrow saying “to Scotland”. The north-east of England was not mentioned at all.

[Diana Johnson]

My hon. Friend makes his point very well. If the Government are serious about rebalancing the economy, they need to invest in northern rail.

It is interesting to note that, because of recent events, the coalition has now realised that flooding is a major economic problem. Perhaps that had something to do with the fact that the Thames valley was affected and the playing fields of Eton were flooded. I am pleased that the Chancellor announced additional money for flood defence work, but of course that should be seen in the context of the Government’s slashing the flood defence budget in previous years. As those in any area that has been flooded know, spending £1 on flood defences saves £8 in the cost of clearing up after a flood, so such investment makes sense.

On flood insurance, I note that the Chancellor is extending the Help to Buy scheme. Advertisements encouraging people to buy are plastered everywhere in places like Kingswood, in Hull North. However, it is a shame that other parts of the Government do not seem to think that houses should be built in areas like Kingswood, because they will not be able to participate in the flood insurance scheme that the Government have negotiated with the insurance industry. I should also point out that the new garden city at Ebbsfleet will be in a flood-risk area, and the owners of the houses built there will not get flood insurance under the Government’s scheme. It seems that one part of the Government does not know what the other part is doing. Small businesses are guaranteed access to flood insurance under the Government’s current scheme, but they will be excluded from the new scheme. The Government need to look at that problem.

On the cost of living crisis, which many people in my constituency face, there has been much fanfare about raising the personal allowance, but we know that 5 million of the poorest workers gain nothing from that increase. Many of those will be women. We know that the Government wanted to give the 8,000 millionaires their £40,000 windfall from the cut in the 50p rate of tax, but it is interesting to note who is bearing the brunt of the coalition’s austerity. The majority of those now falling into poverty and ending up at food banks are actually in work. That shows that the Government are not making work pay: being in work is no longer a guarantee of escaping poverty. FareShare in Hull said this week that demand for its help is up 53%, and the Trussell Trust reported a trebling of food bank use in a year.

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[George Freeman]

The hon. Gentleman makes an interesting point. The bigger point is that in the 1980s the Conservative party launched a historic renaissance of saving and wealth creation whereby more and more people, through ISAs and PEPs, were able to own shares and save. That was wilfully destroyed by the former Labour Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), through his stealth taxes. It has long been necessary for us to restore a culture and a set of incentives for a genuine renaissance in savings, and that is key to the resilience that the Chancellor set out today. That was the most important set of measures in today’s Budget, and it will stand the test of time.

What did we hear from Labour Members? I came here genuinely wanting to hear the Opposition’s response to this package. I wanted to hear the alternative economic policy that Labour is going to put to the British people next spring. For all the noise we hear on the Government side of the House, the real test, as we know, is the silence from the Opposition Benches. What we heard today was an embarrassing descent into business bashing and class war. If that is what the Leader of the Opposition defines as his “new socialism”, I wish him luck. I will be sending a copy of his speech to all the businesses in my constituency, because it fails the business test in spades, and it is the business test that will drive the growth and investment on which the public sector always depends.

[Ian Mearns]

Will the hon. Gentleman also be sending them a copy of the noise that was being generated by Government Members during the speech of the Leader of the Opposition today?

[George Freeman]

I will have a chance to read Hansard. I am not surprised there was noise. It was a shameful performance. When, 12 months from the election, this country needs a choice, and Her Majesty’s Opposition are supposed to set out an alternative economic policy, it was woeful. It gives me no pleasure to say it. The result is that the choice is now clear: a Chancellor, a Government and a Prime Minister with a long-term plan for resilience and recovery, led by the real economy and investment, and a Leader of the Opposition who seems now committed simply to going into the election on a ticket of partisan politics and gesturing to his trade union funders. It was not a Budget response that merited his title. It did not set out a serious economic programme for recovery, and I am afraid that it deserves the response that I think it will get at next year’s general election.

National Minimum Wage

Ian Mearns Excerpts

Wednesday 15th January 2014 Commons Chamber

[Rachel Reeves]

Two million jobs were created under the last Labour Government and employment reached a record high, so I am not sure where the hon. Lady gets her statistics from.

I have quoted the former leader of the Liberal Democrats but, back then, where was the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable)? He was nowhere to be seen in the debates. He was nowhere to be seen on the voting record. On Second Reading and Third Reading, he failed to vote. Apparently, he abstained because he had reservations about a minimum wage. Perhaps he will stand up today to profess his concern for the plight of the low-paid. I am happy to take an intervention from the right hon. Gentleman if he wants to make one.

[Ian Mearns (Gateshead) (Lab)]

Although the Secretary of State for Business, Innovation and Skills had reservations about the minimum wage, many of my neighbours who worked in the security industry on 90p or £1 an hour back then are eternally grateful for the Labour Government’s action in introducing the minimum wage. It made a massive difference to their lifestyle.

[Rachel Reeves]

I thank my hon. Friend for that intervention, which reminds me of a story that my predecessor as MP for Leeds West told me. He saw a job advert in our constituency for a security guard back in the mid-1990s that said, “Pay, 90p an hour. Uniform provided. Bring your own dog.” Those were the sort of jobs that existed back then, but members of this Government opposed the national minimum wage legislation. I look forward to hearing what the Secretary of State for Business, Innovation and Skills has to say later, but people will be entitled to ask him where he was when we abolished the scandal of jobs paying less than £1 an hour and when British workers won the right to be paid a decent minimum wage.

Living Standards

Ian Mearns Excerpts

Wednesday 4th September 2013 Commons Chamber

[Mr Brown]

Yes, that was beginning to happen again, but not at the rate we have experienced from 2010 onwards.

[Ian Mearns (Gateshead) (Lab)]

I had the great privilege of visiting my hon. Friend’s constituency during the summer break. It must be difficult for people on part-time work to put together the combinations of part-time jobs in areas where the economic community is so disparate. I visited Stranraer, Wigtown and Withorn. They are relatively small places, and putting together the combination of part-time jobs to make a living wage must be very difficult in such a community.

[Mr Brown]

I thank my hon. Friend for visiting—I appreciate that he did not tell me that he was coming, but it was on unofficial business. He is right that, in that remote rural locality, jobs are few and far between.

My area lost 1,300 local authority jobs over nine quarters. In those same nine quarters—between June 2010 and September 2012—we lost 2,000 private sector jobs, including quality jobs. The figures are staggering. The average wage in Dumfries and Galloway is some 24% less than the national average. In May 2010, 460 people were long-term unemployed; there are now 970. Jobseeker’s allowance claimant numbers are above the UK average.

Worst of all—the House needs to take this to heart—is youth unemployment. Under the previous Conservative Government, we almost ended up with a complete lost generation. In my area, we have 8.9% youth unemployment. That is not acceptable when the Scottish average is 7.4% and the UK average is 6.2%. I will not stand by and allow the youth—those aged 18 to 25—to sit wasting. That is why, two weeks ago, I held a cross-party summit in my area to discuss the difficulties that we face.

I do not have the answers, but welfare reform has played a big part in what is happening on our high streets. We have seen the Government freeze benefits at 1% because they thought that it was the right thing to do, but all that has done is take money out of the local economy.

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[Harriett Baldwin (West Worcestershire) (Con)]

When I saw the wording of the Opposition’s motion today, I simply could not believe its sheer gall, or the absolute nerve they had in making the points they made. In fact, in honour of Jewish new year tomorrow, I will say that they have incredible chutzpah in putting this motion on the Order Paper today. If there is one sure way in which the Government can reduce the living standards of their citizens, it is by living way beyond their means. A deficit is the spending reductions or tax rises that the Government are not prepared to impose today but willing to pass on to future generations.

I do not ask the House to believe me on that point, but to believe the recently retired Lord King, who has made it very clear that today’s living standard squeeze is a consequence of the Labour party’s policies. In 2011, he said:

“The real consequence of this crisis is only now beginning to be felt. They weren’t felt in 2008, they are only now being felt.”

What we have seen was the consequence of the previous Government, who left this Government with a note saying, “I’m sorry, Chief Secretary, there is no money left.”

[Ian Mearns]

It is a little rich for the hon. Lady to suggest chutzpah on our behalf. I live in the midst of an Orthodox Jewish community in my constituency of Gateshead. It is a learning community, given the local colleges, and contains considerable poverty. The people there would probably disagree with her.

[Harriett Baldwin]

What would that community feel about a Government who left a deficit of 11.8% of GDP? This Government have reduced it by a third, to 7.4%, although there is still a long way to go. More than any community, that community would understand the importance of living within one’s means. We need to judge the Government by their track record, compared with the previous Government.

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[Gavin Barwell (Croydon Central) (Con)]

Beneath the narrow partisanship and complete lack of penitence over Labour’s record in government lies a profound point in this motion about the challenge for public policy in our time: how do we improve the standard of living for people in low-paid work? This Government have done an awful lot to end the obscenity of people out of work being better off than people in work, but there is much more to do to ensure that being in a low-paid job actually pays for people. Government Members should not allow our anger at the hypocrisy of those on the Opposition Benches to cloud the fact that there is a real problem.

[Ian Mearns]

Will the hon. Gentleman give way?

[Gavin Barwell]

I would like to make a bit of progress first.

I want to talk about two things: how the problem arose, and what we can do to solve it. I would argue that there are four causes of the problem. The first was the deficit built up under the last Government, which was partly the fault of the collapse in the banking system, but partly the fault of Labour for having a deficit before the recession started. Let me quote from something written by the Institute for Fiscal Studies before the last election:

“With government borrowing at its highest level since the Second World War…the key domestic policy issue for the next parliament will be how best to implement a combination of spending cuts and tax raising measures to return it, over the medium-term, to appropriate levels.

This will be painful…families”

will be made

“directly worse off”.

That was the view of the IFS, no matter who was going to win the last election. That is the logical consequence of having the deficit, and voters understand that. I spent the summer knocking on more than 5,000 doors in Woodside and South Norwood in my constituency. The electorate understand that tough decisions have to be made.

The second cause is the international economic climate, which has led to lower than expected growth across the developed world. The third and fourth causes have nothing to do with Government: they are rising commodity prices and long-term changes in the labour market, which have led to a lower value being placed on low-skilled work. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) referred to a quotation from the shadow Secretary of State for Work and Pensions identifying the problem back in 2004.

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[Gavin Barwell]

I will give way once more, to the hon. Member for Gateshead (Ian Mearns), because I promised I would.

The OECD forecast shows that our economy is projected to grow in quarter 3 by 0.9%, which is more than any other country in the G7 other than Canada, and in quarter 4 by 0.8%, which is the best projected rate in the G7. Unemployment in my constituency of Croydon Central is 6% lower today than it was when Labour left office, while youth unemployment—which the hon. Member for Wigan (Lisa Nandy), who spoke before me, rightly spoke so passionately about—is nearly a quarter lower today than when Labour was in office.

[Ian Mearns]

Does the hon. Gentleman accept that there are significant variations around the country? I am afraid to say that youth unemployment in the north-east of England is now 25%. We have been accused of being hypocritical a number of times this afternoon, but although he spoke eloquently about the scourge of low pay in his opening remarks, he forgets entirely that his party opposed the implementation of the minimum wage when it was introduced by the last Labour Government.

[Gavin Barwell]

The hon. Gentleman makes two excellent points. The regional variations in economic performance are a profound issue for public policy, and the Conservative party was wrong to oppose the national minimum wage, which is one of the things that the last Labour Government deserve credit for.

The second solution I would suggest involves interest rates. At the moment we have record low interest rates. If we followed the economic policies of the shadow Chancellor, the cost of borrowing would go up, which would make an already difficult problem far worse and hit anyone with a mortgage extremely hard. The third thing we can do is look at public policy changes that Government can make to try to help people in low-paid work. One of the things about this Government that I am proudest of is the increase in the personal allowance. That sounds rather technical, but what it means is how much you can earn—not you, Madam Deputy Speaker, but how much anybody can earn—before the Government start taking money away in tax. When we came to power, the figure was £6,475; from next April, it will be £10,000.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

I add my congratulations to those of my right hon. Friend the Financial Secretary to the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), on the birth of her daughter earlier this year. I welcome her back.

I should also add a word of admiration not only for the hon. Lady, but for the shadow Financial Secretary, the hon. Member for Nottingham East (Chris Leslie). I admire them because, in their speeches today in a debate on the economy, they managed to ignore two points. First, they did not touch on any of the economic data that have emerged over the summer. We heard nothing about gross domestic product numbers, purchasing managers index surveys, employment numbers, CBI and British Chambers of Commerce forecasts or the OECD’s assessment yesterday. I appreciate that the Labour party has had a summer to forget—it has clearly forgotten.

Secondly, the hon. Lady and the hon. Gentleman managed to ignore the economic argument we have heard from them for the past three years that the Government are going too far and too fast. They argued that there was no way we would get growth while cutting the deficit, and that only by borrowing more would we have growth. They also had a five-point plan. As my hon. Friend the Member for Reading West (Alok Sharma) has pointed out, the flagship policy in the plan was a cut in VAT, which would be necessary to get the economy growing again, but that has disappeared from Labour’s platform. We have heard lengthy speeches from Labour Members on economic policy, but they have not talked about their economic policy.

[Ian Mearns]

The Minister refers to economic data from the summer months. We saw an increase in retail expenditure in the summer months, but is it any coincidence that, at a time when people have limited disposable income, household savings have decreased?

[Mr Gauke]

What is striking about the data we have seen is the encouraging, broad-based signs. The manufacturing numbers are very encouraging. Let us not say that the situation is about consumer spending only. There are encouraging signs in the economy, which was not reflected in the remarks of Labour Members.

Finance Bill

Ian Mearns Excerpts

Tuesday 2nd July 2013 Commons Chamber

[Jack Dromey]

I prefer to rely on statistics from the hon. Gentleman’s Government: homelessness has risen by 30% since the general election.

A teacher and a firefighter in their 20s came up to me on Erdington high street and poured their hearts out about how they are desperate to buy their own home but simply cannot get a mortgage. Evidence from Shelter has shown that typically, couples in their 20s will have to save for 11, 12, 13 or 15 years to afford a deposit. Extraordinary statistics show that the number of people between 25 and 34 who own their own home has fallen from 2 million to 1.3 million, and census figures showed that for the first time since the 1950s home ownership has fallen in our country.

I have seen the problems in the private rented sector in my constituency, such as the lady in Streetly road who had to be rescued by the council’s private tenancy team from a premises for which she was being charged a fortune in rent, but which was deeply dangerous because of faulty electrical wiring.

[Ian Mearns (Gateshead) (Lab)]

My hon. Friend makes a powerful point. One sad thing that I reflect on is that a lot of property in the private rented sector is in grossly bad condition, yet the rent is paid by the taxpayer through housing benefit. I do not for the life of me see why we do not have better regulation of the private rented sector when a vast amount of public money goes into that market through housing benefit.

[Jack Dromey]

My hon. Friend is right. We call it protection for good tenants and landlords alike; the Government call it red tape and have rejected every move since 2010 to regulate the private rented sector more effectively. No Government have done enough in our lifetime, but my hon. Friend the Member for Kilmarnock and Loudoun was right: I will compare favourably anytime the record of our Government to the current Government.

--- Later in debate ---

[Jack Dromey]

Indeed, when the former Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps)—a man who gives hubris a bad name—launched the new enhanced right-to-buy campaign, he said that there would be one-for-one replacement. One for nine is what is happening. In addition, as freedom of information requests have just shown, Labour councils are building council homes at twice the rate of Conservative and Liberal Democrat councils.

[Ian Mearns]

Another explanation for the loss of units under the previous Government is that, because they were investing in upgrading homes through the decent homes standard, some homes, particularly in high-rise blocks, were too expensive on a unit cost basis to improve. It was costly, but they had to be demolished. We lost units because we were trying to improve the overall stock.

[Jack Dromey]

My hon. Friend is right: tough decisions had to be made. All of us in our constituencies have seen the benefits of that decision to invest in the decent homes programme: it has transformed the lives of millions of tenants.

Why have the Government made these mistakes? They started with the catastrophic error of judgment of cutting £4 billion in affordable housing investment in 2010, which led to a 68% collapse in affordable house building. What we have had subsequently are a succession of false dawns: four “get Britain building” launches, 300 separate initiatives and thousands of press statements. I once said of the former Housing Minister that if we had a home for every press statement that he issued we would not have a housing crisis.

My hon. Friend the Member for Kilmarnock and Loudoun looked at the track record: NewBuy was to produce 100,000 homes, but thus far there have been 2,500. When the Minister comes to respond on NewBuy, he might care to refer to the recent Help to Buy announcement, when the Prime Minister ruled out, from the Dispatch Box, any question of its being used to buy second homes. I tabled a written question:

“To Mr Chancellor of the Exchequer…with which organisations or companies (a) he and (b) other Ministers in his Department have met to discuss the mechanism that will be put in place to stop people using the Help to Buy Mortgage Guarantee Scheme to purchase a second home.”

In answer, I was told that

“Treasury Ministers have met with a number of companies in the mortgage industry to discuss a wide number of issues, such as the Help to Buy mortgage guarantee scheme, including through the Home Finance Forum.”—[Official Report, 1 July 2013; Vol. 565, c. 408W.]

Has a mechanism been agreed?

--- Later in debate ---

[Jack Dromey]

We have been strong supporters of self-build. The Government have promised a great deal on self-build, but done pitifully little. The figures speak for themselves: a decline in self-build under a Conservative-led Government, compared with what happened under a Labour Government.

The simple reality is that we have seen catastrophic mistakes, a succession of false dawns and, to be frank, downright cheek—the point has already been made that sometimes the Government have claimed the figure is 170,000, when 70,000 of those homes were commissioned by a Labour Government. The comprehensive spending review last week was a missed opportunity. There are indications of a moderate uptake in house building; what we needed was a major investment programme—I will say more about that in a moment. It was a missed opportunity at the worst possible time, and we now run the risk of seeing five wasted years for housing under this Government.

Let me make some brief points about the announcement made last week. It represents a cut in investment in affordable house building, instead of the necessary ambition of approach. I would simply contrast two figures. In the final comprehensive spending review under a Labour Government, £8.4 billion was committed for the three-year period from 2008 to 2011. For the three-year period from 2015 to 2018, this Government propose to invest but £3.3 billion—less than half of what Labour proposed to invest in affordable house building.

In addition, we are seeing an approach on the part of the Government that will mean the slow death of social housing—the mistakes made in 2010, with the cuts in investment; the progressive reigning back of councils’ ability to use section 106 to insist on affordable and social housing; and, now, the Housing Minister talking about the need to convert to the affordable rent model, which is unaffordable for many people and will push up housing benefit bills. We also see the Government once again restating their determination finally to crack the problem of bringing public land to market. We have heard it all before. They have promised a great deal and delivered pitifully little.

It is little wonder that the National Housing Federation was critical of the statement, despite the Government saying that the role of housing associations would be central. The federation attacked it as representing a cut in investment. It is also little wonder that the Chartered Institute of Housing said that the statement lacked the necessary ambition. Just when the country needed a sense of urgency and ambition, the Government let the country down. That is why our amendment argues for a serious approach, designed to get Britain building. First, we have to tackle the biggest housing crisis in a generation. There should be decent homes for all, to rent or buy, at prices people can afford. Secondly, history tells us that there has never been a recovery from a depression, such as that in the 1930s, from a war or from any recession since the war without a major public and private housing programme.

That is why the shadow Chancellor has said that the Government should heed the advice of the International Monetary Fund. Were they to invest that £10 billion in a house building programme, 400,000 homes would be built, and 600,000 jobs and 100,000 apprenticeships would be created. The Government need to invest now, rather than looking beyond 2015. They need to build now, in order to get people back into work now and to bring the cost of failure and the housing benefit bill down. It cannot be right that 95p in every £1 spent on housing investment goes on housing benefit. We need to get that money shifted into bricks. Such investment would ultimately bring down borrowing as well.

[Ian Mearns]

My hon. Friend is making a powerful speech. I have to criticise the Government for the fact that if every one of their announcements on this matter had been a house, we probably would not have a housing crisis now. They have talked an awful lot about house building but, brick upon brick, it is not happening in very many places in this country.

--- Later in debate ---

[Mr Raynsford]

My hon. Friend has made a fair point about the fact that the rise in rent levels means that many people are paying above the odds for accommodation that is not particularly good. However, that is a product of shortage. We need an increased supply of good-quality private rented housing which commands a market rent. There will be people who are perfectly happy to pay that rent, and to benefit from good-quality accommodation as a result.

As my hon. Friend the Member for Birmingham, Erdington said, we need to bear down on exploitative landlords who are letting substandard properties and charging above the odds for them. We also need to ensure that councils and housing associations provide an adequate supply of alternative housing for people who genuinely cannot afford to pay a market rent, and who would otherwise be left either dependent on housing benefit or homeless.

[Ian Mearns]

My right hon. Friend is making some very powerful points. The private rented housing market is very diverse, but in areas such as mine in Gateshead in the north-east of England, where we have a substantial private rented sector, unfortunately much of the property in that sector is housing of last resort and people are having to pay inflated rents for it—rents that are much higher than they would have to pay for much higher-quality socially rented housing in the neighbourhood.

[Mr Raynsford]

My hon. Friend makes a very good point that again illustrates just how dire the consequences of current policies are for people in need of housing.

If the current housing policy and current housing market are bad news for people in housing need, they are also bad for the economy. As my hon. Friend the Member for Birmingham, Erdington rightly emphasised, there would be huge economic benefits from an expanded house building programme. Not only would we see an increase in employment and demand for materials, most of which are sourced within the UK, but there would be huge impacts on the supply chain.

Oral Answers to Questions

Ian Mearns Excerpts

Tuesday 25th June 2013 Commons Chamber

[Sajid Javid]

The short answer is that it most certainly will, and it has been welcomed by the Home Builders Federation. I am pleased that the hon. Gentleman is now concerned about the issue. House building fell to its lowest levels since the 1920s under the previous Government. The number of affordable homes decreased by 421,000 over 13 years and local authority waiting lists almost doubled from 1 million to 1.8 million under Labour—a shameful record.

[Ian Mearns (Gateshead) (Lab)]

12. What recent estimate he has made of the rate of increase of average earnings compared to the rate of consumer price inflation.

[The Economic Secretary to the Treasury (Sajid Javid)]

The best way to deal with today’s cost of living challenges is to have paid employment. In 2012, the number of people employed in the UK has risen faster than most of our competitors, including the US, France, Germany and Japan. As a result, household income has risen by 2.1% more than consumer prices over the past year.

[Ian Mearns]

Despite what the Minister has just said, the Office for Budget Responsibility says that living standards for many will be lower in 2015 than they were in 2010. Is it not the case that, while the rich and super-rich benefit from tax cuts, working people and their families are worse off? Is not the truth that we are not all in it together?

[Sajid Javid]

No, certainly not. I am pleased that the hon. Gentleman is concerned about this issue. The hon. Gentleman became a Member of Parliament in 2010, and he will know that in the last term of the stewardship of the previous Government, his constituency saw paid employment fall, and unemployment rise by a staggering 67%. Paid employment is the best way to raise living standards, and 1.3 million new private sector jobs have been created in the past three years. More people are in employment than at any other time in the history of this country.

Finance Bill

Ian Mearns Excerpts

Monday 2nd July 2012 Commons Chamber

In that spirit, I hope the Minister sees sense, having heard eloquent arguments from Opposition Members and the lack of arguments offered by Government Members.

[Ian Mearns (Gateshead) (Lab)]

Would my hon. Friend care to speculate on how many of the 14,000 millionaires who will be super-beneficiaries of the measures will stop moving the mountains of cash that they currently move to avoid paying tax when the top rate is reduced from 50p to 45p? Surely if they move mountains of cash to avoid paying 50p, they will not move any less to avoid paying 45p.

[Thomas Docherty]

I suspect the best and fastest way to answer my hon. Friend’s question would be to attend the next Conservative party fundraising drinks event, where I am sure many of those millionaires will be buying the Minister a rather hearty round.

Much has been made of the quad’s all-night drinking session. I am sure they were drinking fine Scotch malts—indeed, no fine malts are made outside Scotland—but they should have spent more time looking at the detail of those two decisions. In direct contrast to the hon. Member for Dover (Charlie Elphicke), I would argue that pensioners on an income of £10,000 a year are not among the wealthiest pensioners in the country. If Conservative Members believe pensioner households struggling to get by on £10,000 are wealthy, it goes to show how staggeringly out of touch they are.

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[Thomas Docherty]

I am most grateful, Mr Deputy Speaker.

[Ian Mearns]

Would my hon. Friend care to reflect on the fact that we have just heard from the hon. Member for North East Somerset (Jacob Rees-Mogg) a celebration of stagflation?

[Thomas Docherty]

My hon. Friend is correct. This is not a time for celebration, as the cost of living continues to rise and the cost of energy and other precious commodities heads in the wrong direction. The real-terms cut faced by pensioners this year will make their lives much harder.

It is also worth reflecting on who will benefit from the proposals outlined by Ministers. We are talking about footballers, pop stars and “Big Brother” contestants. We talk about wealth generation and the value of people. With the greatest respect, I would argue that those three categories should not be given priority over our greatest generation. I know that the Minister is a courageous soul and, for his sins, an Ipswich Town supporter—such as that can be—but I wonder whether he truly believes that the value given by Ipswich Town players last year or this year was greater than the value given by the greatest generation in our nation. Surely, he must reflect on whether Middlesbrough, Ipswich Town, Sunderland, Leicester City or Crystal Palace players should really be prioritised over our pensioners.

--- Later in debate ---

[Jacob Rees-Mogg]

My hon. Friend is absolutely right and he has hit the nail on the head.

[Ian Mearns]

The hon. Gentlemen have got it quite wrong. The tribal nature of football is that people idolise their own team’s players and despise the activities of the players from other teams. The bottom line is that the hon. Member for North East Somerset (Jacob Rees-Mogg) would prefer that there was no tax at all.

[Jacob Rees-Mogg]

The hon. Gentleman is wrong on that last point; I recognise that there is a need for taxation, though slightly beyond the clauses we are immediately discussing. However, I will answer the important point that he has raised on the tribal nature of football and why people are willing to see these high salaries paid. It is because they recognise that those salaries get them the best quality players and they want to see the best quality players playing for the team that they so ardently and passionately support—it is an ardent passion that I do not have, but I understand that many people do have it. That requires low taxes, because otherwise these players take their talent abroad.

I come back to Professor Laffer, because his argument is one that is so obvious as to be self-evident: if the tax rate is zero, nothing will be raised and if it is 100%, no sane person will pay it either as there is no point in working or in earning. There is some point along that curve where the least legal avoidance takes place—I emphasise that avoidance is legal—the most amount of working is done and the highest amount of revenue is received. We have seen this. I know that some Conservative Members, myself included, think that there was a golden age when Baroness Thatcher was in charge—

--- Later in debate ---

The 50p rate has been criticised by business. It has risked lasting damage to the UK economy and has raised considerably less than expected for the Exchequer, potentially even costing rather than raising revenue. Change is needed, but it must build on the evidence. We now have a more informed view of the behavioural impact of the additional rate—one fully endorsed and accepted by the Office for Budget Responsibility as central and reasonable.

[Ian Mearns]

I am grateful to the Minister and Ipswich Town supporter for giving way. Does he agree with the general thrust of the argument put forward by his colleague, the hon. Member for North East Somerset (Jacob Rees-Mogg)? It was that tax avoidance is not at all morally repugnant and it should be encouraged as long as it is legal.

[Mr Gauke]

To be fair, that is not what my hon. Friend said, although I did not agree with everything that he did say on that issue. I shall take this opportunity to say a word or so about avoidance, because the Government are keen to address that.

Unemployment (North-east)

Ian Mearns Excerpts

Wednesday 20th June 2012 Westminster Hall

[Stephen Crabb]

As the ministerial Whip for the Department, it is entirely appropriate that I respond to this debate, given that the other Ministers are tied up in other debates in the House.

The hon. Gentleman spoke well about the impact of unemployment on families and communities; that was one of the best parts of his speech. Like me, he comes from a part of the country where, historically, unemployment has been a blight on the community. He and I both have the privilege of representing constituencies in which we have grown up, and we understand the issues well. He powerfully explained the negative effect that unemployment has on communities.

Let me assure the hon. Gentleman and all colleagues in the Chamber this afternoon that the ministerial team at the DWP shares a passion and commitment for tackling unemployment. There is absolutely no complacency whatever within the departmental team about this issue. We recognise that unemployment, especially youth unemployment, is one of the biggest challenges that faces the Government.

[Ian Mearns (Gateshead) (Lab)]

I apologise for turning up late to this debate. I have been meeting a construction company from my constituency that is considering laying off 200 to 300 members of its work force—something that would be catastrophic. The hon. Gentleman correctly mentions the fact that there is little regional consideration of this whole matter. Therefore, there is no differentiation in approach across England in dealing with it, so while unemployment across England goes down, it goes up in the north-east.

[Stephen Crabb]

I dispute that. The Government are trying to move away from the one-size-fits-all policies of the previous Administration. We are looking at locally and regionally tailored solutions, where appropriate.

Several hon. Members mentioned today’s labour market figures. I am not as gloomy as the shadow Minister about them. There are reasons for a measure of optimism. Nationally, employment is up by more than 400,000 since 2010. Private sector employment has gone up by 843,000, since 2010, and it has gone up again in the past month. In the past 12 months, in the north-east region, employment overall has gone up by 10,000 and private sector employment has increased by 17,000, which more than offsets the drop in public sector employment. That counters the point that the Opposition made about the drop in public sector employment being a driver of overall unemployment in the north-east region.

Those are encouraging signs, but we recognise that unemployment remains too high. It is true that unemployment in the north-east remains higher than in other parts of the country. Several Members have referred to the fact that it has the highest unemployment figures of all the UK regions.

Long-term unemployment affects only a minority of people, but it is a particular concern because it brings with it the risk of detachment from the labour market and people losing the hope of finding work again or finding that the skills that they had are diminished or outdated.

In the north-east, more than 24,000 people have been claiming unemployment benefits for more than 12 months. That figure is much lower than it was 25 years ago—the hon. Member for Hartlepool referred to the 1980s—but it is still too high, and we are not complacent.

One of the groups that has been hardest hit during the last two years of recession is young people. We have seen encouraging signs recently that youth unemployment might be starting to come down. Excluding unemployed students, it fell by 23,000, to just over 700,000 in the most recent quarter. That still leaves almost 50,000 16 to 24-year-olds unemployed in the north-east, so there is clearly much more to be done.

In April, we announced an additional £1 billion package of support for young people through the youth contract. Very few Opposition Members mentioned the action that is taking place and the fact that, in the past year, some 7,000 young people have benefited from the work experience scheme in the north-east. Nor did they mention the fact that there are 30,000 additional apprenticeships in the north-east, more than 1,000 of which are in the constituency of Hartlepool. It is not surprising that they do not want to talk about it. As Labour Members elsewhere have mentioned, one of the big failings of the previous Labour Administration was that they did not recognise fully the importance of apprenticeships and the link between high-value apprenticeships and upskilling in the economy.

Jobs and Growth

Ian Mearns Excerpts

Thursday 17th May 2012 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

If I had been standing in this House a month or even a fortnight ago to speak about the prospects for jobs and growth, I might have expressed the opinion that the entire credibility of the Government now stood at a crossroads. A month on, however, I believe that we are well beyond that point. The Budget, followed by the local government elections and the collection of sideshows that make up the Queen’s Speech, have made it clear that the Government have abdicated any responsibility for trying to generate any real growth in our economy.

As Labour Members warned when the coalition came to power, the policies adopted by the Government were effectively an enormous gamble with the future of our nation’s economy. We also warned that whereas the richest and most privileged in our society would be spared the costs of that gamble, the poorest and most vulnerable would be expected to pay the costs. We predicted that the experiment—the gamble—was doomed to failure. However, heedless of the warnings, and driven by an ideological desire to shrink the state, the Government pressed ahead, determined to use the excuse of the budget deficit to drive through their political agenda, oblivious to the damage to our economy.

[David T. C. Davies]

Is the hon. Gentleman simply following the mantra that we should have borrowed even further, on top of the £160 billion that we were already borrowing when his colleagues left office?

[Ian Mearns]

I can tell the hon. Gentleman what I would do: invest to save to grow, and then reap the benefits of that growth through the taxation system.

We warned that the Government’s policy was wrong, but I do not think any of us predicted just how wrong, just how disastrous its impact would be and just how much more difficult things would become in regions such as the north-east of England. The impacts on the young, as so clearly outlined by my right hon. Friend the Member for South Shields (David Miliband), are much greater in regions such as the north-east, yet Government Members seem completely oblivious to what is happening in these regions.

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output is said to be behind the contraction, but it is not the only factor. BBC economics editor Stephanie Flanders says that the situation

“adds to the picture that the economy is bumping along the bottom”.

At Prime Minister’s questions, the Prime Minister has said the figures were “very, very disappointing”—that is perhaps the understatement of this Parliament. He went on to say:

“I do not seek to excuse them, I do not seek to try to explain them away…there is no complacency at all in this Government in dealing with what is a very tough situation that, frankly, has just got tougher.”—[Official Report, 25 April 2012; Vol. 543, c. 944.]

He said it was “painstaking, difficult work”, but the Government would stick with their plans and do “everything” that they “can” to generate growth.

I am surprised that the Prime Minister was disappointed —what did he expect? The economic outcome of his policies was completely expected by many commentators. The outcome was highly predictable. The Prime Minister needs to recognise that it is his Government who have caused this recession in Britain and that it is his policy that has taken us back into recession. He needs to accept responsibility, and to accept that cutting deeper and deeper is the problem, not the solution and that to continue blindly will only damage our economic prospects yet further.

The Leader of the Opposition hit the nail on the head when he said the economic figures were “catastrophic”. He said that

“this is a recession made by”—

the Prime Minister—

“and the Chancellor in Downing street.”

He went on to say that it is their

“catastrophic economic policy…that has landed us back in recession”.—[Official Report, 25 April 2012; Vol. 543, c. 944.]

The Office for National Statistics has said that the output of production industries decreased by 0.4%; construction decreased by a full 3%; and output of the services sector, which includes retail, increased by only 0.1%, after falling a month earlier. Those figures are slightly worse than many expected, but the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted.

The UK economy has been bumping along the bottom for more than a year and is struggling to gain any momentum. The preliminary figures from the ONS are consistent with the messages coming from official and private data, which say that the UK was once again relying heavily on services and consumption by households. That suggests that the recovery will continue to be weak. Demand is very weak. UK business is sitting on a cash mountain but will not invest because there is no demand in the domestic market. So we very much welcome the growth of exports in the car sector, but the fact that such exports are outstripping the domestic market is not really that great news, because the depression of the domestic market is the real problem. We do not have demand.

The ONS figures also demonstrate clearly that the fall in Government spending has contributed to the particularly large fall in the construction sector. Some Government Members have tried to question the ONS figures and argue that the position is not so bleak, but they are burying their heads in the sand. Joe Grice, chief economic adviser to the ONS, has vigorously defended the figures. He said the construction data were based on a survey of 8,000 companies and had been carefully checked and double-checked.

We are in a very difficult situation. All across Britain and Europe people are rallying to challenge the consensus on austerity, because it is nonsense. The election of the new President in France, who is committed to a policy focused on growth, challenges the failed orthodoxy of austerity; the election and protests in Greece, the protests in Spain and the state elections in North-Rhine Westphalia in Germany last Sunday are shouting to us that a change of direction is absolutely necessary.

The Government could, if they so chose, focus on growth, but they do not do so. The fact that they choose austerity—that they choose destruction rather than investment—is wilful, and it is clearly a political choice. But there is an alternative and I beg them, on behalf of regions such as the north-east and on behalf of my constituents, to change tack—we need growth.

Budget (North-East)

Ian Mearns Excerpts

Tuesday 17th April 2012 Westminster Hall

[Sir Roger Gale (in the Chair)]

Good morning, ladies and gentlemen. I need to make it plain before we start that I have applied to the office of the Chairman of Ways and Means for a time limit on speeches. A significant number of Members have written to the Speaker indicating that they wish to participate, and even more Members are present. Given that we will need to call the Front-Bench spokespeople at 10.35 am at the latest, I suspect that we will be down to four minutes per person, but that rather depends on Mr Mearns.

[Ian Mearns (Gateshead) (Lab)]

I thank the Speaker’s Office for allowing me to initiate this debate, and also the many Members who have come along. The debate has created significant interest, particularly in our north-east region.

In the Chancellor’s millionaires’ Budget, which will hand back tens, if not hundreds, of thousands of pounds to some of the richest people in our society, including some of his Cabinet colleagues, it is clear who will suffer the most. It will be the poorest, those looking for work when few new jobs are available, pensioners, families, the hard-working, the squeezed middle and the working poor.

Following the Chancellor’s Budget speech, the Treasury produced a briefing highlighting the measures that will benefit the north-east of England. The region has borne the brunt of this Government’s policies. February 2012 figures show that unemployment in my constituency has risen from 8.3% to 10.5% since the coalition took office, and in the latest Office for National Statistics survey, up to January 2012, the figure for the north-east as a whole has risen to 10.8%, yet the Treasury’s briefing runs to a grand total of three measures that it claims will specifically benefit the region.

Although the first measure—the increase in personal allowances—is welcome, it can hardly be regarded as specific to the north-east. The second measure is that Newcastle will receive the princely sum of £6 million, and become a super-connected city. Perhaps the Chancellor and the Treasury do not realise that Newcastle, as important as it is to the entire region, is not the entire region—in fact, it has about a tenth of the region’s population. Finally, in the month when the north-east is losing its regional development agency, its local enterprise partnerships will receive a paltry £10 million from the Growing Places fund.

In the Budget statement, the Chancellor notably consigned to the dustbin of history the phrase, “We’re all in this together.” The imbalance in this Budget means that most of us are in this together, but the few at the top of society will be exempt from it all. The regional disparity is all too plain to see. In the three south-east regions— London, the south-east and the eastern region—nearly 195,000 taxpayers will reap the benefit of the Chancellor’s higher-end tax giveaway, but in the north-east the figure will be fewer than 5,000, and about 4,000 in Wales.

[James Wharton (Stockton South) (Con)]

Is it not the case that nearly 1 million taxpayers in the north-east will benefit from the personal allowance increase, and that it is the poorest taxpayers in regions such as ours who will benefit?

[Ian Mearns]

That would be the case if it had not been for the hikes in VAT, which as an indirect tax particularly disbenefits the very poor in regions such as the north-east. There are significant figures showing the genuine disbenefits of that for poor people.

When William I sought to quell the north following the Norman conquest, he developed a slash-and-burn policy to subjugate the unruly barons and the Saxon citizenry, and the people of the north-east could be forgiven for thinking that the Government had developed exactly the same approach—a 21st-century scorched-earth policy for the north. In just two years, they have abolished our Minister for the north, our local authorities have had to deal with massively disproportionate cuts, our regional development agency has been eradicated and there has been a miserly investment in transport and infrastructure projects, at the same time as disposable income has been sucked out of our pockets and our high streets. My local Gateshead authority has had to cut £70 million from its budget—equivalent to £88 per head of population—losing 1,500 staff into the bargain. The average cut for the 12 north-east councils was £84 per head of population, while the 12 least-deprived local authorities in England, including Windsor and Maidenhead, Richmond upon Thames, West Berkshire and West Sussex, each lost an average of less than £20 per head of population, so we are clearly not all in this together.

Almost every aspect of the Budget looks as if it was designed to have a negative impact on the north—on our people and on our businesses. VAT on takeaway food not only most affects people with the lowest incomes but has reduced the value of Tyneside businesses, including Greggs plc, which saw £20 million to £30 million wiped off its share value when the “pasty tax” was announced. I have no doubt that the measure will also have a negative impact on the work of the Greggs Foundation, which last year donated £1.4 million to support breakfast clubs for 65 north-east primary schools, at least four of which are in my constituency. The foundation also supports youth groups in some of the most deprived communities of the north-east, and also in Scotland and Wales. So much for the big society.

In addition, the Government’s welfare benefit changes will have a massively disproportionate impact on regions such as the north-east. Currently, 11,000 people in Gateshead claim incapacity benefit and, together with the numbers on jobseeker’s allowance, almost 24,000 people are claiming out-of-work benefits. National figures show that of those people undergoing the work capability assessment, 37% have been found fit for work and 34% have been placed in the work-related activity group of employment and support allowance, but for the vast majority of them in the north-east there is no real prospect of work in the near future. If the national figures are mirrored in Gateshead, almost 8,000 people will be moved off incapacity benefit and receive lesser benefits, if anything at all.

I am told by Gateshead council that the introduction of universal credit will result in 14,500 tenants having to manage a larger personal contribution each week, which will increase demand for budgeting and money management skills, and risk more tenants being unable to manage their household budgets and resorting to expensive borrowing, including legal and illegal loan sharking. The risk of non-payment of rent, based on a calculation rate for sums not covered by housing benefit, could result in an additional £20 million not being there to be collected by local authorities, which are already struggling to cope with the punitive cuts they have endured.

Benefit reductions for under-occupancy will affect 3,478 of our current tenants in Gateshead—18% of all those with the Gateshead Housing Company. Of those, nearly 3,000 have an extra bedroom and could therefore face a 10% to 15% reduction in their benefit, and the 815 who have an extra two bedrooms could face a 20% to 25% reduction. If we magnify those numbers across the region, we could be dealing with a widespread social crisis.

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend on securing the debate. Is the bedroom tax not an example of how much the Government are out of touch with real people? It is not just about the costs. People who have lived in a community for decades will be forced to move because they will be unable to afford to live there, and everything they have built up over many years will be thrown away as if it means nothing.

[Ian Mearns]

My hon. Friend hits on an appropriate point. Regarding how out of touch the coalition is with the vast majority of people in regions such as the north-east, its lack of understanding of how the housing market works in such places is absolutely spot on.

I am a north-east Labour MP, so I suppose that no one will be surprised to discover that I am not impressed by the Chancellor’s support, or lack of it, for the region. However, the north-east’s business community is equally unimpressed. The North East chamber of commerce has said:

“The extra cut in corporation tax is welcome and will help stimulate investment in the UK. However, relatively few North East firms will benefit from this, and we would have preferred to see a greater focus on strengthening investment allowances and cutting employment taxes, to address the two key weaknesses in the North East economy.”

Although it does not deal specifically with the north-east, the Federation of Small Businesses wrote to me when it found out that I had secured this debate, asking that I highlight its concerns. The FSB said:

“We asked for a Budget with long-term measures to help to instil confidence, rather than a barrage of micro-measures that have a limited impact on the ground. We are pleased with some of the actions to cut the burden of red tape, help to get our young workers into employment, and measures to improve access to finance…However, petrol prices remain a major concern for small businesses and we would have liked some further action on reducing the level of fuel duty to help struggling small firms.”

The cost of fuel, although important to all UK businesses, is crucial to maintaining competitiveness in regions such as the north-east. One local business that makes plastic milk bottles informed me that its biggest cost is the cost of fuel. Let us face it: in effect, that business’s biggest cost is transporting its product, which is 90% fresh air, around the UK. Given the geographical location of the north-east and the vital importance of manufacturing employment, was it too much to ask that the Government reduce fuel costs for businesses and maintain jobs in the regions?

The Federation also commented that it welcomed the enterprise finance guarantee scheme, but said that recent figures clearly show that lending under the scheme is falling rather than rising, and that the Chancellor must do a lot more to encourage banks to increase their lending to small firms without requiring the excessive personal guarantees that deter small businesses, particularly in areas such as the north-east.

The Association of North East Councils, which represents the 12 north-east authorities, was also unimpressed, reporting that almost 50% of businesses in the region have no plans to increase staff numbers in the coming months but are hanging on before deciding on reductions. Weakening sales and poor service sector performance are still preventing much-needed growth to offset public sector employment cuts. Job loss in the north-east as a whole is four times deeper than in the rest of the country. None of that has been helped by the complete lack of recognition or action in the Chancellor’s Budget.

This Government are now doing to public services in the north what they did so successfully in the 1980s to our traditional industries of mining, shipbuilding and heavy engineering: bringing them to ruin and laying them waste. If the Government’s plan to replace those jobs is to build the private sector, why are they doing virtually nothing for the north-east? The main problem is not that they are doing nothing but that they are making things worse. For the young in particular, they are removing hope.

The Government have not recognised that for a region such as the north-east, geography and the new politics of the United Kingdom are realities that must be considered. Scotland is just over the border. The Scots at Holyrood still have economic development and tourism strategies and are still offering inward investment incentives, all important determinants whether a company invests in Scotland or the north-east, but the Chancellor and the Secretary of State for Business, Innovation and Skills seem oblivious. For example, Amazon, despite considering a site in the north-east, has located in Edinburgh, purely on the basis of the grants available. Given the existing imbalance in Edinburgh’s favour, the decision to locate the Green investment bank there seems like a political and economic knee in the groin for regions such as the north-east of England.

In last year’s autumn statement, the Chancellor made much of the Government’s plans for our national infrastructure, emphasising the importance of capital spending on infrastructure to support the UK’s long-term growth prospects. He outlined £30 billion in spending, including an immediate increase of £5 billion in Government spending. As one of their central economic priorities, the Government have defined a number of ways in which they wish to rebalance the economy away from over-reliance on public sector jobs and towards private sector employment; away from over-reliance on financial services and towards manufacturing and export industries; away from over-reliance on the south-east and towards more balanced economic growth across the UK.

The Chancellor’s statement emphasised that every region in England will benefit from that infrastructure spending. He even listed a host of road and rail projects in England in his speech. However, research by the Institute for Public Policy Research on the detail behind the Chancellor’s statement paints a different picture. Behind the empty rhetoric and claims of rebalancing, we find that 11 of the 20 largest infrastructure projects will benefit London and the south-east, only five will benefit the three northern regions and more than half of regional transport projects involving public funding will benefit London.

Considered together, London and the south-east account for 84% of planned spending, compared with only 6% for the three northern regions and an unbelievably minuscule 0.04% for the north-east. That equates to £2,731 per head of population for London and the south-east, more than all the other regions combined, compared with £201 in Yorkshire and Humber, £134 in the north-west and just £5 in the north-east of England. A fiver is what we are worth, in comparative terms, in the UK of today. For each £1,000 of gross value added generated in 2009, £81 is being spent on transport projects in London, £38 in the south-east, £12 in Yorkshire and Humber, £8 in the north-west and less than 50p in the north-east.

This Chancellor and this Government have spoken in duplicitous terms, but I now wonder whether they have given up even trying to talk a good fight when it comes to rebalancing the economy. They have clearly been saying one thing and doing another, looking after their home patch while slashing and burning the regions of England. To make matters even worse, they prefer to exemplify the north-east as a basket case. Before this bunch came to office, nothing could have been further from the truth. Thanks to the support of its 12 local authorities and the regional development agency, the north-east had developed an economy that was strong, dynamic and diversified compared with when a Conservative Government last laid waste to it in the 1980s.

However, in a typically knee-jerk, ideological and spiteful reaction, this Government have abolished our RDA, despite the fact that during the last three months of 2011, the north-east enjoyed record high growth in exports. Goods worth £13.5 billion were sold overseas from the north-east, up from £12 billion the previous year. If every other region in the United Kingdom were performing as well in those terms as the north-east, we would be doing rather well indeed.

Only yesterday, I received e-mail confirmation from the largest private sector employer in my constituency—AkzoNobel, known locally as International Paints—that last year it received an essential grant from One North East to support the establishment of its fire protection research and development facility. Recently produced documentation on the legacy of One North East showed that during the past 10 years, the north-east enjoyed the greatest level of economic growth outside London, and that during the last Government, the development agency helped to increase the region’s employment massively and its number of businesses and GVA to among the highest in the country.

Before the RDA’s inception, our regional economy was falling further behind other English regions. Since it was established in 1999, only London has experienced greater economic growth, but this Government have replaced the RDAs with local enterprise partnerships, which have no powers and little or no funding, and the much-heralded regional growth fund, which has delivered only modest amounts of direct aid to companies in the north-east.

From 1999 onwards, employment in the north-east rose at the third highest rate in the country after London and Yorkshire and Humber, and 116,000 jobs were created, representing growth of 11.2%. We also had the highest growth in new businesses, 18.7%, and the highest growth outside London in GVA per head of population. Tourism, conferencing and inward investment were all significantly boosted by the RDA’s “Passionate people, passionate places” campaign. The agency’s work on low-carbon vehicle production and green energy generation are legacies on which we could build if only the Government had a credible policy for the economy.

We had a credible policy for growth in the region, a credible policy for jobs and a credible policy to rebalance England’s economy, which included the idea that the north-east is a place to do business. Sadly, this Government have none of those, and prospects for my region remain bleak. Disposable income is being sucked out of our communities through public sector job losses, wage freezes and benefit cuts.

Before the recess, the Newcastle Journal published an editorial headlined “Never mind a Heathrow runway”, which stated:

“It would be a terrible shame if the row over party funding deafened the Government to the findings of the OECD. Its report makes grim reading for the region, but not simply because it highlights the problems caused by rotten infrastructure, poor connectivity and the lack of continuity in government. No, what really hurts is that a Paris-based organisation has been able to recognise basic, obvious, well-known facts that should not have been possible to ignore. Yet successive administrations in London have managed that feat damagingly well. Never mind arguing about a third runway at Heathrow, how about helping the North East instead?”

What are the Chancellor’s answers to these regional conundrums—a brain wave, a stroke of genius, an innovative investment package? No, what we got was the concept of regional pay. If that is the direction that he wants to take, perhaps we could also ask him to consider regionally reduced utility bills for gas, electricity, water and telephones, and while we are at it, cheaper council tax and grocery bills. If the Chancellor or the Prime Minister fancy paying £250,000 for the privilege of dinner with the chief executives of Tesco, Sainsbury’s, Asda and Morrisons, they could ask them, “Could the supermarkets reduce the cost of shopping in the regions, please?” They could also ask representatives of the east coast main line to charge regionally reduced fares for journeys to London.

[James Wharton]

I thank the hon. Gentleman for giving way to me for a second time. When the previous Labour Government introduced localised pay for the Courts Service, did they also introduce the other measures that he has mentioned?

--- Later in debate ---

[Ian Mearns]

I am afraid that I am not familiar with the position outlined by the hon. Gentleman, but I am not convinced that he is entirely right.

Why do we not go the whole hog on regionalism and consider re-establishing the RDA and setting up a regional Parliament for the north-east? If regionalism is so much in the minds of coalition Members, let us go the whole hog.

The Budget’s impact on the UK regions demonstrates clearly the Government’s ideology. Despite the negative impact of the Budget and their lack of regional policy, the north-east economy still has vibrant and dynamic aspects, as testified by the expansion of the Nissan plant at Washington, which will make it the largest and most efficient car plant in the world; the growing strength of our offshore wind and green energy sector; and, of course, the relighting this weekend of the Sahaviriya Steel Industries steel blast furnace on Teesside. That good and welcome news, however, does little to offset the negative measures inflicted on us by the coalition. The developments are welcome but small compared with the damage that is being wreaked. We have many skills on tap and a willing supply of people who are currently being denied access to the basics of the fruits of a civilised society through work.

The north-east will survive the economic crisis, but it will have to do so without support from this Government. As a result, many of the region’s people will suffer in greater measure and in greater proportion than the constituents of most Government Members.

The Budget has demonstrated clearly the ideological drive of this Government of Tories and Liberal Democrats. It is not about fairness. It is not about, “We are all in this together,” and it is certainly not about pulling together for the collective good, the benefit of the whole country or for every region in the UK. Under this Government, the Chancellor has given millionaires tax cuts, while pensioners have to pay more. Cabinet members and their chums receive unwarranted and undeserved benefits, while hard-working families suffer. Frankly, the well-off and the well-to-do are looking after the interests of their peers—toffs looking after toffs, with little or no regard for the consequences for the millions for whom the experience will be negative, if not dreadful.

Thanks to the Budget, the north-east and the regions of the UK will continue to struggle to grow and maintain employment and prosperity. The vast majority of my constituents and my region condemn the Budget. We need to maintain and increase the pressure to provide the policy and taxation framework that this country and regions such as the north-east need. The framework has to be designed to secure growth, and to support businesses, regions and our most vulnerable and economically fragile communities. The north-east demands that the Government respond to that challenge. If they are not willing to rethink their outdated and massively inappropriate attitudes to our region and its people, they should get out of the way and make room for a Government who will.

[Several hon. Members]

rose—

--- Later in debate ---

[Miss Smith]

Thank you, Sir Roger. The new right-to-buy discount introduced by this Government is more than three times the current limit in the north-east of £22,000.

In his opening comments, the hon. Member for Gateshead used words such as “outdated”, and various other words have been bandied around today. I think that the hon. Gentleman, and other hon. Members, need to look around and see the threat to today’s economy, which in one word is debt. Debt is a problem both in the UK and globally, and this Government are determined to sort it out. Fiscal consolidation is necessary. Those in the Labour party seek to spend more, borrow more and owe more, and therefore to pile more debt on their children, and indeed my children. The hon. Gentleman, and those on the Opposition Front Bench, still believe that child benefit should be claimed by millionaires. We do not; we believe that there should be consolidation.

[Ian Mearns]

Will the Minister give way?

[Miss Smith]

I am afraid that I have no time. If we do not tackle our deficit, it will be worse for everybody. The really outdated view is to burden future generations with more debt, and for the Government to fail to take responsibility and consign all regions in the country to economic disaster. One need only look to the eurozone to get the picture. The Government’s actions have kept our interest rates closer to those in Germany than those in Greece, and made Britain a safe haven.

The topic of young people was raised by the hon. Members for North West Durham (Pat Glass) and for Hartlepool (Mr Wright). I am shocked that the hon. Gentleman thinks that it is patronising to believe that young people can start their own businesses and I disagree strongly. As a constituency MP, I make it my business to support Jobcentre Plus, the youth contract, the work experience programme and the Work programme—perhaps the hon. Gentleman acts differently in his constituency—and that is what I call working together to achieve things for our young people.