Recession (Standards of Living)

Anas Sarwar Excerpts

Tuesday 2nd July 2013 Westminster Hall

[Mr Cunningham]

I am outlining the consequences of the reduction to which my hon. Friend refers, and I want to look more closely at some of the rising living costs.

The most basic expenditure to affect living standards is surely food. Despite the growth in the popularity of own-brand food labels and budget supermarkets during the recession, outgoings on food shopping are still rising. Inflation of 3.13% means that a typical family now spends £234 more on annual food bills than they did in November 2011, which puts significantly more pressure on the earnings required to secure an adequate standard of living for the whole family.

An inability to respond to that pressure has left families with an unacceptable standard of living. There is evidence of that across the country, including in my constituency and surrounding areas. Research has shown that about one in five people in the west midlands have to skip meals and go without food to feed their family. Some 70% of families who are suffering from food poverty have to rely on food supplied by schools in the form of free school meals, breakfast clubs and other school clubs. As a result, more than a quarter of families suffering from food poverty are unable to provide all the meals for their children during school holidays. I am sure that we all agree that that situation is unacceptable. If we judge our society on the basis of the situation faced by the worst-off, it is clear that something needs to be done to improve the ability of families to provide meals for their children without having to go without food themselves.

Another significant section of expenditure is on travel. Average rail fares increased by 5.9% in January 2013, combined with inflation of 4.96%. Expenditure on everyday travel has grown more than any other costs since November 2011. The typical UK traveller spends £341 more every year, and the fact that there was a further average price rise in January 2013 means that such rises are likely to continue.

I have raised my objections to high-speed rail elsewhere, so I will not get into that today. After a previous Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond), described high-speed rail as “a rich man’s toy”, I have not been assured that we will not see transport costs rise even further to pay for high-speed rail. Travel costs do not appear to be a real concern for the Government.

The increasing prices applied by utility providers are putting significant pressure on households. The resulting energy bills have drained an extra £221 from their budgets every year since this Government came to power. Such increases have caused the cost of living crisis that afflicts millions of families across this country, reducing their ability to secure an adequate standard of living. Those issues are compounded by the fact that, according to a study by the Institute for Public Policy Research, 5 million homes are overcharged by energy suppliers. Yet the Government have backed “business as usual” in the energy market, with energy companies having paid out £7 billion to shareholders, which is a clear refusal to challenge the practices, pricing and structures in the energy market that are causing such difficulties for families and individuals alike.

I believe that it is our responsibility to ensure that energy bills are kept at a manageable level for families. When Labour left office, there were 1.75 million fewer households living in fuel poverty, including 500,000 fewer vulnerable households, because our policies—such as winter fuel allowances, cold weather payments and improvements in energy efficiency through the Warm Front scheme and tough requirements on energy companies —ensured that they could spend the amounts of money required to secure an adequate standard of living, rather than having to overspend on energy bills.

Housing expenditure, and specifically rent, makes up a considerable portion of families’ overall expenditure. As a result, the cost of rent can have a huge impact on a family’s standard of living. The greater the proportion of total expenditure taken by rent, the less the family’s ability to spend in areas that would secure it an adequate standard of living.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this massively important debate. May I point him to a comment made by Donald Hirsch, the author of the recent Joseph Rowntree Foundation report on living standards, who stated that

“the next election is likely to be the first since 1931 when living standards are lower than at the last one”?

Does that not represent a failure of the current UK Government?

[Mr Cunningham]

I agree with my hon. Friend, and I have just outlined the consequences of that.

If the issue about rent is taken as a reflection of the overall situation across society, there is serious cause for concern. On top of that, the Prime Minister promised 100,000 new homes under the NewBuy scheme, but there were just 2,000 by May 2013. Indeed, home ownership has fallen from 64% in November 2011 to 59% in January 2013, which is the result of families increasingly shifting to rented properties. The increasing trend towards renting means that 25% of UK families are now in rented accommodation, which is a significant rise from 19% in November 2011. Meanwhile, rent in the social housing sector has gone up by 26%, and the number of families using social housing, including council housing, has increased from 11% to 15% in January 2013.

According to the debt charity StepChange, the combination of those factors has caused the proportion of its clients with rent arrears to increase significantly— from 5.6% in 2010 to 8.6% by the end of 2012. I would describe rent prices as one of the most pressing problems affecting living standards today, and I believe that it needs to be urgently addressed.

StepChange’s findings about rent arrears bring me to another key element of expenditure that is rising—debt. Between November 2011 and January 2013, average debt repayments increased by almost £20 a month or £240 a year. That is accompanied by a dramatic rise in the number of families seeking help for utility bills and with council tax and rent arrears.

Although overall debt levels have decreased, households are now struggling with priority debts that many were previously able to meet. More than a third of those seeking help from StepChange are in arrears on at least one household bill. I find it particularly striking that clients over 60 have the highest overall levels of arrears and single parents have the highest levels of rent, council tax and water arrears. The sad result is that 78% of StepChange’s clients felt that debt problems had undermined their self-confidence and their ability to support both themselves and their family.

There are plenty of other examples. According to research by Consumer Focus, the number of households in debt to their electricity supplier has increased by more than 25% to 850,000, and the number in debt to their gas supplier has risen by 20% to more than 700,000. We all know how debt can be extremely destructive: being in debt can affect someone’s quality of life and financial stability. That matter requires urgent Government attention.

That leads me to the related issue of payday loans, which, thankfully, has been debated a good deal recently, so I will speak only briefly on it. Last year, there was a staggering rise in the number of people seeking help with payday loans. More than twice as many people—360,413—contacted StepChange for help with payday loan problems in 2012 than during the previous year. The data show that, on average, a client’s payday loan debt is up more than £400 on last year, and now exceeds their monthly income.