Recession (Standards of Living)

Debate between Anas Sarwar and Jim Cunningham

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.

Road Fuel Duties

Debate between Anas Sarwar and Jim Cunningham

Tuesday 13th September 2011 Westminster Hall

[Mr Cunningham]

I welcome the hon. Gentleman’s response because he is only apologising for the Government of whom he is part. When he was in opposition, he said the opposite; but never mind, we shall carry on.

Although we cannot broaden the debate, I would like to mention that one of the major implications of the fuel price increase is its impact on the wider economy. We could talk about pensioners who are on fixed incomes, one-parent families or people who rely on transport—whether it is the motor car or the bus. I need to check this out, but I think that, a couple of weeks ago, National Express announced that it may have to reconsider off-peak fares for pensioners because of the subsidy situation. That is something that the Minister may want to investigate.

[Anas Sarwar (Glasgow Central) (Lab)]

I join my hon. Friend in congratulating our hon. Friend the Member for Central Ayrshire (Mr Donohoe) on securing the debate. My hon. Friend the Member for Coventry South (Mr Cunningham) mentioned the impact on pensioners. In the city of Glasgow, 100,000 pensioners face cuts to their winter fuel allowance this year as well as increases in the cost of fuel and of living. Sadly, too many pensioners right across the country will have to choose between putting food on the table, heating their homes and getting out and about around the country. Would he like there to be some real Government action to support pensioners?

[Mr Cunningham]

The previous Government certainly went a long way to try to address some of those problems. Some Labour Members did not necessarily think that they went far enough, but that is another argument. We now have the present Government. If they want to talk about the big society, they must get a grip of the issue and try to do something more positive. It is no good relying on a pilot scheme somewhere and a double-tier price index for fuel. We must tackle the problem in a proper way. Someone mentioned the European scheme, which may well be something that the Government can consider.

I return to the issues that affect the economy. Haulage prices must be affecting businesses, particularly small businesses—for example, in relation to builders. We rely on builders to generate much of the economy. There are one or two examples of that. In addition, small businesses cannot always get credit and have cash-flow problems, which impacts on small and other businesses and therefore on the economy.

It is also worth noting that this Government, like the previous Conservative Government, changed the retail prices index; we now have a new invention called the consumer prices index. Such an approach shows that the Government are concealing the real impact of their policies, particularly in relation to inflation. I hope that the Minister will address that because the retail prices index is a way in which the public can get a good measure of what is happening in the economy in respect of inflation. If we consider current inflation levels, the public are not sure whether they are getting a true measure. The household budget is mucked around with, to use an expression, but the real cost cannot be measured. I hope the Government will look at that.

In relation to the islands, I know a lot more about Cornwall. Some years ago, I sat on the Trade and Industry Committee. We discovered to our surprise that one of the poorest areas in the country was Cornwall. Like the highlands and islands, Cornwall relies on the tourist trade, as everybody knows; a lot of its jobs depend on the tourist trade and a lot of them depend on public transport. That has an impact on public transport and bus fares. That is bound to affect the poorest areas in Britain, whether we are talking about the islands, the south or the south-west.

I remember one scheme where the post office used postal vans as a method of public transport in order to pick people up. There have been cuts in public transport in the south-west; the frequency of buses, that public mode of travel, has been reduced drastically. I wonder what has happened to what we used to call the transport subsidy.

I have covered some of the main points that I thought needed emphasis. My hon. Friend the Member for Central Ayrshire has covered the major areas, so it was worth pointing one or two other things out. The seriousness of the situation has now developed, whether we talk about inflation measurements or the impact on ordinary people who have been encouraged to take part in what is called the big society.