Amendment of the Law

Ann McKechin Excerpts

Wednesday 21st March 2012 Commons Chamber

[Ann McKechin (Glasgow North) (Lab)]

There has been much trumpeting and advance spinning of the Budget in recent days, so almost every announcement this afternoon came as no surprise. There are also hidden messages in the Budget: those who are poor and whose income is being squeezed are being asked to work longer; but for those in the top income bracket, the message is, “Let us ease your pain. We’ve reduced your corporation tax bills, lowered your banker’s bonus tax, now let’s cut your income tax rate.”

[Robert Flello (Stoke-on-Trent South) (Lab)]

Was not another thing sneaked through the Budget quickly and carefully: the more than £1 billion hit that British pensioners will take as a result of the announcement on “simplifying” personal allowances for pensioners?

[Ann McKechin]

My hon. Friend has cleverly noted that hidden message, to which, I am sure, the Chancellor was keen to avoid drawing attention. However, pensioners are not as daft as he thinks, and I think that they will soon reckon that they are paying for the millionaires’ tax bonus announced today.

There has also been complete radio silence on other matters: women, for example, or children. By any rational definition, the Budget has not only ducked the hard issues, but entrenched the division in our society.

[Robert Halfon (Harlow) (Con)]

For 13 years of the Labour Government, the millionaires’ tax rate that the hon. Lady mentioned was at 40%. That was changed only in the last stage, and it is now 45%. Why was it 40% for so long while she was in office?

[Ann McKechin]

As even the Chancellor would admit, the economy was very different. [Interruption.] We had job growth and we were taking people out of poverty—that was the difference, which the hon. Gentleman seems to have completely failed to realise.

The Chancellor must by now be all too aware of the criticism levelled at his efforts in the past two years. Women were left paying more than 72% of the net cost of the changes in taxes, benefits and tax credits in his June 2010 Budget, and the subsequent comprehensive spending review ushered in yet more of a burden on women and families. Of the £18.3 billion raised through net direct tax, pay and pension changes up to now, £13.2 billion is coming from women. For children, the position is even worse. If we are to reach the target set in the Child Poverty Act 2010, the Government need to reduce the number of children in poverty by 120,000 per annum.

[Dr Julian Huppert (Cambridge) (LD)]

Will the hon. Lady give way?

[Ann McKechin]

In a minute. The Institute for Fiscal Studies has told the Government that their current policies will see poverty increasing by 100,000 people a year. What does it say about a country when it allows tax cuts for the richest but at the same time allows more of its children’s lives to be stunted? I will be interested to hear what the hon. Gentleman has to say about that.

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[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. If the hon. Gentleman wishes to make a speech, he should put in for it. He is not going to do it through an intervention.

[Ann McKechin]

I am grateful, Mr Deputy Speaker. The hon. Gentleman should remember that under this Government, unemployment among women is at its highest for more than 23 years. The Chancellor did not make one mention of what he will do about that scandal.

The Lib Dem part of the Government has made great play of the increase in personal allowances, but more than 70% of that benefits higher and middle earners and fails to benefit those at the lowest levels, who already do not pay income tax. I point out to the hon. Member for Cambridge (Dr Huppert) that, funnily enough, the majority of them are women.

While middle earners stand to gain £379 when the threshold reaches £10,000, low earners on housing benefit and council tax benefit will gain only a paltry £57, as the rest will be tapered away. Overturning the perverse reductions in tax credits, which increased child care costs and penalised those trying to work on the lowest income scales, would have helped those in need the most. As my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) said, pensioners will also bear the burden as the years go on.

It is estimated that the reduction in tax credits on child care from 80% to 70% has pushed tens of thousands of parents out of the labour market, with 44,000 fewer families claiming support in December 2011 than in April that year. We have a Chancellor who thinks that it should be no problem for a cleaner to increase their hours from 16 to 24 hours a week to claim tax credits. Frankly, that is the reaction of someone living in a parallel universe, who fails to listen to those who have to attempt the challenge at a time when overtime and extra hours are almost impossible in most low earning jobs. As the Union of Shop, Distributive and Allied Workers reported yesterday, two thirds of those already receiving tax credits who are about to lose them next month already live in poverty: 200,000 couples with children face losing £3,870 per annum and an extra 80,000 children will be pushed into poverty by this one measure. It is immoral, unfair and unjust. I wait to see if anyone on the Government Benches can mount any argument to support such an outrageous measure, given that it completely fails their own core test of making work pay in every case. Even at this late stage, I hope that the Government will see sense and postpone the measure until universal credit is in place. If we are all in it together, why was there no mention of that today? It is a scandal of the Budget.

As the Scottish TUC pointed out in its Budget submission, it is now indisputable that Government policy is hitting wages much harder than profits. Indeed, as I pointed out at last week’s Business, Innovation and Skills questions, UK companies are now sitting on the highest ratio of cash reserves of any major western economy. That is not only unfair, but bad economics. We need more of those profits to be converted into real investment, and we need a much greater rise in consumption if we are ever to achieve the necessary higher growth.

The Government’s austerity plan has led to lower tax receipts and further downward revisions of growth, which is exactly the opposite of what we need. The Business Secretary has asked for a report on how to release company cash reserves. I welcome that, but I detect a complete lack of focus or priority in tackling the issue, just as I do in efforts to achieve a coherent industrial policy. Where is the Budget to create jobs? Where is the analysis to explain why, in the past year, female unemployment in Scotland and across the UK has increased by more than 17% , but male employment has increased by only l%? Where is the analysis on the increasing move into involuntary part-time working? Where is the analysis and policy on how to shift jobs into the industrial and manufacturing sectors, and to retrain those who have lost their jobs to enable them once more to hold down secure employment? Answer is there none.

The fact that we now have the highest female unemployment in 23 years was ignored in today’s Budget speech. That is not going to go away, and I fear that the consequences have been heavily underestimated by the Government, economists and our media. Far more women work in the public sector, and increasingly, men enter and compete for traditionally female-dominated work in the private sector. We are told that three quarters of public sector reductions are still to come, with the inevitable contraction of the work force, but there is absolutely no planning on how to create new jobs for the many women who will seek work.

Announcements on infrastructure are welcome, but construction jobs are entirely male dominated. Only about 1% of electricians are female, for example, and we have the lowest proportion of female engineering professionals of any EU nation, at less than 9%. The Government need to use procurement in such a way that will encourage and increase the numbers of women. There is an example for them to follow—the Olympic Delivery Authority has got more than 1,000 women into work in construction jobs—and I want to ensure that that good practice is followed throughout every major Government procurement programme to come.

[Charlie Elphicke (Dover) (Con)]

I agree with the hon. Lady that we need more women in work, and to look after women and take them out of tax, which is what the Government are doing. Nevertheless, she mentions jobs. In her constituency in the last Parliament, unemployment increased by 44%; in this Parliament it has hardly changed. Does she agree that the previous Labour Government’s policies caused massive damage to this country?

[Ann McKechin]

The hon. Gentleman distorts the employment figures in my constituency and my city, where jobs were growing before this Government started to suppress demand and consumption and to take away huge amounts in benefit. I do not want women out of tax; I want them to get better-paid jobs so that they are in a position to pay tax. That is the fundamental problem, and taking people out of tax is an acceptance of it. Far too many people work in jobs that are too low-paid, but we are not doing anything about it.

As the Joseph Rowntree Foundation and others have repeatedly pointed out, we have a high level of under-employment in this country—4 million to 6 million people are in that category. The Scottish TUC has calculated that more than 0.5 million people, or more than 17%, are either unemployed or under-employed. Tax and benefit changes do nothing to change that long-term lack of demand for jobs.

The Government had the opportunity today to move away from their failed policy of austerity and to focus on stimulus for growth and jobs. They have failed, but the consequences will stay with this country and the communities we represent for many years to come. I am sure that point will depress many hon. Members, and it should depress all hon. Members on both sides of the House.