Budget Resolutions and Economic Situation

Catherine West Excerpts

Monday 13th July 2015 Commons Chamber

[Catherine West (Hornsey and Wood Green) (Lab)]

I am very pleased to be speaking in the Budget debate. The Chancellor’s announcement on the increase in the minimum wage, mistakenly called a living wage, raised the issue of low pay. That is a debate we all welcome. Sadly, when it is combined with high housing costs and cuts to working tax credits, families in my constituency will be worse off. I will not vote in favour of this Tory Budget. Not only will many families be worse off following the Chancellor’s Budget; it has failed to address the deeper issue of social mobility.

This was not a good Budget for young people. For younger people, it is becoming more expensive to attend further education or to secure well-paid employment, and it is much more difficult for them to get on to the housing ladder. The employment training levy, to be levied against workplaces, could provide much needed workplace training opportunities. However, coupled with the proposed cuts to further education due in the autumn, training programmes could be at risk—one step forward, two steps back. Converting student maintenance grants into student personal debt will increase the debt of our young students further. In one case I know of, a student will leave a local university with £56,000 of personal debt—hardly a good start to a career for a young professional.

Preventing under-24-year-olds from gaining access to housing benefit could lead to long-term homelessness problems among a small but needy group of youngsters— many of the rough sleeping population are in this critical age group—creating not just personal misery, but further cost to the NHS in later years.

The cost and availability of childcare is a major block to productivity, and in high value areas such as London it is becoming prohibitively expensive. Childcare cuts to Sure Start and children’s centres undermine the Government’s excellent 30-hour childcare commitment, slowing down parents’ return to work and preventing the return to work of much needed skilled workers. Assessments show that returning women to work in London would be a real spur to the economy. Unfortunately, owing to the prohibitive cost of childcare and lack of childcare places following cuts to Sure Start and children’s centres, we have a false economy.

Renting in the private rented sector is now prohibitively expensive. A family would need a household income of £75,000 per annum to rent a modest three-bedroom property in Finsbury Park in my constituency. This is unaffordable and represents a failure of the housing market to support local families. By spending such a high proportion of income on housing costs, people are unable to save eventually to get on to the housing ladder. The average age of first-time buyers is going up every year in London. We are becoming not just a city of renters, but a nation of renters. Many of our children are in low-quality, high-cost housing with no hope of remaining in the local area to look after us in our older age.

While some elements of the Budget, such as applying the brakes on buy-to-let property, might have benefits, they are undermined by a failure to announce more new affordable housing and by the regressive right-to-buy housing association discounts, which set us back decades on housing supply. We must address the supply issue; it is critical.

Furthermore, pay freezes in public sector employment will be bad for young people. We know we have a crisis in retaining teachers, particularly in English and maths. We know we have a problem retaining nursing staff in our A&Es and our local hospitals. This pay freeze for the public sector is detrimental. Unless young people have access to unlimited family funds for their education, housing and training, they face a bleak future under this Tory Chancellor.

[Richard Fuller]

The hon. Lady has listed a number of steps that would lead to an increase in expenditure to cover some of the important topics she mentioned. Does she accept, however, the overall need, while we are borrowing over £70 billion a year, to reduce expenditure more each year so we can get back into balance? Does she accept that general trend in principle?

[Catherine West]

Let me deal with aspects of the question of expenditure in turn. First, the employment training levy is being levied on small businesses by your Government. It is not a Labour proposal, but I support it because it is about investing in the workplace. Secondly, the position on student maintenance grants amounts to cost shunting—taking the costs from the university and putting them on to the individual. I referred to a case of a student owing £56,000, so instead of it sitting on the balance books of the Chancellor, it is sitting on those of the individual, which is a bad thing. Thirdly, we spent £60 billion on housing benefit over the last Parliament. We should have invested more of that in new build housing. We should not forget that council housing is not a cost. It is a net contributor to the economy because the rent is so low that housing benefit is not payable on many council properties. Housing benefit is mainly payable in the private rented sector. By investing in social homes, we will be saving the housing benefit bill in the longer term. Finally, on childcare, your own pledge by your own Government is 30 hours per week—

[Madam Deputy Speaker (Natascha Engel)]

Order. The hon. Lady must speak through the Chair, so she should be referring to the hon. Gentleman in the third person.

[Catherine West]

How did I forget that? Through you, Madam Deputy Speaker, I am saying that the Government have pledged to provide 30 hours a week childcare, which is an excellent pledge, but it is not a Labour proposal. In fact, Labour proposed something more modest and more affordable. I am thus a little worried that the hon. Member for Bedford (Richard Fuller) thinks that we are over-spending, when this is a pledge of his own Government. I wonder whether it will happen, though; I worry about the feasibility. If we go through all those elements, we find that they are not really about cost; they are about feasibility and getting the job done.