Working People’s Finances: Government Policy

Catherine West Excerpts

Tuesday 21st September 2021 Commons Chamber

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“welcomes the £400 billion package of support the Government has put in place to protect jobs, incomes and livelihoods throughout this covid-19 pandemic, including a temporary cut to VAT, generous cash grants for businesses, a business rates holiday, and the furlough scheme which protected 11 million people at its peak; notes the launching of the Plan For Jobs to help people back into work and gain the right skills to succeed in the jobs of tomorrow through schemes such as Kickstart for young people, Restart for the long-term unemployed, the Lifetime Skills Guarantee and additional funding for apprenticeships, traineeships and work coaches; further notes the measures taken by the Government to keep costs down for working people, such as introducing and increasing the National Living Wage in 2016 so that a full-time worker is £4,000 a year better off than before, doubling personal tax thresholds giving individuals an extra £1,200 per year, protecting local taxpayers from excessive council tax increases, introducing an energy price cap which protects 15 million households by around £100 a year, and freezing fuel duty for 11 consecutive years which has saved drivers £1,600 compared to 2010; and believes that this plan is working, as evidenced by unemployment forecast to be 2 million lower than previously expected, job vacancies at record highs, household incomes protected, consumer confidence back to pre-covid-19 pandemic levels, and GDP recovering rapidly, with the IMF forecasting the UK to have the highest growth in the G7 this year.”.

It is a pleasure to be back at the Dispatch Box and to have the opportunity to respond to the hon. Member for Houghton and Sunderland South (Bridget Phillipson). I thank her for her kind words on my appointment. It is great that the north-east has two representatives in the debate, and I am delighted that the north-east economy is in robust shape, contrary to what we just heard.

In the last 18 months, safeguarding working people’s finances has been the Government’s defining mission, and we have succeeded in that task. Just today, the OECD economic outlook says that it expects the UK to see the fastest growth in the G7 both this year and next. The IMF has described the UK’s policy response as “aggressive” and as one of the

“best examples of co-ordinated action globally”,

helping to mitigate the damage wreaked by the pandemic, and

“holding down unemployment and insolvencies.”

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

The Chief Secretary begins his speech by talking about growth, which everyone in the Chamber would like to see, but what impact is there on struggling businesses from the clobbering increase in national insurance? That will have an impact on not just individuals but employers and the workplace.

[Mr Clarke]

We are clear that the right thing to do as we emerge from the pandemic, in which we have spent £400 billion on providing a comprehensive response, is ensure that our NHS is ready to deal with the backlog of cases that has inevitably arisen as well as providing a long-term fix for social care in a broad-based solution, bringing together a progressive tax rise in which the wealthiest pay more and business plays a fair role. I am confident that that is the right thing to do at this time.

Let me remind the House once more of the sheer scale of what this Government have been doing and of our support for the economy. The £400 billion I referenced a moment ago is spending that has been devoted to safeguarding jobs and incomes the length and breadth of the UK. It is spending that has given millions of people financial certainty through a very difficult 18 months.

The furlough scheme has protected 11.6 million jobs—that is equivalent to a third of the entire workforce—and it has paid out £68.5 billion to employers. The self-employment income support scheme has provided £27 billion to almost 3 million people. Businesses have been kept afloat thanks to loan schemes worth £79 billion, in addition to cash grants, VAT cuts and business rates relief, while the most vulnerable have been supported by a temporary uplift to welfare payments. HM Treasury’s own distributional analysis shows that our interventions have supported the poorest working households most as a proportion of income. That list is far from exhaustive, but it shows how the Government have met an extraordinary crisis with an extraordinary package of measures.

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[Kirsty Blackman]

Stories like this belong 100 years ago; stories like this do not belong in the 21st century. We should not have constituents who are in absolute poverty coming into our constituency offices.

This motion is about the working poor. My great-granny’s mother did not have money to buy what she saw as necessities; she obviously did not have enough money to buy food and stuff but was helped out in that, but she also could not go to church because she could not buy clothes for church. She had her working clothes but could not buy Sunday best clothes to go to church; that was her biggest regret about not having money. Nowadays, people on UC may not be able to afford internet access, which they need to get their UC, or to afford other things we see as necessities. Not many people are wanting a Sunday outfit to go to church—some are, but not that many—but they desperately need access to the most basic of services so they can get their UC and make their claims, and so that they can speak to friends and family and not be hugely isolated.

A cut of £80 a month is a huge amount. For a lot of people, £80 a month is their council tax bill, or two mobile phone bills, or—goodness knows—one pair of shoes for the kid, maybe two pairs for those who are particularly lucky and their child is going to wear something a bit cheaper. It is a huge amount of money, not pennies; it means people will have to cut back on a big, major bill when this cut is implemented. My great-granny remembered her mother crying because winter was coming and she could not afford to buy shoes for the children. That was over 100 years ago; this should not be happening today—we should not be having single parents crying because they cannot afford to buy winter shoes for their children.

[Catherine West]

What does the hon. Lady make of the fact that there are 23 more billionaires in The Sunday Times rich list this year?

[Kirsty Blackman]

I am going to come on to that, because I am thinking there is a divide across this Chamber: the constituency cases we on the Opposition Benches are seeing do not appear to be reflected in the cases being seen by those on the Government Benches, or they would not be making this cut. If they were sitting around those tables with people crying because they are living in absolute poverty and destitution, they would not be choosing to cut this £20 a week.

Some 72% of families who need food bank help have at least one parent in work. In my constituency more than four in 10 families will be hit by the UC cut. Aberdeen has been hit by a triple-whammy: the oil price crash has meant many people have been made redundant; we have seen the reduction in the reliance on oil; and we have seen both covid and Brexit. All those things are having a significant impact on the people of Aberdeen, and particularly my constituency. We have seen massive house prices in our city, too, so people have not been able to save money, and they have not been able to get council houses because of the right to buy, which we have, thankfully, cancelled now in Scotland. They have not had the opportunity to get back on the housing ladder, and they are doing the kind of insecure work my great-granny’s mother was doing: they are cleaning hospitals and working as porters and carers. I defy anyone to tell me those people are not working hard; these are hard-working families, yet they are being slammed consistently by this Tory Government.

We are talking about absolute destitution. My hon. Friend on the Front Bench, the Member for Glasgow Central (Alison Thewliss), mentioned prepayment meters. I do not know how many Members have had a prepayment meter, but I lived in a flat with one when I had hardly any money. If a prepayment meter goes £20 into the red, it stops working—the electricity stops—and people do not just need a fiver to bring it back; they need to pay the full £20 to get back into the green. Many of my constituents are faced with those numbers ticking towards that negative £20 and wondering, “What on earth are we going to do about this? How are we going to pay for the electricity so our children have heat and do not freeze?” We had a guy come into my office one day. This chap was on universal credit, and he was one of those single people on universal credit who is literally destitute. That is a significant portion of single people on universal credit; they are living not just below the poverty line but below the line of destitution. This chap came into my office to say that he did not know what to do. He had not eaten in three days. His dog had not eaten in three days. He had sold every single item of furniture that he had in order to try to keep them both fed. He had sold his bed, so we managed to source a bed for this chap.

That should not be happening in 2021. We should not be having those conversations with people, yet Government Members talk about £6 billion and say, “Oh, we’ve given £80 million to this scheme” or whatever. It does not matter if they have given £80 million to that scheme; it does not make a difference. What makes a difference is ensuring that these folk have enough money to eat—enough money to feed themselves and to clothe themselves. The hon. Member for Bury North (James Daly) talked about hope and aspiration. How can someone have hope and aspiration if they spend every single moment of every single day—

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

What an excellent debate it has been. It was good to hear the maiden speech from the hon. Member for Hartlepool (Jill Mortimer), a number of contributions from the north-east, and different experiences from colleagues across the House.

Many colleagues thanked the volunteers who run food banks. I was reflecting that when I first began contributing to civic life as a councillor, it was all about opening Sure Start centres, and going to see new science labs at secondary schools, new running tracks and new additions to leisure centres—all those hopeful things that we were doing nearly 20 years ago. What a difficult winter we have ahead of us, when we are all talking about visiting food banks on our constituency days. Last Friday I visited Naomi from Highgate, who has a distribution point in her garage. There are soup kitchens run by Mary in Bounds Green and by Ann in Middle Lane in Hornsey. This is the reality of constituency life now and it is hard to compare the two situations: the first, a sense of hope and opportunity for future generations; and now, a dim and difficult winter ahead.

The 8.3% increase in food prices will bring a great deal of difficulty to households that will already be clobbered by the universal credit cut, if it goes ahead—it is not too late to do a U-turn. That £20 less a week will have a huge impact, not only on the families in our constituencies, but on the high street. How many of us are seeing closed shop fronts because people do not have the money in their pockets to keep things going? Next April, the increased national insurance contribution will come to the fore and people will be clobbered again—more taxation than the 1950s. According to Zoopla, rents are up by 5% in the last 12 months. Rail fares are also up, in some cases by thousands of pounds, as my hon. Friend the Member for Warwick and Leamington (Matt Western) mentioned.

Let me turn to local authorities. As a vice chair of the Local Government Association, I am extremely concerned about the difficult decisions that local councillors will have to make. In my experience, local councillors—regardless of party—do not actually like putting up council tax, but unfortunately once again council tax will be going up, because they will have to pay for the new national insurance contributions, which will be payable by local authorities for all the new staff needed to tackle the NHS backlog. Taking on more health and social care staff is great, but it will have a double impact because the public sector will be paying twice.

This is the third most expensive country globally for putting children into childcare if we need to rush out to work. It is wonderful to have more women and more parents in work, but the cost for people with two children under the age of five or six is enormous.

We have had the debate on energy prices at length today. We are going to be paying at least £7 a week more, and that is a very modest assessment by the Financial Times today. The £20 cut, plus the £7 increase, plus the 8.3% increase in food prices means that we are looking at a really difficult winter.

There is also the impact on children in schools where the pupil premium has been cut. In Hornsey and Wood Green, in my local government area of Haringey, there has been a £600,000 cut to the pupil premium. The fact that schools will be reducing their staff and their input will just add to the terrible cuts to household budgets.

We face a really difficult time. This has been an excellent debate. There is still time for the Government to change their mind on this added pain for working people. I hope that they will reconsider this foolish decision and its timing, as the recovery is not yet home and secure. I ask them please to think again.