Living Standards

Charlie Elphicke Excerpts

Wednesday 4th September 2013 Commons Chamber

[Harriett Baldwin]

What would that community feel about a Government who left a deficit of 11.8% of GDP? This Government have reduced it by a third, to 7.4%, although there is still a long way to go. More than any community, that community would understand the importance of living within one’s means. We need to judge the Government by their track record, compared with the previous Government.

[Charlie Elphicke (Dover) (Con)]

The issue is not just the deficit. Real earnings did not rise from 2004 onwards under the previous Government’s mismanagement. We still see the scars of the terrible recession of 2008 in the earnings lag, which continues to this day and which we are battling to turn around.

[Harriett Baldwin]

I agree, so let us turn to the track record of what we have tried to do in government to tackle the very issues raised in today’s debate. We all want to see our constituents prosper and have more money each month to pay their bills. The most important bill that they have to pay each month—on pain of imprisonment if they do not pay it—is their income tax bill. In 2007, people had to start paying income tax once their income rose to just over £5,000. By the end of the next tax year, people will be able to take home £10,000 before they have to pay income tax. That is a halving of the income tax bill for the hard-working person who works full time on the minimum wage. It is also a 20% real-terms reduction in the tax bill of someone on median income. That is the action that a responsible Government can take.

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[Emily Thornberry (Islington South and Finsbury) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for Wirral South (Alison McGovern) and the hon. Member for Croydon Central (Gavin Barwell), who have both made thoughtful contributions to the debate. It is a great shame that more Members are not present on the Government Benches. We seem to be running out of speakers rather early, which speaks volumes.

The Conservative Government seem quite happy to crow at great length about how well the economy is doing, but they seem to take very little interest in the question of living standards. They crow about how well the economy is doing, we hear a great deal of briefing on the subject and we endure a great deal at Prime Minister’s questions, but the truth is that no one believes them. That is because people’s lives do not reflect a growth in the economy. For ordinary people, life is getting harder, not better. People do not believe that next year is going to be better than this year; they believe that it is going to be harder. And I am afraid that, at the moment, it looks as though they are right.

That is partly because services are being cut. It is partly because people are having to queue to see their GP. It is also harder for older people to get social care or to see a consultant. After-school clubs are being cut, youth groups are being closed and there are restricted hours for day centres. Life is also more difficult for people because they no longer have access to the kinds of services that they have been taking for granted, which are being cut by the Government. Primarily, however, life is harder because people feel that their wages and benefits are not keeping up with inflation. The reason for that is that they are not: they are not keeping up by a long chalk.

Those people who are lucky enough to be in work are often not working sufficient hours. They might be working for their poverty, but they are not earning enough to be able to rely on their own wages. They also have to rely on benefits and tax credits. Many of those on low wages who work full time also have to rely on benefits and tax credits, especially in areas such as the one I represent. In central London, it is simply not possible to live on the average wage without relying on benefits to help to pay the rent and to help with child care costs.

Much has been said about what a great idea universal credit is, and about how we should have one level of benefits for everyone across the country, including those in central London. No allowance is made for the fact that rents and child care costs are so much higher in areas such as this. People on average wages in central London rely on benefits too. That is the truth, and if universal credit is introduced in the way the Government propose, I do not know what is going to happen to those people.

[Charlie Elphicke]

I appreciate that the hon. Lady is making a sincere and heartfelt speech, but the difficulty is that every prescription from Labour involves more spending and more welfare. The effect of that would be to drive up interest rates, which would harm the recovery and harm the job creation that could lead to increased wages and a strengthened recovery. The polls show that that is not a prescription that this country finds credible.

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[Andy Sawford (Corby) (Lab/Co-op)]

Any increase in employment is to be welcomed, but the real story of the labour market is a living standards crisis, with falling real wages and millions working harder for less. I know that from the experiences in my constituency. We have heard complacency from the Government today. They say that they have fixed the economy, but for ordinary families we know that things are getting harder, not easier. Ministers just sound out of touch when they ignore the fact that the number of people who are working part time because they cannot find a full-time job is at record level.

Real wages are falling: wages increased by 0.6% on the year to June, while the retail prices index increased by 3.3%, over five times the pace of wage growth. OBR forecasts show that, after inflation, wages are set to be £1,520 lower in 2015 than they were in 2010. That means that, as my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) told the Prime Minister today, ordinary working people will have lost, on average, £6,660 on this Government’s watch. That is a shameful record.

Underemployment is a massive and growing problem for millions of families already feeling the pinch from rising prices and falling wages. More than one in 10 people are now unable to work the hours they would like because this Government strangled the recovery for three years. Today we have heard complacent, boastful comments from the Government, delighted that there is, at last, a slight upturn in the economy. Let us not forget, though, that for three years, having inherited a growing economy, they flattened that growth and people across this country suffered for three years.

The Government and the Prime Minister are out of touch in not understanding that very many people not only work part time but often work on zero-hours contracts. They find themselves working through agencies and are often exploited. People in my constituency have told me about their experience of these zero-hours contracts—of turning up for work only to be told that there is no work that day, yet they might have arranged child care or had to pay considerable transport costs to get to work, or working for half a shift and then being told that they are no longer needed that day. That is no way for businesses to treat their employees, but it is also no way for a Government to behave when they turn a blind eye to the growth of that practice in our economy.

People have told me about not being able to get a mortgage, car finance or a bank overdraft, or even a rental agreement, because they cannot clearly demonstrate that they will have money coming in over the weeks and months ahead.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Andy Sawford]

No. I know that two of my colleagues want to speak, so I am going to push on.

Seventy per cent. of zero-hours contracts are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want it to be fair and secure. Resolution Foundation research shows that those employed on zero-hours contracts receive lower gross weekly pay and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency zero-hours contracts, combined with the very high number of people working through agencies, have created a two-tier work force, with permanent employees often being paid better and having security of employment while many other workers are being paid very low wages and exploited from week to week.

There is an argument that zero-hours contracts offer flexibility. Of course, casual employment has always been part of the labour market, including casual employment where there are no guaranteed hours. I have worked under those conditions and other people do so too. For example, Corby borough council employs lifeguards at the local swimming pool on such casual contracts; of course, it is seasonal work and there are changes in demand over the course of the year. When I talk about zero-hours exploitation, I do not mean all casual employment in the economy. The local Tories in Corby have got themselves into an extraordinary position, saying that my local council should end all casual employment. That is completely bizarre. It has been suggested that it is hypocritical of me, as a Co-op Member, to highlight this issue and campaign against zero-hours exploitation because across the country the 2% of workers the Co-op employs in its funeral business are mainly retained firefighters or semi-retired people. It is a ridiculous suggestion.

Most people understand that some casual employment works for some people, but the key is that it should be reciprocal and fair. That is why I have introduced a Bill that aims to tackle zero-hours exploitation. I want to see what legal changes we can make to help people, particularly by ending things such as exclusivity clauses in zero-hours contracts.

I am delighted that the shadow Business Secretary, my hon. Friend the Member for Streatham (Mr Umunna), has really taken a lead on this issue. Just a few weeks ago, he held a summit bringing together employers and people who are concerned about it. I welcome the support of many organisations in civil society—trade unions and organisations such as Citizens Advice—in trying to tackle it. However, it is not achieved only through legislation; this Government should act, and the Business Secretary’s review should have more resources put behind it. We should try, through public procurement, to encourage Government and local government to stop using zero-hours contracts as far as possible.