(10 years, 5 months ago)
Commons ChamberLet me answer the hon. Member for The Wrekin and then I will come to the soon to be ex-hon. Member for Dover. [Interruption.] If hon. Members quieten down, I will answer the point. Since 2010 there has been a 129% rise in long-term youth unemployment: that is young people on the claimant count who have been out of work for more than 12 months. That figure has gone up by 129%. That is the truth. It is a fact, and I will place the information in the House of Commons Library. There has been a 129% rise since 2010 and I think the hon. Member for The Wrekin should support what I am about to say.
In the constituency of Ipswich there has been a 140% rise in long-term youth unemployment over 12 months, and long-term youth unemployment is a real problem. I am glad the hon. Gentleman intervened because I was reading his Hansard remarks from 2012 when he said that asking the Office for Budget Responsibility to audit the parties’ manifestos at the next election was the right thing to do. He said there was no reason why that could not be done. I will come back to him in a moment on that one.
We support the welfare cap. We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending. Let me explain—
Will the shadow Chancellor give way?
All the evidence shows that action to get young people back to work, especially the long-term unemployed, pays real dividends. It is what we mean by tackling the root causes, and it is the right way to implement a tough welfare cap. That is the approach we will take.
Is the shadow Chancellor committed to a welfare cap on the same benefits and of the same numbers as this Budget—yes or no?
Yes.
Let me end by discussing the role of the OBR, because that is also set out in this charter. Page 5 states:
“The Coalition Government’s major reform to the fiscal framework has been the creation of the Office for Budget Responsibility”.
We agree with that, which is why we have proposed a reform to enhance the OBR’s role and allow it, as the hon. Member for Ipswich has advocated, independently to audit the tax and spending commitments in the manifestos of the main political parties. Why has the Chancellor not used the opportunity of this updated budget responsibility charter to make that reform? If he were to think again, he would be joining not only me, but the Chair of the Treasury Committee and the Chief Secretary to the Treasury, who have both supported this reform. We need legislation in the Finance Bill to make that happen.
(10 years, 5 months ago)
Commons ChamberThe Leader of the Opposition’s rant, as my hon. Friend says, had just one basic message: the wrong belief that the Conservatives want tax cuts for the rich and misery for everybody else. What we want is tax cuts for everyone, and what this and the previous Budget offer is tax cuts for everyone.
Let me explain how we have different types of tax cut for people at different levels of income. We take those on the lowest incomes out of tax altogether, so they get a genuine tax cut: they go from paying something to paying no income tax at all. The House is, I think, united on the wisdom of that. At the top end, we cut the rate, and what happens is that the rich and successful people actually pay more tax, not less. That seems to me to be magic, because then everybody is happy—or they should be. Only the very jealous should be miserable, because what we then have is the rich staying here, investing here, creating jobs here, creating more money here and paying more tax because the rate is lower. What is not to like about that proposition?
What is odd is that the Labour party in office, until the last couple of days, knew that and kept the top rate of tax below the level that we inherited and below the level we have now fixed. It is a bit rich that Labour is now complaining that we are light on the rich, given that our tax rates are collecting a lot more tax from the rich and are higher than the rates that Labour imposed. Indeed, we could collect even more tax from the rich if we brought the rates down a bit more, which I hope, come a Conservative Government, we might be able to do. Surely what we want is to maximise the revenue from such people, not to make a political point and drive them abroad, so that we have a society with less money, fewer jobs and less creativity.
I am pleased that the Chancellor made some moves on energy. We need a much bigger and stronger industrial recovery than we have generated so far. The first thing we need to do to have such a recovery is to ignore the advice of the Green MP, and to go for cheap energy. America is going for cheap energy, and it is re-industrialising very quickly. America is now super-competitive against companies in the European Union. A leading chemical major in Germany has recently said that it will put more of its investment abroad, outside the EU altogether, because, in the light of the energy crisis, the gas feed stock is uncompetitive. We need to find that gas and to get it out as quickly as possible. We need to match the United States’ shale revolution if we wish to save our high-energy-using industries and to re-industrialise and give some hope to the northern cities in particular, with their long tradition of industrial activity, because they need much cheaper energy.
We need to do more for savers, and I am delighted by an elaborate and interesting set of measures from the Chancellor on saving. Savers have had a miserable time after the collapse. Rightly, successive Governments and Governors of the Bank of England have kept interest rates on the floor, as they had to do, to try to stimulate activity and to prevent a worse collapse than we experienced in 2008, at the height of the crisis. That has been very bad news for savers. The tax changes will help savers, and the pensioner bond offer, if the rates are around the level we are now looking at, makes sense and would be a bit more attractive and something for pensioner savers to look forward to. I also welcome more flexibility for pensioners generally. Annuities are not good news at the moment, and if people can put that off or have a better choice, that may well be an excellent answer.
This Budget needs to be good for savers, for industry and for exports, and we are going in the right direction. It will help to promote a bit more growth, and only if we get a lot of growth will we get out of this debt bind.
It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr Brown). I want to start by welcoming the Budget and reflecting on the legacy the Chancellor inherited before bringing us to where we are today. Let us not forget that we had a deficit of £156 billion a year, which has now gone down by a third to £109 billion a year. There was a structural deficit from 2002 onwards, and throughout the Labour years there was a total failure to regulate the banks and our banking system, which left it massively exposed, and unemployment rocketed.
The Chancellor had the most difficult inheritance in this country’s history in many ways. He has turned things around these past four years so that this country is now on the path to recovery. The economy is growing, jobs are up and the future looks promising for Britain. In the past, the roof was not fixed while the sun was shining, but while it has been raining we have been furiously fixing the roof and doing so with some success.
Areas such as my constituency of Dover and Deal do not have enormous amounts of money and there is a lot of deprivation. The rise in the personal allowance to £10,500—it was £6,475 when I was elected—will make a real difference to those constituents of mine who are not well paid. It will make an enormous difference for people without a lot of money.
The freeze in fuel duty will make a massive difference for the many people in my constituency who have to travel by car. It is now 20p lower than it would have been under the previous Government’s plans. A freeze in council tax year after year makes a massive difference to my constituents, after it had doubled in previous times. Moreover, given that unemployment in Dover and Deal rose by 50% in the previous Parliament, it makes a massive difference to my constituents that it has fallen by 20% in the past year alone: more jobs, more money, more aspiration and more success. Aspiration matters, too: the number of apprenticeships has risen from 440 when I was elected to 880 today, so there are more chances for our young people.
Not everyone in my constituency is extremely badly off; there are areas where people have more money and are trying to find somewhere to save it in order to get a return. I greatly welcome the fact that we are incentivising ISA saving with a £15,000 limit. It is really important that we encourage a savings culture in this country. Let’s face it: it was destroyed by the pensions tax and everything that followed in previous times. We have to rebuild that savings culture, the idea of a rainy day fund and the ability of our constituents to take more responsibility.
What this Government have done is not just about practical help in terms of more jobs, more money, more prosperity and fewer taxes. In my constituency they have made a much bigger difference in terms of infrastructure and investment. When I was elected, the port of Dover was about to be sold off, having been stuffed in a car boot sale by the previous Prime Minister in a desperate bid to raise some cash. It was going to be sold off to the French or whoever—we did not know who. Our hospital had been decimated over the past decade and was not fit for purpose. A new hospital was needed and had been talked about for years. There were stalled construction sites all over Dover and Deal. I ran a campaign against “coming soon” signs, because they had said “coming soon” for so long—for the past decade—that one of them had rotted away and had to be replaced.
Fast-forward to 2014 and the port has been saved: we are now talking about a community-led port that can get the investment that the port of Dover has needed for so many years. A new hospital is being built, which will make a practical difference to people in their daily lives and will open its doors next year. More jobs have made an enormous difference to people. A compulsory purchase order has been served on Burlington house, which scars the seafront of Dover. That is making a difference and giving people more confidence and hope and a greater sense of belief in the town’s future. A fast train now rolls up at Deal—which was previously considered a village—and shortly will do so all day long. That kind of infrastructure makes a massive difference to people’s prosperity, success and aspiration.
Whereas in previous times the regional South East England Development Agency spent £20 million building a business park near Deal without anything on it—there were not even any buildings—now the coastal communities fund and the Homes and Communities Agency are supporting the Hadlow college project at the former pit site of Betteshanger, which promises to create 1,000 new jobs. That sort of practical help on the ground, which goes beyond high-level policy discussions, makes such a very big difference to people in their daily lives.
That is why I regret hearing the Leader of the Opposition’s speech. He reminded me of Marshal Foch saying, “My centre is collapsing, my left is in retreat and my right has gone altogether”—because all the Blairites have been chased away, sacked and discredited or have resigned. The Labour party’s lurch to the left has done it no good whatever. In its centre, Labour Members have no economic policy, except for more spending, more welfare, more debt and more taxes. Those discredited policies of the past will not take this country forward. To try by sleight of hand to say that they will have a current surplus—thinking that people will not notice a 25 billion quid bit of wriggle room and that he will get away with it—is not the right way to do it. The Leader of the Opposition should have come to the Dispatch Box today with a plan and a positive case, but all he did was rage against iniquities largely created by his party in past times or during the previous Parliament.
My hon. Friend will also have noticed that the Leader of the Opposition referred to nothing having been done to reform the banks. He seems to have been asleep for the past four years, during which banking reform and financial services legislation has gone through and a huge amount has been done to reform the banks. Does my hon. Friend think that the Leader of the Opposition has been asleep or has just ignored what has happened?
My hon. Friend asks a very important question about what the Leader of the Opposition has been doing for the past four years. He has certainly not been preparing a high-quality response to this Budget, that is for sure.
Even though the Leader of the Opposition wants to say, “Situation excellent; I am advancing”, not only is there a complete hole or collapse in the centre of the Labour party, with the Opposition having no long-term economic plans, but on its left flank, which is in retreat, Labour Members are talking about the cost of living. What will they say if wages rise above inflation in a few months’ time? It little behoves them to talk in that way, because people will start to see through everything they say. They are now saying that long-term unemployment is terribly high and all that sort of thing. However, when they talked about high unemployment, it started falling, and when they then talked about the lack of full-time jobs, people started getting such jobs. The risk is that the number of long-term unemployed will start to fall in a few months’ time, and they will have to look for another selective statistic to cite. Such talk will not do them any good, because people will see through it.
It is therefore time for the Labour party to think more carefully and more long-term about what it can offer this country, because right now it can offer very little indeed. This Government can and rightly do now say that we cannot give back the keys to the people who crashed the car, particularly when they are still drunk, still will not listen and still have not learned anything, but will carry on and do it all again.
Oh, goodness! As my right hon. Friend the Member for Tottenham (Mr Lammy) said, I was very generous in giving way. I come back to the point that one in three councils do not have enough places to deliver the Government’s promised child care for disadvantaged two-year-olds. Today’s announcement will not come into effect until next year. I reiterate that parents need help now, because child care costs are putting parents off going back into work. I am very disappointed as a result of what we did not hear from the Chancellor today.
I listened closely to the Chancellor’s announcements on energy bills, but the best deal in a broken market is not a good deal. Energy bills have gone up by about £300 since 2010. As I said before, my constituents are facing the choice between heating their homes and eating. The Liverpool Echo, my local newspaper, carried out a special investigation last week that highlighted the experience of Merseyside pensioners, who are being plunged into fuel poverty by rocketing energy bills. Under the Government’s new definition of fuel poverty, my constituency is among the top three in the country for that challenge. Where was the help for those people with their energy bills in the Chancellor’s Budget? There was none.
We need proper reform of the energy market. We need to freeze bills so that we can do what needs to be done to ensure that we know the cost of the energy that is generated by the six companies that generate 70% of the energy in the UK. At the moment, we have no idea of the true cost of that energy. We need to create a transparent pool, so that we are all fully aware of what the companies are generating and the cost of that energy. We also need a regulator with teeth, which we do not have at the moment. There needs to be a means by which people can properly compare and contrast prices, as they can for mobile phone bills. That is not possible at the moment because we do not have single standing charges and unit prices that can be compared. Again, there was nothing from the Chancellor to help not only households and individuals but businesses that are struggling to pay their energy bills.
On the day of the Budget, we have also heard the unemployment figures. The hon. Member for Dover (Charlie Elphicke) just talked about the statistics, but when we talk about long-term youth unemployment, we are talking about young people in my constituency who do not have employment, which will have long-term effects—[Interruption.] The hon. Gentleman gesticulates that the number has come down. In my constituency, the number of long-term unemployed young people—those who have been out of work for more than a year—has gone up by more than 60% since 2010. That is a waste of the talent of our young people and has long-term implications not only for them but for the wider economy. The young people who are not employed at the moment bring a cost to our economy of £3.2 billion over their lifetime. In my constituency, 835 young people are out of work, and I wanted more from the Chancellor to address that situation properly. We know that the current schemes are not working, and that less than 20% of young people locally are getting into work. We need to do everything we can.
I will not, because I have less than a minute left.
Labour’s policy is to provide a jobs guarantee by repeating the bankers’ bonus tax. I listened to the Chancellor to hear whether he might do that, but there was nothing on that front, even though Barclays alone has increased bankers’ bonuses by 10% to more than £2.5 billion. Would not some of that money be well invested in the young people of our country, to ensure that they are in work and have a chance throughout their lifetime? We need to get the long-term unemployed, including the young long-term unemployed, off benefits and back into work. A jobs guarantee through repeating the bankers’ bonus tax would have achieved just that.
My constituents will be dismayed by the Chancellor’s Budget. I am sad that he could not find it in himself to acknowledge the cost of living crisis that millions of people are experiencing every day, including in my constituency. The Government are so out of touch, and today’s Budget has reinforced that.
(10 years, 5 months ago)
Commons ChamberWhen the last Government were in office, unemployment among young people rose by 45%, so we are not going to listen to any ideas that Labour Members may have about it. The best way of cutting unemployment, whether long-term or otherwise, is to establish a growing economy that creates jobs. In the last four years, our economy has seen 1.3 million jobs created, and more people employed than at any other time in history.
Youth unemployment in Dover and Deal has fallen by 25% in the last year, having increased by 50% in the last Parliament. Does that not show that it is important for us not just to have a long-term economic plan that is working but to do more to repair the damage done by the last Labour Government?
My hon. Friend is absolutely right. We need to stick to our long-term plan to ensure that we have a growing economy that creates jobs and gives people the financial stability that they need, and the biggest risk to that plan would be our adoption of Labour’s policies of more borrowing, more spending and more debt.
(10 years, 7 months ago)
Commons ChamberIt is a real pleasure to follow the hon. Member for West Bromwich West (Mr Bailey) who made an interesting and well-informed speech.
My general philosophical approach is very much that we want to build a land of opportunity and aspiration where anyone can do well and where they have the tools to succeed and achieve and even reach for the moon. There is a flipside to that form of opportunity politics—that Conservatism—and that is that we also need to protect people from being taken advantage of. In too many cases, there is a history in this country of lax regulation, which has enabled people to be taken advantage of: water and power companies not properly regulated with rising bills; the banking system was not properly regulated and spawned payday lending; a tax system that was lax and weak and allowed industrial-scale tax avoidance, which was unacceptable; and employment law that is not properly regulated, even though it was previously reviewed and zero-hours contracts were allowed to carry on. In too many cases, this Government need to protect people and make sure they are not taken advantage of. In many instances action has been taken, however, and I welcome the action on payday lending announced by the Chancellor.
The problem is not a new one; it has been around for a while. I remember a client phoning me up back in 2006 and saying “I’m thinking of buying a payday lender.” I said, “What is that? I haven’t heard of it.” He explained what it was and I said, “This is a car crash in the making.” He said, “It’s great: it’s a rising a market and I can make lots of money out of it.” I said, “Don’t do it. People will not understand. It will not be acceptable, and sooner or later it will cause a massive scandal in this country and an enormous row,” and that has turned out to be the case. I am glad to say he did not take on that business, but many others did: they saw an opportunity and took it, and what has happened is wholly unacceptable in too many cases.
Many people say we should not take any action on payday lending because that will drive people into the hands of loan sharks, but the evidence from the Bristol university department for business was that when customers could not access short-term loans, most would either go without or approach a friend or relative for help. It showed that a small number would try to borrow from other short-term lenders, but that the use of an illegal lender was not an option that the vast majority would consider. It does not seem right, therefore, to say that most people would end up going to loan sharks.
I want briefly to look at the international comparators. This is not simply a UK problem. It is a problem worldwide, and many other countries have taken action to try to deal with it. The hon. Member for West Bromwich West spoke movingly about advertising and related issues. I want to talk about interest rate caps and what we can do to control the excessive amount of money that is often demanded by payday lenders.
The USA has introduced caps, and the overall result has been substantially to restrict the market. Payday lending has been dramatically reduced as a result. Other countries have gone down different routes. Canada, for example, has introduced substantial regulation for short-term loans and established a payday lending education fund. It has also introduced a two-day cooling-off period during which customers can cancel their payday loan, and banned the inclusion of fees in the value of the loaned amount. The payday loan industry has set up its own industry body. There are also rules banning the rolling over of payday loans; the issuing of multiple payday loans to the same customer; the taking of collateral as security; and the charging of an interest rate greater than 90 cents a week for the first 13 weeks. Canada has thus produced a system of regulation that involves capping amounts of money, rather than capping interest rates.
Japan has introduced an interest rate capping system, set at around 20%, which was implemented in 2010. Australia has introduced an interesting system of payday loan regulations, as many hon. Members will be aware. It has looked at a form of regulation similar to the one we are considering. Those international comparators suggest that we should consider not only an interest rate cap but perhaps a cap involving a particular amount per £100 over a set length of time, and I hope that hon. Members will consider that.
A bit closer to home, in Oldham—and elsewhere in this country—there are good examples of credit unions. They charge very low interest rates and work in the collective interest, which I am sure we all agree is a good thing. Does the hon. Gentleman agree?
I am in complete agreement with the hon. Lady. Credit unions are a good idea, and mutual finance is a good thing. I am a fan of mutuals, having made the case for my own port of Dover to become a people’s port—a community mutual. We have mutuals in the financial sector in this country, but they are rarely mentioned. What happened to the building society movement? Why is no one fighting for that these days? Building societies are mutual organisations. We should look again at what we can do with them and at the kind of organisations they could become. They are substantial organisations, and this is something we should look at. In Australia, the credit unions have been more successful than they are here. Here, we have a building society movement, and we should look at developing it.
I want to touch on a further concern. Why is the payday lending industry there at all? Why has it arisen? I believe that bank overdrafts have a lot to do with it. Anyone who has an unauthorised overdraft will be charged 20 quid for a letter and 50 quid for the unauthorised overdraft fee, plus an extra amount per cheque or payment. That is wrong; it is egregious. When people have run out of money and cannot get an authorised overdraft, it is the behaviour of the banks that can help to drive them to the alternative credit providers. A practical step would be to look into the banks’ behaviour. We need to strike a balance between protecting customers from being stung by the banks when they have short-term cash-flow problems and making access to irresponsible credit too easy for them.
I propose that the banks should operate a grace period, so that people who ended up with an unauthorised overdraft would not get hit with fees immediately. They should be able to overdraw for a short time without being charged. That would reduce the numbers being forced to seek alternative forms of credit. There should also be a wide-ranging review of the way in which the banks handle overdrafts, and of their ability to help people who find themselves short of funds in the short term. Most of us in the House want to defeat the payday lending industry, and the best way to do that is to provide an alternative for people who do not have much money and who are in real need of assistance. I am also concerned about the EU consumer credit directive. The ability of lenders to operate across EU borders makes it possible for payday lenders to bypass anything that we decide here. That needs to be carefully considered and addressed.
Finally, what more can we do, above and beyond what the Financial Conduct Authority is proposing to look at when it takes over in a few months’ time? We could consider the following measures: setting a ceiling on the total cost of borrowing, rather than setting an interest rate cap; seeking reform of the European consumer credit directive; introducing tougher sentences for illegal lending, including mandatory prison sentences; enabling victims of illegal lending to recover all payments made to the lender, plus extra, rather like what the Labour Government did with tenant deposit schemes; requiring payday lenders to form an accredited industrial body; and requiring banks to give a grace period of three working days before customers are charged for unauthorised overdrafts.
(10 years, 7 months ago)
Commons ChamberNot only are Government Members not 100% behind the national minimum wage; they cannot even bring themselves to say “national minimum wage”.
The Government are asking the Low Pay Commission to review the minimum wage with a view to increasing it. Does the hon. Lady welcome that—yes or no?
The hon. Gentleman is a little behind the curve. That is what the Low Pay Commission does: that is what we set it up to do.
The failure to enforce the legislation properly has contributed to a worrying rise in in-work poverty. It used to be thought that if someone got a job, put in the hours and put in the effort, they would be paid enough to keep them and their family out of poverty and have a decent standard of living—that was the deal. But today, for the first time since records began, the majority of people in poverty are in work and the majority of children in poverty are brought up in working households. It is just not good enough that in today’s Britain an honest day’s work does not bring in a decent day’s pay.
In line with the commitment to enforcement, I think we have produced more resources for that. My hon. Friend the Economic Secretary to the Treasury, who will be summating, may want to say a little more about that, but we recognise that the enforcement authorities need resources to do their job.
I thank my right hon. Friend for giving way. As a Conservative Member of Parliament representing a constituency with a lot of social deprivation, I support the national minimum wage and the work of the Low Pay Commission, which is really important. In response to my intervention, the shadow Secretary of State dismissed the Low Pay Commission and talked about restoring the value of the minimum wage. Does my right hon. Friend know what exactly restoring the value of the minimum wage means and how much that would cost?
I welcome the hon. Gentleman’s support and I know that it is shared among his colleagues. This is a historical issue: it has now been laid to rest. I will talk a little more about the mandate of the Low Pay Commission and the fact that successive Secretaries of State, including me, have respected its judgment, which is non-political, non-partisan and represents both the union and employer standpoint.
Let me talk about the wider economic consequences. The shadow Secretary of State talked with a real sense of righteous indignation about things that are, frankly, blindingly obvious. We have had a massive financial crisis, the biggest in our history—certainly in modern times. As a result, the country is poorer. That is a matter of fact. It is not a polemical point: the country is poorer, and that has been translated into lower earnings. That is simple economic reality and nobody is disputing that.
In the wake of the economic crisis in 2008-09, we now know that British GDP fell by 7.5%. That was more than after the great crash in 1929 and worse than in any other western country. I am not going into the business of who did what when; I am just recording a matter of fact. Recession inevitably followed the financial disaster and real earnings have been affected. The shadow Secretary of State is right on simple matters of fact: real earnings fell by 7% and the minimum wage fell by 5%. That is a matter of fact. What I find so very difficult to understand is that the Opposition Front Benchers—it is not just her; her colleagues are the same—have seen the greatest economic disaster in modern economic history and apparently not noticed it, and they have not taken any account of the inevitable economic consequences. What matters is that the Government of the day seek to mitigate those effects.
(10 years, 8 months ago)
Commons ChamberWe are cautious about that because, as a Labour spokesman in the House of Lords said in 2010:
“the OBR should not become embroiled in political controversy.”
I understand that the Labour party is seeking ways to improve its economic credibility. I suggest that a better, more obvious approach would be to change the shadow Chancellor.
Does my hon. Friend agree that, while we are all indebted to the shadow Chancellor for this idea and so much more, the OBR is working well and should not become a political football or controversial?
(10 years, 8 months ago)
Commons ChamberI am happy to look further at the hon. Gentleman’s point. The rules on pension protection and the pensions regulator are designed to prevent people from deliberately crashing their pension scheme to avoid their liabilities, and for those liabilities to fall on to the state or other companies. I am happy to look at any specific case he has. On his broader point on the economy, unemployment has come down by 11% in his constituency. The measures I announced today—abolishing the jobs tax for young people and the £1,000 discount for shops, cafés and pubs on the high street—are all designed to help small businesses, which are the engine of any recovery.
May I welcome the investment in infrastructure, particularly flood defences? In east Kent in the next 24 hours, we face a difficult time and the investment in the flood defences in the town of Deal, which I represent, will help to keep the town more secure than it otherwise would have been.
I, with my hon. Friend, wish the people of Dover and Deal the best as they endure this difficult weather. I join him in praising the emergency services who will help people in that area through this difficult time. The flood defences in Deal will mean that such areas are better protected from adverse weather. The only way to afford such schemes is by controlling public spending and putting it into priority areas.
(10 years, 9 months ago)
Commons ChamberThat is a good point, Mr Deputy Speaker, so I will be brief in talking about the hon. Member for Spelthorne and the Free Enterprise Group. The Free Enterprise Group published plans to slap a 15% increase on essentials such as food and children’s clothes through VAT and to triple the tax on heating bills. A number of hon. Members who are in the Chamber today are members of the Free Enterprise Group. They might be shuffling away from the hon. Member for Spelthorne now.
Perhaps the hon. Gentleman wants to account for that plan. Does he agree with charging VAT at 15% on food and children’s clothes and increasing the tax on heating bills—yes or no?
What was the size of the deficit at the time of the general election in 2010? Was it £150 billion-plus—yes or no?
There is no answer to my question from the hon. Gentleman. I have given him the figures for the national debt.
The extremism and rightwards shift in the Conservative party are visible for all to see. As we can tell from the tactics that they are using, the Prime Minister, the Chancellor and all the Conservative Back Benchers are scraping the barnacles off the 1992 election strategy. They have a barely disguised plan to fight the next election in the gutter. Their tactics are visible for all to see.
The Prime Minister once spoke fondly of environmentalism while hugging the huskies. Perhaps I should ask this on a point of order, Mr Deputy Speaker, but is it using unparliamentary language to quote No. 10 when it allegedly said that it wanted to cut out all of the “green crap”? I know that that is appalling language, but it is a quotation from No. 10 Downing street. The Government are certainly cutting some things out: 578 Sure Start children’s centres have been cut, 76 NHS walk-in centres have been cut, 48 accident and emergency departments have been shut, 200 ambulance stations have been axed and 6,000 nurses have gone from the NHS, but 707 food banks have opened. Perhaps Government Members regard that as a success.
My hon. Friend makes a good point. He reminds the House that the previous Government began running a deficit from 2001, way before any financial crisis. They ran a structural deficit from 2006 onwards. Hon. Members will remember that the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), tried to deny that until he was corrected by the International Monetary Fund.
Without a credible economic plan, we cannot have a plan for helping families with living standards challenges. Anyone, including the Labour party, can come up with a list of interventions, but they are completely meaningless and unsustainable if there is no long-term economic plan to back them up. Labour’s only plan is for more spending, more borrowing and more debt, which is exactly what got us into this mess in the first place.
I have a deep concern that many hard-working people lost earnings when interest was suspended on Co-op bonds in March. I am concerned that, 11 days later, it lent substantial amounts of money to the Labour party. Will the inquiry cover the bank’s relationship with the Co-operative party and whether the bank was unduly influenced by the national executive committee?
My hon. Friend raises a good point, but he will know that I am not in the best position to answer his question in detail. Perhaps the shadow Chief Secretary will rise to his feet to do so. I understand that he is a Labour and Co-operative Member and receives money from the Co-op. I am happy to give way if he would like to answer the question.
(10 years, 9 months ago)
Commons ChamberI am very grateful to my hon. Friend for that intervention. She makes an important point that applies to both businesses and charities. Taking on the first member of staff can be the most difficult step, as it is a big event for a business. If we are able to help and to reform our tax system to enable businesses or charities to take that member of staff on without paying the jobs tax—employer’s national insurance contributions—that will clearly encourage those businesses, which, I hope, will then take on further staff and expand.
Will my hon. Friend confirm that the measure was the largest tax cut in the Budget? Does he therefore not think it is all the more surprising that there are no Labour Members here to scrutinise a major plank of that Budget?
Another observation one could make is that there are no Labour Members of Parliament here because they are—[Interruption.] I apologise. That remark is unfair and I withdraw it. There are the Labour Front Benchers and now three Back Benchers. Who knows? We might reach five or six by the end of the debate. Perhaps Labour Members have confidence in, and enthusiasm for, the Bill and can find nothing to criticise. However, we look forward to the speeches to come later. On that note, as the hon. Member for Bolton West (Julie Hilling) has waited so patiently, and as it is about time that we heard from a Labour Member, I give way to her.
The striking point about the most recent growth numbers is that they demonstrate growth in every sector, and that is very encouraging. I began by saying that the economy in the mid-2000s, say, was very dependent on financial services and on London and the south-east. Of course we want a successful financial services sector and we want London and the south-east to do well, but it is also important that growth is better balanced throughout the United Kingdom, and the Government continue that commitment.
While hesitating to introduce any controversy into the debate, does my hon. Friend agree that the hikes in the jobs tax under the previous Government destroyed jobs, and that this Government’s policy of reducing the jobs tax, particularly in this Bill, will enhance job creation and aid the recovery?
I do agree. Given that we want to increase employment, it would not have been sensible to undertake the increase in national insurance contributions that the previous Government intended. That was clearly a mistake. I am sure that my hon. Friend will be delighted to know that not only are he and I in agreement but Tony Blair said last week that he thought it was a mistake.
(10 years, 11 months ago)
Commons ChamberWhat 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.
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.
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.
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.
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.
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.
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.