Finance (No. 2) Bill

Chris Evans Excerpts

Monday 15th April 2013 Commons Chamber

[Chris Evans (Islwyn) (Lab/Co-op)]

If there was one test that the Government put in place from the day that they got into power, it was reducing the deficit. Three years on, what do we see? Borrowing is increasing by £245 billion and there is no chance of the deficit being paid off by 2015. By 2016-17, debt as a ratio of GDP will be 85.4%. Those are damning figures.

On 23 April 2012, the Prime Minister said:

“We’re involved in an economic rescue mission, but we’re not just a bunch of accountants dealing with a deficit, there’s also a driving passion and vision to change this country and make it much more on the side of hard-working people who do the right thing.”

Unfortunately, those who work hard and play by the rules have seen the top earners in society get a tax cut of 5p. I will not denigrate success: there is nothing wrong with people striving to work hard and enjoy the fruits of their labour; aspiration is what the party I represent is about and it is something that we should believe in. However, if the Government could find a tax cut of 5p for the highest earners, why could they not do it for the middle-income earners, for the families who are worried about their jobs and for the people sitting around their kitchen tables today who see the price of their groceries going up all the time, inflation going up and real wages dropping by 2.4%? Who is standing up for them? Nobody.

We hear wonderful words and statistics from Government Members, but the simple fact is this: we are still stuck in the grip of an economic theory that failed. We were told that tax cuts for the very rich would trickle down through society. We were told that the highest earners would somehow create jobs. What did we see by the end of the ’80s? We saw a record recession in 1990, with more houses repossessed and more businesses going bust than ever before, all because of the belief that we should be on the side of those who ride in limousines, rather than those who go to work every day in their vans.

I believe in one thing. It may be old-fashioned, but I believe that work is the only way out of poverty and the only way to reduce the ills of this country. Having people in work and paying their taxes is the only way to reduce not only the deficit, but the national debt. It is up to this Government and to any Government, whether they be red, blue, yellow or whatever blue and yellow are when they come together, to create jobs and to reduce all the barriers to people getting into work.

What does the Bill do? We have heard Government Members lauding the right to buy scheme. We have heard them talk about getting more people on the property ladder, even though rents are through the roof and it is hard to get a deposit. The average age of a person buying their first house is now 37. At that age, my mother and father had already had two children and got divorced—they had already lived their life. Now, people of that age are still struggling to get on the ladder.

What is the problem? It is not home ownership or high rents, but the lack of housing in this country. Instead of following the pledge of the Labour party to build 100,000 new houses using the sell-off of the 4G spectrum, the Government have ignored the problem completely. How many people will take advantage of the right to buy scheme? Will it go on failing like it is? Only 1,500 people took advantage of it last year. That is not a scheme that will create a nation of home owners; all it does is provide warm words. Whether we are on the right or the left, we have to get to a point in this country where the best ideas are used. Surely, the best idea is to use the money from the 4G spectrum to invest in homes and thereby create jobs.

The next matter that I want to talk about is barriers to work. We can quote statistics all we want, but the simple fact, as Harold Wilson said, is that it does not matter what the employment rate is in the country; for an unemployed person, the unemployment rate is 100%. Most of the people with children whom I talk to in my surgery and around my constituency say that the biggest barrier to getting back to work is child care issues. That is the elephant in the room. We can talk about job creation schemes all we want, but if people have child care issues, their priority is to look after their child.

On 19 March, a Treasury press release lauded the

“New scheme to bring tax-free childcare for 2.5 million working families”.

When I saw that, I applauded it and thought that it was the way forward. However, I then found out that the scheme will not come in until 2015. That means that people who have child care issues now face cuts to their child tax credit. A family with two children have already seen a cut of £1,500 a year in their child care funding. There is not only a cut in child care funding; since 2010, there are 400 fewer Sure Start centres and early years budgets have been slashed. That affects the economy, because if parents cannot go back to work, whether they are mums or dads, it adds to the welfare bill. I genuinely believe that it is economic madness to cut jobs or not allow people to go back into work if it creates a welfare bill that adds more and more to the deficit.

I will move on to another barrier to work. Like many hon. Members, I am bombarded by e-mails and letters from the FairFuelUK campaign. That must be the campaign from which I have received the most e-mails, letters and communications. However, those communications are coming not from a national campaign, but from the ordinary motorist in work. He is struggling to get to work. Again, the Government laud their freezing of petrol duty in September and say that they are on the side of hard-working families and people who need their car for work.

[Andy Sawford]

Does my hon. Friend agree that if the Government had taken the sensible advice of shadow Treasury Ministers to cut VAT, that would have provided much more significant help with the price of fuel than their small offering?

[Chris Evans]

I thank my hon. Friend, because I was building up to that point.

The Conservatives like to tell people that they are the party of low taxation. They might have cut income tax in the ’80s, and cut it now from 50p to 45p, but the one thing they have used over and over again is value added tax. Under the Conservatives, VAT has risen from 15% to 17.5% to 20% as it is now. That is the tool they have always used. It is all very well someone being taxed on what they spend or buy, but everybody has to pay VAT, whether they are a struggling pensioner, a student who needs clothes or equipment for university, or a single parent. Everybody has to pay VAT, whether they are a duke or on the bins.

When VAT is put on petrol, it is instantly put up by 3p. The Government’s proposal means absolutely nothing. This Government could show some bravery and leadership by reducing VAT. I know they will say that once VAT has been put on some goods it has to stay, but that does not mean it has to stay at 20%. When the Labour party was in power in 1997, we reduced VAT on fuel bills to 5%. It has been done before; a precedent has been set and it can be done again.

When I look around my constituency I see so many hard-working people who are being squeezed. The most heinous thing, which I hear all the time, is people being demonised because they claim benefits, even though six out of 10 people who claim benefits are in work. That says one thing: work is not paying. What do the Government do? They make a tiny increase this week to the minimum wage. For me, the minimum wage is the cornerstone of welfare reform—a decent living wage. I am sick to death and tired of hearing my constituents be demonised and criminalised because they find themselves unemployed. They are all pushed together in sweeping statements; they are called scroungers, and being from the valleys that hurts me, because I know how proud is the tradition of working. That is the most heinous thing.

One thing the Government could do to prove that we are—to use a phrase that has not been heard for the past two years—“all in this together” is repeal the bedroom tax. That is close to my heart, because the average person in Islwyn will pay an extra £91 for having an extra bedroom. There will be pensioners who have lived in the same council house all their lives, brought up a family and made a home, but who are being kicked out because they have a three-bedroom house. What are they to do—bring in a lodger or someone they do not know? No. In my constituency of Islwyn in Caerphilly county borough, 80% of my constituents who are renting will be affected for the simple reason that in 1945 the Labour Government did not build council houses just to house people: we built family homes. We built two and three-bedroom houses in which families could grow and thrive in a safe environment. That was a cornerstone of Aneurin Bevan’s vision as Housing Minister—a contribution that people often forget.

I am concerned that ordinary people are getting squeezed all the time. The Finance Bill represents an opportunity for the Government to show that they can be caring and compassionate, but this opportunity has been wasted. It was not a steady-as-you-go, as-you-were Budget, and the figures bear out the situation. Growth in this country is anaemic; it is flatlining and needs investment. The Prime Minister’s mantra at Prime Minister’s questions every week is the same: “All Labour wants to do is borrow more money; it wants to go the same way as Greece and spend it all.” To me, however, it is an absolute no-brainer. We are already borrowing £245 billion, so what is wrong with trying to invest that in creating jobs and building new houses?

I oppose the Second Reading of this Bill because it does nothing for the people we seek to represent. This is not about steady-as-you-go; the Government have failed in their primary aim of reducing the deficit, and therefore the Bill does not deserve a Second Reading.