Management of the Economy and Ministerial Severance Payments

Dan Poulter Excerpts

Tuesday 15th November 2022 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I draw the House’s attention to my declaration of interests and the fact that I am a residential landlord.

We have discussed the cost of living on many occasions in this place, but as the fallout of the disastrous mini-Budget becomes apparent, I welcome the opportunity to discuss the impact on my constituents of soaring mortgage rates. I was disappointed to hear the Minister repeatedly speak of the need to restore credibility and restore stability without really acknowledging the cause of that instability and the lack of such credibility in the first place.

The Bank of England has said that a typical mortgage holder will see annual repayments rise by just under £3,000 over the next year, but according to the Resolution Foundation, at least £500 of that is purely due to the mini-Budget. The Joseph Rowntree Foundation has estimated that an extra 120,000 households in the UK—about 400,000 people—will be plunged into poverty when their current mortgage deal ends, and about 750,000 households or 2.4 million people with a mortgage are already in poverty. That is because, although interest rates have been historically low, there is a crisis of housing affordability. Housing now accounts for such a big proportion of people’s monthly income that they cannot afford any additional shock, whether that is in energy prices, food, council tax or, indeed, their mortgage interest payment.

It is not only mortgage holders who are affected. Those in private rented accommodation, who are already paying even more of their monthly income in housing costs than mortgage holders, are likely to be impacted too, as those who cannot pay their mortgage are forced to leave their homes and increase competition for rented homes, and buy to let landlords either leave the market or pass on higher mortgage costs to their tenants. Rented accommodation is already impossible to find in many parts of the country. I have a constituent who was asked to put down a deposit on a flat in a small market town in North Shropshire before he had seen it, and when he went to pick up the keys, he found a dilapidated, uninhabitable property. Local employers report being unable to attract workers because of the shortage of housing available to them, so any crisis in housing market will send shock waves throughout the economy and worsen this difficult situation.

That is on top of the extreme pressure that household finances are already under. People are paying twice as much to heat their homes this winter as they did last year, and food prices are soaring. The impact is even worse for people living in rural constituencies such as North Shropshire, where studies show that even before this intervention everything cost more than for their urban counterparts—whether that is food, housing, council tax, transport or fuel—alongside the fact that average wages in rural areas are significantly lower. Thus far, we have seen very little done to help those in rural areas, but over the weekend we have seen threats to cut the essential public services that are already thin on the ground here, threats to cut the pensions and benefits of those who are struggling to make ends meet, and threats to raise taxes for those working hard just to keep their heads above water.

So imagine such people’s fury at the fact that the Conservative turmoil has led to huge numbers of former Ministers being able to claim payouts, with the two reshuffles carried out since July potentially costing taxpayers hundreds of thousands of pounds. Ministers who were sacked just months ago but have since been reappointed are still able to claim thousands of pounds each in redundancy pay, as long as they have been out of a ministerial post for only three weeks. For example, the right hon. Member for Esher and Walton (Dominic Raab), who was sacked by the right hon. Member for South West Norfolk (Elizabeth Truss) in September but was later reappointed as Justice Secretary, would be eligible to receive £16,876, despite having been out of a ministerial job for seven weeks. To put that in context, that would be enough to rent a two-bedroom flat for more than two years in Whitchurch in my constituency. Everyone understands the need for legislation to provide severance payments, but as the hon. Member for Glasgow East (David Linden) pointed out, surely this legislation was not intended for this situation of chronic instability. After all, these Ministers have continued to draw their basic MP’s salary, at almost four times the national average, throughout the period of not having their ministerial role.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

The hon. Lady is making a very fair point. Does she think one thing that could help to ameliorate this situation is if we had a rule, as we have for many public sector employees, that if someone receives a redundancy payment but goes back into a job that is similar to or the same as the previous job, they do not receive the redundancy payment?

[Helen Morgan]

I thank the hon. Gentleman for his intervention, and I think that is a sensible suggestion. However, we also need to reflect on the fact that, in the case of the former Prime Minister and Chancellor, they did not leave their jobs through redundancy; they were sacked for incompetence, and that would not normally lead to a severance payment. There is no question but that this chaotic political situation has caused farcical revolving-door bonuses, and I believe this money should be returned to the Treasury to help plug the hole for families struggling with the cost of living or, indeed, to help plug the hole created by the disastrous Budget.

I urge the Government to listen to the proposals made by the Liberal Democrats, because over the summer we have been leading the way on action to tackle the cost of living crisis. We were the first to call for a windfall tax on the record profits of the oil and gas giants, and we were the first to call for a freeze on energy bills over the summer. On top of this, we are the first to call for the Government to provide extra targeted support for mortgage holders on universal credit. We have proposed a mortgage protection fund, paid for by reversing the unfair and unnecessary tax cuts for the big banks, and we would like these measures targeted at those most at risk of repossession. We are also calling on the Government to act urgently to protect renters, to ban no fault evictions and to stop landlords threatening to evict current tenants just so they can hike their rents. We want to produce longer tenancies of three years or more, with fair annual rent increases built in, to give renters the certainty they need.

When those renters see their position become even less secure and those with mortgages struggle to make ends meet or even risk losing their homes, they must be sickened to see the potential scale of Government severance payments. When they see the Chancellor appear on TV to warm them up for cuts and tax rises, I imagine they would not expect the Ministers who have caused this situation with their terrible misjudgment to be benefiting financially. I ask the Minister to confirm whether those Ministers entitled to payments who were subsequently reappointed have accepted their initial severance payouts. Have the ex-Prime Minister, Cabinet members and the Chancellor who caused this situation waived their severance payments, and will the right hon. Member for South West Norfolk, having severely damaged the UK economic outlook, draw expenses of in excess of £100,000 a year while my constituents lie awake at night worrying how they are going to make ends meet?