Management of the Economy and Ministerial Severance Payments

Danny Kruger Excerpts

Tuesday 15th November 2022 Commons Chamber

[Lucy Frazer]

The hon. Member is cherry-picking—and, of course, that particular announcement was of measures that will help the economy. He will know that, to help the most vulnerable, we have cut fuel duty and increased the personal threshold for national insurance contributions, raising it from £9,500 to £12,500. We are providing the cold weather payment, the warm home discount and the increase in the national living wage. For those with young children, we are providing £200 million a year to support the holiday activities and food programme. To help people into jobs, we have the kickstart and restart schemes and the skills bootcamps. We are helping vulnerable people across the board. Moreover, we have been doing so over the past year as these challenging circumstances have manifested themselves. [Interruption.]

[Danny Kruger (Devizes) (Con)]

My right hon. and learned Friend is reciting a list of all the generous support packages that are in place while facing a barrage of chuntering from the Opposition. Does she think they are aware that global energy prices have risen eightfold in the last year thanks to Putin’s invasion? That is causing the inflation that the whole world is suffering. European countries have higher inflation than the UK, and the Government are doing what they can to help households.

[Lucy Frazer]

I am grateful to my hon. Friend for that intervention, because I think it is really important to be honest with the British people about the challenges we face, why we are facing them and, therefore, how we can deal with them. To suggest that they are simply being caused by an event that happened two months ago is simply wrong, and Opposition Members know that.

As well as providing immediate support, we have focused on doing everything we can to get our finances in order domestically, because the risk of higher inflation becoming entrenched is the greatest danger. Sound money and a stable economy are the best ways to deliver what the hon. Member for Wigan asked for: lower mortgage rates, more jobs and long-term growth. We have taken every opportunity to do that in the first weeks of this Government—to restore credibility to the public finances, being up front about the enormous task ahead—and the markets have responded positively to what we have done and the direction in which we are going.

Let me now deal with a specific issue raised by the hon. Member for Wigan, that of interest rates. It is important to point out that the pricing and availability of mortgages are not decided by the Government; they are commercial decisions for lenders in which this Government—indeed, any Government—do not seek to intervene. However, let me highlight four points that I am sure Opposition Members would like to hear.

First, as I mentioned earlier, we have already taken immediate action to secure the UK’s economic stability, demonstrating our commitment to fiscal discipline. That has provided stability for the markets, including mortgages. Secondly, although I recognise that many people are concerned about their mortgage payments and do not want in any way to diminish their real and legitimate concerns about the cost of living, about 75% of residential mortgages are on a fixed rate and are therefore shielded from rate rises in the near term. Moreover, because of changes that have been made to the regulatory regime introduced by the coalition Government applying the lessons of the last financial crash, the mortgage application process has been more rigorous, ensuring that borrowers will be able to continue to afford to make repayments. Today’s mortgage holders are therefore better placed to weather the changes.

Thirdly, the Government have some lines of support available aimed at helping people to avoid repossession, including support for mortgage interest loans for those in receipt of an income-related benefit. As I am sure the hon. Member for Wigan heard, the Government announced earlier this year that they would allow homeowners to access support for mortgage interest earlier than the current nine-month wait time. The details on that will follow shortly.

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[Patricia Gibson]

The public are becoming increasingly wise to the snake-oil salesman approach in which one thing is said, accompanied by handwringing and head shaking, but no real action is taken to tackle those who profit in a way that most people would find obscene.

If we listened to the Minister, we would think that the so-called mini-Budget had not happened at all. The name “mini-Budget” is ironic because it makes it sound small, but the damage it has caused is very considerable. This Budget revealed, for those who still harboured any vestiges of doubt, whose side the Tories are really on. The so-called mini-Budget sought to scrap the bankers’ bonus cap, reduce taxes for the most well off, cancel the planned increase in corporation tax, refuse to bring forward an extended windfall tax and weaken the rights of trade union members.

Labour’s opposition to the mini-Budget amounted to £24 billion out of £43 billion of tax cuts, and it was left to the right hon. Member for Hayes and Harlington (John McDonnell), as it so often is, to call this mini-Budget what it actually is:

“the most socially divisive Budget in a generation.”

I understand that Labour is a bit worried about upsetting hardcore Tory voters in England, but sometimes harsh language has to be used.

Once the markets took fright and Labour saw the extent of the mini-Budget’s fiscal irresponsibility, it demanded that the entire mini-Budget be reversed, which was not its original position. The Resolution Foundation noted that almost half the gains from the proposed tax cuts would have gone to the richest 5%, who would have gained £8,650 on average, while the poorest half of households would have gained £230 on average. Almost two thirds, 65%, of the gains from the personal tax cuts would have gone to the richest fifth of households.

Torsten Bell from the Resolution Foundation described the measures as a

“simply staggering…tax cut for richer households”.

Save the Children described the tax cuts as

“a hammer-blow to low-income families”.

There were £45 billion of unfunded tax cuts, almost exclusively benefiting the rich.

While all this was going on, the SNP in Scotland was being urged, not least by the hapless hon. Member for Moray (Douglas Ross) among others, to follow the Tories in Westminster in entering the bowels of tax-cutting hell, where the most well off enjoy the windfall of a tax-cutting bonanza. Of course, he U-turned on this, as he so often does. It is often hard to tell if he is going somewhere or coming back.

It was, quite frankly, immoral for such a Budget to be delivered when so many are struggling to pay their bills, and the consequences of announcing these measures—again, it is difficult to call it a mini-Budget given its consequences—were catastrophic. The pound dropped by nearly 2% against the dollar, to the lowest level since 1985. The IMF rebuked the Government for causing such damage to the economy, and international investors declared that the UK’s greater economic suffering than similar countries is a consequence of the “moron premium” it pays due to its terrible leadership under the Tories. The cost of this so-called moron premium stands at £30 billion.

For households across the UK, the cost of the Government’s staggering incompetence is still being counted. Forty-one per cent. of mortgage deals that had previously been available were pulled by the banks, with more than 1,700 mortgage products being reintroduced at rates 2 percentage points higher, leaving hundreds of thousands of families across the UK paying far more for their mortgage. Pensions almost collapsed, and the instability within the UK was the talk of the international steamie. The Minister talks about restoring financial stability, but such urgent measures would not have been needed had the Government not caused such instability.

[Danny Kruger]

It is true that mortgages are at their highest rate in 10 years, in Germany. Does the hon. Lady blame the mini-Budget for that? If not, what does she think might be happening?

--- Later in debate ---

[Naz Shah (Bradford West) (Lab)]

May I first respond to the contribution of the hon. Member for Newbury (Laura Farris)? “It’s Ukraine; it’s everything else in the world,” the Government keep saying, but the disaster was cooked up in No. 10, and my constituents and those of Conservative Members are paying the price. The Government cannot keep faking it till they make it. They cannot carry on saying, “It’s this, that or the other to blame,” because the people out there—the public—can see what is happening. There is an air of desperation. The Government are going back to votes from 2010 and 2008 just to cover up their incompetence—

[Danny Kruger]

rose—

[Naz Shah]

No, I will not give way.

For the past 12 years, we have been seeing the crisis develop under the Government’s watch, but we will not be taking any lessons from their “Fake it till you make it” approach. Bring on the next general election—the sooner it comes, the better, because people will say exactly what they make of the Government. This crisis was made in No.10, and nowhere else. It was made by the Government’s own hierarchy. The current mortgage crisis—and not just this one—was created by the incompetency of the Conservative party. The current Prime Minister, then a leadership candidate, warned the former Prime Minister that her economic plan was a “fairy tale”, but still the former Prime Minister experimented with the economy and gambled with the livelihoods and the savings of our constituents—of working people—knowing full well that people across the country were enduring a cost of living crisis.

The Prime Minister now warns of more difficult decisions to come and a profound economic crisis—a nightmare, not a fairy tale—for hard-working people, homeowners, first-time buyers and private renters who will now pick up the tab. The horrific incompetence of the former Prime Minister and the former Chancellor, which the Prime Minister, in his first speech, seemed to describe as well-intentioned “mistakes”, means that millions of families are currently facing mortgage interest rates of 6.5%. For people in my constituency, and those in the wider Yorkshire and Humber region, this means a monthly increase of £348. According to analysis by The Daily Telegraph, 1.8 million homeowners on two-year fixed mortgage rates will need to refinance in 2023. Interest rates are currently at 6.49%, which means that millions of families will face eye-watering hikes in mortgage repayments.

I ask the Minister to put herself in the shoes of families living in Bradford West—that is a tall ask to be fair. This year’s statistics by the End Fuel Poverty Coalition show that 44.6% of households in Bradford West are living in fuel poverty, a stark increase of 22.2% on the comparable figures for 2019. More than one in three children—almost 40%—are living in poverty, literally forced to skip meals. Parents are now looking towards a cold winter, not knowing whether they can keep their families warm in the year to come or whether they can even keep their homes.

The economy has been in the hands of the Tories for more than a decade, during which we have seen a fall in home ownership rates and affordable homes, with 800,000 fewer households being owned by the under-45s. It is clear that, due to this Conservative-made mortgage crisis, it will be harder for people to afford their own homes, robbing generations of independence, comfort and stability.

Since 2010, there have been seven Conservative Chancellors, four in the past year alone. When they first came to power, the future of our young people plunged. It was a Conservative Government who cut the education maintenance allowance, tripled university tuition fees, closed down libraries and youth centres and, with austerity, dragged our economy into downward growth. They failed to build homes and to allow first-time buyers a chance to buy affordable homes. As a consequence of their recklessness with the mini-Budget, they are now attacking working people and working families once again.

Under the Conservatives, the price of food to feed our families is up, the price of energy to heat our homes is up, the price to save us from losing our homes is up, and the price of transport to get us to work is up. Everything has gone up; it is not going down. The price for businesses to invest more has gone up. The price to rent a home has gone up. The price for childcare has gone up. The price for Government borrowing has gone up.

After more than a decade of Conservative destruction, the people across Britain are simply fed up. Enough is enough, Mr Deputy Speaker. This is about party politics. This is about those on the Conservative Benches saving their own skins and not about putting Britain first. If they had been putting Britain first and not putting party over people, they would have called a general election weeks ago. All this has been caused by a decade of Tory Governments, and my constituents deserve better. The Government continuously say that this situation was not made in 10 Downing Street, and that the IMF and the Bank of England had to intervene because of what is happening in Ukraine. They try to measure us against other G7 countries. Their banks did not have to come in. They did not have a run on the pound. They did not have a run on their pension funds. We had that because of the Conservatives. That is what they did to our country. They made this mess, and they need to fix this mess.

On Thursday, I hope the autumn statement responds to my Bradford West constituents and does not put them into even worse poverty than they are in now—and if they really want to fix things, they should call a general election and let the people speak.