Budget Resolutions and Economic Situation

Diana Johnson Excerpts

Thursday 9th July 2015 Commons Chamber

[Diana Johnson (Kingston upon Hull North) (Lab)]

I should like to start by congratulating all those who have made their maiden speeches this afternoon. I pay particular tribute to the excellent speeches by my hon. Friends the Members for Bradford South (Judith Cummins) and for St Helens South and Whiston (Marie Rimmer).

It will be easy for me, as a Hull MP, to keep my remarks about the Budget fairly brief. That is because the words “Hull” and “Humber” did not appear once in the Chancellor’s speech, or in the Red Book, despite the northern powerhouse being a key policy for the Government and Hull being an important city in the north. As my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) said, we all want to broaden, deepen and strengthen the economy in the north, but it looks as though the northern powerhouse has now become the northern power cut, particularly in regard to investment in rail improvements.

Just a few days ago, the Minister with responsibility for the northern powerhouse, the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton), appeared not to know where the north was, so I shall help him by saying that we are the ones who had our rail investment paused, unlike those in the south, where no such pause has taken place. But never mind—we have been offered a plastic Oyster card to make up for the cancellation of the electrification of the TransPennine Express route and the lack of any new rolling stock.

I also want to talk about renewables. The Humber area is working hard to be the UK’s renewable energy estuary, in the interests of energy security, of fighting fuel poverty and climate change and of growing this important area of our economy for the nation. It is therefore unhelpful to keep getting so much hostility to renewable energy from those on the Government Benches. The Budget introduces a change to the climate change levy, which will now also apply to companies that use renewable energy. That will effectively be a charge of £490 million for companies that have switched to renewable energy, and it will discourage firms from using renewable energy in the future. By 2020, the cut will amount to £910 million a year, which will discourage investment in renewable energy sources.

The Chancellor claims that this is a Budget for “working people”. The centrepiece is the pledge of a living wage of £9 an hour by 2020 for those over 25. Younger workers get no such pledge. That is not the living wage. Of course we welcome the increase in the minimum wage—we called for it in our manifesto—but what the Government have announced will not be a living wage because the rate will be too low by 2020. Outside London, the living wage needs to be over £10, not £9, to be worthy of the name. Also, the rate proposed for 2020 is lower than the current London living wage, which is £9.15.

Worse still, the proposals do not compensate for cuts in tax credits. This lunchtime, Paul Johnson of the Institute for Fiscal Studies has said that

“there is simply not enough money going into the new minimum wage to anywhere near compensate…people on tax credits”.

We should be cutting the need for tax credits rather than the tax credits themselves. It is a fact that 75% of children in Hull North live in households that depend on tax credits. They will be worse off overall, just as they were at the end of the 2010 Parliament. One of my constituents, Maureen Craven, will also be worse off even though she is doing the right thing. She told me:

“I have had my grandson living with me since he was four months old. He is now seven years old and I rely on my child tax credit to buy shoes and school uniform.”

Such families, who are doing the right thing, will be affected by this policy.

It is also difficult to take the Tories seriously on the living wage when they have failed to enforce the legal national minimum wage. There have been only two prosecutions for minimum wage non-payment since 2010, and the number of inspections for compliance is falling. Will the Government get tough with big businesses to enforce a living wage? Will they help small businesses that have genuine fears about being able to afford the living wage? Will lower-paid local government workers, who will have years more of 1% pay increases, be paid at the living wage level? Will councils be funded for the costs they have faced—in the light of the cuts—over the past five years? As my hon. Friend the Member for Sheffield South East (Mr Betts) said, there are already growing concerns about the care sector and how it will cope with an additional cut of £1.5 billion that will have to be borne by local authorities.

When it comes to motivating the richest to increase productivity, it means, in the Tories’ view, boosting their income, including unearned income. There is no austerity for them. That is because the Tories have always thought that all wealth creation comes from those at the top of the income scale. For the poorest workers, and everyone in the public services, it involves cutting real incomes and redefining child poverty to cover up the deed. Their welfare to work is really welfare to charity, as we will see, I am sure, at Hull’s food banks. It is the food banks that will need the longer Sunday opening hours, and not local shops, as the Chancellor announced in the Budget.

This was a Budget of selective austerity. It will leave people in a more complex poverty trap. They will have more debt and their work will not pay. After the millionaire tax cut, children of millionaires now get to inherit more unearned income to fund—in the Chancellor’s own words—“their lifestyles”. Meanwhile, aspiring youngsters from working families in Hull trying to get the qualifications for skilled jobs that we want in the city see student maintenance grants axed and turned into loans, and the cap for tuition fees removed.

Let me raise very quickly my concerns about limiting support to two children. It is a particularly ill-thought through policy and will lead to more and more children living in poverty. I am appalled—I use that word advisedly; I do not normally speak like this—by what the SNP spokesperson highlighted yesterday. She spoke about the proposal that a woman who had been raped and conceived a child would, if it was a third child, have to go to the DWP and provide evidence of the rape, and about the stigma that could be attached to the child. It is a disgraceful policy that the Government have brought forward.

As Jonathan Freedland stated today in the media, the rabbit that was pulled out of the hat was very thin. Under close scrutiny, things do not stand up. We will see falling incomes, especially in places like Hull and especially for lower paid women workers. The Chancellor talked about trying to improve wages for people in this country, but that will not be reflected in what this Budget actually delivers.