Working People’s Finances: Government Policy

Debate between Ellie Reeves and Bridget Phillipson

Tuesday 21st September 2021 Commons Chamber

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I beg to move,

That this House is concerned about the negative impact of Government policy on the finances of working people, with a growing squeeze on living standards caused by the £1,040 per year reduction to universal credit, the rise in National Insurance Contributions for low and middle income workers, increases in council tax, the freezing of the personal income tax allowance from April 2022, the increasing cost of household energy bills, the highest petrol prices since 2013 and the potential for the largest rail fare increase in a decade, the fastest rise in private rental prices since 2008, successive above inflation increases in childcare costs, and rising prices resulting from the supply chain disruption caused by worker and supply shortages; and calls on the Government to change the direction of its policies on these issues because they have created an avoidable and unacceptable burden on working people.

Before I begin in earnest, I welcome the Chief Secretary to the Treasury, the right hon. Member for Middlesbrough South and East Cleveland (Mr Clarke), to his new role and congratulate him on his appointment.

In our country today, working families face a sudden squeeze on living standards on a scale not seen for a generation: incomes are coming down; prices are going up, especially energy prices; taxes are going up; rents are going up; childcare costs are going up; fuel costs are going up; rail fares are going up. And with empty shelves in too many shops, restaurants closing because of meat shortages and now refrigerant shortages putting Christmas at risk, it is not just that people can afford less; there is also less to afford.

The people of Britain face an extraordinary squeeze on their living standards this winter—not simply by chance, but because of the choices made by Conservative Governments this year, last year and in the 10 years before. It is not some tragic, unforeseeable series of unhappy accidents that brought us here today. It is a string of choices that this Government have made, sometimes in the face of evidence, sometimes against advice, sometimes through a dogmatic refusal to try, and sometimes simply through a lazy and complacent failure to take the hard decisions that government involves. Time and again, through the pandemic and the long years before it, the Government have left issues to fester rather than taking action to address them, and then rushed at the last moment, only to find that it is too late and the damage is done.

I said at the beginning that incomes are going down, prices are going up, taxes are up, rents are up, childcare costs are up, fuel costs are up and rail fares are up. Let me take each one in turn.

Ten months ago, the Chancellor set out his policy of a public sector pay freeze. Like so much of his policy making, it was a triumph of short-term accountancy over rational economics. Public sector workers—council staff cleaning our parks in lockdown, police officers on the frontline, teaching assistants doing everything they can to give our children the best possible start in life—are not somehow separate from the rest of the economy. They buy food from the same shops as their neighbours working for private firms. Their children go to the same schools as private sector workers. They shop on the same high streets. They visit the same pubs and cafés. Taking money from their pockets while the recovery is so fragile—and it is so fragile—is taking money from our shops, our high streets, our economy. It is pulling demand out of our economy at the worst possible moment.

But the Government have not been content with clobbering those who did so much to keep our country running during the pandemic. In just a few weeks’ time, they are putting their hands in pockets once again: the pockets of the millions of families in our country—40% of them in working households, doing everything the Government have asked of them—for whom universal credit is what keeps them out of poverty. Again, let us be clear: many of the people being clobbered by this hit are the heroes whose bravery in the face of a then little understood disease kept this country running through lockdown after lockdown.

The Government are taking £20 each week from every family who receive universal credit. Government Members may choose to forget what that means. In the years ahead, their voters will remember the choices that they made. They will have heard from their own constituents, as I have heard, the growing worry and anger of the people they represent—the genuine sense of surprise that any Government could do this, mixed with a lasting fury that the Government really are doing this. Twenty pounds each week is not simply a number. It is school shoes, a gas bill, dinner on the table, and decent meals for the children.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

Thirty-seven per cent. of children in Lewisham are growing up in poverty. That is the stark reality of the cost of living crisis. Rather than addressing the issue, the Government are cutting those people’s universal credit and putting up their taxes. Does my hon. Friend agree that this is not the way to treat hard-working families and their children? Should not the Government keep the £20 uplift, cancel the cut and think again about the tax rises?

[Bridget Phillipson]

My hon. Friend is absolutely right. It is frankly indefensible. We knew that poverty was already beginning to rise before the pandemic even hit, and we know the impact that the cut to universal credit will have on family and household budgets, and on child poverty.

It is bad enough to be taking money out of people’s pockets as the recovery falters, but as price after price goes up for working people, this is unforgivable—because prices are up, and they are up sharply. Madam Deputy Speaker,

“August saw the largest rise in annual inflation month on month since the series was introduced almost a quarter of a century ago.”

Those are not my words, but the words of the Office for National Statistics. Alongside the most recent GDP figures, that is a powerful signal of how fragile our recovery remains.

Rising food prices have been driving upward pressure on the inflation rate, but this week, of course, it is energy prices that are the focus of our attention. That rise is taking money out of household budgets directly, but it will also be taking money out indirectly. Higher prices for energy mean higher prices for industry, and that means higher prices for goods. Already factories are being shuttered by higher prices and already that is driving further problems, such as knocking out the carbon dioxide supplies that keep meat fresh along our supply chains.

Ministers are always keen to blame other people, the weather or bad luck, and to claim that all of Europe has the same problems. That is not good enough and the public know it. To assert that other Governments have faults is not to excuse our own. What we are seeing and what we have seen over the last decade is a chronic failure to take responsibility, and it is hard-working families and struggling businesses who will pay the price.