Living Standards

Fiona O'Donnell Excerpts

Wednesday 4th September 2013 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

Living standards, of course, form part of a context in which the wider economy must be considered. I notice that the shadow Chief Secretary to the Treasury is leaving the Chamber, but I wanted to address some of her remarks. She was, I felt, very ungracious in the way she took interventions from Government Members. I am pleased to see her back after her long break and I wish her all the best, but she did not do enough to observe the courtesies of the House in listening to other points of view.

The first point to remember is that the economy is recovering, despite the protestations, gloom and doom and talking down of the economy by Opposition Members. The OECD and Office for National Statistics have doubled their forecasts for 2013 growth, and the OECD is even suggesting that Britain will outstrip her competitors in economic growth. That should be welcomed on all sides of the House.

On living standards, the Labour party has engaged in a series of speeches that have shown collective amnesia, and it has been deeply hypocritical, complacent and unapologetic about the appalling record it left us in 2010. You will remember, Madam Deputy Speaker, that the Chief Secretary to the Treasury in the previous Labour Government left a note that suggested there was no money, simply because they had spent it all. They spent and spent and spent, and that is the context in which our debate about living standards in Britain must take place.

[Fiona O'Donnell (East Lothian) (Lab)]

Perhaps now the hon. Gentleman can prove that he does not suffer from short-term memory loss and tell us by how much wages have fallen in real terms since his Government came to power.

[Kwasi Kwarteng]

What I will tell the hon. Lady is that it is particularly nauseating to listen to Labour Members talk about increased living costs when under their Government fuel duty was increased 12 times. It is not right for members of the public and people listening to this debate to look on those remarks, when Labour increased fuel duty 12 times without any respite.

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[Harriett Baldwin]

I agree, so let us turn to the track record of what we have tried to do in government to tackle the very issues raised in today’s debate. We all want to see our constituents prosper and have more money each month to pay their bills. The most important bill that they have to pay each month—on pain of imprisonment if they do not pay it—is their income tax bill. In 2007, people had to start paying income tax once their income rose to just over £5,000. By the end of the next tax year, people will be able to take home £10,000 before they have to pay income tax. That is a halving of the income tax bill for the hard-working person who works full time on the minimum wage. It is also a 20% real-terms reduction in the tax bill of someone on median income. That is the action that a responsible Government can take.

[Fiona O’Donnell]

Will the hon. Lady give way?

[Harriett Baldwin]

I am sorry, but I have now taken my fair share of interventions.

One of the other large bills that people pay is the council tax. Under the previous Government—let us judge them by their deeds—council tax went up by 100%. This Government have managed to hold it broadly steady, which has meant a 9.5% real-terms reduction. Under the previous Government, fuel taxes were increased on 12 separate occasions for my constituents. Indeed, the previous Chancellor legislated for a further 13p in tax increases on fuel, which happily we have been broadly able to avert—an 11% real-terms reduction in that important bill, or a saving of £7 every time people fill up their tanks.

Mortgage rates are also at a record low. That important monthly bill would be £1,000 a year more if interest rates were to increase by 1%. That is a modest estimate of the increase if the Opposition were to borrow the additional £200 billion estimated by the Institute for Fiscal Studies. The cost of child care is extortionate, and I can speak from personal experience on that, but it went up 77% from 2004 under Labour. The Government have taken many steps to try to increase the availability of free child care for our constituents. For those on median incomes who find that it is not economic to return to work, we will make the cost deductible against tax from 2015.

We have tried to take steps on the unmanageable expected costs of social care expenses, and we have also made sure that pensioners will benefit each year from an increase in their pensions that at least matches inflation—something that will reassure them over time, compared with the 75p increase that they once received under the previous Government.

Those are the steps that we have taken to address the cost of living for our constituents. We also want to invest in skills, apprenticeships and the measures that will help people to move up the ladder of responsibility at work and take on higher-paid jobs over time. Our welfare reforms have made the incentive to work much stronger, so that the number of households with no one in work has dropped to a record low.

Growing private sector employment and record growth in the manufacturing index, which came out yesterday, are what will allow businesses to grow, to grow in confidence and to pay their employees more over time. That is how to tackle the cost of living for our constituents—not by taxing more and borrowing more as the Opposition propose. We must have a credible and responsible Government who keep their own costs down. We must never give the power to tax and spend back to the Labour party, with its damaging track record.

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[Fiona O’Donnell (East Lothian) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies), and I will try to irritate Government Members less. Given his track record, it will, I think, be impossible to irritate them any more.

I am particularly pleased today to welcome back my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chief Secretary. It is great to see her back. Only the hon. Member for Spelthorne (Kwasi Kwarteng) could describe maternity leave as a long enjoyable break. That takes being out of touch to a new level.

I am pleased that so many Opposition colleagues have focused on the impact of falling living standards and access to employment on women in particular. I am sure that all Members will have received from Asda today the Asda Mumdex, and I am sure that my hon. Friend, as a first-time mum herself, will be very disappointed to see that first-time mums reported to that survey that they are twice as worried about financial pressures than about their own health.

Such stories do not talk in statistics, percentages and GDP, but they show the real impact of the economic crisis on people’s lives and on what that is doing to families. People often say that a happy mother is a happy family. A happy father is pretty important in that picture, as is a same-sex partner or, as will soon be the case, a same-sex wife or same-sex husband. We need to examine the human cost of this crisis and what it is doing to a generation of children growing up.

I am sorry that we have not heard much today from Government Members about investing to reduce child poverty. What are they going to do about that? They are happy defending their own record and attacking ours, but I suspect that our constituents want to hear, in the 37th month in which their income has dropped in real terms, what the Government are going to do about it. All sorts of barriers are involved here. We all know that employment is a means to improve the well-being—the income—of a household, but that will not always be so.

The other figure in today’s Asda Mumdex that stands out is that 74% of mothers say that they do not think that it would be financially worth their while going back to work because of the cost of child care. The Government really need to address that if they are serious about helping mothers back to work. I am looking forward to going to my local Asda store in Dunbar on Friday to sit down with a panel of mothers and listen. My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also recommended to the Minister that he does the same. The Government need to sit down with mothers, as do we all, to hear the stories of how this economic situation is having an impact on their lives.

I was pleased that at today’s Prime Minister’s questions my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) raised the issue of school uniforms, which has arisen again. It resonates with many of us because of our memories of knowing that pressure. Last year, I was horrified to hear the story of people from the high-street payday lender, The Cash Store, standing outside a primary school in my constituency giving balloons to children. Fliers had been put up around the area beside the school saying, “Need a school uniform. Come to us.” That is shocking. This week, we have heard about Wonga’s profits for the quarter. We talk about “legal loan sharks”, and that is the right term for them, because they are predators. They sniff poverty in the way that a shark sniffs out blood, and then they home in and profit from that poverty.

I am not saying that I want to make this debate completely about payday lending and regulation—of course there is a need for people who have no assets to have access to credit—but the Government must try to get a grip on this area. The debt charity StepChange has seen a dramatic increase in the number of my constituents seeking help with debt because of problems with payday lenders—the figure went up from 10% to 28%. So I appeal to the Government to do more; they are so concerned about debt—rightly—but why are they not more concerned about unsustainable debts that so many of our constituents are taking on? [Interruption.] I thought someone wanted to intervene, but it was just another Government Member leaving the Chamber.

[Emily Thornberry]

Would my hon. Friend like to join me in noting that only four Government Members are in the Chamber—a Whip, a Front Bencher and two on the second row—whereas a large number of Opposition Members wish to speak?

[Fiona O’Donnell]

I am grateful to my hon. Friend for that remark. I am afraid that I have just been very unkind and tweeted that not only were there only three Government Members—I think it was—in the Chamber, but the Opposition Whip had fallen asleep. [Interruption.] I should have said that the person sitting in the place usually occupied by the Government Whip has fallen asleep—I say that for the benefit of Hansard.

Fuel bills are a huge problem for families, having risen by £300. The Prime Minister promised this country that he would do something about excessive rises in energy prices, and he has not made good on that promise. The Government parties ask what we did about the energy companies, and I am proud to share the fact that in my sock drawer at home I have a pledge card from the 1997 general election. One thing that Labour did was to use its windfall tax on the privatised utilities to invest in creating jobs. That is the difference between Government Members and Labour Members.

[Ben Gummer]

I am very happy to intervene on the hon. Lady, and I hope that she will have another minute in which to continue her thoughtful speech. On energy prices—I know the next debate will address this—the previous Government may have come to office in 1997 wishing to control energy prices, but in the end by building so few power stations, they have left us having to invest more than any other western European nation—£200 million—to renew our infrastructure. In the end, that money will have to come from somewhere. Part of it will come from those who pay for fuel. The hon. Lady, or at least the Labour Government, must bear some of the responsibility for that situation.

[Fiona O’Donnell]

I am willing to take responsibility when that is due, but it seems as though for this Government the past three years have not happened. In my constituency, a coal-fired power station has closed down. That is good for the environment, but Scottish Power and the Spanish firm, Iberdrola, cannot invest the necessary money to convert that into a gas cylinder plant because the Government are not giving clarity on the charges for connecting to the grid. We should all share the responsibility. Unfortunately, in opposition, there is less that we can do about it, whereas the hon. Gentleman has the privilege of being in government. I wish the Government would use the little time that they have left in office to get on and make a difference to the lives of my constituents.

Yesterday’s debate makes me worry about who will stand up for those people in my constituency who are falling foul of payday lenders and who cannot afford to put food on the table. The whole debate about food banks is thoroughly depressing, and although I welcome the fact that they are there in so many communities, including my own—I am a trustee of my local food bank—I worry that we are propping up a system that is dismantling the welfare state in this country. We need to pause and think about that further. I am grateful to have had the opportunity to contribute to the debate and look forward to hearing the Minister’s response.

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[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

This is probably the most relevant debate we could have when it comes to the issues that affect our constituents day in, day out. There is a living standards crisis in the UK today and it has been caused directly by the actions of this Government. I have no doubt that the Prime Minister and his Government are entirely out of touch with families up and down the country who are struggling to make their pay packets last until the end of the month.

Before the last general election, we were promised that a Conservative Government would improve people’s living standards and that people would not only see their incomes rise but their quality of life improve. That has not happened. In fact, the opposite is true. There are only two possible conclusions to be drawn. The first is that the Government—Conservatives and Liberal Democrats—have decided that they are happy to pursue policies that drive down living standards, and the second is that their policies are failing entirely.

The Minister should be in no doubt that the crisis is real. Every week, people in my constituency come to me to talk about rising energy bills, rail fares and fuel bills; cuts to tax credits and benefits; and the problems caused by low pay, underemployment and unemployment. I do not know what is in his postbag or in-tray, but that is what is in mine. He does not have to take my word for it, as the statistics speak for themselves. Since 2010, real wages in Scotland have fallen by an average of 6.4% or £1,420 a year, which is a huge sum. Statistics for the whole of the UK from the Office for National Statistics show that under this Prime Minister real wages have fallen for 35 consecutive months—longer than under any other Prime Minister since records began. What a shameful record that is.

[Fiona O'Donnell]

Will my hon. Friend give way?

[Gemma Doyle]

I will not at the moment.

In my constituency of West Dunbartonshire, between 2010 and 2012 average wages rose by just 0.6%, while inflation hit 8%. With the cost of essentials such as food and energy continuing to go up and up, one does not need a calculator to work out that the figures just do not add up. In recent months, the community of West Dunbartonshire has come together to launch a food share project. People are so appalled by the need for that in our area that they do not want to call it a food bank. They do not want it to be just a food bank, so as well as collecting donations and redistributing supplies, the group has wider aims, such as campaigning on poverty and poverty pay. I am delighted to say that Labour-led West Dunbartonshire council is a living wage employer. I very much hope that other local employers will follow suit. I intend to have discussions with local businesses about how they can work towards that.

Earlier in the summer, figures published by Citizens Advice showed that one in five families feel that they cannot afford to feed their children. Frankly, that should shame us all. Its advisers are seeing people who have nowhere else to turn. The chief executive of Citizens Advice Scotland, Margaret Lynch, has stated that it is no longer unusual for advisers to see people in their offices who do not have enough money to pay for food, never mind other bills such as rent and council tax.

I have had men and women bring their bills to my surgery. Some have lost their jobs and many have had their hours cut. They are desperate for more hours or for a job that will pay them enough to make ends meet. They have trimmed their outgoings to the bare essentials. They put their bills on the table in my office and ask, “What should I do?” It is difficult, but I give them the best advice I can. I tell them about the food bank, although I have to think twice about that, because it embarrasses people so much. It is a dreadful situation for people to be in, because they feel a huge responsibility towards their families, but it is not they who are failing, it is the Government who are failing them.

At the same time as that is going on in all our constituencies, the richest people in this country have had a tax cut. Conservative and Liberal Democrat MPs have decided that they want to give millionaires a tax cut, which beggars belief.