Cost of Living

Glyn Davies Excerpts

Wednesday 16th May 2012 Commons Chamber

[Jessica Morden (Newport East) (Lab)]

I promise to speak quickly, Mr Speaker, and I thank you for giving me the opportunity to take part in this debate and give a voice to my constituents, who are really struggling with the cost of living. Like other Labour Members, I wish to concentrate on the realities of how those on lower incomes are coping during these times.

Like other hon. Members, I found, in Newport, that the cost of living was the No. 1 issue on the doorstep during the local elections. The good voters of Newport had their say on the Government’s policies, voting out the Tory-Lib Dem coalition in Newport and electing a new Labour council. I feel very much that people are sending a message, and we must listen closely to them.

As other hon. Members have said, the Queen’s Speech undoubtedly contains some worthy ideas; many moons ago in this debate, my right hon. Friend the Member for Croydon North (Malcolm Wicks) mentioned flexible parental leave, a Labour idea, and I wish to mention the attempt to speed up the process of adoption, which was a real issue for the couple I met last week in my constituency. They have waited a long time to adopt and have left me in no doubt as to the difficulties of that process, and this is well worth tackling.

However, the Queen’s Speech is about priorities, and last week the Government failed to offer a glimmer of hope to those families and constituents of mine who find themselves struggling to get by and just managing to keep their heads above water. These are families who are living in the real world, where careful budgeting is thrown out by the washing machine breaking down or by a child needing a new pair of shoes—by just a small unexpected bill. They were looking to this Government to help or at the very least understand, but instead the Queen’s Speech came on top of the measures announced in the autumn statement and in the Budget, particularly the cuts to tax credits, and has done nothing to help and offers little hope.

While food, energy and fuel prices and transport costs are up, wages are stagnant or cut and the Government are taking away tax credits. In April, 730 families in my constituency will have had their tax credits reduced unless they have been able to find extra hours to work. They will have lost around £3,800 a year, but they are the people who can least afford to lose that money. They are on incomes of about £16,000 or £17,000 a year and are those most impacted by the price rises because they spend a disproportionate part of their income on fuel and food. They are the people who are now turning up at my citizens advice bureau with three children saying that they are staying in private rented accommodation, have had their income reduced by £70 a week and are really struggling.

[Glyn Davies (Montgomeryshire) (Con)]

I have a lot of sympathy with what the hon. Lady is saying, but does she welcome the fact that the core measure in the Budget this year raised the very people she is talking about out of the taxation system altogether? The Budget and the Government’s strategy are aimed at helping the very people she is talking about.

[Jessica Morden]

I have a lot of respect for the hon. Gentleman but the Government are giving with one hand and taking away with the other. I just need to say “VAT” and “tax credit cuts”. I am sure that the family I am talking about who presented themselves at the CAB will not recognise themselves as being better off in any way as a result of the measures he mentions.

As other hon. Members have mentioned, there was nothing in the Queen’s Speech about helping with the cost of child care. For many families, it is as much as the mortgage or housing costs, if not more. What are the Government doing for families in my constituency whose child care costs are rising by 4% to 6%? The Childcare Trust recently pointed out that those costs are increasing, particularly for the under-twos, whilst wages are stagnant and the child care element of the working tax credit has been cut. There is an urgent need for creative solutions in this area of policy, as child care is a massive part of the cost of living for many of my constituents.

Last week in my constituency office—I cannot be alone in experiencing this—I saw constituents who are having to wait months, not weeks, for appeals on tax credits. In the meantime they are struggling along. I see people with disabilities who have medical evidence backing up their situation having their benefits withdrawn. Half of them then appeal successfully, but they have to wait months for their appeal. I am even seeing parents who cannot afford to take up nursery places because of the cost of petrol. In my local CAB there were 1,900 extra benefits cases in the last financial year, and that figure is going to increase.

There are two food banks operating in my constituency, with the churches in Caldicot looking to set up and operate another one. In December alone the food banks distributed more than 3,000 parcels. I have to pay tribute to the food banks in my constituency run by the Raven House Trust and the King’s Church. They are a fantastic example of the good society and have heart-warming community support. However, the new people turning up at food banks are often those affected by benefits changes who have to be helped until an appeal is heard or who, because of low pay, just cannot make it to the end of the week.

Finally, into this picture of people struggling with the cost of living in Newport we throw the fact that the Government are raising the spectre of regional pay. There are 23,000 public sector workers in Newport, which has a lot of public sector workers precisely because of the previous Government’s policy of relocating jobs out of the south-east to increase employment in targeted areas, which was a fantastic thing to do. As a result, our employers include not only the local authority and the NHS but the Office for National Statistics, the Prison Service and the Intellectual Property Office, to name a few. Those jobs have been a boost to our city and a huge success story, but public sector workers in Newport have had a pay freeze for two years now and there will be a 1% cap for a further two years. They are also having to pay increased pension contributions. We have had 9,000 public sector job cuts in Wales and the TUC predicts a possible 39,000 more in the years to come.

Regional pay would be devastating for Newport and Wales. Last week, the Welsh Government published their response to the Treasury consultation on regional pay, and all the parties in the Welsh Assembly have expressed their opposition to it. I agree with the First Minister, Carwyn Jones, that the proposal is just

“code for cutting pay in Wales”.

The Welsh Government point to the lack of Treasury evidence that high public sector pay crowds out the private sector. We believe this is a back-door way to drive down public sector wages and will be bad news for Welsh workers and the Welsh economy.

Not only will struggling public sector workers see their pay driven down; there will be a devastating effect on the economy in Wales. In my area, the public and private sectors are inextricably linked—they are intertwined. Money taken from public sector workers means less spent in the local economy, which then hits the private sector.

In Newport, we saw how close that connection was when the Home Office tried to close our passport office. Closure of the office would have devastated our city centre, which relies on the throughput of its staff and customers to survive. The argument that holding down public sector wages will make private sector jobs magically appear is ill thought out.

In Wales, women make up 64% of the public sector work force and 87% of part-time workers. The previous Government made particular efforts on equal pay. Average pay might be higher, but I ask the Government not to roll back progress for women.

In March, like many hon. Members, I challenged Ministers about where the extra hours would come from for families who would lose their tax credits as a result of the Government’s proposals. We said then that the Government had demonstrated no understanding of the real difficulties faced by families. Nothing in the Queen’s Speech demonstrates that they have any more understanding than they did then. I urge them to do all they can to help people with the cost of living.