Budget Resolutions and Economic Situation

Grahame Morris Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

indicated dissent.

[Grahame M. Morris (Easington) (Lab)]

rose—

[Michael Ellis]

I will give way to the hon. Gentleman.

[Grahame M. Morris]

That is very kind. The hon. Gentleman has given a list of organisations that support the Chancellor’s Budget. I wonder whether he recognises this quotation from the North East chamber of commerce. Although it was pleased to see certain measures that coincided with its priorities, it said that the Chancellor had

“fallen short of providing the raft of measures that businesses and investors need in order to kick-start growth.”

[Michael Ellis]

The chambers of commerce have accepted that this is an excellent Budget. Of course there are issues that need to be addressed, but we are dealing with a dramatic deficit. Not everything can be done overnight.

The measures that we have taken on fuel duty mean that it will be £7 per tank cheaper to fill an average car, such as a Vauxhall Astra, than it would have been under Labour’s fuel duty plans. Under Labour, fuel duty went up dramatically. It was costing more and more. The Chancellor’s fuel duty cuts will have a dramatic effect on the cost of filling up the average car.

Measures are being taken across the board in very difficult times to improve the economic position that we inherited. All that Labour can do is whinge, whine, moan and be judgmental.

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[Kelvin Hopkins (Luton North) (Lab)]

I watched the Chancellor carefully during his speech and he looked to be a very worried man, as if his whole political life was flashing before him because it was not going to last much longer. He was particularly worried when he had to say that the Budget was “fiscally neutral”, when what we need is an expansion for growth and employment.

Labour Front Benchers kindly describe our current situation as the economy “flatlining”. Actually, we are in an ongoing recession. Some 2.5 million people are unemployed. I am considerably older than everybody else in the Chamber and remember the days of full employment. In my youth, unemployment of 2.5 million would have been seen as a catastrophe. At times, unemployment fell to a tenth of its present level. Let us not be too kind to the Government. The economy is not flatlining; we are in an ongoing recession.

We must focus on the continuing economic illiteracy of the Treasury. Its consistent mistakes over decades have put us in this situation. Two years ago, I made a speech in this Chamber in which I referred to the view of Paul Krugman, among others, that the Government were going in precisely the wrong direction. I agreed with him then and I keep repeating that because in politics, one has to repeat things to ensure that they register.

It is instructive to look at the history. There was a similar situation in the 1920s. After the first world war there was big government debt, and the Government introduced what became known as the Geddes axe—pubic expenditure cuts—which drove up unemployment and poverty, and resulted in low growth. At the end of the 1920s—surprise, surprise—deficits were bigger, not smaller. In the 1930s, we had a period, similar to now, when the Conservatives and their friends were in charge. In Prime Minister’s questions, I asked the Prime Minister whether he wanted to be remembered as the President Hoover of our times, whose draconian cuts drove the world, not just America, into the great depression. He made a sarcastic reply—I suppose that was understandable; I was being slightly humorous with him—that I understood later to be a reference to Benny Hill. I would rather refer to John Maynard Keynes and to Paul Krugman, but obviously the Prime Minister is more inspired by the wisdom of Benny Hill.

By contrast, in 1945, government debt was three times what we have now, but we had a sensible Labour Government who ran a full-employment economy. The debt at that time fell dramatically because we had full employment. I have to give credit to the Conservatives, because in the 1950s they carried on with the same sorts of policies. In the 1940s, 1950s and 1960s, we saw full employment most of the time. We had the occasional hiccup, but essentially it was a full-employment era. We saw living standards rise and poverty fall, and a much better world than we had ever had before. Indeed, the world was being run so well, I thought we should carry on like that. Instead, somebody reinvented the 19th century, and went back to the kind of neo-liberal policies that were pursued at that time.

Extraordinarily, at that time of full employment, Labour and Conservative Governments competed to build hundreds of thousands, if not millions, of council houses. That all seems to have disappeared now, but it was a very fine and productive competition.

[Grahame M. Morris]

Would my hon. Friend care to comment on the impact of a house building programme on growth and jobs?

[Kelvin Hopkins]

A house building programme is exactly what we need. We do not want to increase demand for houses, but supply. If we increase demand without supply, we get house price inflation.

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[Grahame M. Morris (Easington) (Lab)]

rose—

[Dr Offord]

This will be a sensible contribution.

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[Grahame M. Morris]

I am sure it will.

I am pleased to follow my hon. Friends, and the closing statement by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), who linked the snow and the inclement weather to the Budget outlook. He asked where the spring was. Perhaps I should add that this

“is the winter of our discontent”.

This is the coalition Government’s fourth Budget since 2010, including the emergency Budget. We were told that we were out of the danger zone, and the Prime Minister promised that the good news would keep on coming. In reality, growth is down, borrowing is up, and families are paying the bills and picking up the pieces and consequences of the Government’s economic mess.

I want to concentrate on welfare issues, given the subject of today’s debate. At every opportunity, the Government appear to be undermining the economic foundations that are the route to recovery in the most deprived communities in our country. Constraints on family budgets, wage cuts, and decimated social security budgets have led to a loss of confidence, which in turn has pushed demand out of the local economy. The latest figures detailing the impact of Government cuts and benefit changes on those on the lowest incomes show that a single parent working full time on the minimum wage will lose £415 this year; taken with the previous two years, the total loss is nearly £1,000. Over the same period, a single person working full time on the minimum wage will lose £706, and a family with two children, and two parents working, one full time, one part time, will lose £1,197. Those examples do not take into account other cuts that have affected working families. Child tax credit for babies under one was cut from April 2011; and the child trust fund has been cut, as has the health in pregnancy grant and the education maintenance allowance. Housing benefit has been capped, and the bedroom tax will affect more than 1,600 households in my constituency, with an average loss of £728.

Cuts to social security have undermined economic recovery by driving demand out of the local economy in areas such as mine. It is estimated that the changes to social security will take £150 million a year out of the local economy in County Durham. It is my constituents in east Durham who are living with the consequences of the dark shadow cast by the age of austerity that grows longer and longer after every Budget. We need to restore demand, which has been sucked out of the economy by the past three years of austerity. That has had a monumental impact on unemployment in my constituency. Government Members have proclaimed that unemployment has fallen, but in my constituency the claimant count has risen by 900—yes, 900—since the Government came to power in May 2010, and it currently stands at 3,501. As things stand, there is little prospect of reducing the unemployment figures to the pre-recession levels of 2008, when 2,000 fewer people were looking for work in my constituency.

I have absolutely no doubt that austerity is failing, and that the cuts have made it increasingly difficult for people to meet everyday expenditure on life’s basics such as food, energy and housing. With less money in the local economy, it is no wonder that jobs and growth have stalled as a result of the Government strangling demand. The Budget seems to promise a further assault on the welfare state. The prospect of capping annually managed expenditure, a large part of which is spent on social security, is frightening for low-income families. A “super cap” limiting social security provision would mean that in times of greatest need benefits could be spread more thinly or restricted, breaking the link between social security provision and need.

I understand that Ministers are considering which areas will be subject to spending caps, but I was interested to read in The Daily Telegraph that housing benefit is a strong contender. As my hon. Friends the Members for Eltham (Clive Efford) and for Westminster North (Ms Buck) have said, the solution is to build more affordable homes for rent and to cap rents in the private sector.

It is a cruel irony that at a time when they are pressing ahead with the unfair and unjust bedroom tax, hitting 1,600 households in my constituency and taking away between £14 and £22 a week from the income of some of the poorest families, the Government propose to underwrite mortgages for properties worth up to £600,000. Ministers should realise the monumental consequences of taking away what they may consider to be relatively small sums, such as £14 a week with the bedroom tax, and the impact that that can have on families and individuals living off low and increasingly limited fixed incomes. The Secretary of State for Work and Pensions demands that the unemployed “get on the bus” to look for work. But what do they do when the Government cut their income to such an extent that they can no longer afford the bus fare, or food to eat, or to heat their home?

It is strange that the Government will penalise my constituents when they are deemed to have a spare bedroom, but seem to be willing to introduce a second home subsidy. We need more social and affordable housing, not a scheme that will drive up house prices, forcing people to take on higher mortgage debt. A £600,000 property is out of reach of the vast majority of people in my constituency and the wider area. It seems a strange priority to underwrite huge mortgages when the Government are telling us that we must withhold welfare payments from those whom the courts found to have been illegally sanctioned.

We all know that the Work programme is not fit for purpose—the Public Accounts Committee told us so. It is clear that welfare under this Government is unfair and in chaos, and I do not think things will change until we have a general election in 2015.

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[Dr Offord]

I apologise, Mr Deputy Speaker. I can only say to the hon. Member for Easington (Grahame M. Morris) that perhaps he would like to see some of the conditions that my constituents experience, and then he can conclude whether the previous Member of Parliament, or indeed some of the Labour councillors, did anything to assist them.

[Grahame M. Morris]

I did not want to intervene, but I really cannot let that pass. As someone who served on a local housing authority for almost 20 years and came into contact with many elected Labour councillors, I can tell the hon. Gentleman that it was a top priority for us to try to ensure decent housing, and I am sure that that philosophy has also applied in Hendon.

[Dr Offord]

I can assure that hon. Gentleman that in my experience it certainly has not. I certainly would never wish to impugn his reputation, or indeed the work he has done over the past 20 years on the housing authority. I only wish that some of my Labour councillors had the credibility that he has.