Budget Resolutions and Economic Situation

Huw Irranca-Davies Excerpts

Wednesday 18th March 2015 Commons Chamber

[Huw Irranca-Davies (Ogmore) (Lab)]

Five years ago when the so-called emergency Budget was announced, I remember twice intervening on the Chancellor and challenging his assertion that there would be an economic recovery and that his was a good long-term plan that would benefit everybody. Ultimately, he had to acknowledge that it would come down to his judgment. Five years on, I have to say that his judgment has failed. It has failed miserably for the people whom I represent. This has not been the so-called long-term economic plan that benefits everyone. It has not been an economic recovery that benefits everyone. It has not been an austerity programme that hits everyone. It has been balanced on the backs of those least able to afford it socially and economically all the way through.

I do not believe it was ever intended to be a fair plan under which everybody would shoulder their fair burden. The language of the so-called emergency Budget of 2010 made that clear. The recovery has been unbalanced, both sectorally and geographically; it has been delayed, because there was a period of two or three years when we flatlined as a result of the decisions of the coalition Government to cut off infrastructure spending; and it has left people behind. It has left behind a generation of young people and a generation of working poor. When did we see this last? We saw the same approach in the 1980s—“Don’t worry. We’ll do our very best. It will trickle down and the effects will be seen.” The recovery does not trickle down into my constituency.

Some people, I accept, have hardly seen the impact of this recession. They have done well. They have been in a secure job. Life has gone on almost as normal. We have a great manufacturing belt in my constituency. Many people there will not have seen the recession. They will have got through okay, but underneath that there is now a huge group of people—those who work part-time, those who wait for that call in the morning to see whether they are to be brought into work, those who have seen a drop in earnings of probably 6% to 10% if they are working, and those who balance two or three jobs to try to make ends meet.

What would it be like—this is the reality check that we need five years down the line—if the Chancellor had to wait for a text in the morning to say, “Take a rest day today. You’re entitled to it. We haven’t got any hours for you”? Could he work on that basis? What if the Chancellor did not have to put on his suit and head up to the Banqueting House for a nice gala dinner or a fundraiser, but had to walk 4 or 5 miles between food banks on different days of the week to collect sufficient food for a working family to get through that week? Five years ago, after the emergency Budget, there was one food bank in my constituency. There is now not one town, one village or one street that does not rely on food banks. The generosity of those who supply them is amazing, as we always say, but we should not be in this situation when we are still the sixth most prosperous country in the world.

What would the Chancellor do if he had not simply to be the Chancellor, but to do another job to make ends meet, or perhaps three jobs—and I am not talking about directorships, by the way. That is the reality for many people. I have spoken to those people, and when I hear the Chancellor speak I wonder if he ever has the same conversations. Does he have constituents who come in and say, “Even after running two or three jobs, some of them on night shifts, I still can’t make ends meet”? Does he ever have that conversation? I have never heard it from him. My constituency must be very different from his, yet mine is not a poor, poor constituency. There are some people who are doing quite well, yet from other constituents I hear about the problems all the time.

That is backed up by the statistics, which show that in the Bridgend county borough area, a prosperous manufacturing belt on the M4 corridor in commuting distance of Cardiff, there has been a tenfold increase in people who rely on payday loans. Some of them are piggybacking payday loans—not just one, but another one to get over the original payday loan. I have referred to the extent of the food banks and to the fact that, under this coalition Government, people at those food banks are in work as opposed to not working, and that for the first time in history, we now have more working households in poverty than non-working households in poverty. All this stacks up to a compelling argument.

Since the emergency Budget five years ago, when the Chancellor said to me in response to two interventions, “You’ll have to trust in my judgment. This will not fall on the working poor or on the young”, we have seen what has happened to youth unemployment levels. It is great to see claimant counts coming down. They have come down in my constituency, and that is fantastic. However, the last time I heard such praise for claimant figures was during the 1980s when everybody was moving out of the jobcentres and on to sickness benefit. We can cut these figures in any number of ways, but if the people who are coming off claimant counts are in self-employment, they are typically earning 40% below the average median earnings of somebody in a full-time-wage job. If those people are working two or three jobs in order to make the money up, and if there is, as there has been under this Government, a massive increase in housing benefit and in poverty pay subsidised by the taxpayer, I say to Government Members that something has gone seriously wrong, and it stems back to the point in time when a decision was made to say, “We have to go for this austerity; we must have this fetish about deficit reduction above and beyond everything else.” At that point—

[Adam Afriyie]

Will the hon. Gentleman give way?

[Huw Irranca-Davies]

I have no time—I apologise. [Interruption.] Oh, I do have time, so I will give way. Perhaps the hon. Gentleman will explain why the Government chose at that time to do the complete polar opposite of what I did as Minister in the Department for Environment, Food and Rural Affairs, when we had capital spending on flooding and chose to keep people employed in their jobs.

[Adam Afriyie]

Of course we all agree that we want the least well-off in society to do well, and the measures that the Chancellor has taken over the years are beginning to show effect. Does the hon. Gentleman not remember that under Labour’s Budget proposals, the cutting of the deficit was at a steeper rate?

[Huw Irranca-Davies]

Nearly every party is agreed on this, apart from some who have said that there is no need to cut the deficit. We agreed that we had to cut the deficit, but we also made it clear that we had to keep people in jobs while doing so. That is why, when I was a DEFRA Minister, we brought the funding forward and made sure that people in the Environment Agency were employed building flood defences.

My argument to Government Members and to the Chancellor is that there seems to be a complete disconnect. Throwing around claimant counts stats and saying that everybody has had to shoulder the burden simply does not ring not true for my constituents. Over the years, there has been an honourable tradition among those on the Government Benches of arguing for the working poor as well as others, but that seems to have disappeared over this five-year cycle. I hope that next time we will have a Government who deal with zero-hours contracts and the exploitation of agency workers, give a jobs guarantee to young people, have the sorts of initiatives that are being carried out by Labour in Wales, and build an economic recovery that benefits everybody, not just those at the top.

--- Later in debate ---

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

I rise on behalf of my constituents to share my bitter disappointment about the Budget. It was out of touch and arrogant, and the Chancellor even had the gall to use the phrase—from which my constituents recoil when they hear it—“We’re all in this together”. He told people that they are better off now, when my constituents—I meet and engage with them every week—tell me that they are not. In fact, if we look at the evidence and what is actually happening, we see that there has never been a bigger gap between the rhetoric we heard today and the reality of people’s everyday lives. The Chancellor has presided over the slowest economic recovery in the UK’s history and has borrowed more in this Parliament than Labour did in 13 years. He has also broken his promise to eradicate the deficit by the end of this Parliament.

I have said it before and I will say it again: giving with one hand but taking more away with the other is nothing to celebrate. This has not been a recovery felt by millions of people across the country. Looking at the Tories’ tax and benefit changes, we know that families are on average £1,127 a year worse off; working people are £1,600 a year worse off; wages are down for the first time since the 1920s; and people are earning less at the end of a Government than they were at the beginning.

Despite what the Chancellor said in his speech, I found buried—on page 67 of the OBR document—the fact that the real consumption wage will not rise above its pre-crisis peak until the end of 2018. The Chancellor’s own documents, and the OBR’s documents, do not correlate with what we were told earlier.

We also know that the Government have raised taxes 24 times since 2010. I contrast that with the fact that people on the highest incomes have seen a tax cut, and hedge funds in particular have seen a tax giveaway of £145 million. This is not a recovery felt by the majority: it is a recovery felt by a very few people.

I am concerned that our NHS is in crisis. We know that one in four people cannot access a GP appointment, and we know that the Government did not met A and E targets for the whole of last year. Too many people have not received cancer treatment in good time. I hoped that the Chancellor might talk about what the Government would do about the NHS, and I was struck by his comments about child and adolescent mental health services and maternal mental illness. He said that the people affected had been forgotten for too long. I was surprised to hear him say that because it is on his watch that we have seen some clinical commissioning groups spend as little as 6% of their budget on mental health. Despite the campaign for parity of esteem for mental health services by Labour peers—they were successful, and it is one of the few things that the Opposition can be proud of in the Health and Social Care Act 2012—in practice we have seen the complete opposite.

It is on this Government’s watch that we have seen cuts to mental health trusts that are 20% higher than for other elements of our national health service. A response to a parliamentary question reveals that there have been real cuts of £50 million a year to child and adolescent mental health services. Just yesterday, the CAMHS taskforce released its report. It was interesting to see the sanitised version of the report, because we saw a leaked copy in The Times a couple of weeks ago. Across the country, we have seen a reduction in the number of specialist mental health nurses by 3,300, and a reduction in the number of beds by 1,500. Too many young people are having to travel hundreds of miles to access mental health services, if they are able to access any sort of treatment or support at all. I thought it showed some cheek for the Chancellor to say that these people had been forgotten, because it is on his watch, over the past five years, that we have seen this reduction in attention and support for mental health.

There was nothing in the Budget to counter one of the biggest problems in our country: job insecurity. Many of my hon. Friends have raised the challenges of zero-hours contracts. I was very interested to hear the hon. Member for Dover (Charlie Elphicke), who is no longer in his place, call them flexible work contracts. According to the ONS, 1.8 million zero-hours contracts were used by firms in the UK last summer. I know, from a report I conducted with two of my hon. Friends on Merseyside, the impact faced by too many of our constituents every time they wait for that text message or that phone call to find out if they have work. I was struck by the experience of my constituents who said that they could not buy a belt because they were not able to plan their finances from week to week. This is not just about zero-hours contracts, however; there are low-hour contracts too, and the millions of people who are in part-time work who wish to be in full-time work. If I had been the Chancellor, I certainly would not have talked about the national minimum wage, given that he previously backed a minimum wage of £7 an hour but has failed to introduce that in this Parliament.

Other hon. Friends have pointed to the challenges relating to food banks. It is a disgrace that just under 1 million people have had to access emergency food aid.

[Huw Irranca-Davies]

My hon. Friend is making an eloquent speech. What does she make of the study by the Children’s Society and the StepChange charity, which points to 86,000 families in Wales—23% of the total number of families—who are failing to keep up with household bills and loan repayments, and the response of a Wales Office spokesman who said, “The UK Government’s long-term economic plan is working”? Where have we heard that before?

[Luciana Berger]

I thank my hon. Friend for that intervention. He and I have been campaigning on this issue for many years, because we do not believe that in the sixth-richest nation in the world we should have any food banks, let alone the number that we have across all four nations. The fact is that just under 1 million people have had to access emergency food aid for themselves and for their children—all too often it is children who are affected. It is not just people who are out of work, but people in work, often on zero-hours contracts, who are struggling from week to week. People deserve better. I reflect on the comments made by my hon. Friend the Member for Stretford and Urmston (Kate Green) on the increase in absolute poverty. I am ashamed to live in the sixth-richest nation in the world, when we have seen an increase in absolute poverty in 2015.

I represent Liverpool Wavertree in north-west England. We heard in the Budget that cuts to local authorities are coming down the line. I have very serious concerns about what will happen to local authorities, particularly in the north-west where already we have experienced cuts 75% higher than in other parts of the country. Yet another report came out last week, showing that Liverpool has seen a reduction of £390 a head in funding since 2011, while in the south Wokingham has seen a cut of just £2.29. Our budget in Liverpool has been cut by 58% in real terms since 2011. That is £329 million. Page 130 of the OBR report states that we should expect a much sharper squeeze on local authorities’ real spending in the next Parliament. I shudder at what that will mean for my constituents and residents across Liverpool and the north-west. I am concerned about what will happen to our libraries, our social care and our children’s centres.

Ordered, That the debate be now adjourned.—(Mark Lancaster.)

Debate to be resumed tomorrow.