Iain McKenzie
Main Page: Iain McKenzie (Labour - Inverclyde)Department Debates - View all Iain McKenzie's debates with the HM Treasury
(10 years, 2 months ago)
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Jonathan Edwards
The point that is often forgotten is that despite the fact that London is one of the richest parts of the European Union and that communities such as mine in Carmarthenshire are at the bottom of the European wealth league, public expenditure per head is higher in London than it is in Wales—that is until very recent figures, which showed that Welsh spending had caught up. It is an incredible situation. I could not make this up.
The way in which monetary policy is formulated is also in severe need of reform. The week before last, I tabled an early-day motion calling for the Bank of England, or the Sterling Central Bank as it should be renamed, to be reformed better to take into account the economies of the UK when formulating monetary policy. The Governor should appear for scrutiny before the relevant Committees of the devolved legislatures, and meet with the devolved Governments, just as he has to with the Chancellor and the relevant Select Committees in Westminster.
In addition, the four external members of the Monetary Policy Committee should be nominated by the four nations, rather than hand-picked by the Chancellor of the day from the self-serving banking elite. [Interruption.] I am grateful to my friends from Northern Ireland who supported that early-day motion. There is an interesting story in the Western Mail about the need for the Welsh Government and the Northern Ireland Assembly to collaborate in the event of Scottish independence, be it a yes or a no vote, to ensure that we are not bombarded by Westminster. I hope that it might be a small step on the road to greater collaboration. Instead, what we have is a drive towards regional pay in the public sector, introduced by the previous UK Government and now developed by the coalition, which ghettoises low-wage economies outside London.
Labour has gone a step further, with a pledge to cap benefits on a geographical basis if it forms the next Government. That means that the unemployed and disabled in Wales will receive fewer payments than those who happen to live in London. Wales will have lost more than £1 billion during 2013-14 due to cuts in benefits. Those include payments that people in work receive to top-up low wages. That money would have been spent directly in the Welsh economy, but is now lost.
Rather than hitting the sick and unemployed with a stick and labelling them “scroungers”, why do we not embrace the active labour market programme employed so successfully in Sweden? It is an interventionist policy, in which the Swedish Government spend twice the amount per capita that is spent in the UK, creating tailored action plans. The programme has productivity and mental health benefits, so it ends up costing the taxpayer far less, as individuals are moved from social security into employment, and it eases considerable pressure on heath services.
It is increasingly clear that the Treasury has been re-infected with the British disease of basing growth on inflating house prices backed up with taxpayers’ cash—the Help to Buy policy. Far from rebalancing the economy, the Treasury is reintroducing boom and bust. Instead of delivering an equitable share of infrastructure investment across the UK, the Exchequer lavishes London with its grand design projects, be it the Olympics, Crossrail 1 and 2 or High Speed 2. UK Trade & Investment does not deliberately channel foreign direct investment into the poorest parts of the state, unlike its German counterpart, Germany Trade & Invest, which has a statutory duty to do so. Is it not sobering that despite the cold war and a physical wall between the east and west of its country, Germany today is far more balanced in geographical wealth than the UK?
Other places have shown the way. Germany is a federal republic, and the constitution requires fiscal equalisation among the Länder. That is a timeless requirement on all parts of government, and policies are required no matter the era. After reunification, when poorer East Germany joined developed West Germany, a massive effort meant a variety of measures were implemented, including financial transfers to poorer regions and industrial development policies.
The same could be done from Westminster, but it has not been. The alternative is the approach favoured by the London parties, whereby investment is concentrated in London and the south-east, and wealth inequalities continue to rise. It is clear that it is time for a change. Where are the voices in support of such a change? Who will turn back the tide of growing inequality? We know that we cannot rely on the Tories in London, so unashamed are they in their love of banking and the financial elite. Where is Labour? Why is it not standing up against inequality? Its amendment seeks to wreck our motion, absolving it of its role in creating rising inequality over the past decade, but it is bereft of policies.
Last week, some of Labour’s Wales-based Members defended the UK as a redistributive Union. They are deluding themselves, both about their record in government, as inequality rose during that period, and about the current situation. A closer examination of their voting record would suggest that their rhetoric is unsupported by action. I cite their abstention on the Welfare Reform Bill, which introduced the cruel and dreaded bedroom tax; their abstention on a cut in the top rate of income tax; and their refusal to support any measure to help to promote measures to provide the Welsh Government with the economic powers that they need to move the Welsh economy forward.
Mr Iain McKenzie (Inverclyde) (Lab)
The hon. Gentleman mentioned the bedroom tax, and I invite him to congratulate Scottish Labour which, in the Scottish Parliament, pushed the Scottish Government to end the bedroom tax in Scotland. Will he further assist me in calling on the Scottish Government to reimburse those good citizens who have already paid the bedroom tax?
Jonathan Edwards
The hon. Gentleman seems to forget that his party is not in power in Scotland any more—it is the Scottish National party Government who introduced that policy. Rather than grandstanding, he would be better advised to congratulate the SNP on its progressive track record in government.
Who could forget the hon. Member for Leeds West (Rachel Reeves), the shadow Work and Pensions Secretary, promising to be “tougher than the Tories” on benefits? Only today, the Leader of the Opposition has praised none other than Baroness Thatcher, that well known proponent of fairness and equality, in a bid to reform public services. By that, he can only mean more privatisation. Perhaps the greatest let down, and without a doubt Labour’s greatest folly, reflecting its abandonment of the fight against inequality, is its commitment to Tory austerity cuts post-2015. It is now blocking fiscal devolution to Wales, which would enable us to develop our own economy. It has also failed to commit to fair funding for Wales, even though it admits underfunding by more than £300 million a year as a result of the Barnett formula.
The national parties of Wales and Scotland fight for a partnership of equals between the nations of these isles. However, it is about far more than that. It is about what we do once we achieve that aim. The main reason is to honour the political traditions of our countries, which I have set out today and which have been undermined by centuries of Westminster rule.
Mr MacNeil
I thank the hon. Gentleman for that interesting intervention. As an MP for a left-of-centre party—sadly, the hon. Member for North East Somerset is no longer in his place to hear this—I am asking how it is possible that our society and, indeed, many other societies, particularly in the English-speaking world, can tolerate inequality, which has now grown to levels beyond those of the 1920s. Has something primitive been transmitted to our minds through the media? The belief that the poor are poor because they are undeserving and have not worked hard enough is a primitive thought. People have to be helped, because we are complex creatures living together in society. People have deep psychological needs and some can suffer from the paralysis of feeling swamped or depressed when they feel stuck or trapped.
Yesterday’s report by the Living Wage Commission, “Working for Poverty”, looked into the scale and problem of low pay and working poverty in the UK. The first shocking statistic I stumbled on came from the work of the Resolution Foundation, which had tracked low-paid workers for a decade between 2002 and 2012. Despite working for a decade, only 18% of those people had managed to escape low pay in that 10-year stretch. In other words, people in low pay had a four in five chance of remaining there.
The report further notes:
“1.3 million employees remained stuck in low pay for the subsequent decade, and a further 2.2 million workers held higher paid jobs but returned to low paid jobs by the end of the decade.”
That is and should be depressing. Imagine the feelings of the people we eyeball who have been living with that reality on a daily basis for a decade.
There is good news and bad news. Over the past decades, the wealth of this and other countries in the west has grown as productivity has increased. The bad news is that the fruits of that productivity have been disproportionately distributed. According to the BBC’s wealth gap analysis, as the wealth pie grew and there was more to slice up, many people got roughly the same slice of the pie while others took a share that would embarrass a lion.
Between 1997 and 2007, the income of the top 0.1% grew by 82% to an average of £1.179 million annually; the top 0.5% saw an increase of 66.5% to an average of £452,000 annually; and the top 1%, which, of course, includes the previous two groups, saw their income rise by 60%, but their rise was only about a quarter of that of the 0.1%.
Meanwhile, between 1997 and 2007—the happy decade, as some in financial circles call it, before the crash of six years ago—the bottom 90%, which includes most of society, saw their wages rise by only 17%, a disproportionate slice of the economic pie. Another way of looking at it is that the fraction of pay the bottom 90% were getting in comparison with the top 1% had fallen by a fifth over that decade. As Professor Stiglitz says:
“A corporate CEO will not exert less effort to make the company work well simply because his take-home pay is $10 million a year rather than $12 million.”
The “Working for Poverty” report contains a series of nuggets and goes fearlessly into some thought-provoking factors.
Mr McKenzie
The hon. Gentleman has mentioned poverty and how to tackle it, which is welcome, but can he explain why the SNP Government in Edinburgh have taken £1.2 billion out of anti-poverty programmes since 2008?
Mr MacNeil
The hon. Gentleman will find that the efforts of the SNP have been very laudable in Scotland, with unemployment and youth unemployment lower than in the rest of the UK. The SNP Government have done all they can. He should realise that the Government in Edinburgh are in a financial straitjacket set by the philosophies of the Chancellor of the Exchequer and the Secretary of State for Work and Pensions in London. If the hon. Gentleman really wanted to tackle such issues, he would free himself from that straitjacket, and the SNP or whichever party was in government in Edinburgh would be fully accountable, rather than held within the straitjacket of another Government’s philosophy with which we disagree. Does he want to intervene again?
Mr Weir
I do indeed have great fears about what will happen to our country if we do not get a yes vote in September, because either this lot will continue in power with the cuts already promised by the Chancellor, or we will have the Labour cuts commission and heaven knows what it might come up with.
We have a different vision for our country. We will be able to do many things with independence that we cannot do under devolution. The problem of child care, for example, is not just about improving the early education of our children and helping families, important as those things are; it is also an important economic policy. If we can raise female participation in the labour market to the levels achieved in, for example, Sweden, we will not only boost general economic performance, but raise an extra £700 million a year in tax revenue.
Under devolution, the Scottish Parliament has been able to increase the amount of child care available and it has recently announced a further extension, but with independence we could go beyond that and deliver our ambitious plan for the provision of free universal child care for all children aged one to five—a policy that, when fully implemented, would save families up to £4,600 per child per year.
Why do we need independence to deliver that? Because at the moment, as I have said, Scotland receives a fixed budget from Westminster. We would not receive the increased tax revenues resulting from having more women in the workforce unless Westminster decided that we should, so under devolution the costs of providing increased child care would have to be met from within a fixed budget, which would inevitably mean cuts in other services. Those who are making that argument need to tell us where they want to see the cuts. That social and economic transformation can be achieved only when we have access to all of Scotland’s resources, and that is why we need independence delivered to the full.
We could also take action to ensure that most people are treated fairly and that work is genuinely a route out of poverty. We should not accept this as a given, but the fact is that many women work in low-paid jobs, so what we do with the minimum wage really matters to the living standards of women and their children. With independence, we will able to guarantee that the minimum wage will rise at least in line with inflation every year and not leave it to the whim of the Government of the day.
It is interesting to note that, if the minimum wage had increased in line with inflation over the past five years, the lowest paid would be £600 a year better off than they are now. That has been the cost to the lowest paid of not being able to take such decisions ourselves and of not being able to make the impact we want on the inequality that stalks our nation.
With independence, we and not Westminster will be responsible for implementing the Equal Pay Act 1970, closing the scandalous 32% gap that still exists between the pay of men and women. Why is it that 44 years after that Act was passed there is still such a huge gap between their pay?
Decisions being made down here about the retirement age are also a problem. Just a few years ago, women could expect to retire at 60. By 2020 the retirement age for women will be 66—an increase of six years in just a decade. As things stand, young women entering the work force today will probably have to work until they are about 70. Of course, we all have to accept that people are living longer and that things cannot stand absolutely still—we accepted the first rise in the retirement age—but the rapid increases being imposed by Westminster are not right for Scotland, because we have different demographics. We have serious problems in some of our communities and we are working hard to deal with them. The fact is that life expectancy is often much lower in some of those communities than in the general population. It is, therefore, surely better that decisions about the retirement age are taken in Scotland, where such distinctive circumstances will be properly taken into account.
I have often spoken in the House on energy, and it will be no surprise that I want to say a few words about it. In its recent campaign, Energy Bill Revolution made the point that fuel poverty has increased across the UK by 13%, but one gain from devolution is that that is not the case in Scotland. Under the latest Scottish house condition survey, which was revealed at the end of last year, the number of those in fuel poverty in Scotland has decreased by 3.4% at a time when energy prices are rocketing. That is a tremendous achievement by successive Scottish Administrations, who have made real efforts to tackle fuel poverty. However, there is so much more we could do.
Mr McKenzie
On fuel poverty, will the hon. Gentleman explain why the SNP Scottish Government have changed the criteria for boiler replacements for the elderly, which Labour set up? None of them can get boiler replacements.
Mr Weir
The Scottish Government have invested much more in fuel poverty measures: more is now being spent than was spent in the last year in which Labour was in power, and much more is being spent there than is spent down here. As I have said, we have reduced fuel poverty at a time when it is rising in the UK as a whole, but we need to do more. We need to transfer fuel poverty measures from energy bills, which need to be reduced, and put money into a direct programme to increase the fuel efficiency of many houses in Scotland—particularly hard-to-heat houses of solid wall construction—which will help people.