Budget Resolutions and Economic Situation

Iain McKenzie Excerpts

Wednesday 18th March 2015 Commons Chamber

[Mr Iain McKenzie (Inverclyde) (Lab)]

Members from across the Chamber would probably describe the Chancellor’s statement as quite unbelievable, but for very different reasons. My constituents would certainly describe it as unbelievable because they have again listened to a Budget that is unable to hide the fact that, after five years of this Government, working families are worse off. The Chancellor claimed otherwise, but we know that the real truth is that people in this country are still struggling.

As we know, we have a Chancellor who gives with one hand and takes much away with the other. His tax and benefit changes since 2010, including that big VAT rise, have cost families dearly year after year, and no pre-election tax cut can make up for that. Worse still, we know the Tories are planning more extreme cuts after the election, which will go way beyond balancing the books.

We need a better plan—a Labour Budget that puts working families first. That is why this Budget will not be welcomed by the majority of people in my constituency of Inverclyde, or indeed in Scotland. Labour’s plan for creating wealth does not just target a few at the very top, but, unlike this Government’s plan, aims to help hard-working families across the country. We need something better, recognising that Britain only does well when we all do well and prosper. The gap between rich and poor is still too wide, and history tells us that our society does not fare well when that gap is so wide. We need support for and investment in business; and, as has been said, we need investment in our young people too, to create not just jobs for them, but careers.

The Chancellor claims that the economy is a success, but the reality is failure on every measure which the Government have set themselves to achieve. They have borrowed more, debt is up, low-paying jobs are up and tax receipts are down. All those are connected, for people cannot expect to deliver an economic recovery solely through the millionaires at the top. The squeeze on living standards during the past five years means that the Chancellor has failed to bring in the tax revenues necessary to balance the books. Indeed, the Government have broken their promise to balance the books by 2015. Low and stagnant pay means that tax receipts have been £68 billion lower than expected and national insurance contributions £28 billion lower than expected.

The Government have failed to tackle the cost of living crisis. Wages continue to stagnate, and too many jobs have been created in low-paid, insecure work, rather than in high-paid, high-skill sectors. So what is the Government’s solution to fix their mess? As we have heard, it is to take Britain back to spending levels last seen in the 1930s, with further planned cuts of £50 billion. We have already had five years of that and it has not worked. The Government want to run the state, but they do not believe it should exist. The Government’s plan has clearly failed, and we need a different approach. We need a Government with new ideas on how to support business, to create jobs, especially for our young people, and to improve living conditions for hard-working families.

Labour’s Budget would have seen support for working families not simply through tax-and-spend redistribution but by building a more inclusive recovery. Wealth does not flow from the top down: it is created from the bottom up, by working people and families. Every person in every sector of the economy is a wealth creator.

My constituents in Inverclyde will not be fooled by the small rise in the minimum wage announced by the Chancellor to take effect in October. It falls far short of the £7 minimum wage that he promised over a year ago. Under this Chancellor, we have seen the value of the minimum wage eroded and working people’s living standards fall. The hard-working families I represent in Inverclyde are on average at least £1,600 a year worse off under the Chancellor. Without doubt, Labour has set a more ambitious target for the minimum wage, which would see it rise to £8 an hour. We will also act to make sure the national minimum wage is properly enforced, unlike this Government who have failed to get to grips with non-payment, and named and shamed but a handful of companies.

Labour will take action to help to make work pay with an economic plan that works for all, not just a few at the top. We will tackle low pay and address insecurity in the workplace. My constituents tell me on the doorstep that they are struggling to make ends meet as the cost of living crisis bites deep; they need a pay rise and fairness in their contracts at work. Increasing the minimum wage to £8 an hour would instantly benefit more than 6,000 people in my constituency, but we need to go further and encourage more employers to pay a living wage by establishing “make work pay” contracts.

My constituents would also benefit from our compulsory jobs guarantee to provide a job for every young person unemployed for more than a year. The Government sorely lack any plan to give those young people an opportunity in life. The jobs of tomorrow will come from a large number of small businesses, not simply a number of large ones. That is why we also need to look at how overheads can be cut for businesses, but the Chancellor has given us nothing like Labour’s promise to lower energy bills through a price cap or to reform the energy market. Cutting costs for businesses means they have more scope to hire, contributing to the recovery and creating more jobs.

Scotland needs more than low-paid, low-skilled jobs. In Scotland, 82% of the jobs created since 2010 fall into that category. Those jobs fall way short of allowing families to make ends meet from week to week, and we have seen in-work poverty increasing and zero-hours contracts flourish. If we do not get to grips with low pay, low skills and poor contracts, we simply cannot expect Britain to lead the way in existing markets or in developing new markets.

Labour’s agenda is about fairness and opportunity for all. I hope that this will be the last Budget from a Government focused on millionaires rather than the millions who need help.