The Economy

Ian C. Lucas Excerpts

Wednesday 26th November 2014 Commons Chamber

[Chris Leslie]

Government Members want to airbrush the fact that there was a banking crisis, and a global banking crisis—[Interruption.] They do not like the fact that there was a banking crisis. They want to pretend that it was everybody else’s fault—there they go again.

I must tell the hon. Member for Halesowen and Rowley Regis (James Morris) that he has been in government—perhaps he has not been a Minister, but he has supported the Government—for nearly five years. The Government must start taking some responsibility for the state of the economy.

[Ian Lucas (Wrexham) (Lab)]

On living standards, in Wrexham median weekly earnings have fallen by 7.4% in the past year. The Government show a complete lack of comprehension of my constituents’ lives. For as long as they continue to do that, they will not even begin to address this country’s fundamental economic problem.

[Chris Leslie]

It is the complacency from those on the Government Benches that will, I think, shock our constituents most of all.

Only last week, the Deputy Prime Minister said in questions that “the economy is fixed”. How out of touch are Ministers in this Government, whether they are Liberal Democrats or Tories?

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[Chris Leslie]

I do not know where the hon. Gentleman has been, but did he not see the headlines in all the newspapers about the results of the annual survey on hourly earnings that the Office for National Statistics published last week? According to the ONS, the average weekly pay of full-time workers went up by just £1 between 2012 and 2013. That is a rise of just 0.1%, far below the rate of inflation. Prices continue to rise, but pay, wages and earnings do not keep pace with them. Government Members may not realise that. In the world that they inhabit, life is sweet—everything is fine in the world that they inhabit—but for most of our constituents, times are tough and life is getting harder.

[Ian Lucas]

Will my hon. Friend confirm that this is the first Government since the 1920s who will preside over a real-terms fall in the salaries of the people who elect us?

[Chris Leslie]

This may even be the worst situation since the 1870s. Perhaps we should ask the House of Commons Library to go back in history, and tell us how bad things were in the 19th century.

I have set out our priorities for the autumn statement. However, we do not just need a strong economy to ensure that everyone gets a piece of the action; we need a strong and sustained economy to deliver strong and sustained public finances, which is why the autumn statement also needs a plan to balance the nation’s books in a fair way.

When will Ministers realise that the health of our economy shapes the health of our public finances? During the first seven months of this year, borrowing has been £3.7 billion higher than it was during the same period last year. Why? The Office for Budget Responsibility itself says that stagnant wages and all those low-paid jobs are keeping tax revenues down. The Chancellor has to realise that a low-wage, low-productivity economy will not deliver the goods. The OBR is predicting that growth will slow down next year, and yesterday the OECD cut its growth forecast for this year and next year.

The deficit has not been tackled effectively, and not just because of falling revenues. The Government like to sound tough on welfare inflation, but they do nothing to tackle the underlying causes of it. The Department for Work and Pensions has overspent by £25 billion since 2010. Let me give the House a few examples of where it has gone awry. It has spent £5 billion more than it planned to spend on tax credits during the current Parliament, because of the failure to tackle rising levels of low pay and insecurity. The number of working people—working people!—who are claiming housing benefit has risen by 50% since 2010 and is set to double by 2018, which will cost nearly £13 billion.

Whether the underlying issue is low pay, rising rents or the 700,000 young people who are in long-term unemployment, the Government have produced no serious, structural response. For them, tackling the deficit means little more than lopping off a fixed percentage from every departmental expenditure limit in each 12-month cycle. We need an economy that delivers higher-quality jobs, decent living standards, and robust and sustained growth, as well as tough decisions on spending and tax.

The Chancellor of the Exchequer caved in too easily to the lobbying of his friends who pushed him for that £3 billion a year tax cut for the top 1% who are earning over £150,000 a year. They must have been pestering him—“Give us that tax cut!”—and he did not have the will power just to say no. Instead, he piled higher VAT and cuts in tax credits on to millions of working people, because he did not mind that so much. I am afraid that a fairer plan for reducing the deficit must mean reversing the huge tax giveaway for millionaires—

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[Priti Patel]

My hon. Friend is absolutely right and this brings us back to the heart of this debate. It is about having a long-term economic plan that is tackling the challenges for our economy left by the former Government, while also looking ahead to the future and making sure we have a plan in place.

[Ian Lucas]

How can a 7.4% fall in median average earnings in Wrexham be a good start?

[Priti Patel]

The hon. Gentleman will recognise that had it not been for Labour’s great recession, living standards in this country would be much higher. Thanks to our economic plan and policies, we are now seeing booming inward investment, often by more than the rest of the EU combined, with all the main sectors of the economy growing. A growing economy, a falling deficit, record numbers in work: those are the economic facts that Opposition Members seem to want to deny. They want to continue to scaremonger and misrepresent the economic reality. We said we would get the deficit down, and the deficit has come down. We said we would recover the economy, and recovery is taking place. The Opposition predicted that 1 million people would lose their jobs, but 1.7 million jobs have been created.

It would not be realistic to pretend that the job is done, however, or that the situation is perfect. We know it is not, and that is a result of Labour’s great recession, but I am sure that all Members will agree that responsible government means being straight with the public about the economic situation we are in.