Budget Resolutions and Economic Situation

Jack Dromey Excerpts

Thursday 9th July 2015 Commons Chamber

[Jack Dromey (Birmingham, Erdington) (Lab)]

Yesterday, the Chancellor trumpeted one nation. If one nation means anything, it is that Britain cannot succeed through London and the south-east alone. Building on Labour’s great devolution legacy in Scotland, Wales and London, we are pleased to see the devolution agenda for England moving forward, but we in the west midlands were surprised that there was but a throwaway reference by the Chancellor yesterday to the midlands powerhouse. Little wonder that the Birmingham chambers of commerce accuse the Chancellor of hot air and say it is time that he backed the midlands engine.

[Julian Knight (Solihull) (Con)]

Does the hon. Gentleman acknowledge that the midlands engine and the devolution we are undertaking in this country are supposed to take a bottom-up approach, rather than a top-down approach? It is up to the authorities in the west midlands to come to the Chancellor with their proposals, rather than for the Chancellor to dictate to them.

[Jack Dromey]

On this issue, we are as one. We are working together in the west midlands to construct the midlands powerhouse and realise the full potential of the midlands. What was surprising yesterday was that the Chancellor waxed lyrical about the remarkable Greater Manchester, mentioned the northern powerhouse in considerable detail and referred to just about every other part of Britain, and at the end of his remarks made a throwaway reference to the midlands powerhouse. That has not gone down well in the midlands.

Crucially, at the next stages what the Chancellor cannot do is empower but impoverish. One of the great problems with this Government is that everything they do is characterised by a fundamental unfairness of approach. Some £700 million has been cut from the budget of Birmingham City Council—£2,000 for every household—yet in the Chancellor’s own constituency there has been an increase in spending power of 2.6%. Likewise, the West Midlands police have been treated unfairly. If they were treated fairly, they would be entitled to £43 million more—enough for 500 police officers back on the beat.

We will never be one nation while the Chancellor and the Government continue to demonise and divide, with their talk of shirkers or strivers, work or benefits. I was born in poverty—my father a navvy, my mother training to be a nurse; they worked hard to get on. I have always believed that those who can work should work, but I object to wicked caricatures of the sort we heard yesterday in relation to the young homeless—“they come out of school, they go on benefits, then they want to get a flat”.

Three years ago, I hosted in the House of Commons the Homeless Young People’s Parliament in Parliament—quintessentially middle England, middle Scotland, middle Wales young people, the best of Britain, who had ended up homeless, overwhelmingly through no fault of their own. Last Friday, I was at Orchard Village, which serves young homeless people in my constituency. It is substantially dependent on housing benefit for its income and now faces closure.

If we are to be one nation, the Chancellor cannot continue to play politics with the United Kingdom, posing one nation against the other. EVEL—if ever there was an accurate acronym, that is it.

As for the Tories being the party of working people, they introduced in the Budget a tax on aspiration, saying to working families in social housing, “If you get on, you have to pay much more or move out.” The party of working people? On Sunday trading, I agree with what was just said. One of Labour’s greatest achievements, the weekend, is now threatened by this Conservative Government, who would compel seven-day working, in reality forcing millions of retail workers, particularly women, to work on Sunday and putting at risk thousands of small stores all over the country.

The party of working people, with the so-called living wage? Yesterday, when the Chancellor spoke about this, he grinned like a Cheshire cat and the Secretary of State for Work and Pensions punched the air, as if England had scored the winning goal in the World cup. The living wage? Twelve years ago, I was a founder member of the drive for the living wage, working through the former Transport and General Workers Union, with the East London Citizens Organisation and London Citizens, to organise, for example, thousands of cleaners in Canary Wharf and the City of London and the first-ever strike in the history of the House of Commons to win the living wage. This is not the living wage or a “new contract” with the British people, as the Chancellor called it this morning; this is a con trick by a cunning Chancellor, who gives with one hand and takes away with the other.

In the west midlands, 56% of families are on tax credits and 300,000 children depend on tax credits. Yet a family with two children and one full-time earner on £20,000-plus now faces losing £2,000: for every £1 they get from a higher living wage, they will lose £2 in tax credits. What is the Government’s answer? They say, “Ah, the £9”. That is £9 in 2020, but they are cutting tax credits in the here and now.

[Chris Stephens (Glasgow South West) (SNP)]

The hon. Gentleman is making an excellent speech. Does he agree that there has been a further attack on working people in that public sector workers have been told there will be a 1% pay rise every year?

[Jack Dromey]

The hon. Gentleman and I both come from a trade union background. I feel for public servants such as the firefighters, the police officers, the nurses. All those who do excellent work for the communities we serve, who have already been squeezed for five years, now face a 1% increase for the next four years. Effectively, that means a substantial cut in the living standards of millions of public servants.

The Chancellor says that the £7.20 rate will start next April, but the real living wage—I repeat, the real living wage—is already £7.85, or £9.15 in London; that is not based on cutting tax credits. As for the Chancellor being the workers’ friend, I did not come down with the last rainfall, and neither did the country. It is not a living wage if people cannot live on it. As the reality dawns and millions feel the pain of what the Chancellor has done, the last 24 hours of triumphalism on the part of the Conservative party will give way to the grim reality as Government Members go back to their constituencies and explain why they are inflicting cuts in living standards on the hundreds or potentially thousands of families they represent. The IFS’s verdict today is absolutely damning: for 13 million families, the living wage will not compensate for the tax credit cuts, and the poorest will be hit much harder.

When it comes to the Tories as the party of working people, let us not forget that this was certainly not a Budget for young working people. The crucial test of any Government is how they treat the next generation. Young people need the basics in life to get on—a decent job or education, and a roof over their heads. The Budget fails on all those points. It locks young people out of the living wage, makes higher education increasingly a luxury and cuts housing benefit for thousands who would otherwise end up homeless.

At this defining moment for our country, we must ask ourselves about what kind of country, economy and society we want. For me, it is an economy with a real living wage, not a phoney one. Crucially, as I have argued throughout my trade union life, it is the high-pay, high-quality, high-productivity culture of the kind that can be seen in the Jaguar factory in my constituency. We need a serious long-term economic plan if we are to promote such a high-pay, high-quality, high-productivity culture throughout our country, but the Budget failed lamentably on the fundamentals of productivity, skills, homes, rail and road. Ultimately, this country will never succeed and working people will certainly never succeed if we proceed on the basis of a low-waged, low-productivity economy.

What kind of country do we want? It has to be one in which our citizens are safe where they live and work, their children are protected and we are protected from terrorism. It is therefore fundamental folly for the Government, having cut 17,000 police officers, to continue down the path of cutting 17,000 more police officers. What kind of society do we want? Before the Budget, the OECD was right to warn against measures that would slow recovery and harm the poor, but that is exactly what will now happen.

Rick was a lifelong Tory and an ex-sergeant-major in the British Army, but he has joined my local Labour party. He told me, “I was a lifelong Tory, but I have joined the Labour party because I believe in both aspiration and support for the vulnerable.” He is in sharp contrast to a cunning Chancellor who gives hubris a bad name and is ambitious not so much for the country as for himself. After the last 24 hours—and the last century—now and in the future, the simple reality is that the party for the working people always was and always will be the Labour party.