West Midlands Economy

Debate between Jim Cunningham and Karen Lumley

Wednesday 19th December 2012 Westminster Hall

[Mr Cunningham]

There are a couple of schools of thought about that, but my understanding is that the trade unions are worried and will be having discussions with Tata. Some years ago, there was concern about Jaguar’s trade with China. Some people thought that cars would be built in China, but they were only assembled there, and there had been a misunderstanding. We need to find out more about the current deal, and discussions are ongoing.

Coventry city council is suffering from Government funding cuts. From 2010-11 to 2012-13, the council has suffered cuts of £101.89 per capita. That is among the hardest hit 20% of local authorities. More unjust and distressing is the fact that of those local authorities with cuts of more than £100 per head, including Coventry, 85.71 % are Labour-run, and only 5.36 % are Tory-run. Meanwhile, of those local authorities with cuts of less than £100 per head, 60.82% are Tory-run and 19.4% are Labour-run. It is hard not to be concerned about the Government’s fairness when the cuts seem to be distributed across local authorities on party lines. Coventry council had expected to lose 1,000 jobs over four years to 2014-15, but it is now predicting 1,600 job losses over the four-year period, with a cut of more than 10% in the work force.

Those cuts are impacting on the council’s services for the vulnerable. For example, its funding for early intervention will be cut yet again. Two years ago it was £22 million per annum, but from next year it will be £11 million. That is particularly damaging given the current increased pressure on social care. Every penny spent on early intervention in families with young children to help them help themselves is of paramount importance in taking people out of poverty and improving children’s life chances. Those pressures are increased by a social care budget for children of £64 million which has not significantly changed for two years. Similarly, the pressures are increasing daily on the adult social care budget because elderly people and disabled people are living longer, but that is not reflected in the budget, and the extra cost of care is not recognised in financial terms.

Those are only a few of the extreme budgetary pressures on the council; to put the huge cuts in funding into context, there are others. In my constituency alone, 920 households have already received letters from Her Majesty’s Revenue and Customs informing them that their child benefit is likely to be reduced or withdrawn. Across Coventry, that figure is 1,740 households. The jobseeker’s allowance claimant rate in Coventry and across the west midlands is 6.2%, well above the UK’s rate of 5.2%. Even worse, the rate of jobseeker’s allowance claims by 18 to 24-year-olds across the west midlands is 8.7%, far higher than the UK’s 7.1%.

[Karen Lumley (Redditch) (Con)]

Will the hon. Gentleman give way?

[Mr Cunningham]

I want to get on. If I have time, I will let the hon. Lady in.

Looking at the proportion of people referred to the Work programme who have had a job outcome, there has been poor progress. In Coventry South, 1,670 referrals were made to the Work programme last year. In the same period, only 50 job outcomes resulted from the programme—a success rate of only 3%. Although employment levels have increased, we do not have enough information about the type of work being gained. There are clearly many people in part-time work who are not earning the income they need to survive. We need to look closer at the numbers, as it is not a question of simply being in or out of work; we need to know more about the type of work.

[Karen Lumley]

I congratulate the hon. Gentleman on securing this debate. Does he not agree that under this Government, unemployment is falling month on month, and that new business start-ups in Redditch have increased by 14%? Does he not think that that is good news for the west midlands economy?

[Mr Cunningham]

We do not have a breakdown of those figures. We do not know how many people are part-time workers or are in temporary jobs. I want to know more about those figures.

Budgetary pressures on the council are made all the more damaging in light of the financial pressures individual households face. For example, I am extremely concerned about the coming introduction of the under-occupancy penalty, or bedroom tax—in other words a new poll tax, but no one has grasped that. It will cut the housing benefit of working-age tenants in the social rented sector who have spare rooms.

The Government say that if people do not want to face the benefit cut, they can simply move into a smaller property. However, there are simply not enough smaller homes available in the current housing market. There is a national shortage of one-bedroom houses, particularly in the social housing sector. Furthermore, there are concerns that tenants are not being sufficiently prepared for the changes and do not know anything about the penalty.

The Department for Work and Pensions estimates that the introduction of the social sector size criteria measure is likely to affect 60,000 working-age housing benefit claimants living in the social rented sector in the west midlands at the time of its introduction in 2013-14. The change will mean that anyone in social housing with a spare bedroom will lose 14% of their housing benefit, or 25% if they have two spare rooms. Most people with a spare bedroom are pensioners who live in two or three-bedroom houses. There is a national shortage of one-bedroom houses, particularly in the social housing sector. In many areas, moving is not an option, because there are not enough smaller places to move into. I have long been concerned about that issue and want to prepare those who will be affected in Coventry as much as possible.

Another factor that is putting pressure on households is fuel prices. Petrol prices have fallen by less than 4p a litre, despite a 10p drop in wholesale prices—almost mirroring what happened six months ago.