National Insurance Contributions (Increase of Thresholds) Bill

John McDonnell Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

Thank you, Madam Deputy Speaker. I remind my hon. Friend the Member for Luton South (Rachel Hopkins) that she has just made a brilliant speech, but if she wants to repeat it she is perfectly welcome to do so!

The hon. Member for Rother Valley (Alexander Stafford), who has just left the Chamber, made a valid point about the nature of today’s debate. We as a House need to look again at how we deal with financial statements. It is all well and good having a statement followed by questions, but these statements are becoming increasingly significant—they are, in effect, mini-Budgets—and we need to look again at how we try to cram a debate about the whole statement into just one piece of the legislative proposals stemming from it. In future it would be better, just as we do with the Budget, to timetable specific debates on the statement and then we would have the legislative flow from that.

I put on the record my apologies to the Pendle constituency Labour party. I was meant to be doing the Sydney Silverman annual lecture this evening, but I have postponed it. I apologise to the CLP for any inconvenience caused. The annual lecture is a significant event, because Sydney Silverman was the man who abolished capital punishment and he had a fantastic record as a Labour MP up there. They have been very good about it and we will choose another date. I have postponed it because, as I raised with the Chancellor yesterday, there is nothing in this spring statement—and for me this is the most significant thing about it—for the poorest in our society, including those forced to live on benefits and pensioners, and I am really worried about what will happen to them over the next six months. My reason for being here is to say that we need to have a proper debate in these coming weeks and months about the nature of poverty in our society, the nature of low incomes, and the options available to us to tackle those issues. I have tabled an amendment, but it looks as though the whole debate is going to run into one.

Last Friday I met a group of unpaid carers who are looking after family relatives. I remind Members that the carers allowance is £67.60. I just do not know how people can live off that. In fact, they cannot live off it. They now face the energy price increases that we have discussed today, and they are being hit by the inflation rate going up. The fact is that, although both benefits and pensions are to increase by 3.1%, the predictions for the increase in the rate of inflation are anything between 7% and 10%. That is a startling cut in people’s living standards, and I do not know how they are going to cope.

I want to wage a cross-party campaign to get the Chancellor to come back sooner, with more measures to assist the poorest in our society. As I said yesterday, I predict that when we get to November there will be large numbers of pensioners and others sitting in their homes freezing. We have gone through a period where, year after year, we have highlighted the number of excess deaths in this country, particularly of older people during winter, and I think that that number will increase again.

Much has been said about the Government’s record on pensions, but I have to remind them that the reason the triple lock had to be introduced is that Mrs Thatcher broke the link between pensions and earnings, and the pension became undermined. When the Government proposed the triple lock, I wholeheartedly supported it. That is why all our manifestos at the last election committed to supporting and abiding by the triple lock, so I found it truly shocking when the Government tore that up and suspended it last year. I thought that we had embedded it into the political thinking of this country that, whatever happens, pensioners should share in the wealth growth of this country, including wage growth, or at least be protected against an inflation hit, but we seem to be going backwards. I know that the Government have said that it has been suspended possibly for only a year, but I fear that it might become the norm. That is why Members from across the House should try to secure from the Chancellor a commitment that something should be done to inflation-proof at least the benefits and pensions of the poorest in our society.

Another issue that I think is going to come at us rapidly in these coming months—I think it will become an important part of the political debate and we should wake up to it now—is that of wages. Unless we inflation-proof wages, I predict that we will see a flaring up of industrial strife in our country. I will give the example of what has happened to council workers in the latest pay settlement. With inflation possibly between 8% and 10% by the end of the year, their wage settlement is 1.75%. That means, in effect, a wage cut of up to 8%. I invite the Government to consider the issue of wages in the public sector, because they obviously set the terms of those in the private sector as well. Unless we inflation-proof wage settlements, our lowest-paid workers will be hit hard by the erosion of their wages as a result of inflation. I think that the Government should be saying to the pay review bodies that, in negotiations, they should start with inflation-proofing settlements.

We also have to recognise that we have to play a role with regard to prices overall. The Government have accepted that there needs to be a continuation of some form of cap on energy prices. I think there should be a cap on profits. The Common Wealth think-tank published its analysis of the energy company profit rates, which were between 42% and 45%. That is absolutely staggering. If that is not profiteering, I do not know what is. We have to come back to this House within the next couple of months. We cannot leave it beyond the recess. Before the recess, we need to know the assessment of the Government, the OBR and others of what the energy price situation is going to be like in three months’ time, and we need measures in place to protect people. We know that the price of oil and so on will fluctuate, but we have to make predictions on the best information we have, before the recess at the end of July, so that we can start to protect people.

We also need to consider other measures on prices. Last week the Mayor of London Sadiq Khan proposed a 12-month rent freeze in London. I proposed a rent freeze last October because it was clear from talking to ACORN, the London Renters Union and others just what rent increases were coming through post covid. Unless we start protecting people with rent controls, particularly in high-rent city areas, a rush of evictions will start again, leading to an increase in homelessness and to those homeless families unfortunately having to rely on cash-strapped councils to support them.

Finally, in addition to the need to provide more support for the hardest hit, including those living in poverty and pensioners, and the need to control the implications of increased prices in both energy and rents, we need—and I hope this is coming next week—clear plans from the Government on where we go from here in tackling the energy crisis. I welcome the lifting yesterday of VAT on solar panels and so on, but, to be honest, that was a fairly small step in terms of what is needed. One of the most effective ways in which we can help people in this coming period is through investment in home insulation. A few years ago, we put forward a plan to insulate 27 million homes, the independent assessment of which was that it would create about 450,000 jobs and reduce energy bills significantly. What we can do now is make sure not only that we insulate people’s homes and bring down their energy bills, but that we create good jobs. We need the Government to come forward immediately with a programme that prioritises that action. Of course we need to go for green growth and investment in wave, wind and solar power, but the quickest gains can be made through home insulation. In that way, we might give some hope to people who, at the moment, are viewing the coming winter as a pretty bleak period.

I have listened to this debate from the start, and I have listened to all those who are quoting the IFS, the Resolution Foundation and so on, but what sticks in my mind is the fact that there are 2 million pensioners and 4 million children living in poverty. We can argue about the Government’s record over the past 10 years, but that is the stark reality of it. The Resolution Foundation analysis that 1.3 million more people will be forced into poverty is shocking and it should shock us all. We should treat it as an emergency that we need to address very quickly. That is why I say that this cannot be the last debate on it between now and the summer recess. We need to have the chance to consider clear proposals about how we deal with the plight of the poorest in our society, how we tackle the way that they are being hit by prices rises and rent increases, and how we can insulate their homes for the future.

I will finish on the point that I made yesterday. A 3.1% increase for those forced to live on benefits and for pensioners, with inflation at anything between 8% and 10%, will push so many people over the edge into real poverty, real stress and mental health problems, and unfortunately for some it will further existing distress. That is what we should be talking about today. We need to be considering measures to address the whole issue, otherwise we will be failing in our duty.

One final point. We are all on good wages and salaries and we do not suffer anything like the hardship of many of our constituents, so it behoves us to try to take into far greater account the most deprived people in our society. So far in these discussions, with all the point scoring and so on, I do not think that we have properly done so. In the coming months, how we tackle this matter must be the nature of our debate.

[James Daly]

The right hon. Gentleman is making a very thoughtful speech. Among his proposals is a cap on profits. I wonder whether he could expand on that. In my constituency, for example, we have many small businesses; we do not have multinationals or anything such as that. Does he advocate that all private sector businesses, whatever their size, should have a cap on profit?

[John McDonnell]

I do not think the hon. Gentleman heard me properly. I was referring to the energy companies, specifically in regard to the profits that they have made. If he looks at the report of Common Wealth, the think-tank, he will see that it was looking at 42% to 45% rises for a number of those energy companies. That is where we need to cap profits. That would then give us the opportunity to redistribute some of that into supporting families and so on. It is about trying to be as targeted as possible so that we get the maximum benefit for the maximum number of people in our country. In his speech the hon. Gentleman used the slogan, “For the many, not the few”. It just shows what a good slogan it is when the opposing side starts stealing it.