Living Standards

Jonathan Ashworth Excerpts

Wednesday 30th November 2011 Commons Chamber

[Jonathan Ashworth (Leicester South) (Lab)]

We have heard many Members on the Government Benches, including the Secretary of State, complain about the level of the structural deficit. However, I recall that up until the financial crash the Prime Minister and the Chancellor supported every penny piece of our expenditure. It was only when the crash hit that they changed their position. To be fair, the Secretary of State, in the period when he was Leader of the Opposition, did not support our spending, but the current Prime Minister certainly did.

I shall make a few comments about the rising cost of living. I think it was the Governor of the Bank of England who said earlier this year that households in 2011 would experience the toughest squeeze in living standards since the 1920s. That has been endorsed by the OBR, which stated yesterday that

“household disposable income is forecast to have fallen by 2.3 per cent this year, a post-war record.”

The OBR went on to predict that it will not be until 2014 that earnings will rise faster than prices. That means, in effect, that over the course of 2010 to 2015 the average growth in real household disposable income will be just 0.5% per annum. It is no wonder that household spending has been so weak and that in the run-up to Christmas we had an extraordinary report from the CBI this week showing that shops are laying off workers at the fastest rate for two years.

Although there were some measures in the autumn statement to help people, such as the fuel duty change, the Chancellor is paying for the changes that he introduced by means of a public sector pay freeze and hitting low- paid workers who rely on tax credits. As I understand it, the changes to tax credits amount to a cut of £1.3 billion to families, affecting 5.5 million families.

I read today in The Times that Tory sources are baffled that Liberal Democrats agreed to this. My constituents will not be baffled when they find out about it. They will be livid when they see what the tax credit cut will be for them. I am particularly concerned because that will lead to an increase in child poverty. The Treasury’s own figures show an increase of 100,000. In Leicester child poverty is a particular issue, and the cut will only make matters worse.

We are plainly not in this together. The Chancellor is not in this together with the young mother on the Saffron Lane estate in Leicester who is seeing her tax credit cut. The Chancellor is not in this together with the young people in Highfields who are still unemployed. Members on the Opposition Benches have been calling for a youth unemployment scheme. I hope that the youth contract announced by the Deputy Prime Minister is a success, but as my right hon. Friend the Member for South Shields (David Miliband) so eloquently explained, a similar scheme introduced by the Lord Chancellor when he was Chancellor in the mid-1990s was an utter failure. I hope the scheme succeeds, but we on the Opposition Benches will scrutinise it carefully. Many constituents ask me whether it would have been better to keep the future jobs fund. They also ask why on earth young people in Leicester have to wait until next April for the scheme to be introduced.

I want to say a few words about the industrial dispute going on today. Many of my constituents are on strike. They take industrial action reluctantly and with a heavy heart. Earlier today the Paymaster General said that he is prepared to consider suggestions on the 3%. I want him to go further, and perhaps the Minister might respond to this. Will he think about going further and look at entering meaningful negotiations on that 3%?

When we left office, the economy was growing, unemployment was falling and inflation was under control. We now have next to no growth, record unemployment and one of the highest inflation levels in Europe.