Budget Resolutions and Economic Situation

Justin Madders Excerpts

Thursday 9th July 2015 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I congratulate Members who have made their maiden speeches today. I will not list them all, as some of the Scottish constituencies in particular are quite lengthy, but they all spoke with great passion about the areas that they represent. I especially welcome my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer), who has served in local government for a long time, and has been a great public servant. I am sure that she will repeat that role in the House.

I believe that in the Budget the Chancellor has put rhetoric above reality. He has talked about a northern powerhouse, but at the same time he has put key transport projects at risk. He has offered nothing positive to constituents such as mine, not least because he has been unable to establish whether my constituency is part of the northern powerhouse. As for the living wage, about which I shall say more shortly, it is nothing of the sort. Perhaps the clearest example of rhetoric over reality, however, was the Chancellor’s statement that this was a Budget for one nation. This is not a one nation Budget; it is divisive. It is a Budget that says, “If you lose your job, if you are sick, if you have what the Chancellor deems to be too many children, if you get disabled, if you’re young, if you’re disadvantaged—you’re on your own.” This is not a one nation Budget; it is a two generational Budget.

It is clear that the Government have taken a cynical decision to attack young people, presumably on the basis that they are less likely to vote. If there is anything that will motivate young people to vote, I believe it is this Budget. Let us look first at the so-called living wage. I see no reason to limit it to people over the age of 25. Are people not adults at 24, 23 or 22? Is their contribution any less deserving at that age? I am worried that employers will, in effect, be incentivised to sack people when they reach the age of 25. What a fantastic 25th birthday present that will be.

Many others, including the Living Wage Foundation, have commented that next year we will not see an above-average increase in the living wage: we will see an increase in the minimum wage, and that is what we should go on calling it. It is not only a rate far lower than that proposed by the independent Living Wage Foundation and already paid by living wage employers, but when we consider the tax credit cuts, it represents a huge reduction in income for the many who will receive it.

What about those good employers who already pay the living wage rate of £7.85 an hour? What message does the Budget send out to them? Whatever the headlines proclaim, the details tell a very different story. A single parent in my constituency on the minimum wage stands to lose around £1,500 a year under these proposals. A couple could lose around £2,000 a year. For both of them, it is about 10% of their annual income. I agree that subsidising low pay with tax credits is not the way ahead for this country, but for five years this Government and the Chancellor have made no attempt to tackle in-work poverty. The focus has been on the low-wage insecure economy that we still see today. They cannot take away tax credits without putting in place a proper system to replace them.

Rebranding the minimum wage is not a proper system to tackle low pay. This Budget is an attack on the family. Penalising the third-born and denying families access to tax credits is not a humane approach and will only increase child poverty. I have heard it said that the state should not support more than two children. Are the Government trying to prevent the third child from attending school or accessing the NHS or other public services? Of course not. That would be ridiculous, but the cost of a child’s education far outweighs the cost to the taxpayer in tax credits. That exposes this proposal as a cheap, cynical and calculated attempt at division.

A further attack on young people is the replacement of student maintenance grants with loans. I recall Government Minister after Government Minister speaking out in favour of the £9,000-a-year tuition fee system on the basis that the least well off would be supported by grants. That did not last very long, did it? How many will now decide that what they will have to repay is so prohibitive that they cannot even contemplate higher education? Starting a working life with debts of over £50,000 is surely a daunting prospect for anyone, and we already know that the loan system is unsustainable because of the low levels of repayment. The new system will increase debt and decrease opportunity.

One of the big challenges that we face is in relation to housing benefit costs. I note that the Budget proposes a modest reduction in social housing rents, but it seems completely to ignore the spiralling cost of private rents, which make up the bulk of the increase in the housing benefit bill. One serious consequence of the measures in the Budget is that the reduction in income for housing associations and council housing revenue accounts will reduce further the amount of social housing that is built. It has been estimated that around 27,000 homes a year will be lost as a result of these measures. That will put more pressure on the private housing market, increasing the housing benefit bill further. What we need is meaningful action to reduce private sector rent levels, but we have heard nothing from the Government about that.

Another worrying measure is the removal of housing benefit from those under 21. It means that if people are young, work hard, move out of the family home and are then unlucky enough to lose their job, they will lose their home as well. What kind of message does that send out to children who want to get on?

The proposal that households with higher incomes should pay more rent will penalise young people in work. Those who are living with their parents but are saving up for a home of their own will be penalised. Already a constituent in this situation has told me that the money they were putting aside for a deposit will now be used to pay the increased rent that their parents will have to pay. How is that going to create more homes for everyone?

As for the northern powerhouse, I could not get an answer yesterday, but I think we are getting closer to finding out where it is. I note that in the Red Book there is something called “Transport for the North” which will be established as a statutory body with statutory duties. That will help us to identify where the northern powerhouse is. I see that an interim partnership board already has representatives from Manchester, Liverpool, Sheffield, the north-east, Hull and Humberside, but there is no mention of Lancashire or Cheshire. About half the north-west does not appear to be in the northern powerhouse at all. There is nothing in the Budget for my constituency, and across the country there is nothing to tackle chronic insecurity in the workplace, or to encourage the transition from part-time to full-time work. There is nothing about job creation, improving public transport, or creating a sustainable and fair economy.

It can be no coincidence that the Budget projects personal borrowing to increase significantly over the next few years, because what we have is a conjuring trick of the Chancellor giving with one hand and taking back with both hands. He is taking more than he is giving, and people will discover that reality in the next few months once the headlines have faded. Members of the House will have to deal with the reality of a con trick.

[Several hon. Members]

rose—