Working People’s Finances: Government Policy

Karin Smyth Excerpts

Tuesday 21st September 2021 Commons Chamber

[Matt Western (Warwick and Leamington) (Lab)]

It is a real pleasure to follow my hon. Friend the Member for Slough (Mr Dhesi), who is a good friend. He put his arguments so forcefully and cogently. So many of the contributions this afternoon, certainly from Opposition Members, have been impressive and consistent in their criticism of the Government’s attitude and policies for addressing a fundamental problem in our society.

That perhaps comes as no surprise. When someone has their lunch hand-delivered to them every day by a company based in the Cotswolds, they might not be totally in touch with what is going on out in the economy—the price of food, the price of sandwiches and so on—but as I understand it, that is exactly what happens for the Prime Minister; one of his donors delivers a sandwich to him every day. It is a very reputable and nice business, based in the Cotswolds; I actually visited it myself once.

That kind of out-of-touch-ness is at the heart of this Government. They are divorced from the harsh impacts of what is going on in our economy—of inflation and the real cost of living. We must think about what has happened in the past 15 or 18 months for our nurses, hairdressers, decorators, plumbers, brickies, care workers—all those who are now facing the severe impacts of really high inflation, with wage growth not keeping up.

Those of us who are in touch with the weekly shop, as was evidenced by my hon. Friend the Member for Swansea East (Carolyn Harris), know how much we are seeing in price increases—not just the standard price increases that are going on, but the price gouging that is happening on our high streets. I have seen that at first hand. We have a Tesco store on the Parade in Leamington, and there is sometimes a 60% price difference between what people pay in the Tesco superstore a mile and a half away and what the vulnerable, the elderly and so on pay in that store on the high street.

I am not sure how this computes. If someone’s real concerns are about buying Lulu Lytle wallpaper at £840 a roll, I do not think that necessarily puts them in touch with what is really going on at the local DIY store, or the cost of timber down the timber merchant to build themselves a shed. I think that is at the heart of the policy and the Government’s inaction in addressing inflation and the pressures on families up and down our country. Certainly, the hard-working people in Warwick and Leamington are being very hard hit by rising costs. We are all facing the rising prices of energy, food, travel and housing, all of which are contributing to rising inflation, not to mention, as has been said repeatedly from the Opposition Benches, the sledgehammer of the universal credit cut and the pressure on pensions. When we put all that into the mix, together with tax increases, we realise how hard it will be for people and families up and down the country.

Looking at inflation—sadly, I am one of those who takes a real interest in this sort of stuff—the biggest jump on record was in August. The Bank of England expects inflation to peak at 4%. I think it is slightly underestimating the impact of what could happen—personally, I think it might exceed that—but even 4% is double the Bank of England inflation target of 2%. The Government, the Prime Minister and the Chancellor seem to be acting surprised that inflation will be peaking at 4%, but surely they will have access to briefings from the Bank of England and the senior economists—the likes of Andy Haldane and others—who will be saying what is happening to the UK and global economy and where the price pressures are that will impact on ordinary households. They track the data and get input data from businesses in the regions—in the west midlands, all the businesses will be feeding that information into the Bank of England’s regional office.

[Karin Smyth (Bristol South) (Lab)]

My hon. Friend is making an excellent point about inflation. He and I may be of a similar age and remember how, perhaps in our younger years, inflation was such an important issue that we were mindful of almost daily. However, there is a generation that does not really understand, or perhaps has not experienced, what inflation means to the daily and weekly cost of living for ordinary families. By not being up-front or public about this, the Government are perhaps not educating people on how to manage the coming crisis.

[Matt Western]

I thank my hon. Friend; she is incredibly generous to suggest that I might be of a similar age, but I will take that compliment from her. Of course, I agree. Certainly, I think about my generation and what happened to inflation in, say, 1990 and 1991, as someone who was paying a mortgage at the time and seeing 60% of my income going on the mortgage because of the excessive interest. Those on tracker mortgages and so on will be really worried about what is happening, because their incomes are certainly not keeping up with that kind of increase. I speak as someone who suffered—okay, I am nowhere near, and never have been, the sharp edge of the sort of extreme poverty that we are here to talk about. However, we should realise the pressure that that puts people under emotionally and psychologically, and the impact on mental health. What inflation can do, in eroding pensions and impacting on household budgets, should be a real concern to everyone in this House.