Oral Answers to Questions

Kim Johnson Excerpts

Tuesday 19th March 2024 Commons Chamber

[Afzal Khan (Manchester, Gorton) (Lab)]

5. What recent fiscal steps he has taken to help reduce regional economic inequalities.

[Kim Johnson (Liverpool, Riverside) (Lab)]

15. What recent fiscal steps he has taken to help reduce the level of economic inequality between the north and south of England.

[The Exchequer Secretary to the Treasury (Gareth Davies)]

The Government continue to tackle regional economic inequalities and level up the United Kingdom. The Government are empowering local leaders through a range of devolution deals, regenerating places across the country and investing in vital infrastructure.

[Gareth Davies]

We are committed to levelling up, and are delivering on it across the country. Median pay growth has been higher in every region outside London and the south-east under this Government, and the hon. Gentleman’s constituency is receiving £19 million from round 1 of the levelling-up fund and £20 million from round 3. We have announced a Greater Manchester trailblazer devolution deal and a Greater Manchester investment zone, which will bring more jobs and prosperity for all of his constituents.

[Kim Johnson]

I have heard what Ministers have said this morning, and I must be living in an alternative universe. Liverpool has some of the most deprived wards in the country, which have experienced poverty and destitution over the past 14 years as a result of austerity. Some 300,000 people have accessed the household support fund, and while we are a resilient city and will continue to support those households, can the Minister explain what safety net will be put in place to support those in poverty and destitution when the household support fund ends in six months’ time?

[Gareth Davies]

The hon. Lady is right to highlight the fact that we have extended the household support fund for the most vulnerable. That is on the back of £96 billion of support during the energy crisis and nearly £400 billion of support through the global pandemic. I would just point out to the hon. Lady that the fundamental difference between Conservative Members and Labour Members is that we believe the best route out of poverty is through work, and our party is increasing employment.

Mortgage and Rental Costs

Kim Johnson Excerpts

Tuesday 27th June 2023 Commons Chamber

[Rachel Reeves]

My hon. Friend is absolutely right. People who live in Hornsey and Wood Green, where house prices are high, will see a big increase in their payments. When rates go up from below 2%, which is what many people were paying, to above 6%, there will be huge increases. It is through no fault of my hon. Friend’s constituents, or any of our constituents, that they are in that position, which is what is so frustrating.

I remember a time—you may as well, Madam Deputy Speaker—when the Tory party used to preach personal responsibility, yet this Government are taking no responsibility for the devastation that they have caused. Where is the apology for the Tory mini-Budget? Where is the apology to those paying hundreds of pounds more a month in mortgage payments, or to those at risk of losing their homes? There is nothing.

Let us just imagine for a moment that a group of people working in an office, a supermarket or a factory burn the place down. Everyone else who works there is told that they have to pay to clean up the mess and that that payment will carry on for years. The next day, the arsonists turn up to work again, expecting to be paid as normal and, not only that, they are furious if someone even brings up the incident of the fire with them. That would be preposterous and outrageous, and yet it is precisely what the Government are doing. “Inflation? Oh, that was nothing to do with us. It was all global events. It was those public sector workers asking for a pay rise. It was the Bank of England. It definitely was not anything to do with us.” That is what we hear from this Government. Well, we know what the Tories did last autumn was totally outrageous. The country will not forgive or forget the scale of the harm that the Tories have caused to the economy and to families up and down our country.

The Government say that this is happening everywhere, so let us look at what is happening in Europe. The latest data comparing interest rates among our European neighbours show that a household in Britain, with a £200,000 mortgage, is now paying over £2,000 per year more for its mortgage than in France, over £1,000 a year more than in Ireland or Belgium, and £800 more than in Germany. That impact on families in Britain reflects the choices made by this Tory Government.

To make matters worse, after 13 years of the Tory Government being in power, average real wages are still lower than they were in 2010. Many families have faced one financial pressure after another. Energy bills are twice as high as a year ago. The weekly food shop is astronomical. On top of all that, higher mortgages and higher rents are the last thing they needed. No one is reassured by the suggestion from the Prime Minister that he is “100% on it”. After 13 years in power, it is clearer by the day that the Tories are the problem, not the solution.

The truth of the matter is that we have the highest inflation in the G7, with core inflation rising and interest rates rising too. We are in a weaker position than many as a consequence of Tory choices that have left our economy lacking resilience and security in the face of shocks, including global ones. Banning onshore wind, closing our gas storage facilities and scrapping the home insulation programme have all contributed to higher bills, higher costs and less security.

A patchwork Brexit deal full of holes is making goods such as food more expensive, with the prospect that that could get worse at the end of this year, with new import checks and costs. What is the Government’s latest idea? One of the Chancellor’s economic advisers called last week for the Bank of England to “create a recession”, adding:

“They have to create uncertainty and frailty."

Will the Minister tell us whether the Chancellor agrees with that advice from his advisers? If not, why is taking advice from them?

A Labour Government would be built on the firm foundations of economic responsibility, with strong fiscal rules. We would negotiate a bespoke British food and farming agreement with our trading partners, while staying out of the single market and customs union. We would lift the ban on onshore wind and reform antiquated planning rules, working in partnership with businesses and trade unions to invest in the jobs and industries of the future, protect our energy security and reduce our energy bills. That is what is needed to get our economy on sustainable and stable path, so that families are not grappling with a cost of living crisis created by this Tory Government.

If ever there were proof that the Government do not have the answers that our country needs, it is what is happening on housing. The Conservatives once claimed to be the party of home ownership: not any more. Home ownership is falling. It is not because of just their failure to require lenders to provide mandatory support for mortgage holders, although that would certainly help today. Incredibly, the Prime Minister has scrapped house building targets in the face of pressure from some of his councillors and Back Benchers. The consequence of the Tory Government’s policy is now to push the prospect of home ownership for young people and families starting out in life even further away.

[Kim Johnson (Liverpool, Riverside) (Lab)]

My right hon. Friend is making excellent points, particularly about young people being priced out of the property market. Does she agree that we need to overhaul the housing system to include better rights for renters and more council housing?

[Rachel Reeves]

My hon. Friend makes a really important point, because the Tory mortgage bombshell is experienced whether people have a mortgage or not. Renters are seeing huge increases in their rents—on average 10% in the last year—in Liverpool and around the country. That is why Labour’s renters charter is so important right now.

Treasury Ministers remain ignorant or indifferent to the plight of the renters whom my hon. Friend spoke about. A Labour Government would bring in a renters charter, ending no-fault evictions, and introduce a four-month notice period. Renters right now are exposed to their landlords passing the higher costs of their mortgages on to their tenants. Yet it is not clear whether the voluntary package, which the Chancellor described yesterday, includes buy-to-let mortgages. Will the Government tell the House and the country what they think the consequences of that will be? Labour would rebalance the housing market towards first-time buyers and towards renters. We would bring in a comprehensive mortgage guarantee scheme, stopping overseas investors buying whole developments off plan, and introduce our tough private renters charter.

The Tory mortgage bombshell could not come at a worse time for family finances—right in the middle of a cost of living crisis. Our country is being made to pay the growing price of Tory economic failure. People cannot afford this Tory Government. We have seen mistake after mistake, wrong decisions taken for the wrong reasons, and the Government never standing up for working families and refusing to take responsibility for the problems that they have created. The only thing that the Tories have to offer is desperate excuses for the state of the country after 13 years of their Government.

At the next election, people will be asking this question: are me and my family better off after 13 years of Conservative Government? The answer to that is a resounding no. The last thing that our country needs is this Tory mortgage bombshell. The country needs security for working people. That is what Labour will deliver. We are on to the third Prime Minister of this Parliament. If this Government had any decency, they would call a general election and let the people decide who they want to stand up for them and lead our country.

Corporate Profit and Inflation

Kim Johnson Excerpts

Tuesday 16th May 2023 Westminster Hall

[Richard Burgon (Leeds East) (Lab)]

I beg to move,

That this House has considered levels of corporate profit and inflation.

It is a pleasure to serve under your chairship, Sir Mark. I secured this debate because the discourse on inflation in Parliament, in Government and in the Bank of England has been dominated by the need to curb workers’ wages. Government policy has focused on driving down workers’ real wages. In the words of the Bank of England’s chief economist, people should just

“accept that they’re worse off”.

That approach has ignored the elephant in the room—the role that corporations are now playing in driving up inflation through price hikes designed to boost their profits. There is mounting evidence that such corporate profiteering is playing a very significant role in the latest wave of inflation. It has been called many things: price gouging, profiteering and, most commonly, greedflation. The US Senate Committee on the Budget has held a special hearing on this subject, but there has been very little focus on it in Parliament so far. Today, that situation changes. I believe that this is the first specific debate on greedflation in this House. It should not be the last one. Indeed, I hope that this debate kicks off a serious discussion in this House about how we tackle greedflation.

Of course, higher inflation since late 2021 has been affected by big problems in supply chains, as a result of post-covid trade disruption and the war in Ukraine. However, two excellent studies have highlighted how soaring profits are now having a big impact. The Institute for Public Policy Research and Common Wealth think-tanks have shown that profits were up 34% at the end of 2021 compared with pre-pandemic levels and that nearly all of that increase in profits was due to just 25 companies. As the IPPR has recently said:

“It’s time for policymakers to look at ‘greedflation’ and prioritise reining in corporate profits, instead of blaming workers’ wages for driving up inflation.”

Using the latest available figures for the largest 350 companies on the London stock exchange, Unite the union has shown how profit margins for the first half of 2022 were nearly double—89% higher—than for the same period in 2019, before the pandemic. Unite’s report finds that in the last six months company profits are responsible for almost 60% of inflation. As its general secretary, Sharon Graham, correctly states:

“Make no mistake, profiteering has resulted in the high prices we’ve all had to pay”.

I pay tribute to those organisations for bringing attention to this issue. For example, Unite the union has secured press coverage for its recent study. However, I fear that the Government, in their reply, will simply dismiss these studies as coming from left-of-centre organisations and will plough on regardless. Therefore, I want to use the next part of my speech to focus on how this issue goes well beyond the centre-left and is now a mainstream debate. The financial press, investor bodies and central bank officials are openly discussing how corporate profits are, in fact, driving inflation. It seems that it is just the Government who are ignoring this issue.

Let us look at some of the recent headlines in the financial press. One Financial Times headline said:

“‘Greedflation’: profit-boosting mark-ups attract an inevitable backlash.”

A Wall Street Journal headline said:

“Why Is Inflation So Sticky? It Could Be Corporate Profits.”

That article went on to explain:

“Businesses are using a rare opportunity to boost their profit margins.”

MoneyWeek, the UK’s best-selling financial magazine, had a piece entitled:

“What should we do about greedflation?”,

which noted:

“Companies’ price hikes have been driving inflation.”

Fortune said:

“‘Greedflation’ is the European Central Bank’s latest headache amid fears it’s the key culprit for price hikes”.

Meanwhile, an Investors Chronicle headline said:

“‘Greedflation’ is only making things worse”,

adding:

“Business using inflation as cover for unjustifiable price hikes are on borrowed time”.

Likewise, economists and investment strategists are openly saying that corporate profits are driving price hikes.

[Kim Johnson (Liverpool, Riverside) (Lab)]

I thank my hon. Friend for raising the issue of corporate greed. The spotlight has been shone today on the crisis of unaffordable baby formula, with parents forced to steal or settle for black market alternatives, putting the health of their babies at risk. Given that the revenue in the baby food segment of the UK food market is set to increase by £265 million, or nearly 15%, over the next four years, will my hon. Friend join me in calling on the Minister to put an end to the scandalous profiteering that takes money directly out of desperate parents’ pockets and into shareholder profits, fostering a public health crisis whose repercussions we will suffer for decades to come?

[Richard Burgon]

As ever, my hon. Friend makes the point about what is really happening out there. She gives a powerful example about baby food. I will come on to food and a policy suggestion for price caps later.

The chief economist of UBS global wealth management, Paul Donovan, has stated that

“much of the current inflation is driven by profit expansion. Typically one would expect about 15% of inflation to come from margin expansion, but the number today is probably around 50%.”

Albert Edwards, the global strategist at Société Générale, one of the largest financial services groups in Europe, tweeted:

“More Greedflation? When are government going to force a halt to this price gouging?”

Elsewhere, he explained how companies have

“under the cover of recent crises, pushed margins higher”.

In more technical language, but saying the same thing, Goldman Sachs economists said of the eurozone:

“Unit profit growth now accounts for more than half of GDP deflator growth, with compensation per employee growth explaining a little over a third.”

Central bankers are also raising concerns. In fact, the European Central Bank’s Fabio Panetta said that

“there could be an increase in inflation due to increasing profits.”

He has also said that

“unit profits contributed to more than half of domestic price pressures in the last quarter of 2022”.

Meanwhile, Lael Brainard, formerly of the Federal Reserve and now a White House official, said:

“Reductions in markups could also make an important contribution to reduced pricing pressures.”

Autumn Statement

Kim Johnson Excerpts

Thursday 17th November 2022 Commons Chamber

[Jeremy Hunt]

The hon. Gentleman may have heard me say that we are going to have an independently verified long-term workforce plan to ensure that we are training enough doctors and nurses in Devon and, indeed, all over the country, and I think it is incredibly important for us to do that.

[Kim Johnson (Liverpool, Riverside) (Lab)]

Poverty is a political choice, and the Chancellor had the opportunity to take millions of children out of poverty with his Budget today, including children in my constituency. That has not happened, and the increase in benefits will not happen until April next year. Can the Chancellor tell the House what families are going to do when they are talking about heating or eating this winter?

[Jeremy Hunt]

This year we have supported the poorest families with £1,200 to deal with an exceptional increase in the cost of living. We have the household support fund, which we are giving to councils so that they can help to ensure that people do not fall between the cracks, and there is money for the NHS and care system, which is also targeted at the most vulnerable and people living in poverty.

We are doing a great many things today. There is always more that we can consider, but strong public services need a strong economy, and that is what you get with the Conservatives.

Health and Social Care Levy (Repeal) Bill

Kim Johnson Excerpts

2nd reading
Tuesday 11th October 2022 Commons Chamber

[Kim Johnson (Liverpool, Riverside) (Lab)]

I welcome this decision to repeal the regressive hikes to national insurance, which would have seen those least able to pay with the heaviest proportional tax burden to tackle the crisis in social care. This is the right thing to do, but it should never have happened in the first place. Tax rises on the poorest, especially during a cost of living crisis, are cruel and unnecessary.

We now need urgent reassurances from the Minister that new funding for adult social care will come from progressive taxation and the pockets of those who can most afford it. We must be clear that a U-turn is not a plan; it is the absence of one. We still have no answers from the Government about how they plan to tackle the crisis in adult social care or where the funding will come from, other than to wait until 31 October for the medium-term fiscal plan.

Twelve years of Tory austerity have already seen £8 billion taken out of the social care system. Now we are facing a winter of hardship driven by the rampant cost of living crisis. Instead of bringing forward measures that will help the poorest and those most in need, the Government are prioritising tax cuts for the rich and public service cuts for the rest of us. They have removed the triple-lock protections on pensions and are refusing to commit to raising benefits in line with inflation. They have made disastrous economic decisions that have crashed the economy and made the cost of living crisis one of the worst among comparable countries.

Local governments are being forced to make further crippling cuts, as well as find extra money for energy costs and inflation to maintain their public services. We know that adult social care provision will suffer. Liverpool has lost £465 million of our budget since the start of austerity, which is more than two thirds of our overall budget since 2010. Liverpool, like other cities, has a growing elderly population with increasing complex needs, including dementia.

We urgently need a big injection of funding to councils’ care budgets alongside a social care workforce strategy to meet rising demands. We are facing unprecedented staff shortages in the health and social care sectors, with more than 165,000 vacancies and a massive staff turnover of 30% a year. In Liverpool, 15% of our social care workers are employed on zero-hours contracts and we have a vacancy rate of over 10%. Without action, the consequences will be devastating. We must be absolutely clear: a shortage of staff costs lives. It is as simple as that.

We are about to face a second round of Tory austerity, with £43 billion to be slashed from public services that have already been decimated during 12 years of Tory Government. Instead of more cuts, we need a serious injection of cash into adult social care and a plan to bring those services back in-house to end the rampant profiteering of companies backed by private equity funds, which sucks public money out of the system and out of services and straight into tax havens in the Cayman Islands to be hoarded by the super-rich. Decent pay, terms and conditions for undervalued employees must take centre stage of any serious plans to tackle the deep-rooted structural issues in the social care sector along with a long-term workforce strategy and improved quality and standards of care.

The Secretary of State for Health and Social Care has committed to maintaining the same levels of funding on health and social care despite today’s cancellation of the levy. However, the Prime Minister and the Chancellor are crowing about this reversal to national insurance contributions as a key victory in their tax-cutting agenda, which will see £43 billion slashed from public services. Will the Minister confirm whether the Government will commit to spending the same planned £12.4 billion a year over the next three years that would have been raised by this levy? A simple yes or no answer would be great, thank you.

The Growth Plan

Kim Johnson Excerpts

Friday 23rd September 2022 Commons Chamber

[Kwasi Kwarteng]

Obviously, I will have to look at the specifics of the case, because I have just heard about it today. If the hon. Lady corresponds with my Department, I am sure that we can get back with a timely answer to her question.

[Kim Johnson (Liverpool, Riverside) (Lab)]

This is not a growth plan for the constituents in my constituency, or for the 4 million children living in poverty. The No Child Left Behind campaign is calling urgently on this Government to tackle child poverty. Will the Chancellor commit to finding funding to roll out free universal school meals immediately and to tackle childhood poverty?

[Kwasi Kwarteng]

This is not a spending statement, but, of course, we take child poverty and the vulnerable extremely seriously. That was the basis of the energy intervention.

Economy Update

Kim Johnson Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

I am not sure that I followed the hon. Gentleman’s question, but I know that while many families are facing difficult times, we are providing significant support for them—in total, £37 billion, or 1.5% of GDP. The support we announced today and in February is worth up to £1,200 for a typical vulnerable household—a third of the country.

[Kim Johnson (Liverpool, Riverside) (Lab)]

In my Liverpool, Riverside constituency, 10 children in a class of 30 are living in poverty, with two thirds living in working families on poverty wages. The targeted one-off payment does not go far enough. Does the Chancellor not agree that increasing welfare benefits in line with inflation and lifting the two-child cap will tackle this problem long term, whereas what he proposes today is a sticking plaster on a gaping wound?

[Rishi Sunak]

The hon. Lady may not have heard what I said the last few times I answered this question. What we are doing is more generous than uprating. Uprating is worth on average just over £500; the one-off payment we are providing is £650.

Tackling Short-term and Long-term Cost of Living Increases

Kim Johnson Excerpts

Tuesday 17th May 2022 Commons Chamber

[Kim Johnson (Liverpool, Riverside) (Lab)]

Chronic Tory under-investment in our public services and our communities means that we have barely begun to recover from the last recession, and we are standing on the brink of another. With inflation now predicted to exceed 10%, the combination of soaring food and fuel prices, inflation and low pay is driving millions into poverty, hardship and hunger. For my constituents in Liverpool, Riverside and across the country, the Queen’s Speech provides little hope or comfort, especially for those experiencing extreme poverty: pensioners forced to spend the day on buses just to keep warm; children going to school hungry; and private renters terrified they are not going to be able to keep a roof over their heads. Household finances are at breaking point, with bad bosses driving down wages and working conditions, driving in-work poverty through the roof.

Meanwhile the richest 1%, the wealthy individuals, corporations and the energy giants are reporting eye-watering record profits. The boss of Shell received a £1.1 million pay rise, while the Governor of the Bank of England is telling workers not to ask their employers for a pay rise; this is the height of hypocrisy. No matter what pathetic and insulting excuses this Government give for the last 12 years of failures to support struggling families—telling poor people to take cooking lessons, get a better-paid job, or shop for bargain brands—this poverty is a political choice. This Government have chosen not to support those most in need, forcing working people into food banks and into an impossible choice between heating and eating, while the profits of the wealthiest go through the roof.

The stark reality is that this is a class war. Nowhere is that more devastating than in the soaring rates of child poverty. In Liverpool, Riverside, the equivalent of 10 children in a class of 30 are already living in poverty, and a record-breaking two thirds of them are living in working families. That is why I have tabled an amendment to the Queen’s Speech that includes measures to address sky-rocketing levels of child poverty. These are clear, simple actions that prove the cost of living crisis is not inevitable; it is a political choice. We need action, and we need it now, with the introduction of a windfall tax, the minimum wage being set at £15 an hour, and by reinstating and extending the £20 uplift to universal credit and all benefits.

Instead of levelling up, the Tories are doing what they do best: levelling down. The worst of the cost of living crisis is yet to come, which is why I urge all across the House to support the amendment.

Oral Answers to Questions

Kim Johnson Excerpts

Tuesday 15th March 2022 Commons Chamber

The Chancellor of the Exchequer was asked—

[Kim Johnson (Liverpool, Riverside) (Lab)]

1. What recent assessment he has made of the impact of inflation on living standards.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

6. What fiscal steps he plans to take to help reduce the impact on households of the rise in the cost of living.

--- Later in debate ---

[The Chancellor of the Exchequer (Rishi Sunak)]

The Government, of course, recognise that inflation is rising and are closely monitoring the situation together with the Bank of England. We are also putting in place policies to help families meet the rising cost of living, such as freezing duties, cutting the tax rate in universal credit and increasing the national living wage. Last month I announced to this House a £9 billion package of support to help households with rising energy bills.

[Kim Johnson]

The question was about what assessment has been made. The Resolution Foundation predicts that inflation will rise above 8% but benefits will increase by only 3%. Liverpool has some of the most deprived communities in this country, with 33% of children in my Riverside constituency suffering poverty. Does the Chancellor believe that now is not the time to increase national insurance contributions while the cost of living is increasing, forcing people into poverty at the highest level since the 1970s? Will he commit to putting measures in place in the spring statement?

National Insurance Contributions Increase

Kim Johnson Excerpts

Tuesday 8th March 2022 Commons Chamber

[Kim Johnson (Liverpool, Riverside) (Lab)]

Listening to Members on the Government Benches this afternoon makes me believe that they are living in an alternative universe, because during this pandemic, the number of billionaires has increased and the richest 1% have increased their wealth exponentially, while more are suffering in-work poverty and are increasingly reliant on food banks. We are the fifth richest country in the world, and that should not be happening.

A recent report from Oxfam found that an annual wealth tax on billionaires and multimillionaires in the UK could pay the salaries of £50,000 new nurses, permanently increase universal credit by £20 a week and build 35,000 new affordable homes. It also said that the revenue could cover the cost of the health and social care levy twice over every year, completely eliminating the need to raise national insurance and place the financial burden on those least likely to afford it. What have the Tories actually done? They have chosen to hit the lowest paid and the youngest the hardest. The very key workers who kept our country going throughout the pandemic are now struggling to put food on the table. Research by the Bakers, Food and Allied Workers Union showed that 40% of its members were eating less because of a lack of cash, and nearly 10% had run out of food altogether because of a lack of money.

The choices that this Government have made are driving working people into food poverty, so does the Minister agree that their record of giving bankers a billion-pound tax break while voting to raise taxes on working people and cut social security and pensions in real terms is an absolute disgrace? Inflation is predicted to rise above 8%, but benefits are increasing by only 3%. This is the worst time to increase national insurance contributions, as it will hit working people hardest and mean that they will have to decide whether to eat or heat.

My constituency has some of the highest child poverty rates in the country, rocketing to 29.3% compared with the national average of 19.1%. One quarter of children in my constituency live in absolute poverty, although more than half of those families have at least one parent in work. Our NHS and social care systems are on their knees after a decade of Tory cuts. They should be funded by a wealth tax on the super-rich, not by a tax rise on the poor, who are already being hit hardest by the crushing cost of living crisis that is expected to worsen after April with a 54% increase in the cost of energy, food and fuel.

Instead of supporting and resourcing local government to provide gold standard in-house social care services with decent pay and conditions for workers, the Tories have systematically defunded councils for 12 years. They have cut £450 million in Liverpool alone, with a further £34 million of cuts in the pipeline. No matter how the Government try to dress it up, the perfect storm of low pay, insecure work and tax hikes on working people means that the finances of millions of families across the country are on the brink of catastrophe.

We cannot allow the Government to continue to turn a blind eye to the skyrocketing levels of poverty that they are presiding over. We must take urgent action to reverse the cuts to public services and local government, implement a £15 an hour minimum wage to boost the income of the lowest earners, reverse the cuts to social security and pension payments, and scrap the national insurance contributions hike. The worst of the cost of living crisis is yet to come. Enough is enough: it is time to make the wealthy pay their fair share and alleviate the burden on the working classes.