Liam Byrne
Main Page: Liam Byrne (Labour - Birmingham Hodge Hill and Solihull North)Department Debates - View all Liam Byrne's debates with the Department for Work and Pensions
(12 years, 11 months ago)
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Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I beg to move,
That this House believes that the Government is out of touch and does not understand the impact of its policies, including the Autumn Statement, on children, parents, women and hard-working families; and further believes that these policies have resulted in a squeeze on households’ living standards.
I speak for many in the House when I say that I feel a debt to the hon. Member for Morecambe and Lunesdale (David Morris) for his bringing his 10-minute Bill before the House. I had no idea that it was so dangerous to go into a hairdresser’s, and I certainly will not return to one until his Bill becomes law. I do not know if I can speak for the Secretary of State for Work and Pensions too, but it is good to start debates on a note of consensus.
The verdict is now in. It is time to put all the excuses of the past few months—the snow, the cold, the royal wedding, the Japanese earthquake—to one side. We now see the true extent to which the Chancellor has drained the life out of the economy and its recovery. The Government are fundamentally failing to get our economy back on the move, and they demand of working people, parents and children that they should pay the price of the Government’s economic failure.
Yesterday, the Chancellor could no longer hide behind excuses. The Office for Budget Responsibility laid out the truth. Families, pensioners and businesses across the country have known for some time that his plan is hurting, but yesterday they found out that it is not working.
Mr Byrne
I will give way in a moment.
The Government are now set to put on the national credit card £158 billion more than they planned a year ago—£6,500 for every house in this country. Why? It is because they are planning to put on the dole another 250,000 people over the next year or two. They are bringing down the number of people in jobs by 300,000, and they have put up the benefits bill—that sign of welfare waste—by an incredible £29 billion over the forecast period.
Once upon a time, the Chancellor told us that we were all in this together. Not any more—it is back to the economics of, “You are on your own.”
Mr Byrne
I will give way in a moment. There are not too many speakers on the Treasury Bench today, so there will be plenty of time for interventions.
Let us consider what the Chancellor’s proposals mean for jobs. The OBR now predicts that unemployment will rise next year, and unemployment forecasts for the years ahead are up year after year until 2015. The Government say that there is no alternative, because they still believe that unemployment is a price worth paying. Unemployment is bad this year, but it will be worse in the years ahead: the OBR said yesterday that it will rise up to 8.7%, while youth unemployment already stands at over 1 million. The brutal price that our young people are paying for the Government’s failure to get people back to work is now clear to hon. Members across the House. Those young people will be at the sharp end of rising unemployment in the years ahead. I will give way to the hon. Member for Devizes (Claire Perry), who will perhaps tell me how the Government can do more to get down youth unemployment in her constituency.
Claire Perry
Does the right hon. Gentleman think that the words, “There is no money,” were sufficient excuse, or is that actually a fact?
Mr Byrne
The Chancellor said yesterday that he is putting £158 billion more on the national credit card—£8 billion more borrowing than I and my right hon. Friend the Member for Edinburgh South West (Mr Darling) set out. The Government are set to borrow £37 billion more than we set out in the Budget before the election. The tragedy is that 7,700 people in the hon. Lady’s constituency will see their tax credits cut next year to pay for the failure of those on her Front Bench to get this country back to work.
Mr Byrne
I will give way in a moment.
There have been announcements in the past few days, not, sadly, from the Secretary of State for Work and Pensions, but from the Deputy Prime Minister, who announced the youth contract, which is set to be so successful that the OBR said yesterday that it cannot count on its getting any extra people into jobs. All that we have had this week from the Minister for unemployment is a decision to blame the figures—it is all down to the statistics, not his failure to get people back to work.
Long-term unemployment among young people is going through the roof—it is up 83% this year alone—but another jobs crisis is emerging up and down the country among our most experienced workers. Among the over-50s, long-term unemployment is more than 110,000—up 20% since the start of the year. People with experience to offer, who have worked hard and paid in all their lives, deserve better than to be thrown on the scrap heap.
Charlie Elphicke (Dover) (Con)
The right hon. Gentleman’s premise is that the Opposition would not have borrowed more money, but that is fundamentally false, as the reality is that they would have borrowed billions more to deal with the eurozone crisis. In addition, interest rates would have been higher, costing home owners more money on their mortgages.
Mr Byrne
I know that the hon. Gentleman takes these matters seriously, and that he will feel bad about the fact that 10,000 families in his constituency are seeing cuts to their tax credits to pay for the failure of his Front Bench to get people back to work. He is such an assiduous attender of these debates that he will know as well as I do that the OBR’s analysis of our last Budget showed that we were set to borrow £37 billion less than the Chancellor set out to the House yesterday. He should explain that to the 10,000 families in his constituency who are seeing a cut in tax credits.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The right hon. Gentleman is being generous, as ever, in giving way. I remind him, however, that there is obviously a split between him and the shadow Chief Secretary to the Treasury, because on yesterday’s BBC programme “The Daily Politics”, she was asked this specifically:
“If you had been writing the autumn statement, borrowing would have been higher? Yes or no.”
Her answer was yes.
Mr Byrne
We do happen to believe that further action is needed to get people back to work, because we are now seeing the costs of the right hon. Gentleman’s Government over the past year and a half. We have now seen the Chancellor set out £158 billion of extra borrowing because he has drained the recovery of growth and put the benefits bill up over the course of this Parliament by £24 billion. That is the only part of his budget that is growing.
Mr Dave Watts (St Helens North) (Lab)
Does my right hon. Friend not find it strange that Government Members talk only about deficit? They do not talk about unemployment, poverty or growth. Do we not need a more balanced approach to the problem?
Angie Bray (Ealing Central and Acton) (Con)
As I have found before, the right hon. Gentleman does not like history. The fact is that a note was left saying, “There’s no money left,” and that had consequences. This country is living and breathing the consequences of how Labour managed the budget. We are in deficit, which is why we talk about it so often, and it is about time the Labour party recognised the consequences of the way in which it managed this country’s finances.
Mr Byrne
Perhaps the hon. Lady’s memory of history is suddenly faltering, because she should surely remember that in the Chancellor’s emergency Budget, borrowing turned out to be £20 billion less than my right hon. Friend the Member for Edinburgh South West projected when he was Chancellor. Unlike his, the Conservatives’ borrowing forecasts have come in £158 billion higher than originally projected. That means thousands of pounds more for every household in this country—and of course, the price of the consequences is being paid by the hon. Lady’s constituents. More than 7,000 families in her constituency are now seeing their tax credits cut to pay the higher bills of higher unemployment.
Ms Karen Buck (Westminster North) (Lab)
Can we turn from history to current affairs? One of the key messages from the Government was that they were going to make work pay. Following from my right hon. Friend’s argument about how additional spending is being generated because of the failure of their policies, would he comment on the fact that in-work benefits for working households, such as housing benefit for those in work, have risen by 42% since the general election, as 115,000 more households have been forced on to in-work benefits?
Mr Byrne
That underlines an extremely important point, and I hope that in the Secretary of State’s response he will say a little more about how he reconciles the “Budget” that we heard yesterday with his own honourable intention to ensure that work pays. Right now, in my constituency, I have working parents, especially women, coming to me and saying that they are now giving up work—because the Government are cutting benefits, meaning that it is no longer economic to work. Surely that cannot be right.
Sammy Wilson (East Antrim) (DUP)
Does the shadow Minister not find it strange that the Government argue that if we were to borrow to stimulate the economy the money markets would go mad and put up interest rates, yet the markets seem to have no problem in lending us money to pay for unemployment?
Andrew Percy (Brigg and Goole) (Con)
May I take the shadow Secretary of State back to the subject of youth unemployment? Doubtless the previous Government did some very good things in that area—they did some very bad things as well—but does he admit that the present situation was not created overnight? When Labour left office there was an upward trend in unemployment—[Interruption.] For youth unemployment, there was an upward trend from 2004. Does he accept that under Labour the number of children brought up in workless families hit record levels and the gap between the best performing and the worst performing schools widened? What he is saying is political knockabout, but this is a long-term issue, which deserves to be treated seriously.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Interventions are getting longer, and a lot of Members wish to speak. Please let us not use up the time on interventions.
Mr Byrne
I am afraid that the hon. Gentleman is simply wrong. Youth unemployment was coming down before the election; it has now gone through the roof, since his party took office. It is now up through the 1 million mark for the first time. Long-term youth unemployment in this country is up 83% since the start of the year. He would surely admit that that is a badge of shame for this Government, and demands much more urgent action from them.
George Freeman
Does the Opposition spokesman agree that his authority to talk about this subject would be heightened if it were not for the fact that during the previous 10 years, before his party lost office, youth unemployment rose to a quarter of a million—and that was during a boom? His authority to talk about this is hugely reduced by that track record.
Mr Byrne
Youth unemployment came down to record lows under the Labour Government. It was coming down before the election, because we chose to act. Now the key back-to-work scheme for young people has been taken off the shelf for the past year and a half. What is the result? Youth unemployment in the hon. Gentleman’s constituency is going up. He should explain that to young people in his constituency, and he should apologise to them. The back-to-work scheme set out by the Deputy Prime Minister last week is not even planned to come into place until next April. That shows how much his party cares about getting young people back to work.
Mr Byrne
I shall give way in a moment.
The weakness in the jobs market is not abstract; it shows up in people’s pay packets. That is exactly what the Office for Budget Responsibility confirmed yesterday. Earnings, it says, are now set to fall throughout the rest of this Parliament. By 2016 wages will be no higher than they were in 2001—£1,400 below their pre-crash peak—yet prices are not falling; they are rising. Prices are going up over the course of this Parliament. Wages are falling and prices are rising. That double whammy is now hurting families all over this country.
Not long ago, the Governor of the Bank of England said that we in this country now confront the worst squeeze on living standards since the 1920s. Yesterday, the Institute for Fiscal Studies said that the squeeze was “unprecedented”. This is the biggest fall in household income since records began. With our nation’s family budgets under such pressure, we would have thought that the Government would step in to help. Not a bit of it. Instead, working families are being asked to pick up the pieces.
Mr Redwood
The right hon. Gentleman is making a very important point—that a big squeeze on living standards started under his party’s Government. It is continuing under the coalition. As the forecasts make clear, a big element in that is energy and fuel prices. Does he have any proposals that the Government could adopt to tackle that problem?
Mr Byrne
We do think that Government should be doing more in the energy market to help to bring down prices. The right hon. Gentleman will, I know, feel strongly about that, because of the 6,500 families in his constituency who are now seeing cuts in tax credits.
When wages are falling and prices are rising, people would expect the Government to do more to help, but what we now have is a budget set out yesterday that tightens the squeeze on working families. Last Friday the Deputy Prime Minister blustered his way through an interview on the radio and said, once again:
“We will not balance the books…on the backs of the poorest”.
That is an old line, and today it rings pretty hollow, because that is exactly what the Government are doing.
Yesterday, the Government rejected any new tax on bankers’ bonuses. Instead, it is children, women and working parents who are picking up the tab for the Government’s failure to get people back to work.
Bill Esterson (Sefton Central) (Lab)
My right hon. Friend is making the case extremely well about the unfairness of what the Government announced in the autumn statement about targeting those on lower and middle incomes instead of targeting the bankers and the bonuses—a move that was successful under Labour and should be repeated by the present Government. He was asked about prices, and I am sure that he will soon say something about cutting VAT as an effective way of helping hard-pressed families through reduced prices.
Mr Byrne
I will indeed come on to that topic in a moment, but I first want to talk about the impact on children of yesterday’s Budget. We knew before yesterday’s Budget that all the gains made in reducing child poverty over the last decade were set to be wiped out by the decisions of just the last year. Once upon a time the Prime Minister told us he would not increase child poverty. That was the rhetoric, but today the Institute for Fiscal Studies has given us the reality. It has already said that almost one in four children will be in poverty by the end of the decade, thanks to this Government. That was before the attack on working families in yesterday’s Budget. A generation of children will not thank this Government because hundreds of thousands more of them are now destined to grow up poor.
Then we had yesterday’s Budget, reversing any improvement in child tax credit for the poorest, and robbing 5.5 million families of £110 per child. There will now be 13 cuts to children’s benefits beginning in March, which next year will take out £2.5 billion in benefits for children. That is almost eight times the level of benefit cuts this year. Almost £12 billion is coming out of children’s benefits over the course of this Parliament; that is £1.5 billion more than is coming off our nation’s bankers. I therefore have to ask this question: what kind of Government take more off children than they take off bankers?
Nick de Bois
Does the right hon. Gentleman not recall that in his Government’s 13 years in office between 1997 and 2010 they increased personal tax allowances by only £2,400, whereas in only 18 months we have increased people’s earnings by raising those allowances by £1,800, and we will go further by the end of this Parliament by raising the figure to £10,000? Is that not a major contribution to addressing lower pay?
Mr Byrne
No, because what comes with that is the biggest raid ever on the benefits of children and families. Let us consider the bill that will be paid by families under yesterday’s announcements. An average family on the minimum wage with two kids will lose £320 a year as a result of the changes made yesterday. They would only ever gain £120 a year through the increases in tax thresholds to which the hon. Gentleman referred. Overwhelmingly, poorer families and children in this country are now getting poorer as a result of his Government’s Budget.
No wonder Save the Children said yesterday:
“For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry.”
The Child Poverty Action Group said:
“Britain’s poorest families have been abandoned today and left to face the worst…the government has actively decided to let child poverty rise.”
Those on the Treasury Bench should be ashamed of themselves; they should be ashamed of what they have done to children in this country. Labour will be the party that stands up for a fair deal for working parents.
The scale of the cuts to children’s benefits is not the only story. There is more. Let us consider the cuts to working tax credits for working families. Working families are already in line for seven big cuts to their tax credits next year. That was going to lose them more than £1.7 billion, but that was not enough for the Chancellor, so yesterday they got an eighth cut to their working tax credits. They will now lose almost £2 billion next year. That is almost double the cuts they received last year.
Some 2 million families in our country now face a double hit, with the cuts to child tax credits and the freezing of the working tax credit. There is therefore a great deal of extra squeeze that will hit working families, but I want to flag up one cut in particular. It is the subject of a Westminster Hall debate secured by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), and I want the Secretary of State to reflect on it further, as I think it will have consequences that he would not intend. One of the changes he will make next year is to increase the number of hours a working couple must work in order to get tax credits. At present, they can qualify for tax credits if they work 16 hours a week. From next April, they will need to work 24 hours a week. At present, however, companies are not handing out extra shifts. Many families that will be affected work in the retail sector. If anything, big retailers are cutting back on their employees’ hours, not increasing them. A family that is on the minimum wage for 16 hours a week might bring in just over £5,000. Working tax credits and child tax credit might increase their take-home pay to about £11,000. If they cannot get an extra shift, all of that working tax credit will be gone. Those families may well find themselves better off on jobseeker’s allowance.
We must not create a situation in which cuts to tax credits mean families are better off on benefits than in work. I am sure that is not the Secretary of State’s intention, and I urge him to look at this matter in more detail before those cuts bite in April next year.
The Minister of State, Department for Work and Pensions (Steve Webb)
I am trying to follow the right hon. Gentleman’s reasoning. I think he has argued so far that people out of work should not face cuts and that people in work should not face cuts, so who should?
Mr Byrne
The Pensions Minister should reflect on the following point. When we add together the cuts to children’s benefits and the cuts to families’ working tax credits, the total is £20 billion over the course of this Parliament. That is twice the amount of money his party is taking off the country’s bankers. Surely he would reflect on the wisdom of taking more off children and working parents than off bankers? I think he should reflect on that further.
Sajid Javid
I thank the right hon. Gentleman for giving way. When he left office, why did he leave a note saying there was no money left?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Member for Devizes (Claire Perry) is pushing her luck today. She has already intervened, and I do not mind her rising to seek to do so again, but continually to stand up and barrack is not the way forward. She has a great future in this House, and I am sure she wants to protect it.
Mr Byrne
Finally, I want to talk about the impact on women of these Budget changes. The shadow Home Secretary, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), will say more on this in her winding-up speech. She has already set out with clarity and force how the Budget changes made by this Government have, overwhelmingly, hit women harder than men. I would just highlight to Members, and especially those on the Treasury Bench, the comment made yesterday by the hon. Member for Calder Valley (Craig Whittaker). He put it very simply when he said that of course women are paying the price most. At least someone on the Government Benches has the honesty to tell it straight. He was right: women are being hit hardest by these Budget changes, not least through the changes to child care. Some 30,000 women in this country have had to give up work in the last year because they can no longer afford the child care. That is £50 million in lost tax to the Exchequer. What a shambles.
The tragedy in this debate is that there is a different way. We have set out a different way of jump-starting growth and getting people back into work. Yes, it does start with a tax—a fair and sensible tax—on bankers’ bonuses to help get 100,000 young people back to work. What have this Government proposed instead? They have proposed a fund of about one third of the size, paid for not by those with blessings to share, but by children and families who are already feeling the squeeze. That decision alone tells us everything we need to know about who this Government stand for. That decision alone tells us how out of touch this Government have now become, and it is for that decision if no other that I say this House should support our motion.
Mr Duncan Smith
I do not agree with the hon. Gentleman. I am talking about choices. I remember a great deal of debate, even in the Select Committee, about whether the working-age unemployed would see their benefits reduced. Everybody said it would happen; newspapers predicted it. In fact, my right hon. Friend the Chancellor has stuck to increasing them by CPI at 5.2%—just one good example of making a choice about who would be affected most direly by any change or any reduction. That was a bold choice and one on which we should congratulate him.
Mr Byrne
I am grateful to the Secretary of State and I am following his argument closely. Further to the intervention from my hon. Friend, the right hon. Gentleman will no doubt have seen the analysis from the Institute for Fiscal Studies this morning. If it is true that the Government are not hitting the poorest families harder, why has the IFS said that for 2012-13 the poorest three deciles in this country are being hit three times harder than the overall average?
Mr Duncan Smith
According to the findings of the IFS and of the Treasury, the top decile pays a huge amount more in relative terms than anybody else. [Interruption]. Hon. Members should listen. Taking account of uprating, about 80% of households with children will see their tax credit awards rise at least in line with earnings next year. Members can pluck little bits out, but when they average it across, they will see that there have been some choices.
I am quite prepared to recognise that the pressure on the bottom deciles will always be tougher and harder because of where they spend their money. That is not the issue. The issue is, within the bounds of what we could afford, what were we trying to protect? The decisions we took and the changes we made, which I will come to in a moment, mean that we have protected the most vulnerable as well as we could and better than the Opposition would have done, had they been in power.
Mr Byrne
I am grateful to the Secretary of State. He is being most generous. The IFS was pretty clear this morning. It said that the richest decile would see an impact of just over 0.5%. The poorest decile would see an impact of minus 1.6%. So it is clear that the poorer families in this country are being hit much, much harder than the richer ones.
Mr Duncan Smith
I am sorry, those are not the figures that I have. The figures on the chart that I am looking at show that the richest decile has a greater proportion of its income taken, even in relative terms. Yes, I accept that, relatively, those in the bottom three deciles do quite badly in many senses, but the right hon. Gentleman should look at the Treasury figures, which show that the wealthiest decile do worse than anybody else, in absolute and in relative terms.
Mr Duncan Smith
I am grateful to my hon. Friend who, as ever, talks sense, and I agree with her.
This is an Opposition day debate and I had hoped to hear something about what they would do to fix things. My right hon. Friend the Member for Wokingham (Mr Redwood) asked a very specific question but never received an answer from the right hon. Member for Birmingham, Hodge Hill. We have today had to endure the usual waffle and confusion. On the one hand, the Opposition criticised us yesterday for borrowing too much, but on the other they seem to think that more borrowing is the only way to fix the deficit. The director of the IFS was pretty clear yesterday on the Opposition’s position on borrowing more to spend. He said:
“You would have to believe some pretty surprising things about the way the economy works to think that if you reduce tax by a pound then borrowing would go down rather than up.”
Does the right hon. Gentleman agree with the director?
Mr Duncan Smith
With respect, that is not a policy; that is just a lot of waffle. In reality, what the right hon. Gentleman has to tell us—[Interruption]—and I will give way to him again or to the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper)—is whether he agrees with the shadow Chief Secretary to the Treasury, who yesterday said that if the Opposition had made the autumn statement, they would be borrowing more.
Mr Byrne
We think that we could get more people into jobs if we had a temporary cut in VAT to get shoppers back on to the high street; if we cut national insurance for small firms to hire extra workers; if we brought forward infrastructure projects, none of which we saw yesterday; if we cut VAT on home improvements; and if we had a tax on bankers’ bonuses to get 100,000 young people into jobs.
Mr Duncan Smith
Borrowing, borrowing, borrowing. More borrowing—isn’t it wonderful? Interestingly, the Opposition were supposed to say that they would stick to the original Darling plan, but the measures just laid out involve borrowing way above that, because, as my right hon. Friend the Member for Wokingham has said, if we look at what the Opposition have opposed, out of all that that we have had to do, we find that the bill now stands at some £91 billion extra a year, or £326 billion for the next five years in which they might have been in government.
These are all the spending cuts that the Opposition have opposed; the VAT position—opposed; welfare savings—opposed; in-year spending cuts—opposed; local government reform—opposed; capital spending on education—opposed; two-year public sector pay freeze— opposed; cuts to capital investment allowances—opposed; increasing public sector employee contributions—opposed; Ministry of Justice reform—opposed; police reform— opposed; DEFRA reform—opposed; cuts to the HMRC budget—opposed. That is not a policy; that is a joke.
Mr Byrne
The truth is that the plan laid out by my right hon. Friend the Member for Edinburgh South West (Mr Darling) would have halved the deficit over four years and, according to the OBR, resulted by the end of this Parliament in borrowing £8 billion less than that which the Chancellor set out yesterday. It would have involved borrowing £37 billion less than the Chancellor over the forecast period. The truth is that he has put borrowing through the roof, because he has put welfare through the roof, because he has put unemployment through the roof.
Mr Duncan Smith
The reality is that the OBR yesterday told us categorically that the position in which the Labour Government left us was significantly worse than anybody expected. It also said that unless we had taken the decisions that we took last year, we would be borrowing more than £100 billion in each year of this Parliament. On top of that, the Labour party’s measures would have resulted in even worse, but at least we had a little honesty from the shadow Chief Secretary to the Treasury, who said that borrowing would rise because she would borrow more. Given the economic situation, the Treasury estimates that such measures would cost far more—on the back of the OBR figures.
We now know what the Government at the time were doing, and what the Opposition today are about. They are determined to put hard-won interest rates, which we have held down, at risk. Last April, under Labour, our interest rates were higher than Italy’s; 18 months later, we are the only major western country to have seen its credit rating improve. Italy’s interest rates are now about three times ours, despite it having a lower deficit—actually, almost half the deficit that the previous Government left us. So, while the rest of Europe is under intense pressure, the UK remains a safe haven and the Labour Opposition are completely confused.
Yesterday the shadow Chancellor insisted that low interest rates were the sign of an economy in trouble. That is the same man who, back in 2004, described long-term interest rates as
“the simplest measure of monetary and fiscal policy credibility”.
Mr Duncan Smith
It is well worth reflecting on the fact that the previous Government’s debt cannot be detached from their deficit. In case the hon. Gentleman does not understand it, I will explain that what they did was ratchet up spending before the recession began. We had the largest structural deficit of any G7 country before the recession began.
Mr Duncan Smith
No, I will not give way. The previous Government then went on a spending spree, ratcheting up the deficit, which now pumps the debt. It is no good playing silly games—
Stephen Williams (Bristol West) (LD)
Yesterday, I think we all agreed when listening to the Chancellor’s statement that much of what he had to say was grim news indeed. It was worse than many of us had anticipated. The situation was certainly worse than the last Government declared when they were in office, or even predicted when they could choose their own predictions. It was also worse than the independent Office for Budget Responsibility forecast when this Government came to office.
We now know that finances will be difficult throughout this Parliament. There will be a squeeze on many people’s real incomes. Perhaps more importantly, in terms of confidence, there will be a suppression of hopes and expectations. I understand absolutely why many people are anxious, and I even understand why many people are right to be angry about the situation in which we find ourselves. They are also right to think that some people are indeed “out of touch”, as the motion puts it.
We have seen in many major cities around the world the Occupy people, who are protesting against capitalism. I do not agree with much of what they say; I am a free-market liberal, and I want capitalism to work. Those of us who believe in the functioning of the market economy, however—I think that this now unites the three main parties in this country—must address the concerns that many of our constituents feel about the failure of the market economy to deliver fairness in our society. Last week, the High Pay Commission referred to the “gross inequality” that has arisen in our society, most of which arose, of course, during the period of the last Labour Government. The average pay of someone in work is now £25,900, whereas the pay of a chief executive of a top 100 company has risen to £4.2 million —145 times average pay.
Mr Byrne
The hon. Gentleman is kind in giving way, and I am following his argument closely. I am not certain which measure of inequality he is looking at, but I am sure he would accept that the Gini coefficient, which is one of the most popular measures of inequality, was practically the same at the end of Labour’s term of office as at the beginning. I am sure he would also accept that, looking around the world, the UK was one of the only countries in the OECD—I think that Turkey and Ireland were the others—where inequality was held in check. It went through the roof everywhere else.
Stephen Williams
We can trade statistics, but the right hon. Gentleman cannot deny what everyone is seeing and what all our constituents are saying to us. They are fed up that the people at the top of companies— Labour Members have referred to bankers, but it is not just the bankers; this also applies to others—seem to have got away with it, while people at the middle or bottom are being squeezed. I hope that the Government act on the High Pay Commission recommendations.
The Government are acting to safeguard the living standards of those at the bottom of the income scale.
Guto Bebb (Aberconwy) (Con)
I am pleased to follow the hon. Member for Erith and Thamesmead (Teresa Pearce) because it is important that we challenge some of the myths we have just heard. Before I was elected as Member for Aberconwy, I remember going out in the constituency with the police, and we came across people who were living rough. That was before this coalition Government came to power. From listening to Labour Members, however, one would think that poverty did not exist until May 2010. Their rewriting of history is completely unacceptable.
Mr Byrne
Is the hon. Gentleman as concerned as I am about the Institute for Fiscal Studies estimate that a further 600,000 children will be plunged into absolute poverty over the course of this Parliament, and is he worried about the Treasury’s own analysis published yesterday showing that 100,000 children may fall into child poverty over the next year or two?
Guto Bebb
There is not a single Member of this House who will not be concerned about the fact that there are people who are facing real difficulties, but this Government are trying to make sure we tackle the real poverty we have in this country. In Wales, for example, in many instances what we have is a poverty of ambition, which was fostered by 13 years of Labour Government. For 13 years the economic performance of Wales was worse than that of the rest of the United Kingdom. For 13 years, Labour Members happily threw money at an issue in order to salve their consciences—they threw money at the issue and felt they could then forget the communities that I am proud to represent.
I am part of a coalition Government who are aiming to ensure that if people are willing to work and take part in this economy, they will be better off by doing so. The Government are tackling a long-term problem with long-term solutions. It is unacceptable that the Labour party is attacking a Government who are willing to have a long-term strategy by trying to make short-term points about the past 18 months. This Government are brave enough to look not to the next electoral cycle but to the future.
I was astounded when I read the motion, which refers to the need to look after hard-pressed families. It does not read very well if one is a Welsh MP, because the Labour Assembly Government have completely forgotten about hard-pressed families. What has happened with the council tax in Wales, compared with that in England? The Westminster Government have made money available to allow council tax to be frozen, but the Labour Administration in Wales have decided that supporting hard-working families is not a priority. Some Labour Members have said to me, “The council tax saving is £12 a month. What’s £12 a month?” For people in my constituency, where the average wage is £23,000 a year, £12 a month is a lot.
Mr Byrne
The hon. Gentleman is making his argument with passion and force, as he always does. He will be worried, I am sure, that the cuts made over the past 18 months mean that in his constituency 700 families are losing help with child care, and the tax credits of nearly 6,000 people are being cut. He must surely accept that that is contributing to the squeeze his constituents are feeling.
Guto Bebb
Indeed. The problem is that the Labour party believes that the Government should be responsible for ensuring that families have money in their back pockets. I believe that my constituents want to take that responsibility for themselves. Hon. Members should be proud of the fact that this Government are trying to ensure that those who work are better off. My constituents will be able to keep more of their earnings because we are moving to higher personal allowance rates, and I welcome that.
Steve Webb
I can understand why the right hon. Gentleman did not want to deal with the issue that I raised. I can point out to him, however, that the total number of people in employment will rise from 29 million last year to 30 million in 2016 under the projections. There will be more people in employment, and a rebalancing towards a vibrant private sector, which we want to see.
As well as mortgages, Members on the Government side have talked about the council tax. Labour Members did not seem to want to talk about the council tax, as though it did not matter. The council tax is one of the most regressive taxes that we have. This Government froze it and will freeze it again. That is real help for hard-working families.
A number of hon. Members talked about fuel prices and petrol. It is this Government who cancelled the 3p rise in January. It is Labour that had the escalator, year after year, with above-inflation increases in petrol prices. Under our plans for duty, petrol prices will be 10p a litre less than under Labour’s plans.
Steve Webb
I am grateful to the right hon. Gentleman for intervening, because I asked him the question when he was speaking, and he said that he opposed cuts for people who are out of work and that he opposed cuts for people who are in work. When I asked him whom that left, he said nothing—he never answers the question—and his Back Benchers said, “The bankers”. He was in the Treasury when, before the general election, the Labour Government introduced a “temporary” bankers’ bonus tax. If Labour thought they were going to win the election, why did they not make the bankers’ bonus tax permanent? It was a one-off, pre-election gimmick, whereas this Government have introduced a banking levy that, every year, will raise more than his temporary banking tax raised in any year.