Management of the Economy and Ministerial Severance Payments

Lisa Nandy Excerpts

Tuesday 15th November 2022 Commons Chamber

[Lisa Nandy (Wigan) (Lab)]

I beg to move,

That this House censures the former Prime Minister, the Rt Hon Member for South West Norfolk, and the former Chancellor of the Exchequer, the Rt Hon Member for Spelthorne, for their mismanagement of the economy while in office, which has resulted in an average increase of £500 per month in mortgage payments for families across the UK; and believes that, if they have not already done so, both Rt Hon Members should waive at least £6,000 of their ministerial severance payments.

Like every Member in this House, I have been inundated in recent weeks by constituents who have seen their dreams of home ownership go up in smoke and who have seen hundreds of pounds added to their monthly mortgage repayments since the disastrous mini-Budget which crashed the economy and sent interest rates soaring. Yesterday, I spoke to a constituent who has had her mortgage offer withdrawn. She is in private rented accommodation and her private landlord, like many others, is getting out of the system. She has been served with a no-notice eviction. She has a young son and she has been told to leave her home before Christmas. So I make no apology for coming to this House angry today. I am angry that this has been visited on my constituents. I am angry that this is a crisis that was made in Downing Street and that since it happened the Government have not lifted a finger to help.

Mortgage offers have been withdrawn. Dreams have gone up in smoke. We have seen the largest interest rate hike since 1989 and the cost of borrowing is at its highest in almost 15 years. A typical family is now paying £500 more every month towards mortgage repayments.

[Peter Gibson (Darlington) (Con)]

indicated dissent.

[Lisa Nandy]

The hon. Gentleman can shake his head, but it is a fact. This is money that many families across the country simply do not have. Food is going up, energy is going up, rents are going up and now mortgages are going through the roof. The one thing that this country cannot afford anymore is more of this Tory Government, who have been in office for 12 years.

Almost 2 million people are struggling to afford their mortgage costs. Government Members do not have to take my word for it—that is according to the Office for National Statistics. That is one in four mortgage holders. First-time buyers now face putting £1 of every £4 they earn towards their mortgage. Mortgage repossessions have soared by 91% compared with the same period last year, while the number of orders to seize property is up over 100%.

The crisis does not just affect homeowners; it is seeping into every part of the housing market. Buy-to-let landlords’ profits have declined by almost three quarters compared with last year because of rising interest rates, which means many tenants, already forking out huge chunks of their income on rent, are seeing their rents go through the roof. This is a housing crisis, the likes of which we have not seen for a generation, and what caused it? Let us make no mistake that this is a Tory crisis created in Downing Street by a disastrous mini-Budget which crashed the economy and threw families up and down the country under a bus. It is no coincidence that, after the mini-Budget, more than 40% of available mortgages were withdrawn from the market. It is no coincidence that the Bank of England had to launch an unprecedented intervention to stabilise the markets. Hon. Members do not need to take my word for it; 12 days ago, the Bank of England’s Monetary Policy Committee report said:

“The sharp pickup in UK interest rates has been partly driven by global factors, but UK-specific factors have played an important role”—

and that

“UK interest rates had increased by somewhat more than others”.

[Alex Cunningham (Stockton North) (Lab)]

I congratulate my hon. Friend on her very good speech. I have been pleased to see lots of new homes being built in my constituency and nearby, because that has created jobs. However, does she share my anxiety that, with increased mortgage costs, the new homes will not be sold and that the people who will build the next phase will lose their jobs as well?

[Lisa Nandy]

My hon. Friend is absolutely right, and I will say more about that in a moment. This country is facing not just a housing crisis, but a growth crisis. Housing is a central part of the answer to the growth problem that the Tory Government have presided over for the past 12 years and it has to be part of the solution. This is a Tory crisis; it was made in Downing Street and is being paid for by working people. It is not Tory Ministers who will pay the price for it, but working people who will do so for years to come.

[Neil Coyle (Bermondsey and Old Southwark) (Ind)]

There are 8,000 mortgage payers in Southwark who face a rise, on average, of £1,254 a month. Does my hon. Friend agree that they are owed and still waiting for an apology from the Government for the mess of the mini-Budget, which directly caused their mortgages to rise?

[Lisa Nandy]

The hon. Member is absolutely right. Like many others, I was astonished to see the former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), recently give an interview in which he said that the only thing that the Government had got wrong was not to explain themselves properly. That is absolutely disgraceful. We are giving Government Members the chance to set this right today and to show whose side they are on. Are they on the side of the people they put in office, who walked away with ministerial severance payments and profited from the crisis that they caused, or are they on the side of working people, who are currently paying the price?

[Gareth Bacon (Orpington) (Con)]

I would be grateful if the hon. Lady could advise the House on how many Labour Ministers refused their severance payments in 2010.

--- Later in debate ---

[Lisa Nandy]

I will throw the question straight back to the hon. Member: how many times did we see, in 44 days, the former Prime Minister and Chancellor essentially use the security of people in this country as an experiment? They treated us as lab rats for their ideology. They crashed the economy and left working people to pay the price.

[Gareth Bacon]

rose—

[Lisa Nandy]

If the hon. Member wants to be the first on the Government Benches to apologise, I will certainly give him the opportunity.

[Gareth Bacon]

I note that the hon. Lady did not answer my question; will she do so now?

[Lisa Nandy]

Honestly, a bit of humility from Government Members would be in order. The situation is unprecedented. They have been in office for 12 years. You put two people in office, or rather, they put two people in office, Mr Speaker—I would never for a moment suggest that you would do such a thing—who were fundamentally unsuitable for the role. They supported them, backed them to the hilt and stood up from the Government Benches and supported every move that they made. They cheered as the mini-Budget was announced and they still do not have the humility to apologise for the damage that they have inflicted on families up and down the country. The Chancellor may have U-turned, the new Prime Minister may have admitted that mistakes were made, and the Secretary of State for Levelling Up, Housing and Communities may have apologised for the error of his party’s ways, but apologies do not cut it. Government Members allowed this to happen. Without them, the right hon. Member for South West Norfolk (Elizabeth Truss) would not have become Prime Minister and the right hon. Member for Spelthorne would not have been Chancellor. Government Members let it happen; they cheered as the disastrous mini-Budget was commended to the House. They may be sorry now, although I am still waiting to hear it, but the damage has been done. Some 113,000 people were forced to re-mortgage between the mini-Budget and the present Chancellor’s belated U-turn.

[Jim Shannon (Strangford) (DUP)]

Does the shadow Minister agree that this is not just about those who have to re-mortgage or restructure their deal, but about people’s vision of having their own home? I and everyone in the House own their home. My constituents own or want to own their home, but their dreams have been knocked on the head. Does she agree that we are at a crossroads—betwixt where we are and where we will be? If we do not sort this out, people’s ambition to own their home will not be realised.

[Lisa Nandy]

The hon. Member and I have discussed that issue many times. As he knows, in my first job, I worked for the homelessness charity Centrepoint and I learned that a secure, decent home that is fit to live in is the foundation of a decent, secure, richer, larger and more dignified life, and without it, nothing is possible.

Some 1.6 million borrowers on variable rate deals—one in five mortgaged homeowners—are seeing their bills rise higher than ever. Many of them face the prospect of re-mortgaging on more expensive deals because rates are now higher than they would have been otherwise.

[Chris Elmore (Ogmore) (Lab)]

My hon. Friend is making a passionate speech. On the damage done, I raised with the previous Welsh Secretary—we have had a few of those in the past few months—the issues that my constituent faces. They bought a house five years ago, and they have now come out of a five-year fixed mortgage and their mortgage has gone up by £276 a month. The solution for my constituent is to sell their home, so not only are this Conservative Government stopping people buying homes, but in some case people are having to sell their home and go back into the private rented sector or to a smaller house. Does my hon. Friend agree that that is the damage this Conservative Government are doing?

[Lisa Nandy]

My hon. Friend is absolutely right. The truth is that before the former Prime Minister and Chancellor crashed the economy, we had a housing crisis in this country. We saw social housing stock being lost faster than it was being built, with rents rising in the private rented sector and a real squeeze on people there. The Government promised to do something about it, but we have had three years of them dragging their feet. We have had more Secretaries of State than we have had promises, and we have had a lot of those, but nothing has been delivered. I will say more about that in a moment.

Given all of that, I genuinely ask Government Members: where is the Housing Secretary? Why has he not met banks and lenders in the middle of this mortgage crisis? Any Government worth their salt would be moving heaven and earth to help families and protect vulnerable people as we head into what promises to be the harshest winter that many families can remember. The crisis is of such magnitude that we accept that there is no magic-bullet solution, but any Government worth their salt would do everything in their power and pull every lever to make a difference.

This afternoon, the shadow Chancellor—my hon. Friend the Member for Leeds West (Rachel Reeves)—and I will be talking to lenders about what can be done. Why is the Housing Secretary not doing the same? He has a reputation for roving across Government as Mr Fix-It. This is a major crisis in his brief; why is he not doing everything he can to fix it?

[Alex Cunningham]

I am grateful to my hon. Friend for giving way a second time. I remember the mortgage rates during the Thatcher years: mine exceeded 15%. Despite a good income, we struggled, but all around us, people were losing their homes. Interest rates have some way to go to reach those levels, but does she share my anxiety that if the Government do not take the right action now, another generation will face double-digit interest rates in this country?

[Lisa Nandy]

I agree absolutely. Bringing stability back to the economy is the first step, but the Government could do more. We know that the only way out of this crisis is growth and we know how central housing is to that part of the puzzle. The Government could start by committing again to their target of 300,000 homes a year and do more than that by actually building them. The Conservative Government’s failure over 12 years to build enough homes is a major cause of the housing crisis.

[David Linden (Glasgow East) (SNP)]

Before the hon. Lady moves on to the section of her speech about the Government abdicating responsibility, does she share my astonishment that the right hon. Members for South West Norfolk (Elizabeth Truss) and for Spelthorne (Kwasi Kwarteng) are not here today? Given that they are no longer in Government, what else do they have to do that is so important that they cannot be here to account for their actions?

[Lisa Nandy]

I imagine that the right hon. Members are counting the value of their severance payments somewhere else. Meanwhile, the rest of us are dealing with our constituents who are suffering from the fallout of their appalling choices. Home ownership rates have fallen over the past 12 years and the number of new affordable homes that are available to buy has plummeted. That is before the mortgage guarantee scheme and Help to Buy come to an end later this year.

[Chris Bryant (Rhondda) (Lab)]

As an 11-year-old child at a primary school in the Rhondda put it to me on Friday morning, the Tories broke the money. That is the problem. Many people in the Rhondda are losing their homes, either because buy-to-let mortgages have collapsed and people are selling or because they cannot afford the additional mortgage fees. They are furious and scandalised that the people who brought that about are being rewarded with multi-thousand-pound pay-offs.

The Government may try to pretend that today’s motion is irrelevant, but will my hon. Friend confirm that every single time such a motion of censure has been tabled, the Government have sought to vote it down and not just run away? Sometimes that has led to people losing their salary or resigning, or to the Government falling. The Government cannot just pretend that nothing is happening today. They have either to vote the motion down or lose—and if they lose, they go.

[Lisa Nandy]

The Government have a clear choice today: they can stand up for people whose hopes and dreams have been shattered, or they can stand with a former Prime Minister and former Chancellor who have profited from a situation that will leave families across this country paying the price for years to come. If the Government do not back the motion, they cannot possibly turn up in this place on Thursday and tell us that this is about fairness or that they are on people’s side.

Millions of people are affected—not just those who will be paying more on their mortgages for years to come, but the millions who are stuck in rented accommodation, including thousands who saw their dreams of home ownership shattered when their mortgage offers were withdrawn in the days after the mini-Budget. Many of those families are facing the dreaded prospect of homelessness because they cannot afford higher rents.

The Government have promised to end section 21 no-fault evictions. Why on earth has that not happened yet? The Opposition called for emergency legislation months ago to make it happen. That protection is more important than ever this winter, but it is not there because the Government continue to drag their feet. Renters need greater protections, which is why Labour has laid out plans for a renters’ charter to give families more security and stability in their own homes, including with an immediate end to no-fault evictions.

The truth is that there is no short-term plan to deal with the crisis, and no long-term plan either. The Government could reform compulsory purchase orders to build more houses. They could raise stamp duty on foreign buyers to stop them buying whole developments off plan. They could give first-time buyers first dibs on newly built homes. A serious Government would use the affordable housing budget that has already been allocated to get more homes built. That is the route out, not just from the housing crisis but from the growth crisis that the Tories have created over the past decade. I will say this to the Minister, because her boss is not here: we will be watching like hawks on Thursday. If a penny of the affordable housing budget is clawed back to the Treasury because it has not been used, that will be on him, on her and on all Conservative Members.

This country needs a plan. People need hope, and any Government worth their salt would be providing it. In that context, it is obscene that the former Prime Minister is in line to receive a severance payment of almost £19,000 and the former Chancellor is set to rake in nearly £17,000. That is more than many of my constituents earn in an entire year—and they would have some brass neck to pocket that much for a job so atrociously done. It is abhorrent that someone can become Prime Minister of this country with the backing of only 80,000 people who are all Conservative party members, and then appoint a Chancellor, jointly crash the economy, cost hard-working families hundreds of pounds every month for years on end, and walk away scot-free with a severance payment worth thousands in their back pocket. To quote the former Prime Minister, that is a disgrace.

Today, Conservative Members have an opportunity to put things right. They can vote with us to send a message that we will not stand for this. If they are serious about making a clean break with what has gone before and serious about fairer, more decent decisions that put hard-working people first, they can vote with us today. They can make it clear that what is happening is unacceptable and express the clear will of this House that it should not, cannot and must not stand.

The choice that Government Members face is simple. Whose side are they on? Are they on the side of the hard-working families who are suffering because the economy was set on fire and who are paying hundreds of pounds more, through no fault of their own, at a time when just getting by is already a struggle? Or are they on the side of the arsonists—the people who set fire to our economy and have left working people to pay the price? These severance payments are indefensible, and Government Members know it. Now is the time for the new Prime Minister and his MPs to decide which side they are on.

--- Later in debate ---

[Lucy Frazer]

I am going to continue for a moment.

Let us be clear about this. There has been a lot of criticism from the Opposition about what we on this side of the House would do, but what is Labour’s record of delivery? This Government have always been clear that it is difficult to solve everyone’s problems all the time, but let us consider what solutions a Labour Government would have come up with in this challenging time and their record of delivery. Our Prime Minister’s approach is one of fiscal responsibility and sound money. Does anyone across this House know what Labour’s annual fiscal black hole is? Labour has racked up £147.8 billion— [Interruption.] I am happy to provide the details. Labour has racked up £159.8 billion of annual spending commitments and only £11.2 billion of annual revenue raisers across a five-year Parliament. Does the hon. Member for Wigan know what that would cost every household? It would be £5,474—

[Lisa Nandy]

Will the Minister give way?

[Lucy Frazer]

I am just going to finish this point.

We recognise that work is the best way out of poverty, and our approach is to support the most vulnerable to get into work. Under a Labour Government in 2010, benefits were the largest source of income for the poorest working-age households. Under the Conservatives now, it is their earnings. We have low unemployment, yet every single time Labour has left office, the unemployment figures have been higher than when it took office. It is Conservative Governments time after time who have managed the economy in a stable and responsible manner to secure our public finances.

[Lisa Nandy]

Can I just gently say this to the Minister? I have heard her blame the Labour party, although her party has been in office for 12 years. I have heard Conservative Members blame the Bank of England. I have heard them blame the bond markets and I have heard them blame society. What I have not heard is a single one of them have the humility to come here and say sorry to the people whose mortgage payments have gone through the roof and whose hopes and dreams have gone up in smoke. She knows, Conservative Members know, we know and most of all the public know who is responsible for this crisis. It is a crisis made in Downing Street by a Tory Government who still cannot bring themselves to say sorry. She can blame us all she likes, but they have had 12 years. Say sorry!

[Lucy Frazer]

I am grateful for the hon. Member’s very short intervention. I think she will have noticed that, throughout this speech, I have recognised that this Government, like every Government across many years, have made some mistakes. I have also stated the important point that the Prime Minister has shown, throughout his time as Cabinet Minister—as Chancellor and as Prime Minister—that he cares very deeply, as I and my Front-Bench colleagues do, about ensuring that vulnerable people get the support that they need.

I would like to turn to the issue of the severance pay. Payments connected to the loss of ministerial office are defined in legislation that has been passed by Parliament and been in effect for successive Administrations. Ministerial changes and departures are part of the fabric of government. All Administrations experience them and they are a routine part of the operation of government.

--- Later in debate ---

[Paul Howell]

I absolutely agree with my hon. Friend. What I find wholly inappropriate is this: we have constituents very worried about what is happening, the way interest rates are rising globally and so on, and what are the Opposition doing? They are scaremongering, making people think it is even worse than it is and that the worst effects are affecting everybody. That is wholly inappropriate and it is making people who are already worried become terrified.

I am sure we all go home and talk to our constituents and our businesses. I have many businesses in Sedgefield, and all the ones I talk to are nothing but grateful for the support this Government have given them to make sure they can pay their energy bills. They are nothing but grateful for the way we introduced the furlough scheme, which put a lot of the cost into the equation.

I personally have every confidence that our Prime Minister and our Chancellor will show us on Thursday that they are compassionate Conservatives, and that they will look after and help most those who need it the most, not just take a broad brush across everything—[Interruption.] The hon. Member for Wigan (Lisa Nandy) is chuntering from a sedentary position. On the other point that has been raised about severance payments, those payments are statutory, and it is wholly inappropriate to have political intervention on those, just trying to make them a thing. Many people have received them over the years on both sides of the House, and there should therefore not be political interference in that process. It is up to the individual to choose not to take them; if they think it is inappropriate, they can take that decision.

[Lisa Nandy]

What do you think?

[Paul Howell]

What do I think? I think it depends on the individual. The hon. Lady has chirped and talked—[Interruption.] Do you want to hear, or do you want to shut up?