Finance (No. 2) Bill

Mark Lazarowicz Excerpts

Thursday 18th April 2013 Commons Chamber

[Mr]

McKenzie: It is a pleasure to serve under your chairmanship, Sir Roger.

It is blatantly obvious that families up and down the country are paying the price of the Government’s failure to come to terms with the economy and to create growth and prosperity for all. The cost of living has never been higher. I speak as someone who brought up a family in the 1980s, and I thought that times were hard then. I am now seeing those circumstances repeated in my constituency. My constituents, especially the working families, are finding it extremely hard.

One of the indicators is the rise in unemployment, yet again, across the country. That illustrates that times are doubly hard for those who can least afford it and who are struggling to get employment. In my constituency, we have been fortunate in keeping unemployment down. Before Government Members jump to their feet saying, “We did it for Inverclyde”, however, let me advise them that they did not. The reason that we have been so successful in reducing youth unemployment is that my Labour-led council has put its money where its mouth is and continued with the future jobs fund for the past two years, to ensure that our young people have a future. It has ensured that they have employment not just for a few weeks or months, and it has gone back to the employers and the young people to ensure that their employment is sustainable for years. Now, 80% of those given employment places have remained in them for more than a year, and we are glad that that success is doing something to alleviate unemployment among young people in Inverclyde.

Unfortunately, however, there has been little impact on those who have been unemployed for more than two years, and the Government have offered them no assistance other than shipping them off to a private firm to be placed in employment somewhere for a week or two. It is clear that only Labour can guarantee those people a job with a living wage.

Prices are rising faster than wages. The Office for Budget Responsibility has confirmed that, by 2015, people will be worse off than they were in 2010. That illustrates the result of this Government’s policies. Most people in my constituency feel that, while Ministers might have read economics at university, it is they who are actually living the economics, day in, day out. The cost of living has never been higher, and that is partly due to increased food prices. I encourage any Member to go round their local supermarket and do their weekly shopping, as I do. I see less and less going into the trolley, and more and more going into the till at the end of my shopping trip. Even those families who are thrifty and who shop around and buy own-brand items are seeing a dramatic increase in their food bills. They are being pushed into using food banks, which is another indicator that times are indeed hard.

In my constituency, we have the i58 project, in which one of the local churches has been running a food bank since last September. I was staggered when I visited it at Christmas. It thought that the numbers of people being referred to it had peaked at 1,000—mine is not a large constituency, after all—but the figure has continued to increase in the new year. It is deeply regrettable that we are not seeing any reduction in those numbers. Ever more families, including working families, have been referred to food banks.

Even with the steps we have taken in my area to insulate homes to try to keep energy bills as low as possible, there have been dramatic increases in households’ energy costs. That seems to happen year in, year out. There seems to be no stopping the price rises introduced by the energy companies. These ever-increasing bills spread fear, particularly among the elderly and those on low incomes. People are struggling to pay to heat their own homes. In my area of Scotland, investment in home insulation has been in place for four or five years, yet people are still struggling to pay their energy bills.

Rents have increased recently, too. Not enough homes are being built, so increasing numbers of people are unable to find social rented accommodation. They are pushed into the private sector, which has taken full advantage by pushing up rents time and again. That, too, is having a dramatic impact, particularly on those who can least afford to pay.

We have already heard about the high fuel prices. Those who are fortunate enough still to be able to afford to run a vehicle find that the price of petrol at the pump increases year after year. A number of approaches to the Government have been needed to get them to halt the increases in prices, but we continue to ask for VAT to be removed from fuel. That has one of the biggest impacts on fuel prices, as was pointed out in an earlier intervention. It was also pointed out that we can drop VAT, on an individual basis, from fuel.

There is more evidence of hard times to be seen on the high streets, with shop after shop closing, and brand name after brand name disappearing. The shops that are replacing them are loan shops, bookmakers and pawnbrokers, which shows that those on low incomes are increasingly having to make visits—perhaps on a weekly basis—to such shops in order to bridge the gap between what they are receiving and what they are having to spend on the bare essentials.

The way to deal with the increasing costs of living is through employment. All wealth comes from employment and we must make sure there are as many jobs as possible. We must create jobs by stimulating the introduction of projects throughout the country. We welcome the large projects, of course—we had great success with the Olympic games, and in Scotland I am sure we will have great success with the Commonwealth games—but the smaller projects in and around our communities need to happen as well, to stimulate local economies and get things moving. We all know of shovel-ready projects in our areas that need to go ahead, but they are not progressing.

Last year, the Government gave additional funds to the Scottish Government for shovel-ready projects. Where that money has gone remains to be discovered, as to date only £10 million has seen the light of day in projects across Scotland.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

What my hon. Friend says highlights one of the advantages of the proposal to cut VAT. Even with the best will in the world, investment in infrastructure can take a long time to get through all the resistance, which is why even now, after up to three years of trying, we are still not seeing the full benefits of that, whereas a cut in VAT would have an immediate effect on the high street, and on construction and many other sectors of our economy. That highlights why it is so important that the VAT cut should go ahead.

[Mr McKenzie]

My hon. Friend makes a good point. I visited some of the employers in my area in the Easter recess. Time and again they told me they needed a stimulus to the local economy from a VAT cut, to get people spending and buying things. My local construction firms in particular said they needed a reduction in VAT to get people to consider going ahead with smaller projects such as house improvements, thus creating employment locally. They felt a VAT cut would serve to stimulate that local growth and get things moving; otherwise, they could see only a bleak future, if any future at all, for the construction industry. They also brought up the continuing difficulty of being closed out of local and national Government contracts. The procurement process still seems to be far too complex and to exclude the small and medium-sized businesses that could stimulate the local economy.