Budget Resolutions and Economic Situation

Mark Prisk Excerpts

Wednesday 16th March 2016 Commons Chamber

[Michael Dugher (Barnsley East) (Lab)]

We all look forward to poring over the details of today’s Budget, particularly to see the distributional analysis and to wait to hear from the IFS. Experience has taught us that, when it comes to this Chancellor, the devil is almost certainly in the detail. The Chancellor spoke a lot in his statement today about his record, on which I would like to focus the majority of my remarks.

I welcome today’s overall fall in unemployment—we all do—but unemployment in my Barnsley East constituency is actually going up. It rose again today for the second month in a row, which is a matter of huge concern locally. It highlights the weakness of the economic recovery, the fundamental variations that are taking place in different parts of the country and it shows once again why more jobs are needed in areas such as mine.

In former coalfields, including my own area, there are still not enough jobs. The recent report of the Centre for Regional Economic and Social Research, “The state of the coalfields”, highlighted that there are approximately 50 jobs for every 100 residents of working age across the former coalfields. The Government’s own figures show that the employment rate in my Barnsley East constituency remains lower than the national average.

Indeed, the picture that the Chancellor painted today about what is happening in our economy will seem like a million miles away from the day-to-day realities of life for very many people, including in my constituency. Despite all the Chancellor’s boasts about the employment rate, and for all the palpable nonsense about a “northern powerhouse”, there are still huge discrepancies across the country.

According to the Resolution Foundation, in Yorkshire and Humber the employment rate increased by just 0.2% from the financial crash to 2015. That compares with 3.3% in London. Young people have been left behind, with the same figures showing that nationally the employment rate for 18 to 24-year-olds actually decreased by 3.5% over the same period.

What about the jobs that have come? Let us look at the reality behind some of the headline figures. The truth is the jobs that have come are too often insecure and are low paid. The number of zero-hours contracts is now at a record high, with more than 800,000 workers on a zero-hours contract for their main job. In 2010, there were 168,000 people on zero-hours contracts. The percentage of people on a zero-hours contracts with no guaranteed hours is higher in Yorkshire and the Humber than it is across the rest of the UK. Again, young people are hit hardest, with 38% of all 16 to 24-year-olds employed on a zero-hours contract. It is no wonder that this age group is not saving: they cannot get the hours, so they cannot get the money in to pay the bills. They are still struggling. If we look at today’s figures, we again find a significant rise in part-time working. How often do we knock on doors or talk to people at our surgeries and hear people saying, “I just cannot get the hours.”? They are struggling because of that.

[Mr Prisk]

Will the hon. Gentleman give way?

[Michael Dugher]

I would like to make some progress, if the hon. Gentleman does not mind.

If the jobs that have come are more insecure, let us look at what has happened to living standards. According to the Resolution Foundation measure, there was an 8.9% fall in median pay for all employees between 2009 and 2015. For 22 to 29-year-olds, pay has fallen by 12% over the same period. Even using the Government’s own ONS figures, gross weekly pay for full-time workers in my constituency has actually fallen to £432.80 in 2015—a wage cut of more than £22 since 2010, and significantly below the national average.

We know that 29% of women earn less than the living wage, and the figure is 18% for male workers. We know that up to today, 81% of the savings made to the Treasury through the Chancellor’s tax and benefit changes since 2010 have come from women. According to the IFS analysis of the Chancellor’s last autumn statement, we know that when all of the tax and benefit changes are taken into consideration, 2.6 million working families will be on average £1,600 worse off by 2020.

[Mr Prisk]

Will the hon. Gentleman give way?

[Michael Dugher]

No, I am going to make some progress.

It tells us everything we need to know about this Government when they seek to redefine rather than reduce poverty. Three in 10 children in Barnsley East are living in poverty. How does that fit with “putting the next generation first”? Where under the previous Labour Government the number of children living in absolute poverty fell significantly, the number under this Government has risen significantly. That is why local campaigns in Barnsley, such as the one being led by my hon. Friend the Member for Barnsley Central (Dan Jarvis) on tackling child poverty, are so important.

We know that one of the biggest growth industries under this Chancellor has been in food banks. In 2010-11, just over 61,000 three-day emergency food packages were distributed to people in crisis across the country. Under this Chancellor in 2014-15, over 60,000 were distributed just in Yorkshire. The figure for the whole country is more than 1 million.

A bad situation is being made worse by the Chancellor’s approach to local government funding in particular. Not only is the Department for Communities and Local Government seen as a soft touch, but cuts for local government are presented as “cuts for town hall bosses”. Let me make clear what we are actually talking about. We are talking about cuts in social care, mental health and other vital local services. We are talking about jobs going, about cuts affecting libraries, museums and grassroots sport, and about cuts in support for fantastic organisations such as Barnsley Independent Alzheimers And Dementia Support, the local dementia charity of which I am a patron. We are also talking about cuts in Sure Start: we have lost more than 100 jobs in children’s centres in Barnsley because of this Government’s cuts.

It is not as if the axe has fallen on local government in a fair or equal way. Under this Chancellor, the idea that we are “all in it together” is just a really, really bad joke. More than one in five neighbourhoods in the Barnsley council area are ranked in the top 10% of the most deprived in England, yet analysis of the Government’s own local government finance settlements—verified by SIGOMA, the special interest group of municipal authorities, a cross-party body that represents local authorities in urban areas—shows that from 2011-12 to 2016-17, Barnsley council’s spending power will be cut by more than 26%, whereas that of the Prime Minister’s local authority, Oxfordshire County Council, will be cut by only 10%, and that of the Chancellor’s local authority, Cheshire East Council, by only 9%. Why should people in my constituency, an area with greater needs that is only a few miles from the south Yorkshire pit village where I was born, suffer bigger cuts than some of the most affluent areas in the country?

Why should women be hardest hit—women with children, and those who act as carers? Why should young people be held back? That is the reality, regardless of what the Chancellor said today. Does he not understand that every time he lets a young person down by allowing a children’s centre to close, it is not just a disaster for those young people and their working parents, but a disaster for the whole country? An opportunity denied to a young person means a talent wasted for the country. But of course the Chancellor does not understand that; if he did, he would have done something about it.

We heard a self-congratulatory victory roll from the Chancellor today, but it is clear that he is completely out of touch. This is a Chancellor who does not understand, or simply does not care about, the impact that his policies have on many people in very many parts of the country. The Chancellor talked a great deal about his record today, so let us be clear about it. His record is one of promises broken, his own targets missed, the lowest-paid working families worse off, the deliberate targeting of disabled people, young people let down, women hit hardest, the poorest parts of the country suffering the most, poverty deepening, and inequality widening. How on earth can that possibly accord with the nonsensical claim that this is a Government for working people?

If the picture that the Chancellor has painted in his Budget today seems a million miles away from the realities that many people face, that is because we have a Chancellor who lives in a world that is a million miles away from the realities that many people face.

--- Later in debate ---

[John Redwood]

But of course. I have checked the Government’s very own net contribution figures, and it is very likely that they have got those figures right, because even the Government can count how much they have spent and how much they have had to give away to the rest of the European Union. That is the damage that is being done.

On the balance of payments, I would urge my right hon. Friends on the Front Bench to do more work on getting the balance of payments deficit down. Obviously, they will not all agree with me about taking the quick easy hit of getting our £10 billion back to make a big reduction in the deficit, but we need to understand that that deficit is entirely the result of an adverse goods trade with the rest of the European Union. We are in profit with the rest of the world and we are in profit in services, but we have a colossal manufacturing deficit with the rest of the EU. Some of that relates to the way in which France and Germany get round the EU rules to make sure that they can buy French or German products, whereas we in Britain apply the EU rules extremely fairly and end up buying a lot of foreign products from the continent.

It is also the case that the very dear energy that European policies require and enforce is doing a lot of damage to our steel industry, our ceramics industry and other high energy-using industries. It is a great tragedy that, despite higher domestic demand for steel, we are still unable always to use British steel in British public sector contracts. Surely we ought to have a fix to create more demand for our own domestic industries.

We also import massive amounts of timber, despite having a big state sector involvement in the timber industry in this country. Why cannot more be done to cut more of the timber we already have as a state resource to meet our domestic demand, along with replanting and extending the planting, given that many people would like more forests? Why cannot we have more managed timber, with the state having an influence over it? We could also do more with the tax system to encourage more private forestry. We have rather good growing conditions here, compared with some of the colder Nordic climates from which we import timber at the moment.

We also import energy, but we have no need to do so. We are an island of coal, oil and gas set in a sea of coal, oil and gas. We also have lots of natural renewables, particularly lots of potential water power. Why cannot we create an energy policy in which we do not need to rely on importing timber from Canada, electricity from France and energy from Norway?

I am pleased that the Budget is starting to tackle the issue of the oil industry offshore through tax changes. We need to do other work on that, and we also need to get on with gas extraction onshore. We will probably find further oil resources when we are prospecting for shale gas in the shale sands. We need to start bridging the gap on energy before it becomes even more damaging to our balance of payments.

[Mr Prisk]

On encouraging greater exports, would my right hon. Friend acknowledge that one of the challenges that small and medium-sized firms face is the availability and pricing of mid-sized capital to enable them to pursue longer-term export plans?

[John Redwood]

I am not sure that the cost of capital is a problem. The Government have already done certain things to try to deal with that through the investment bank and so forth. It is often the case that medium-sized companies probably need equity investment but are reluctant to give away control. That is a cultural issue that we have to deal with. Certainly for bigger companies there is nothing wrong with the long-term cost of borrowing if they have access to the bond market, because we have exceptionally low interest rates at the moment.

I am all in favour of the Government pressing on with large infrastructure projects if they make economic sense. The main ones that we need to reinforce are broadband and extra energy capacity. We are short not only of affordable energy but of energy of any kind. We do not want our economic recovery—which we have rightly been told is the fastest in the advanced world, on the historical and prospective figures—suddenly to come up against the constraint that there is not enough energy available to fuel the recovery.