Living Standards

Michael Shanks Excerpts

Thursday 1st February 2024 Westminster Hall

[Michael Shanks (Rutherglen and Hamilton West) (Lab)]

It is a pleasure to participate in this debate under your chairmanship, Mr Mundell, and to speak in a debate brought by my neighbour, the hon. Member for Glasgow South (Stewart Malcolm McDonald). I congratulate him on securing it. He and I endured many electoral scrapes before we got to this place, but this is the first opportunity we have had to participate in a debate at the same time. It is a pleasure.

This is a timely debate because, as we have already heard, over the past few weeks the Government seem to be trying to give the impression that everything is okay —that there is “nothing to see here” and we are back to normal; the cost of living crisis does not exist, and everybody, all across the country, is getting on just fine.

The hon. Member for Glasgow South made the important point that the cost of living crisis affects individuals, but also the very fabric of our society. I will come back to that point later on. From my own constituency casework and from meetings with community groups and others—I know it will be the same for all of us —I know that the cost of living crisis is far from over. In fact, people are struggling now more than ever. It is important that we keep talking about living standards and that we push the Government, in the weeks that they have left in office, to do more. This Parliament is on record as being the first in modern history during which living standards in the country will contract. Household income growth is down by more than 3% in this Parliament. Britain is worse off.

The hon. Member for Dover (Mrs Elphicke) made some reflections on history, which was an interesting perspective to bring. At one point, I thought the praising of Bevan might have led to another faction in the Conservative party—the Bevanites—but it was an important point. I will take away particularly the idea of a unified Department to look at these issues. She made the point very well. Just a few weeks ago, I raised the issue of prepayment meters in the main Chamber. It is a classic example of a straightforward issue, but the various bodies that deal with it are divided and sit at different parts of the system. Bringing them together would be very helpful.

I mentioned before the cumulative impact of the cost of living. That is important, because we see levels of poverty and destitution reaching horrifying levels. People who were teetering on the brink of poverty have been plunged into it, and into destitution. Inflation may be coming down, but the aftershocks are still being felt. Wages have not kept pace with costs. Debt is rising across many households. The ability to make the pay packet stretch just a little further every month is becoming more and more difficult, if not impossible.

We saw this week that even the hon. Member for Mid Norfolk (George Freeman) has had to confront mortgage challenges. A salary of £118,000, some four times the average salary of a worker in my constituency, still did not allow him to continue in his ministerial job, although I suspect there will not be a huge outpouring of grief in that case.

More than 1 million households are expected this year to come to the end of cheaper mortgage deals, leading to an average increase in annual housing costs of about £1,800, according to the Resolution Foundation. Yesterday the leader of the Labour party, my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), raised the case of an Iceland worker and was met with derision from many Members on the Government Benches. Dozens of similar cases have been raised with me over the past few months. Constituents who were stretched to afford their mortgage in the first place now find themselves in greater debt, with income no longer matching the mortgage payments that they could only just afford before.

Citizens Advice has done some research and found that, previously, mortgage holders on average had about £61 left after paying for essentials, but now, after the mortgage changes, they find themselves more than £100 at least in debt every month—there is a cumulative impact—and in some cases it is four, five or six times that amount.

Of course, part of the problem is the still rising cost of food. Although inflation overall may have come down, food inflation continues to be a huge problem for families. The overall price of food rose last year by 26%, which is a staggering figure. Of course, we also have the slightly more subtle version of inflation through companies simply reducing the product that they are selling, which puts even more pressure on families.

Energy bills have soared, with people struggling to heat their homes. As we have heard from other Members, a quarter of adults last year said that they were occasionally, hardly ever or never able to keep themselves comfortably warm, which is a basic that any of us should be able to expect. It was the case that 34% of adults said that they cut back on their heating, and 16% of adults said that they were worried that their food would run out and they could not afford more. That is a staggering statistic.

Many of us may have visited the Trussell Trust’s event in Parliament yesterday. I spoke to a number of people who raised examples of families who were in work, in well paid, permanent jobs, but were still struggling to make ends meet. We know that more and more people in the economy are not in such work and so they are in an even worse position. Working-age adults are far more likely to turn to food banks, and almost half of households experiencing food insecurity are dealing with disability—an issue to which I want to return. This is a picture of a country with so many people teetering on the brink of poverty and now living such a precarious life that even work is not lifting them out of poverty.

A number of Members have raised the intergenerational nature of poverty—the challenge of a generation growing up now without any of the expectations that a previous generation had. Before I was elected to this place, I was a high school teacher and saw many of those young adults. They were very well qualified, intelligent and capable, but they were leaving school and going off to university or work with none of the expectations about being able to get a permanent job and afford a home. That just does not exist for many of them now. The fact that so many of them have resigned themselves to that fact is in itself depressing.

In the midst of all this, we have a Government—I am hoping that the Minister will correct me—who seem to suggest that everything is fine and there is nothing to see here. The fact is that the economy is not working for working people across this country. We have now had 14 years of a Conservative Government, and people are certainly no better off than they were before. People have higher taxes and higher mortgage payments, and prices are still rising at the shops. There have been 25 tax rises in this Parliament alone, with households paying on average £4,000 more in tax each year. The Conservatives have become the party of high tax because they are the party of low growth.

The same is true in Scotland: we see tax rises in Scotland to cover for fiscal mismanagement and a £1.5 billion black hole, but also for a lack of growth, which I attribute to both Scotland’s Governments. We need to get some basic economic competence back so that we can boost wages, bring down bills and make working people in all parts of our country better off.

[Patricia Gibson]

rose—

[Stewart Malcolm McDonald]

rose—

[Michael Shanks]

I knew that would prompt something. I give way to the hon. Member for Glasgow South first.

[Stewart Malcolm McDonald]

I am glad that the hon. Gentleman is talking about economic competence. When the Scottish Labour leader described removing the cap on bankers’ bonuses as economically incompetent—he went further than that, saying that it was “economically illiterate and morally bankrupt”—was he right or wrong?

[Michael Shanks]

The leader of the Scottish Labour party—my good friend, Anas Sarwar—is always right. Of course, we opposed lifting the cap at the time. Since then, we have outlined that this is not the moment to bring it back, but we have very clearly said that bankers should be on notice that, if we see the behaviour that led to the cap in the first place, it would be very easy to implement it again.

[Patricia Gibson]

Does the hon. Member accept the independent evidence of the OBR that shows that—I have the evidence and can share it with the hon. Member, if he wishes—the majority of people in Scotland pay less tax, including council tax, than they would if they lived in England? His remarks about tax make me wonder whether he no longer supports what was on his leaflets during the by-election: that council tax should be frozen.

[Michael Shanks]

I am grateful to the hon. Member for North Ayrshire and Arran for her dedication in checking my leaflets and retaining that information; I think that is what we call “cut-through” in the political world. I accept the interesting point that she makes. She has questioned the Government on that point on a number of occasions. I think that there is an issue when somebody on £28,500 is paying more tax—those are not wealthy people. In the midst of what we have all been talking about in this debate, that is an increase in the cost of living.

On the subject of the council tax—I feel like I am relitigating a by-election that I thought was behind me for now—I opposed the proposal of a 25% increase, which was in the consultation carried out by the Scottish Government. There is a world of difference between opposing a 25% increase and announcing a council tax freeze, which will hammer communities all across Scotland. Of course, the hon. Member may be very aware of my leaflets, but I am not sure that any of her party were aware that the First Minister was going to announce that policy before he announced it, which shows just how little thought went into it.

I will get back to Labour’s new deal for working people, which is what I thought the interventions were going to be about. We have made it very clear that, in the first 100 days of a Labour Government, we want to introduce the strongest commitment to improving the lives of workers in a generation: raising wages, improving working conditions, bringing stability back to employment and enshrining workers’ rights from day one. That would undo the damage of much of the anti-worker legislation we have seen over the past 14 years.

We have also set out how we will bring down energy bills by building cheaper and cleaner power across the country, through the creation of GB Energy, a publicly owned clean energy generation company headquartered in Scotland—something that I am sure my colleagues from Scotland will warmly welcome. We will also look to reform things like work capability processes—I have raised that on a number of occasions in this Parliament—so that people entitled to benefits are not locked out of them by bureaucracy that simply does not work.

I return to the comments that the hon. Members for Glasgow South, for North Ayrshire and Arran and for Dover made about the intergenerational question, which is incredibly important. I spoke about being a teacher. Before that, I worked for a charity that worked with young people involved in gangs and offending. The route out of that involvement was often through giving people something to aspire to: a sense of hope that their future would be better than the poverty and destitution that they found themselves in. It seems to me that we are increasingly turning our backs on a generation of young people who have done nothing to cause any of the crises that they face, but who are going to pay the price of them for a long time to come.

I will briefly address the issue of disability. I draw attention to my entry in the Register of Members’ Financial Interests, as I am a trustee of two disability charities. Disabled people face higher costs of living across the board. Scope found that disability-related costs represent the equivalent of 63% of a disabled person’s income. Just by having a disability, you are already at a financial disadvantage, and the cost of living crisis has exacerbated that hugely.

I want to mention a woman who I met just before Christmas. She was forced out of her home because she could not afford to heat it any more. She had spent the past three months in the living room. She had a hospital bed where she ate her meals, had her personal care and spent most of the day because it was the only room in her home that she could heat properly. The downside was that the rest of her house became damp and infected with mould because she could not turn the heating on. She had been failed by the benefits system, cuts to her care package and rising energy and food bills. She also lost the opportunity to continue in her employment programme, which was what gave her opportunities in life.

There are countless such examples. I am sure that every one of us could recount an example from our constituents. We should be ashamed that in 2024, in a country as rich as ours, people have such a standard of living.

I want to close by saying what the hon. Member for Glasgow South started by saying: the fall in living standards is a huge crisis facing our country. It affects mental and physical health, education, family wellbeing, housing, employment—a whole range of issues. It is not going away. It has not declined. It is not getting better. It will stalk families for years to come, possibly for a generation. Debt is piling up to eye-watering levels and with it comes the impact on families. The Government have failed in basic economic tests, and working people, as always, pay the price.

I thank the hon. Member for Glasgow South for securing this important debate. I look forward to hearing what the Minister will do in the few weeks that the Government have left to change the situation for families across the country.

[David Mundell (in the Chair)]

I call the Minister. My only request is that we leave a few minutes for Mr McDonald to conclude the debate. It must end at 3 o’clock, so there is ample time for the Minister to respond.