Equitable Life
Pamela Nash Excerpts(9 years, 8 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
I, too, congratulate the hon. Member for Harrow East (Bob Blackman) and my hon. Friend the Member for Leeds North East (Fabian Hamilton) on their work on this important issue and on securing the debate today. They outlined articulately the time line of the issues surrounding Equitable Life, and I do not intend to repeat any of that. More than 1 million people throughout the country have been affected by the issue, which dates back to the early 1990s. No Government between then and now have adequately dealt with the problems; they have been problems for successive Governments. However, the people who are affected do not care which party is in government; they simply want to be compensated and to feel supported by the Government of the day in getting the compensation and help that they deserve.
On Friday, I met two of my constituents who have been impacted by the maladministration of Equitable Life in quite different ways. The first was a gentleman who had cautiously saved for many years with Equitable Life. His hope, when he took out the policy, was to fund an early retirement at the age of 60. He is now approaching that age, but his hope has been dashed by the failure of Equitable Life. He managed to withdraw some of his money when the problems started to occur, but he has still suffered the loss of tens of thousands of pounds and he has been given to understand that he is entitled to no further compensation. The second was a lady in her 80s who had saved for decades but has been left with just a small fraction of her money in retirement.
These are not gullible people. The policyholders who got caught up in the Equitable Life disaster were hard-working taxpayers who played by the rules, worked hard and prudently and responsibly saved for their retirement. The lady I just mentioned had worked for a company that had to comply with financial services legislation, which only serves to fuel her incredulity at what has been allowed to happen. She retired 20 years ago, hoping that the policy she had taken out would fulfil its promise, but she was misled and mis-sold a policy that she had received with good industry-approved advice. She believed that she held a legitimate and lucrative policy. She, and many others like her, put their faith in the pensions system and planned for their retirement sensibly, only to find that the rug had been pulled from beneath their feet when they retired. These are not wealthy people; they are people who are being hit by the cost of living crisis that my other constituents are facing. They have lost life-changing sums of money and their standard of living has been devastated in many cases. Their own personal long-term economic plans have been shredded, through absolutely no fault of their own.
Some hon. Members have referred to the fact that locating the people who are eligible for compensation has been slow and inadequate. I believe that about 151,000 people still need to be found by the Government. What does the Minister plan to do to widen public knowledge of this issue in the near future? What publicity campaigns are planned to reach the most unreachable people, many of whom are pensioners without internet access? They would probably use the more traditional forms of media used for publicity campaigns. Also, I found it difficult when preparing for this debate to get figures telling me how many of my constituents might be affected. Will the Minister explain to the House why no figures are obtainable showing the regional breakdown of those affected by the collapse of Equitable Life’s payment scheme?
Time is against many of the policyholders. We have heard that many have sadly died. The Lib Dem manifesto promised to set up a
“transparent and fair payment scheme”
and the Conservative manifesto had a similar promise, but many policyholders feel that the current scheme does not fulfil those promises. Those affected by the maladministration of Equitable Life have been left in great financial difficulty despite planning and saving carefully for their retirement. This has had a serious impact on their quality of life. In my experience, those affected are just as angry with the Government as with Equitable Life. They are angry with successive Governments for not taking full responsibility for the failures identified at the time and for not adequately compensating those affected. One elderly constituent said to me, “They are waiting for us to die.” That is the appalling impression that that lady has been given, and I am sure that she is not alone.
I acknowledge that the present Government have made considerable progress towards compensating those who have suffered losses, but that comes nowhere near to fulfilling the promises of a fair payment scheme that appeared in the Conservative and Liberal Democrat manifestos. That is not just my view; I suspect that it is the view of the vast majority of the 1 million people who have been affected. I ask the Government not to leave this matter any longer and to address it in the upcoming Budget. I ask them to ensure that people are compensated so that they no longer feel that the Government are letting them down.
Fairness and Inequality
Pamela Nash Excerpts(10 years, 9 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
The sun is certainly not shining in Scotland; I have had to send my constituency office staff home because of the snow back in Airdrie.
I am delighted to make a late contribution to this debate, the title of which—fairness and inequality—is the essence of why I got into politics. I am sure that many of my colleagues, at least on the Opposition Benches, would say the same. Much has been said already about the tragedy of in-work poverty, so I shall restrict my comments to the impact of welfare reform and Government cuts on inequality, and I will add my voice, and that of my constituents, to the call for a commission of inquiry to look into the impact of welfare reform and the Government’s other austerity measures on inequality and poverty.
Jonathan Edwards
I believe the hon. Lady when she says that fairness and inequality were why she entered politics in the first place, but will she tell the House how she will vote later when we divide on our motion?
Pamela Nash
It will not come as a surprise that while I agree with the majority of the motion, I am disappointed by its tone. It does not recognise what the Labour Government achieved on inequality between 1997 and 2010—in fact, it attacks that Government—so I will be abstaining, and I am glad to have had the opportunity to put on the record my reasons for doing so.
In my region of north Lanarkshire, the welfare reforms will take £55 million out of the economy every year, which affects not just individuals whose benefits are being cut, but local businesses in our town centres which are now struggling to cope with a vast reduction in customer numbers. That is damaging the development and visible progress of the last 20 years, during which time we have struggled to repair the damage done to our depleted heavy industry and manufacturing in the west of Scotland.
Partly owing to our industrial heritage, my constituency has relatively high levels of disability and chronic illness—as a result of old injuries from those days—and that has made my community particularly vulnerable to the welfare cuts. Many households have a member living with a disability or illness, as I see every day. I have been particularly perturbed by the scrapping of crisis loans, which is affecting the most vulnerable in our society, and although many of the changes have been mitigated by the Scottish welfare fund, many people are still being left in dire straits. Every day I see people whose benefits have been sanctioned and who are no longer entitled to a crisis loan.
Dame Anne Begg
I am sure that my hon. Friend will be as disappointed as I was to learn that, according to figures published today, the Scottish welfare fund has been underspent by a considerable amount. Obviously, those who are losing out are the most vulnerable families. It is a great shame that the SNP Government did not see their way to ensuring that the money was properly spent and properly allocated.
Pamela Nash
That does indeed upset me. When people come to me and tell me that their benefits have been subject to sanctions, it usually proves to have been due to an honest error; but are we really saying that, in this day and age, even those who have been sanctioned through their own fault should be starving? The only places that I can tell those people to turn to are my local food banks—and food banks throughout the country are confirming that benefit sanctions are one of the main reasons why people are going to them to obtain food just to survive.
I know that time is limited, so I shall try to keep the rest of my comments brief. The myriad statistics that have been shouted across the Chamber today, and all the political posturing, have sometimes made it difficult to bear in mind that individual people with whose cases we all deal as constituency Members are affected by the cuts that are taking place. An old classmate of mine from primary school came to see me a few weeks ago. He is a former serviceman, and when he came out of the Army he became a security guard, but he is now struggling to find employment. How can he be expected to find a job at a time when more than 2 million people are still unemployed, and at a time when many other servicemen and servicewomen will be joining him in the dole queue as further job cuts in the military are announced?
Most of the jobs that will be available to that ex-serviceman will be part-time jobs, or jobs involving zero-hours contracts. Moreover, he depends on housing benefit to keep a roof over his head, and he has been hit by the bedroom tax. His child’s bedroom has been deemed to be a spare room by the Department for Work and Pensions, because the child also has a bedroom in the mother’s house, so he has had to pay bedroom tax for a long time in order to ensure that he still has regular access to the child.
The Scottish Parliament recently passed a budget to fund complete mitigation of the bedroom tax. I welcome that measure, and I am glad that the Scottish Parliament eventually listened to the Scottish Affairs Committee—of which I am a member, although we are not allowed into the Parliament—but many people have already been affected by the tax, and I have to say that the “smoke and mirrors” approach taken by the SNP to one of the clearest examples of UK Government policy making the poor poorer has been nothing short of shameful. They have sat on their hands and done nothing when they could have taken action.
The UK Government made it very clear that the Scottish Government had the power to mitigate the bedroom tax long ago. The SNP said that there was no cash, and then found £20 million. It subsequently said that its hands were tied, but the Scottish Affairs Committee was told by the Scotland Office months ago that that was rubbish, and that the Scottish Government already had the power to mitigate the tax for all the people who were suffering in Scotland. I ask them now to think about the people who have suffered since the bedroom tax was introduced 10 months ago, and to consider apologising to those people and telling them how they will be recompensed.
As I have said, I regret the tone of the motion, which does not acknowledge the progress made under the Labour Government in alleviating the poverty of families both in and out of work. I hope that the Government will heed the many important points that have been raised by members of all parties today, and that they will establish a commission of inquiry to examine the impact of welfare reform—on the most vulnerable in particular—and to investigate inequality throughout the United Kingdom. I also hope, for my constituents’ sake, that the Scottish Government will immediately take advantage of every lever that their devolved powers have made available to them to protect the people of Scotland, and will not continue to pretend that they are powerless to tackle inequality without independence.
Dr Whiteford
I will not give way. I want to make some progress; I have a lot to get through in a limited amount of time.
The extremes of income inequality that we see today had their genesis in the late 1970s. The hon. Member for Dumfries and Galloway (Mr Brown) challenged the motion’s wording about the upward trend of inequality in the UK. I am prepared to grant him that, in the early years of the Labour Government after 1997, there was a stem in the rising tide of inequality, but if we look at the long-term historical perspective we find that it is clear that from 2003 onwards inequality started to rise again. We can argue the piece about that, and I would not take away from the Labour party things it managed to achieve in government that were beneficial to people, but I question the lack of responsibility we have seen from Members on both sides of the House. They have tried to blame each other for not only the financial collapse, but how we have been dealing with the aftermath. It is incumbent on us all to take responsibility for the situation in which we find ourselves and work out how we can build a more prosperous future for everyone, in which the rewards of our prosperity are shared more evenly.
Today, the richest 10% of the population across the developed world have incomes nine times greater than those of the poorest 10%, but in the UK the margins are even more stark, with the richest 10% having incomes 12 times greater than the incomes of the poorest 10%. Can we really say that a person’s contribution is worth 12 times that of another person? I find that a difficult piece of maths to do; I certainly do not think I work 12 times harder than people who are earning a lot less than me in my constituency, as I know they work very hard in difficult and often demanding jobs.
According to the OECD, the UK is now placed 28th out of 34 in its inequality league, as measured by the Gini coefficient. Of course that is not the only way in which to measure inequality, and some commentators who use a wider range of measures consider the UK’s inequalities to be even more stark. For example, Professor Dorling of Oxford university considers the UK to be the fourth most unequal country in the developed world, despite being one of the wealthiest. Those of us who aspire to live in a fairer, more equitable society will have been shocked by the research published by the Joseph Rowntree Foundation in December, to which reference has been made. It showed not just that 13 million people in the UK are living in poverty, but, for the first time, that more than half of those people live in working families.
We used to hear the mantra that work is the route out of poverty. For people who are able to secure better-paid, full-time jobs that is undoubtedly true, but the reality of modern Britain is that now most poor people are working, but that work no longer guarantees a life above the breadline. About 5 million people in the UK are paid below what would be considered a living wage, and millions of working people find they have to depend on the benefits system to top up their income to adequate levels. My hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) made the point that the report published yesterday by the Living Wage Commission showed that 21% of the work force are being paid below a living wage, which is a 9% increase in the past 12 months. People cannot get out of low-paid work. One of the most important points in the report, which echoes comments made by the hon. Members for North East Somerset (Jacob Rees-Mogg) and for Strangford (Jim Shannon), and my hon. Friend the Member for Moray (Angus Robertson), was that once people are in a low-paid job, it is extremely difficult for them to get out of it. Only 18% of those people manage to get out of minimum wage work in the course of their working lives; a decade later those people are still stuck in those jobs. So work is a route out of poverty only for those people who have well-paid jobs.
A number of hon. Members, the first being the Minister, mentioned food banks. We have seen a huge increase in their use over the past two years, which is a shocking development in a wealthy country. We know that that increase has been driven by changes to the benefits system, particularly by delays in benefits payments and the increased use of sanctions. It has also been driven by the rising cost of living. One thing that has shocked me most in my constituency is the number of working people who are now dependent on food aid parcels. Half a million people in the UK now depend on food aid, and instead of squabbling about whose fault it is and whose Government the levels rose most under, we should be trying to tackle the problem and ensure that people have enough to eat.
Ours is a mature democracy with a well-developed welfare state, but the tax and benefits system remains the main lever through which Governments mitigate poverty and inequality. The recent reforms of the past couple of years have been overwhelmingly regressive and have exacerbated hardship. The promise from the Chancellor in recent weeks that £60 billion of further cuts are on the way shows that there will be no respite for disadvantaged people in modern Britain. Of all the regressive measures we have seen in the past few years, perhaps the changes to housing benefit best illustrate both the willingness of the Government to squeeze the incomes of the poorest households and the London-centric drivers of policy making. The under-occupancy penalty, or the bedroom tax as it is better known, is punishing disadvantaged people in our society who live in social housing and need help with their rent. It is squeezing the incomes of those who are already most hard pressed financially and driving the most extreme forms of inequality. In Scotland, around 80% of those affected by the bedroom tax are also affected by disability, which highlights that link between poverty and disability. Disabled people are still disadvantaged in the workplace and often find it hard to make ends meet. The proportion of disabled people in the UK as a whole is slightly smaller than it is in Scotland, but it still represents two-thirds of the households affected by the bedroom tax.
We also have a structural mismatch between the available housing stock and the needs of tenants. Some 23% of the housing stock is one-bedroom accommodation, yet 60% of tenants need a one-bedroom house. Even if it was in anyone’s interest to play musical chairs with housing allocations, there are simply not enough one-bedroom homes to go round. Provision of one-bedroom lets in the private sector also falls well short of demand and, in any case, costs the public purse considerably more than renting from social landlords. As well as pushing low-income households into debt, the policy is costing more than it saves, and the Government’s persistence in pursuing the policy is foolhardy in the extreme.
I know that the Scottish Government have already made extensive efforts to mitigate the impact of the bedroom tax by increasing the budget for discretionary housing payments to the legal limit. In answer to the strange and bizarre interventions by the hon. Member for Airdrie and Shotts (Pamela Nash), there are legal constraints on how much the Scottish Government can top up those payments.
Dr Whiteford
No, I will not waste time taking an intervention from the hon. Lady. Her earlier intervention was really quite unbecoming. There has been cross-party support in the Scottish Parliament—not just from the Labour party and the SNP but from the Liberal Democrats who are represented on the Government Benches—to increase the discretionary housing payments budget to mitigate the effects of the bedroom tax. I therefore ask the Secretary of State, who is in his place, to talk to his colleagues in the Department for Work and Pensions about the matter so that when the Deputy First Minister, Nicola Sturgeon, is in London on Thursday, she can meet the Secretary of State for Work and Pensions to progress the issue further.
Transfers made to low-income households are the major tool through which our tax and benefits system compensates for the low-wage culture and, in a small way, mitigate the inequalities created by the structure of our labour market. Over the past two years, as the hon. Member for Llanelli (Nia Griffith) highlighted, changes to tax credits have created significant reductions in the incomes of families in low-paid work. Although some very low earners have been lifted out of tax, the gains have been more than cancelled out by cuts to tax credits and the freeze in the uprating of other benefits, which have fallen in real-terms value. That point was also made at length by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).
The Government’s own distributional analysis of their tax and benefit changes shows that the lower half of the income spectrum has paid the greatest price of austerity, while tax cuts at the very top end have allowed the gap to grow between the haves and the have-nots.
A number of Members have drawn our attention to the fact that women make up a disproportionate share of the low-paid work force. In an early intervention, the hon. Member for Coventry South (Mr Cunningham) made the point that the Government have made tax adjustments of £14 billion, £11 billion of which have fallen on women. It is unfortunate that he was not able to stay to make a longer contribution, as I am sure that it would have been worth while.
Women are more likely to be in low-paid, part-time work. They are more likely to be working in insecure, temporary jobs, or on zero-hours contracts, and more likely to be working in jobs for which they are overqualified. More than 40 years after the Equal Pay Act 1970, women are still paid 12% less than men. When we look at who is poor in the UK, we find that women, especially women with children, are over-represented. When we look at who has been impacted most by the UK’s benefit reforms, we see women once again in the front line. That is largely because women take on the greater share of responsibility for child care and for looking after elderly relatives. Child benefit, child tax credit and working tax credit are all paid to the main carer of children, and when the changes were introduced, 83% of in-work families receiving those benefits had a woman payee.
The second half of the 20th century saw women enter the labour market in ever-greater numbers, to some extent masking the ever-widening gulf in wages by increasing overall household incomes. None the less, women are losing out heavily and as a society we lose out because women are not reaching their full potential. According to a recent report by the Resolution Foundation, two thirds of mothers find the cost of child care a barrier to working more. The UK labour market has some of the lowest participation rates by mothers of any OECD country. Some women make a choice not to work when their children are small and choose to take a break in their working life. Many, particularly those with more than one child, want to work part time, but most women find that their choices are financially constrained. There is clear evidence that many women who want to work full time or work more hours face barriers because they cannot afford child care. They cannot get work in the hours for which they are available, or they cannot get the kind of work for which they are qualified. We all know families in which a second earner has given up work because they cannot afford the cost of child care for pre-school children. That is particularly the case for people on low and average earnings, but I know men and women on graduate-level salaries who have given up work because child care for more than one child, plus commuting costs, adds up to working for free. That is bad for families in the longer term, but it also extremely bad for our economy.
Child care has been mentioned by a number of speakers, and in my view, a step change in child care would be the single most transformative policy that the UK Government could make in tackling inequality, because it would boost prosperity, improve work incentives for parents, empower women in the workplace, and would help to tackle child poverty. The hon. Member for Foyle (Mark Durkan), in an important intervention, discussed the Child Poverty Act 2010, and the important gains that were won with cross-party support in the House in the previous Parliament. This week, the Joseph Rowntree Foundation published a report on child poverty in Scotland that showed that, although gains have been made, progress is under real threat because of the austerity measures introduced by the Government.
Child poverty in Scotland has fallen by twice as much as in England. Most reductions in poverty are attributable to improvements in employment rates, but it has been argued that the additional fall in child poverty in Scotland, where it is now 40% lower, is due to a shift to full working—both parents in the family are working, and at least one of them is full time. That has not been replicated across the UK. I have no doubt that that is partly due to the fact that in Scotland we have the best child-care package anywhere in these islands. We have to go significantly further if we are to compete with the best in Europe and have ambitions for the next generation. Otherwise, we face the threat of more and more children falling into child poverty.
The Scottish Government have made huge efforts to try to ensure that all our young people have opportunities. A point made early in the debate by the hon. Member for South West Bedfordshire (Andrew Selous), which was not picked up very much, concerned the issue of skills, which are at the heart of how we increase prosperity and close the wage gap between high earners and lower earners. The Scottish Government have introduced the “Opportunities for All” programme, which means that every single school leaver has the offer of a positive destination to take up when they leave. We have record numbers of young people in apprenticeships. We also have record numbers of people completing apprenticeships. Some 92% of young people who complete an apprenticeship are in work six months later, with 79% of them in full-time work. Over 90% of our school leavers are now in positive destinations, and 89.5% of them are in work nine months later, or in education or training. That is the highest it has ever been, and it shows what can be done when we put our mind to it.
Today’s debate shows exactly why Scotland needs the full fiscal levers of a normal country to tackle inequality, why Wales needs the power to grow its economy and improve the prospects of its people, and why it is in the interests of the whole UK not to bury its head in the sand any longer but take responsibility for the failures of the past and respond to the needs of our citizens in the next generation. The motion calls for a commission to investigate the impact of welfare and spending cuts on poverty and inequality, which reflects the wishes of the House expressed on 13 January. Importantly, it goes further, because we cannot really tackle poverty, particularly the kind of poverty that we have in the UK, unless we understand inequality and take steps to tackle its long-term drivers. That is why I fully support the motion, and I hope that Members on both sides of the House who have listened carefully to the debate will join us in the Lobby. The motion would allow us to address the shortcomings of the past, and I hope that all Members will join us in building a fairer and more equal society.
Finance (No. 2) Bill
Pamela Nash Excerpts(11 years, 7 months ago)
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Stewart Hosie (Dundee East) (SNP)
May I start by making two observations? This ought to be the keynote debate on the Government’s annual flagship Finance Bill, but there are only five Government Members in the Chamber—two Ministers, a Whip, a Parliamentary Private Secretary and one solitary Liberal, who I suspect will leave at the earliest possible opportunity—none of whom is now standing to speak. It is a terrible indictment of the Government that even the normal cheerleaders are not here to back the Chancellor. That probably indicates that many Government Members consider the Budget to be as miserable as we do.
I was struck by the fact that the hon. Member for Redcar (Ian Swales) chose to defend the millionaire tax cut. One reason he gave rather explodes the “we’re all in it together” myth, which, as someone else has said, is rarely used by Government Members these days. Even if this year’s Red Book is right and the cost of the millionaires’ tax cut is only £500 million in the next five years, I think we would all argue that if £500 million is going spare it would be better to spend it on direct capital investment, capacity for the future, and job and GDP creation, rather than give it to people who are already wealthy.
The Finance Bill is a consequence of the March Budget. Apart from some measures I welcomed relating mainly to business tax, it was a pretty miserable Budget. It was miserable because, by and large, it merely continued with the Government’s failed policies. We know they have failed because the Chancellor told us that they have failed—they failed by every measure he set. The net borrowing requirement, which was due to fall to £92 billion, has gone up to £121 billion. The national debt, which was due to peak at 92.7% of GDP—£1.36 trillion—in 2014-15 on the treaty calculation, is now expected to peak, on the same calculation, at more than 100% of GDP. National debt on the treaty calculation is due to reach 100.8% of GDP, or £1.58 trillion, by 2016-17. Therefore, when we hear that the deficit is lower and debt will fall, it does not really bear any scrutiny, even by the Chancellor’s and the OBR’s own numbers. The Chancellor has failed to meet his own targets on his original time scale for his own fiscal rules: that the structural current deficit should be in balance in the final year of the five-year rolling programme, and that debt should fall as a share of GDP. Of course, according to the OBR those objectives were highly dependent on GDP growth, which, as we have seen in previous Red Books, was based on incredible, unbelievable, unmet and frankly unmeetable rates of business investment growth.
Let us remind ourselves that in 2010 the Government suggested that business investment had to grow by between 8.1% and 10.9% a year for five years. By the time we got to the OBR’s fiscal outlook the next year, growth in business investment had actually turned negative, which was extraordinary, and so it went on year after year after year. They were at it again this year, forecasting future business investment rates of between 6.4% to 10.2% from 2013 onwards. I suspect that nobody, even in Government, believes that those targets will be met. The Chancellor, or some other poor Minister, will be back at the Dispatch Box at some point in the near future explaining why this was all somebody else’s fault.
The Chancellor also failed because the Budget and the Bill continue down the path of deep cuts and tax rises. I am sorry that the hon. Member for Cities of London and Westminster (Mark Field) is no longer in his place. He gave a customary thoughtful speech, in which he suggested that perhaps we had all not been honest and that the cuts should be deeper. However, last year’s Red Book told us that the total cost of fiscal consolidation—discretionary consolidation; that is, tax rises and cuts—would be £155 billion a year from 2016-17 onwards. As I pointed out on Budget day, that 2016-17 figure of £155 billion of discretionary consolidation, tax rises and cuts had somehow been deleted from the Red Book, and there was no forecast for 2017-18.
It is fair to say that the Government have made a U-turn and that the fiscal tightening will continue to be the equivalent of approximately 7.5% to 8% of GDP stripped out of the economy in tax rises and cuts. It is extraordinary that they think they can cut their way to growth at the best of times, but that they think they can do so while pursuing a policy which, according to their own numbers, will see fiscal consolidation, discretionary tax rises and cuts of the equivalent of between 7.5% and 8% of GDP in demand stripped out of the economy. If they can cut their way to growth on the back of that, they should be given a Nobel prize. The problem is that none of us believes it will happen. Of course, the overall impact of 4:1 cuts to tax rises tells us exactly who will bear the brunt of these austerity measures.
I said at the beginning that I do not want to be wholly negative—there were some measures to be welcomed. Earlier, we discussed briefly one of the most potentially significant measures, which is the tenfold increase in the annual investment allowance to £250,000. That is for two years only, however, and the Government need to understand that even at this level investment decisions may take some time to be agreed before businesses are able to use the benefit. I therefore ask the Government to look again at the temporary nature of the increase. While we would certainly argue that it makes sense to have targeted tax allowances such as this—it makes sense for businesses to be allowed to keep more of their own money to invest, particularly when banks are still refusing to take the full share of the risk they should take—the real problem with the Budget, the Red Book and the Bill is that the Government continue to set themselves against direct capital investment when the economy needs it most, which is right now.
To understand just how damaging that is, let me give one example: the UK Government argue that they have given Scotland an additional £279 million in capital over the next two years. It is debateable whether that is true, as I will come to, but even if it is, it would still imply a 20% real-terms cut to the Scottish capital budget over the four-year spending review period. But it is not real capital expenditure: £266.5 million is classified as a financial transaction, meaning that it can be used only to fund loans or equity investments. That is a straitjacket. It is accompanied by £103.5 million cut in hard cash from the resource budget, half of which— £56 million—will be cut this year from already agreed budgets. This is not just daft; it is economically really, really silly. I despair that the Government think it makes sense to be putting administrations—public bodies of one sort or another—into a straitjacket, while removing hard cash and discretionary spending.
Pamela Nash (Airdrie and Shotts) (Lab)
Before the hon. Gentleman moves too far on from capital spending, will he say why his party in Scotland is imposing even more draconian cuts on local government than the parties in government here, cutting public sector construction projects in Scotland and contributing to the 40,000 construction jobs lost in Scotland since his party took power?
David Rutley
According to the permanent secretary at the time, wishful thinking was prevalent across the Labour Government, and it led to the hyperbole that it was possible to bring about an end to boom and bust. Of course that did not come to pass; none of that Government’s work did. We are about sustainable growth and putting forward the positive action plan that was included in the Budget—[Interruption.] If the hon. Member for Airdrie and Shotts (Pamela Nash) wishes to intervene, she should please do so.
Pamela Nash
The hon. Gentleman says that my party is guilty of wishful thinking. At the moment, there is no growth in this country; we had 63 quarters of consecutive growth. How can he possibly compare the two?
David Rutley
If the hon. Lady had listened, she would know that I did not say that. The phrase about wishful thinking came from Lord Turnbull—one of Labour’s permanent secretaries, speaking for himself. The groupthink that pervaded the Treasury at the time led to the tragic results that we are having to clear up, and the Bill is taking steps to do that.
The Bill is a fitting tribute. It will promote competition and reduce barriers to entry for the ambitious and aspirational people of this country, who simply want the chance to work hard, compete and get on. The Chancellor’s Budget speech made it clear that the Bill will be followed by future measures that continue these efforts to free enterprise and remove the roadblocks to economic growth. That is a clear commitment from the Government.
It is worth reflecting on what enterprise actually means. It does not mean that people are on their own as some critics allege. As John Donne wrote:
“No man is an island, entire of itself.”
He could have written the same thing about enterprise, because free-market economics is not an atomistic pursuit, but recognition that we all advance by pooling our comparative advantages in a common free economy. We should remind ourselves of the common value and purpose of enterprise as we lay the foundations for future growth. It is not about state intervention, as Opposition Members suggest.
Business transactions must involve at least two parties—the supplier and the consumer—and the very word “enterprise” is derived from joint undertakings: enter from the French “entre”, meaning “between”, and “prise” from “prendre,” to take. It is suggested, perhaps rather dubiously, that President George Bush once said, “The problem with the French is that they have no word for entrepreneur.” Forgive my French, Mr Deputy Speaker, but although we do not have a word for entrepreneur, we on the Government Benches understand the meaning of enterprise, which is literally the joint seizure of opportunity for mutual advantage. The Bill sets out how the Government will encourage it.
Enterprise is voluntary, and therefore it carries for suppliers involved in business the element, and excitement, of risk that consumers for the service or product may not be found. Suppliers need to be flexible to survive and thrive in competitive markets where consumers, even usually loyal ones, are free at any time to say no. That is why the Government need to ensure that there is the freedom to be flexible and the confidence to be bold for enterprise to thrive and succeed.
Pamela Nash
My hon. Friend may know that we had a similar problem in my area, north Lanarkshire, with our Tata Steel site and public sector projects, so the steel was bought from abroad.
Andy Sawford
My hon. Friend is absolutely right. The story of the decision to close the steelworks in Corby in 1980 has now come full circle and been shown to be short-sighted, given that the steel is now coming from Port Talbot. Some of Tata’s steel is now coming from abroad, because it is so difficult for it to compete in this country. I called for measures in the Budget—I spoke about this in a recent Adjournment debate—to support the steel industry in the UK in order to mitigate the impact of high energy prices around the world. The contrast between this country and others is stark and instructive of this Government’s approach. Germany, where the economy is growing—it now has more than 3% growth—has a £5 billion mitigation package for energy intensive companies, while this country has a £250 million mitigation package and we are not even clear about its details.
Andy Sawford
If the hon. Gentleman is being honest, he knows that the figures that he is quoting reflect the impact of a huge global economic crash in 2008, which had a big impact on my constituency, not least because it is a manufacturing constituency. [Interruption.] The Economic Secretary is suggesting that because the figures go from 2005 to 2010, they reflect the Government’s record across the whole period. Government Members fail to say that the economy was growing for much of that time. We all acknowledge that a global crash happened in 2008 and that that caused unemployment. The critical thing is what we do about it.
Pamela Nash
Is the key point not that unemployment in this country is now higher than when the Government took office?
Andy Sawford
My hon. Friend is right. Of course, unemployment is also higher in Corby. My constituents will think that Government Members have a cheek to raise those figures in the way they have today.
My constituents will be appalled by the comments of the hon. Member for Macclesfield (David Rutley) and others, who have told them to stop whingeing and moaning. They are talking about people who are trying desperately to find work and whose situation has been made worse, not better, by this Government. The Tories do not understand the lives of those people. They do not understand the margins of the labour market or the margins that many of the poorest in our society live on. They understand the marginal impact of their millionaires’ tax cut, which is about £100,000—after all, many of them will get it—but they do not understand the marginal impact of their policies on people who have very little to live on. Fourteen pounds may be half a bottle of claret to the Chancellor, but for people in my constituency, it means choices about food, heating, fuel and new shoes for the kids.
The Government’s Budget was a chance to get back on track after three wasted years in which the UK went back into recession and lost its credit rating. The best that the Chancellor could do was to say that he hoped that we would not have another quarter of negative growth. He has his fingers crossed that he does not become the triple-dip Chancellor. Borrowing is going up not just this year, but next year and the year after. We are now told that there will be deeper cuts to services and the living standards of people in this country. While George and his friends get a tax cut, my constituents are told that things will get worse. Since the Chancellor’s spending review in 2010, the UK has been 18th out of the G20 countries in terms of growth. It is worse than the USA, Germany, France and Turkey, but the Government refuse to change course and recognise that we will get on track only if we get our economy growing.
I was incredibly disappointed that in the Finance Bill the Government rejected our proposals to use the 4G receipts to fund house building, for a proper tax on bankers’ bonuses to fund a jobs guarantee for young people and to bring forward infrastructure investment. Only 14% of the 576 projects in the Government’s national infrastructure plan have started.
In their first three years, the Government spent £12.8 billion less on infrastructure than the previous Government had planned to spend. The Chancellor has been told by the International Monetary Fund, the CBI, Sir John Armitt, some of his Back Benchers and Lord Heseltine that the Government should boost the economy with greater infrastructure spending. They make announcements such as that about the A14—part of which runs through my constituency—which is now not set to start until 2018. The electrification of east midlands trains to Corby was announced with great fanfare. What will fund it? It is the same amount of money in the next Parliament that the Government cut from what we would have spent on infrastructure in this Parliament to upgrade our railways.
In the previous Government’s plan for 2012-13, we were due to spend £48.4 billion this year on infrastructure. This Government say they will spend £41.7 billion on infrastructure. We were planning to halve the deficit during this Parliament, but this Government said that they wanted to go further and eliminate the structural deficit. What is the effect of that? They are spending £13 billion less on infrastructure—precisely what we need to get our economy growing—and £13 billion more on social security. It all sounds familiar to people in my constituency who remember that when Margaret Thatcher, the architect of this kind of trickle-down Reaganomics, came to office, 2 million people were on out-of-work benefits. When she left office, 6 million people were on out-of-work benefits and we see it all again. The rich are getting richer, the poor poorer, and many are paying the price of economic and social failure. Meanwhile, in countries such as America, which should be instructive to the Government if only they would raise their sights, the stimulus has been maintained and there has been growth of more than 4%.
What do I want now? If the Government will not listen to my hon. Friends as they present the way forward for our economy nationally, I want action locally. The south east midlands local enterprise partnership bid in my constituency is focused on housing, and at last money from the Government’s Get Britain Building fund has gone to meet some of the infrastructure gap, particularly as the council and others have had to renegotiate section 106 agreements, which became too expensive for developers to move forward. After three years, some of that money has just begun to trickle to my constituency. If the Government support the SEMLEP bid, there is a real opportunity to substantially reduce the gap in budgets for infrastructure, which we need now that we are renegotiating the section 106 agreements. We are not asking for additional money; we are asking for flexibility such as an increase in the borrowing cap.
I want help for local firms—I mentioned Tata Steel and I have invited the Minister to come and help—and I want targeted help for young unemployed people in my constituency. The City Minister, the right hon. Member for Tunbridge Wells (Greg Clark), for whom I have a great deal of time, has shown that, relative to his colleagues across Government, he is willing to take action and listen to local areas. He has taken action in cities around the UK to help fund social innovation. I would like the Government to talk to people in Corby about how we can help young people in the most difficult place in the country in which to get back to work.
I hope that the Government will listen and stop telling my constituents to stop whingeing. They must stop stigmatising those most affected by their wasted three years, and stop trying to divide people at a time when we need the country to come together with a Government who are backing our workers and businesses to get Britain growing again.
Budget Resolutions and Economic Situation
Pamela Nash Excerpts(11 years, 8 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
It is a pleasure to follow the hon. Member for Bournemouth East (Mr Ellwood). Interestingly, he used the analogy of walking out of the bad weather. The Chancellor used exactly the same analogy on Radio 4 this morning, but he blamed the economic weather for everything that was going wrong with the Government’s economic policy.
I am grateful for the opportunity to put forward my constituents’ deep concerns about the Budget. A Budget should speak to the entire country, but when the Chancellor delivered his statement yesterday, he spoke not for one nation, but for individuals, such as the millionaires who will benefit from his top-rate tax cut in just a few days. Today, I shall focus on the impact that the Budget will have on my constituents and the effects that his economic policies have had in Airdrie and Shotts.
The unemployed claimant rate in my constituency stands at 8.4%. That is not only higher than rates in the rest of Scotland and the UK, but much higher than when Labour left office. The same applies to the employment count across Scotland. Today, there are 145,000 jobseeker’s allowance claimants in Scotland—the same as the population of Dundee. This dole queue of people would reach from Edinburgh to Glasgow. The claimant count in my constituency is now three times what it is in the Chancellor’s constituency. In 2007, two people were going for every vacancy, but now 12 people are chasing every job.
Long-term unemployment is also an issue in my constituency. According to the stats, the number of people who have been unemployed for more than a year is up by 52% and the number of young people who have been unemployed for 12 months has risen by 116% in the past year alone. That is not acceptable. Youth unemployment in Scotland is one third higher now than it was in May 2010, with 38,000 young people claiming jobseeker’s allowance in Scotland—more than the entire population of Airdrie. How can it be acceptable that such a large number of young people are blocked from achieving their dreams and aspirations after two years of austerity measures?
The Chancellor called this Budget the aspiration Budget, but not one word of it spoke to young people. These are not faceless statistics; I am speaking about my constituents and people I have grown up with and known my whole life. Just a few days ago, a constituent I went to school with contacted me. He wanted to tell me how much the Government’s policies were affecting him. He served his country in the Army, before returning home and working as a security guard on a construction site. Like many of those in the industry, however, he now finds himself unemployed.
Not only does my constituent have to worry about finding a job in an economy facing the increasing likelihood of a triple-dip recession, but he will now be hit by the bedroom tax. He rents a modest two-bedroom home to allow his child to visit him at the weekends, but owing to his current situation he is now dependent on housing benefit and has the choice either of not having his child stay overnight in their own bedroom or being forced to move away from the area in which, like me, he has lived his whole life. How many Government Members truly understand the problems he is facing? When they talk about tough choices, I doubt that any of them ever have to make the decisions that he has to make, choosing between seeing his child and paying the rent.
The case of my constituent is not an isolated one. The National Housing Federation has said that 2,000 people in my constituency are losing out from the bedroom tax. My local authority of North Lanarkshire council has 5,500 tenants who will be affected by it, but at the last count it had just 26 one-bedroom properties available to rent. With those figures, where are those 5,500 people supposed to go? There is nowhere for them to go; they simply face a painful benefit cut. This is an attack on our most vulnerable and on many who are struggling with bills every month and with under-employment, and it is resulting in millions of pounds being taken out of my local economy.
If the Government really want to solve the problem, one of the things they should do is build more houses. That would go a lot further to support growth than the bedroom tax or the mortgage guarantee that was announced yesterday, which is already falling apart at the seams. In Scotland, housing makes up 40% of the construction sector. Every £1 spent on housing generates £3 in the wider economy. It is a no-brainer. Every new home creates two jobs in the construction sector and four in the supply chain. When construction makes up a third of the businesses in my constituency and around one in 10 jobs, hon. Members can see why I was hoping that capital spending in Scotland would be a bit higher than was announced yesterday. The Scottish Government could also do a bit more with the money they already have. Some 40,000 construction jobs have vanished in Scotland since the Scottish National party came to power, and in December more than 14,000 construction workers were still on the dole.
There are things the Government could be doing. For example, my local council—Labour-run North Lanarkshire—is working to help to create private sector jobs through its youth investment programme, which helps small businesses by paying 50% of the cost of employing a young person for the first year. It also has programmes helping older workers to return to work. I hope that the Government might go away and look at that example—I am happy to provide more information on it—to see how simple, practical support is making a difference to help small and medium-sized businesses and create employment just where it is needed.
To conclude, yesterday’s Budget offered none of the helpful measures that I and my constituents were hoping for. We need a change of course to bring growth back into our economy. If this Chancellor will not change course, the next Labour Government will.
Oral Answers to Questions
Pamela Nash Excerpts(11 years, 9 months ago)
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The Financial Secretary to the Treasury (Greg Clark)
I can tell my hon. Friend that in the most recent period, net lending under funding for lending has increased by £500 million. It is also the case that the average interest rate on small business loans has declined by 0.33% since the scheme was introduced.
Pamela Nash (Airdrie and Shotts) (Lab)
T6. Families living with a disabled member are going to be hardest hit by tax credits and benefit cuts. That is not according to a third-party briefing, but according to the Government’s own assessments. What do this Government have against disabled people in this country?
Danny Alexander
I think that is a very poor way to phrase the question, especially when the hon. Lady will know that disability living allowance payments, for example, are continuing to be uprated in line with inflation, even as we have to take more difficult decisions on other parts of the economy.
Fuel Duty
Pamela Nash Excerpts(12 years ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
I am disappointed that we have been forced to call this debate this evening. It shows just how out of touch with the public this Government are that they have yet to postpone January’s 3p increase in fuel tax. Dropping hints about the autumn statement is just not good enough at this stage.
I am sure that the high volume of correspondence I have received on fuel prices is replicated among Members across the Chamber, as fuel prices are now cutting into the quality of life of each of our constituents. In particular, I have been hearing from those who live in the rural and farming areas of my constituency. Rural sparsity, combined with the ongoing decline in rural bus services and a loss of local services, means that a car is a necessity in many rural areas, not a luxury. The Scottish Labour party has been calling for the re-regulation of bus services, as the Scottish Government’s policies have resulted in essential routes being unsubsidised and in many cases scrapped. Although voluntary projects such as the “Getting Better Together” project, in Shotts, and our regional transport partnership, Strathclyde Partnership for Transport, are working hard to fill the gaps, it will take direct action from the Government—to start with, by regulating our bus services—to fix this problem across the board.
The point is that the public transport infrastructure at this point is not at a level that could possibly allow the majority of people in rural communities to give up their cars without risking their quality of life and becoming increasingly isolated. The situation is becoming impossible for those who are having to decide to give up their cars, when there are little, if any, alternative forms of transport where they live. Every rise in fuel costs places a disproportionate burden on our rural communities, and now they feel that enough is enough.
It makes no sense to the Opposition that the Government, who postponed the fuel tax rise in August, seem to be ploughing ahead with this rise. Although we are cautiously coming out of a double-dip recession, most people have yet to feel this in their pockets. They are not yet seeing the difference in their bank statements at the end of the month. Incomes are still frozen, and the cost of essential bills continues to rocket. Those living in our towns are not escaping the assault on their standard of living, either. Increasingly, many have had to make difficult choices every day about using their car or paying other important bills.
Chapelhall, where I live, is home to many commuters. Commuters live where they can access more affordable housing, and homes are cheaper the further away they are from public transport links. Commuters also have to travel further to find jobs, as the employment market has yet to recover fully. This means that millions of commuters across the UK depend entirely on their cars to access work. Rocketing fuel costs are making work pay less.
I am particularly concerned about those of my constituents living with a disability that makes it difficult to travel. Labour introduced Motability way back in the 1970s to ensure that those living with a disability who require a car in order to travel can afford it. However, the costs are mounting for those running a car on Motability, and I have yet to hear the Government announce an increase in disability living allowance alongside the planned increase in fuel tax in order to plug the gaps caused by these additional costs. Some of the most vulnerable in our society will have to limit their car use, to the extent that it will jeopardise their chances of having a decent quality of life.
Robert Halfon
I am grateful to the hon. Lady for giving way, and for her speech. Given what she has just said, does she not recognise that the Government increased benefits by 5% and still froze fuel duty this year?
Pamela Nash
I thank the hon. Gentleman for his intervention, but the Government have taken other measures such as increasing VAT and cutting other benefits, which have had an adverse effect on the people I am speaking about. The fact that the Office of Fair Trading is conducting an inquiry into fuel prices reflects the public’s deep concern about the cost of fuel.
In press reports today, Government Back Benchers referred repeatedly to this debate as the cost of living debate; I have not heard it called the fuel duty debate at all. In his opening speech, the Minister seemed to talk about everything but fuel duty. It seems that Government Members want to talk about anything other than fuel tonight, because they know that the country is not on their side. I expected more Tory Back Benchers to be in the Chamber this evening trying to explain to their constituents why they are voting against our motion on fuel duty. I suspect that many of them are watching ITV to see their colleague in the “bug burial” in the jungle.
It is clear to Opposition Members, and to the thousands of constituents who have written to us about fuel duty in recent weeks and months, that the Government will be out of touch with the people of this country, who have been drastically affected by the increased cost of living, if they do not announce this evening the postponement of January’s fuel tax increase.
Amendment of the Law
Pamela Nash Excerpts(12 years, 8 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
It may surprise Members to learn that I shall begin by saying something positive about the Budget. I welcome its announcement of a range of measures—such as improving gift aid—that are designed to encourage more people to give to charities, including those working in the arts. However, I agree with Mark Pemberton, chief executive of the Association of British Orchestras, who has urged that any increase in private donations is not used to replace sustained local and national public investment, especially now that tax reliefs have been capped. At a time when public funding is being slashed, local projects—such as Reeltime, a community music project in my constituency—are in a very vulnerable position. The Westminster Government, the devolved Assemblies and local councils must protect and sustain these valuable projects, not view them as easy targets.
That was the good news. Unfortunately, the rest of the Budget was bad news. Last week’s Budget—and, indeed, the plentiful newspaper reports that preceded it—laid out a plan that will burden the many, not the few. On Friday, I was joined by my right hon. Friend the Member for East Renfrewshire (Mr Murphy) during a visit to New Wellwynd church’s lunch club in Airdrie. Many of the people there were senior citizens, and it soon became clear just how angry they were about the Government’s new granny tax. Some 370,000 pensioners in Scotland will be affected by the personal allowance change, while a mere 16,000 will benefit from the removal of the 50p top rate of tax.
Perhaps my constituents would understand such measures if they could see that the Government’s “austerity plan” was actually working. However, it is delivering nothing but pain for hard-working families and vulnerable people across the UK. It is certainly not delivering growth, and the Chancellor is now being forced to borrow £150 billion more than he had planned in his spending review. He might need to arrange a few more dinner parties.
Most importantly, the Government’s plan is not delivering jobs. Young people are facing employment prospects that are as bleak as in the darkest days of Thatcher’s “price worth paying” economic policy. More than 1 million of them are now out of work. Long-term youth unemployment has more than doubled in my constituency in the last year.
It is therefore left to the Labour party to fight for jobs. Our national five-point plan includes a tax on bank bonuses to fund 100,000 jobs for young people, and a tax break for small and medium-sized businesses. That is exactly where our focus should be: on keeping Britain working. Labour’s real jobs guarantee would help 115 young people in my constituency. Locally, it is our Labour council that is the last line of defence against the cuts. North Lanarkshire council has an action plan, which will get 5,000 people back into work over the next three years, and it is already helping local SMEs. This is the action Labour takes when facing a jobs crisis.
This Government, however, take a different path. They take one that is not fair on women, who are disproportionately affected by this Budget; not fair on young people, many of whom are being left to linger without education, employment or training; not fair on families, who are facing a reduction in child benefit and tax credits at a time when the cost of living is spiralling out of control; and not fair on pensioners, who have now been saddled with additional taxation. So who is it fair on? The answer is the Chancellor’s chums and the Prime Minister’s pals—their dining buddies. This Budget, sadly, contained the same old damaging policies from the same old Tories, helping the rich get richer and the poor get poorer.
Global Economy
Pamela Nash Excerpts(13 years, 3 months ago)
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Mr Osborne
There are quite a lot of American references in this debate. We have used the receipts of some of the asset sales that we have proposed—and indeed undertaken—to invest in new infrastructure, or in a particular industry. Of course, we have to do that on a case-by-case basis, but the spending review set out how we were going to use the proceeds of some of the asset sales for future investment.
Pamela Nash (Airdrie and Shotts) (Lab)
The Chancellor failed to mention in his statement that the Bank of England has now downgraded the growth forecast for this country five times since he took office. How does he reconcile that fact with his claim that Britain is a safe economic haven?
Mr Osborne
I reconcile it by quoting the Governor of the Bank of England, given that the hon. Lady mentions the Bank. [Interruption.] Labour appointed the Governor of the Bank of England; in fact, I suspect that the shadow Chancellor made the appointment. The Governor of the Bank of England said yesterday that
“the UK has done what it can”,
in terms of putting the major conditions in place to ensure a rebalancing and a recovery. He went on:
“We have a credible medium-term fiscal plan, which many countries do not”.
The Economy
Pamela Nash Excerpts(13 years, 5 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
It is said that there are three stages of a Government’s life. First, they blame their predecessors for all the wrongs of the world, including the decisions that they are making themselves. They then get into their stride and take responsibility for their own policies. Eventually, they make decisions that make the public unhappy, and things go downhill from there. I suspect that this Government may get through all three stages rather quickly.
As we have heard, today marks a year since the Government gave their first Budget. I hope that this anniversary marks the beginning of the Government entering the second stage and taking responsibility for the pain that they have inflicted on families in my constituency and throughout the country over the past 12 months.
We have heard repeatedly from Government Members that the previous Labour Government were wasteful with taxpayers’ money. That is simply not true. The Government should stop patronising the electorate and stop using the unhelpful credit card analogy. The national debt is in no way analogous to a credit card. The balance sheet contains both assets and liabilities. The Labour Government paid for additional infrastructure, roads, schools and hospitals. Even so, until the collapse of Northern Rock, we had a lower national debt than we had inherited from the previous Tory Government in 1997. We should ask how much our assets are worth compared with our liabilities, as one would if one inherited a home worth £200,000 with a £20,000 mortgage on it. The next generation will receive not only the debt, but the assets. One example is Building Schools for the Future.
Government borrowing was invested in production, such as the planned loan to Sheffield Forgemasters, which would have aided an export-led recovery. The country would have seen a return on that investment. Instead, this Government took yet another decision that led to the stagnation of growth and the rotting of assets, which will be passed on to the next generation. That is typical of Government policy over the past year. They have made quick, deep cuts that have saved a little money in the short term, but they have had no adequate plan for the future and blame the Labour party for the consequences.
Labour’s bail-out of the banks was universally seen as essential to combat the effect of the global financial crisis on Britain. I will concede that mistakes were made on our part in banking regulation, but the Tories in no way opposed our measures at the time. In fact, until recently deregulation has been central to Tory policy. For months after the collapse of Northern Rock, the Prime Minister continued to promote bank deregulation. He stated that plainly in a speech to the Institute of Directors in April 2008.
It is, of course, more comfortable for the Government to blame everyone else, but it is time they took stock of the effect that they are having on the people of this country. For example, since last year’s Budget consumer confidence has clearly collapsed, with the figures consistently showing consumer spending dropping. That drop in personal spending power is the first since the 1980s.
Margot James
Does the hon. Lady not accept that there is bound to be restraint on the part of consumers considering the enormous level of household debt? Should not the Government learn from the public? The public are holding back, and the Government need to hold back.
Pamela Nash
I would argue that the Government’s policies in the past year have done nothing to increase the confidence of this country’s consumers. The British Retail Consortium and KPMG’s retail sales monitor shows that the total value of retail sales last month represented
“the worst drop in total sales since we first collected these figures in 1995…high inflation and low wage growth have produced the first year-on-year fall in disposable incomes for thirty years.”
Worse still, according to the BRC the main cause of inflation is not just wages or consumer-driven increases but external shocks such as the VAT increase.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I agree with many of the points that the hon. Lady is making in her thoughtful speech. However, my recollection of last year’s Finance Bill debate is that the House divided on a Plaid Cymru and Scottish National party motion to overturn the decision to increase VAT, and the Labour party abstained. Can she explain why?
Pamela Nash
I cannot explain why, but I hope that our shadow team will answer the hon. Gentleman’s query at the end of the debate.
The VAT increase has already had a considerable effect on stretched budgets in homes throughout the country. It has hit the poorest in our society hardest, as have this Government’s two Budgets as a whole. It has meant that people are living in fear for their personal domestic budgets, as they do not know what the future will hold. The decision to increase VAT, a regressive tax, illustrates the priorities of the Tory-led Government.
The Chancellor’s claim in the Chamber a year ago today that the emergency Budget was “progressive” was frankly laughable. The Institute for Fiscal Studies has confirmed that it was regressive, and that half a million more children in the UK will end up in relative poverty by 2013. That is disgraceful. The Government are feeding the cycle of poverty and repeating the mistake of Thatcher’s Government in the ’80s. The Prime Minister stood at the Dispatch Box today and claimed that his Government were helping people out of poverty, but the experts beg to differ.
Young people are particularly affected, and they have a right to feel victimised by the Government. There have been a series of failures, leading to their generation being hard done by. Thousands of young people will now be saddled with up to £40,000 of debt after completing a degree. I am glad that my constituents still benefit from Government-funded higher education in Scotland, but even they leave university with considerable debt from the living and material costs of what is usually a longer term of four years at university.
When a young person graduates from uni, they then have to find a home. Unfortunately, the average age at which a person in the UK can afford their first home has risen to 37 under this Government. The national drop in house prices has had a smaller effect in Scotland, as the prices were much less inflated originally than in the south of England. Despite that, Scots are still just as affected by the difficulties in obtaining a mortgage without the considerable deposit of about 10% that is often now required.
After leaving university with so much debt, people have to cope with low and frozen salaries, if indeed they are lucky enough to get a job. Many remain without a job, as unemployment is hitting young people and Scotland in particular. We had the lowest unemployment rate in the UK in 2007, but we are now closer to the highest after four years of the SNP’s budget mismanagement.
The scrapping of the future jobs fund was yet another massive blunder by the Government. To label it a waste of money and say that the jobs created were not real is frankly offensive. I have met numerous future jobs fund workers in Airdrie, Newarthill and Shotts who enjoyed their six months in the programme, learned essential skills, improved their self-confidence and, in many cases, ended up creating a role for themselves and being kept on. At the very least, they were helped to find a similar job once they left their placement.
Unfortunately, the new Work programme is more likely to make the poor poorer than it is to get Britain back to work. There are two major problems with it. First, the promise that it will give 2.4 million unemployed people jobs over the next five years depends entirely on economic growth, evidence of which remains to be seen. There are currently 2.43 million people unemployed and 2.4 million out of the labour force, but in the last quarter there were only 469,000 vacancies. Secondly, the Work programme operates on a payment-by-results basis. Although I welcome the fact that good results are required for taxpayers’ money to be spent, in today’s limited job market are not private companies much more likely to pick individuals who are not long-term unemployed?
The majority of unemployed people are looking for a job. Many have the wrong skills, or are in the wrong place, and unfortunately they have little hope of gaining funding for retraining at the moment. The housing market also makes it almost impossible for them to relocate. With limited means, people are supposed to pay for increased food bills and sky-high energy bills. Despite the fact that I now spend almost half my time in Westminster, away from home, I still received a letter last week, like many people in Airdrie and Shotts, telling me that my electricity and gas bill is going up by £20 a month.
Fuel bills are also rocketing, and people are rapidly finding themselves struggling to cope. At a recent meeting with my local citizens advice bureau, we discussed the fact that the people who are now coming to us for advice are not just those on benefits or very low salaries but people in a variety of salary brackets, who are seeing their wallets empty much earlier in the month. If those on half-decent salaries are struggling, how are those on benefits and the minimum wage even beginning to cope?
The Government have spent their first year in power causing successive growth forecast reductions and prolonging the effects of the recession on both families and businesses, and a generation of young people has been put on the scrap heap. When are the Government going to stop blaming everyone else and find a plan B that will get the UK working again?
Oral Answers to Questions
Pamela Nash Excerpts(13 years, 6 months ago)
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Pamela Nash (Airdrie and Shotts) (Lab)
6. What assessment he has made of the effects on families and children of the tax and benefit changes introduced in April 2011.
The Chief Secretary to the Treasury (Danny Alexander)
I echo your tribute to David Cairns, Mr Speaker. I knew him as a very effective Scotland Office Minister, and as a champion of Scottish broadcasting. It is a tragic loss, and he will be very sorely missed by Members in all parts of the House.
Direct tax and benefit changes introduced in April are progressive. On average, households in the bottom 80% of income distribution gain. As a result of the direct tax changes introduced in April, 21 million individuals earning up to about £35,000 per annum will benefit in real terms this year.
Pamela Nash
Let me take a moment to associate myself with the Chief Secretary’s comments on the sad death of David Cairns. David provided me with a lot of support and a lot of laughter during my time here as a parliamentary researcher and, over the last year, as a Member of Parliament.
Families with two or more children will lose up to £1,560 per year as a result of the cuts in the child care element of working tax credit. Does the Chief Secretary accept that that will deter many parents who would otherwise have returned to work from doing so?
Danny Alexander
The vast majority of people on low and middle incomes will benefit from the income tax cuts that will result from the raising of the income tax threshold by £1,000. For families with children, we have increased the child element of child tax credit by £180 above indexation. I agree with the shadow Chancellor, who admitted on the BBC shortly after the Budget that
“only the majority of families”
would benefit from those moves.