Cost of Living

Debate between Robert Flello and Sharon Hodgson

Wednesday 16th May 2012 Commons Chamber

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

The cost of living is an excellent theme for our debate on the Queen’s Speech, because alongside and intertwined with the strength of the economy and the availability of jobs, it goes to the core of what ordinary people are most concerned about right now, as I see in my inbox and hear from constituents on the doorstep and in my surgeries. Frankly, I am amazed that the Secretary of State was able to speak for so long, given the lack of action to help with the cost of living in the Her Majesty’s Gracious Speech.

I think the Queen’s Speech was best described by the deputy political editor of The Daily Telegraph, as

“a ragtag bag of second-order legislation and moderate tinkering, partly to address some quite important issues, but also simply to look as if they’re doing something.”

There are one or two Bills that I am pleased to see and will discuss later, but where was the meat? Where was the creativity? Where were the drive and ambition to get this country out of the first double-dip recession in almost 40 years? Nowhere. There was no change, no hope, and Ministers still act like they have no idea of the impact of their policies on the lives of my constituents. Quite frankly, they just do not have any ideas.

One of the biggest cost of living pressures that working families are feeling is child care. According to the Daycare Trust’s annual child care costs survey, the average price of nursery provision in the north-east has increased by 7.5% over the past year, but the cost of out-of-school child care has increased by more than 25%. That is but one part of the triple whammy that parents are facing, because at the same time the help they receive from the Government has been cut by 12.5%, and child care places are becoming scarcer as the money councils get to ensure availability and affordability is slashed and de-ring-fenced, and private nurseries face a daily struggle to stay afloat, due to the increasing number of women who are leaving the work force or finding alternative care, coupled with increased costs and cuts to child care tax credits.

Add to all that this year’s changes to working tax credit eligibility, which affect an estimated 355 families in my constituency, and ever-rising costs of petrol and public transport, and the result is a situation where the cost of working is forcing parents, particularly women, out of work at an alarming rate. After last year’s cuts to child care tax credits, about 44,000 parents stopped claiming. Many will have left work because continuing just did not make financial sense any more. Last month’s changes will no doubt exacerbate that worrying trend. Where were the measures in the Queen’s Speech to help? Again, nowhere.

The cost of child care is normally higher for children who are disabled or who have special educational needs. In addition, places for those children are scarce: according to the Daycare Trust, only 12% of councils have sufficient places to meet local need. A children and families Bill was announced in the Queen’s Speech; I welcome that and look forward to working on it when it comes before the House. I am delighted that, as part of that debate, the House is to discuss how we can improve outcomes for children and young people with special educational needs and disabilities. Where, though, is the commitment to increase the availability and affordability of child care for children with special educational needs and disabilities, to allow their parents to hold down a job, which is not only important financially, but provides much needed respite in some cases?

The Government have also said that, in that Bill, they will continue Labour’s reforms on flexible working, allowing mothers to transfer some of their maternity leave to their partner. There are of course social benefits to that, but where are the financial benefits for families? Research commissioned by my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) back in 2010, when she was Minister for Women and Equalities, showed that only about one in five women earned more than their partner, although the number is thankfully rising. With that in mind, transferring statutory leave will come down to a practical economic decision for many families. It will be a luxury that most cannot afford, especially if the Government continue to do nothing to mitigate the rising cost of living.

Colleagues have mentioned a number of other pressures on household budgets, and I will echo their points if I have time. Those pressures include rising energy bills, rising shopping bills exacerbated by last year’s rise in VAT, which took £450 out of family budgets at a stroke, and the rising cost of fuel and public transport, about which we have heard quite a bit.

One particular problem that has been raised with me, and mentioned in the media in the past few months, has been banks hiking up mortgage interest rates while the base rate remains at a record low. Mr Edward Cairns of Washington called my office to complain that on the same day as the Royal Bank of Scotland announced a total bonus pool of £785 million for 2011, despite the fact that the bank had made an overall loss of £2 billion, he had received notification that the interest on his mortgage was being increased by 0.25% to 4.25%. I wrote a letter to Stephen Hester asking him to explain that hike and the fact that it coincided so insensitively with the announcement of the huge bonus pot. Unfortunately, I am yet to receive a response from Mr Hester, so I also wrote to the Chancellor to see what he was going to do about it. I received a letter back from the Financial Secretary to the Treasury saying, in a nutshell and in a very polite way, absolutely nothing.

RBS is a bank in which Mr Cairns, as a taxpayer, has an 84% stake, yet it and other banks are needlessly hitting people like him in the pocket while their executives are being rewarded for failure. That is bad news not just for consumers but for the Government.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am sure my hon. Friend is aware that in the letter that Halifax sent out to mortgage customers, it stated that the reason why it had increased its rate was the parlous state of the economy and the recession born out of No. 10.

[Mrs Hodgson]

Very interesting. I hope that Ministers are listening and that my hon. Friend’s point will be fed back.

Banks putting their standard rates up means that average interest rates increase, so the amount that the Government have to pay out in support for mortgage interest also increases. It also means that people have less disposable income to spend in shops, pubs and restaurants, so tax receipts are hit as well. Did the Queen’s Speech do anything to address that worrying trend? No, it did not.

What my constituents wanted from the Queen’s speech was a sign that this Tory-led Government had listened to the message that had clearly been sent to them through the ballot box on 3 May. They wanted a change of direction and some hope for the future. They actually wanted what Labour is offering—a fair deal on tax, instead of a great deal of tax being given back to the wealthiest few; a fair deal on energy, wresting power back from the big six and ensuring that pensioners get deals that allow them to eat as well as to heat their homes; a fair deal on transport, reining in the constant price hikes by train operators; a fair deal for consumers, stopping rip-off charges and practices by unaccountable companies, including payday lenders and secondary ticketing websites; and, above all else, a fair deal on jobs, getting young people in my constituency and others involved in working our way out of the recession that this Government have created. They did not get any of that. It was just more of the same from an out-of-touch and incompetent Government.

Ministers need to listen to Paul Dixon, who lost his seat on 3 May, before which he was the only remaining Lib Dem on Sunderland city council. He said that the coalition Government need to open their eyes, take a good look and realise the damage they have done. I agree with Paul, but the Government need to start putting it right. I hope they do so sooner rather than later, or else they should step aside and allow Labour to do so.