Management of the Economy and Ministerial Severance Payments

Sarah Owen Excerpts

Tuesday 15th November 2022 Commons Chamber

[Sarah Owen (Luton North) (Lab)]

Thank you, Mr Deputy Speaker. I am proud to respond to the debate on behalf of Labour. Despite what Government Members may say, this is an important debate. Why? Because it reflects the discussions being had around every kitchen table by parents with hushed voices behind closed doors so as not to worry their children. It is the sinking feeling that people are getting every time another bill comes through their letterbox. As we have heard throughout the debate, that is especially so with mortgages.

Under the Tories, we have seen next to no growth for the last 12 years and the economic picture is about to get worse. Over the next two years, the IMF predicts that the UK will see just a third of the growth of Canada and Japan, and less than half that of France and the US. The most recent GDP figures show the UK’s economy shrinking by 0.2%. We are teetering on the edge of what is predicted by some to be one of the longest and deepest recessions in history and, as my hon. Friend the Member for Bradford West (Naz Shah) rightly said, it is a problem made at No. 10. It is not a problem made solely by Russia’s war with Ukraine—if it was, surely every country would be enduring the levels of next-to-no growth that we have had to experience.

[Clive Efford (Eltham) (Lab)]

My hon. Friend points out that this is a problem created in No. 10. On Thursday, after we have taken into account the reversal of the unfunded tax cuts that the mini-Budget put in place, the Chancellor will be dealing with the £30 billion gap left from that Budget, and taxpayers will have to pay for that in the months to come. On top of paying higher mortgages, therefore, people will be paying higher taxes because the Government frittered away £30 billion in a matter of weeks.

[Sarah Owen]

Unfortunately, my hon. Friend is absolutely right. As my hon. Friend the Member for Rhondda (Chris Bryant) has said, even an 11-year-old knows that the Tories “broke the money”. While our European neighbours are working with mortgage rates of about 2.2%, a two-year fixed-rate mortgage in the UK is currently 6.3%. What makes the UK so different from other countries to the extent that our mortgage rates are more than double those of France, Germany, Sweden and Norway? The list goes on. What they do not have to contend with, though—unfortunately, we do—is a Tory Government weighing down our country with more than a decade of stagnation and failure, a shockingly ill-judged mini-Budget and the distraction of scandal after scandal.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

When the Treasury Committee looked at mortgages in detail, one thing that was highlighted in the evidence sessions was the impact on the buy-to-let sector, where fewer properties will mean rents become more expensive. Does my hon. Friend agree that the Budget not only managed to harm people who own properties but is having a detrimental effect on the income levels of people who are renting?

[Sarah Owen]

My hon. Friend is absolutely right. What is shocking is that, time and again, we have heard warm words from Ministers at the Dispatch Box, but there has been absolutely no meaningful action for renters. Labour has called on the Government to bring forward urgent legislation to end section 21 eviction notices. Thousands of people across the country are being evicted from their homes through no fault of their own. The Government could act, but they choose not to.

Ministers cannot hide behind the spectre of Putin forever. At some stage, surely, they have to own their own mistakes. Who has to pay for this failure? Is it the people who caused it? It is not the people who crashed the economy, according to the Government. This warped world we live in now means that the former Conservative Prime Minister and former Conservative Chancellors are actually being rewarded for crashing the economy. It beggars belief.

[Naz Shah]

Not only have the Government trashed the economy, but what adds insult to injury is the fact that, while they recognise the mistake, they are trying to spin a new narrative to try to fool the British public into believing that this was not made in No. 10, but made by other factors across the world.

[Sarah Owen]

Absolutely. My hon. Friend makes a powerful point. Yes, everybody makes mistakes, but this mistake is a £30 billion mistake that the British people are going to have to pay for because Government Members refuse to take responsibility for their actions. It goes against every sense of decency and fairness we have in this country. I would love the Treasury Minister to tell me how they can justify rewarding the former Prime Minister and the former Chancellor with a golden goodbye, paid for with taxpayers’ money—not theirs, but taxpayers’ money. I will give way to anyone who can give me a justification for that—anyone who believes they should not give that money back and can give me a reason. We have heard that former Ministers can give back their severance pay—we have seen that happen and we have seen former Ministers donate it to charity—yet we hear nothing from the former Prime Minister and the former Chancellor who crashed the economy.

[Taiwo Owatemi]

My hon. Friend is making an important point. Given the fact that the former Chancellor and the former Prime Minister crashed our economy, it is absolutely insulting to so many families who will be struggling to pay their mortgages that they will not give back their severance pay.

[Sarah Owen]

My hon. Friend is absolutely right. What is also shocking is that they could not turn up today to say sorry, apologise, and face up and take responsibility for the damage they have done.

There are millions of people in this country who do the right thing. They work their fingers to the bone. They are the ones paying for this Government’s repeated mistakes. They include people like the nurse in the heartbreaking case spoken of by my hon. Friend the Member for Birmingham, Erdington (Mrs Hamilton), and a couple in Peterborough, who told us,

“My husband and I are both teachers. We work full-time and have a joint income of nearly £80,000. We have a deposit sitting and waiting of £35,000. I have only ever rented for the past 18 years. We couldn't afford to buy at the start of our careers. We were recently told we would be snapped up as first-time buyers. But then the crash came. We can't keep adding to our savings, costs are going up and some banks now want a 40% deposit.”

They include people like Jon, who works full time and whose wife is a small business owner. They and their two children live in London and now face a 60% increase in mortgage payments—an extra £600 a month. They include people like Bernadette in Hastings. Her fixed-term mortgage comes to an end in December and the earliest she can renegotiate is this month. She is incredibly worried about what the costs will be. She is a hard-working mum and a Communication Workers Union member who works two jobs, one as a postwoman and one as a small business owner, which she works around her schoolchildren.

As for the hon. Member for Sedgefield (Paul Howell), when he tells us to shut up—no. When people in this country are suffering, when people in this country cannot afford their bills and when people in this country cannot get on the housing ladder—no, I will never shut up, because the Conservatives crashed the economy. We on the Labour Benches will always, and proudly, be on the side of ordinary working people. Perhaps he should go away and learn some manners.

[Emma Hardy]

In a Treasury Committee evidence session, Charles Roe, director of mortgages at UK Finance, said that, when the Prime Minister was the Chancellor, he agreed to get rid of the zero earnings rule for the mortgage interest rate relief system. He signed it off. Does my hon. Friend agree that the Prime Minister should follow through on that promise, so that people who cannot afford their mortgages are able to get the support they need, which they were promised months ago by this Government?

[Sarah Owen]

That perfectly highlights the problem here. We may have had a change at the top, but we have not had a change of the people making the decisions. Ultimately, there was a problem before the mini-Budget. As we have rightly heard from across the House, people were struggling to get on to the housing ladder and that is continuing. So we need to hold the Prime Minister to account for what he promised when he was Chancellor, but we also need to hold him to account for his inaction since.

Citizens Advice Scotland reports a 25% increase in views of the webpage, “What to do if you can’t pay your mortgage”. As my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) said, it is not just customers, but lenders who cannot have certainty or confidence in the Government to make life better. As the shadow Minister, my hon. Friend the Member for Wigan (Lisa Nandy), rightly said, why are Ministers not meeting with lenders in the same way that Labour Front Benchers are?

If hon. Members think that is bad, across all advice webpages relating to mortgage problems, there has been a 277% increase in page views between this year and last. People are desperate. As my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) said, that is not scaremongering. People are terrified because there is no leadership and because of the Government’s failure.

First-time buyers have yet again been the most affected, with home ownership down 26% compared with last year. That is not progress. I am glad that the hon. Member for South Cambridgeshire (Anthony Browne) is back in the Chamber, because I would like to update him. His points, which were either given to him by a researcher or his Whips, were clearly wrong, because the peak home ownership rate was actually 70.9%. Guess when that was? In 2003, under a Labour Government. As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) said, people should have the right to security and peace of mind in their homes. People would have that under a Labour Government again.

--- Later in debate ---

[Anthony Browne]

Home ownership rates peaked under the last Labour Government but then fell under that Government, and they are now going back up.

[Sarah Owen]

We can argue statistics all we like, but on home ownership, people know what is happening to them right now and the reality that they face outside this Chamber. On average under a Labour Government, home ownership was 5.5% higher than it currently is.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

The hon. Member makes the point about home ownership under the Labour party. Does she accept that the home ownership rate was high in 2008, when we had the global financial crash caused by mortgages and people not being able to make their payments? That was, sadly, on the watch of the last Labour Government, allowing a scheme to take place that enabled bankers to crash our global economy.

[Sarah Owen]

It is good to hear that the hon. Member is so concerned about people who crash the economy. I wonder whether he thinks his constituents would accept that the people who crashed the economy just a couple of months ago should take a severance payment and a golden handshake using taxpayers’ money.

[Jonathan Gullis]

Will the hon. Member give way?

[Sarah Owen]

I will not, because that would be a conversation, not an intervention.

To bring this back to the motion, for too many people, the dream of home ownership is now a never-ending nightmare of moving goalposts, with Tory Ministers reaching Jordan Pickford levels of blocking people from reaching their goals. It should never have been this way. The former Prime Minister should never have been coronated without an election, and the latest one should not have been either. The Conservatives should never have gambled other people’s homes, livelihoods and savings on their catastrophic economic strategy. The Ministers responsible for crashing the economy should never be rewarded for their failure, and the good people of this country can never afford a Conservative Government again. The damage has been done. We need a change of Government for good.

--- Later in debate ---

[Alex Burghart]

As I was about to make clear, it is not within the Government’s power to do that. This is a power set in law. It is a power set in the Ministerial and other Pensions and Salaries Act 1991.

[Sarah Owen]

The Minister has laid out the legalities behind severance pay for Ministers, but—we on the Labour Benches have already asked this question several times—does he feel that it is right for the former Prime Minister and the former Chancellor who crashed the economy to take that severance pay?

[Alex Burghart]

The House will be aware that my right hon. Friends the Members for South West Norfolk (Elizabeth Truss) and for Spelthorne (Kwasi Kwarteng) served continuously as Members of Parliament for long periods before taking up the offices of Prime Minister and Chancellor of the Exchequer—in the case of the former Prime Minister, for 10 years, and in the case of the former Chancellor, for four.

Let me be clear. The fact that this is a statutory entitlement does not mean that Ministers are not able to waive such payments. However, that is a matter not for the Government but for the individuals involved. I am not a Treasury Minister; I am a Minister for the Cabinet Office. This is one of the basic facts that the Opposition do not seem to have picked up on when they embarked on the motion.

Let me now address the points raised throughout the debate about mortgages and housing. I recognise the anxiety that people feel about mortgage payments, which obviously constitute one of the biggest bills that many people experience. There are a range of factors affecting mortgage and other interest rates, but this Government will do everything possible, under this Prime Minister and this Chancellor, to get a grip on the problem of inflation and seek to limit the impact that it has on mortgage rates.

The Government are providing unprecedented levels of support to tackle the rising cost of living. From last week, nearly one in four families across the UK will receive a £324 cost of living payment as part of our £1,200 package for the 8 million most vulnerable families. Our energy price guarantee will save a typical household £700 this winter, on top of the £400 through the energy bills discount.