Working People’s Finances: Government Policy
Debate between Stephen Kinnock and Alex Cunningham(3 years, 2 months ago)
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Stephen Kinnock (Aberavon) (Lab)
It is a pleasure to follow my hon. Friend the Member for Liverpool, Wavertree (Paula Barker), who made such a powerful and passionate case, so rightly pointing out the false economy that inequality represents.
Thousands of families in my constituency, like families across the UK, have taken a real buffeting over the past 18 months, and this month could bring the perfect storm for them as the furlough scheme ends, the universal credit uplift is scrapped and the cost of living spirals upwards. The pandemic has had a significant impact on household finances, which have been stretched to breaking point, and not everybody is able to weather the storm as easily as others.
Conservative Members like to claim that their Government have fixed the roof while the sun is shining, but the reality is that the Tory roof is made of straw and a cold wind is blowing. Worrying research from the Bevan Foundation has found that one in three Welsh households does not have enough money to buy anything beyond everyday items, while more than one in five households with a net income of less than £20,000 have seen their income drop since January. The planned cut to universal credit will only deepen these inequalities, as those on the lowest incomes will be pushed into poverty and destitution.
In Aberavon alone, more than 7,000 households receive universal credit. For those families, the £20-a-week uplift has been a lifeline, protecting those who have lost income and preventing them from slipping into poverty or having to visit the food bank to feed their families. It is important to note that of the 7,000 households in Aberavon that are on universal credit, 2,000 have registered since the start of the pandemic. The idea that the removal of the uplift is somehow not a cut is deeply disingenuous, because the 2,000 households that have registered since the start of the pandemic have certainly not known any other rate of universal credit. The Government’s claim is blatantly and deeply disingenuous.
The uplift has made a real difference to family budgets. My inbox has been filled with emails from residents telling me how it has helped them to meet the cost of essentials and allowed them to pay their bills, make the rent, put food on the table and switch the heating on. To some, £20 a week may seem like a small amount of money, but to the families I am talking about it makes a world of difference and would have been crucial to help them with rising energy bills and the escalating cost of the weekly shop. They are now deeply anxious about their precarious finances and worried about how they will make ends meet without the uplift.
The reality is that we are potentially moving into an age of anxiety. The anxiety that is now afflicting so many millions of families and households throughout the country saps the strength from the recovery and defeats growth. It is a brake on growth, which is why the Government’s policies are so deeply damaging. They are not only the wrong thing to do in a civilised society but the definition of a false economy because they are putting a brake on growth and holding back the recovery.
Some of those who contacted me are shopworkers and carers who worked through the pandemic and now face the cut to universal credit. That is no way to thank them for what they have done. Members on the Government Benches stood on their doorsteps applauding our key workers; now they reward them with this cut and a cost-of-living crisis. Their hypocrisy is breath-taking.
Alex Cunningham
My hon. Friend talks about people applauding on their doorsteps; when I put a question to the Prime Minister when he was talking about his tax increase, he said that the Government do not pay care workers. Apparently, somebody else does, but does my hon. Friend agree that the Government pay grants to local authorities, and that money goes to carers? We hope that some of the extra tax money will go to local authorities to pay care workers, so is it not about time that the Government said, “We’re paying for the fiddler so we’re going to decide the dance”? They should decide the level of pay for care workers and it should be much higher than it is now.
Stephen Kinnock
My hon. Friend is absolutely right. As the Leader of the Opposition, my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), has confirmed, we are committed to a proper living wage in this country of a minimum of £10 an hour. Government Members constantly ask for Labour’s plan; there is one absolutely key element of it. It is about making work pay and rewarding the heroes of the pandemic: those who kept our economy running and our supply chains open. Rather than rewarding them with cuts and destroying supply chains, we should seek to build an economy that works for everyone.
The grim reality is that around 40% of the families who claim universal credit are in work, but that work is insecure and involves short hours or low pay. They are claiming universal credit not because they are workshy but because the Government are presiding over an economy in which jobs are not paying the bills and low-paid people are forced to top up their income. If the cut to universal credit goes ahead, it will be the biggest overnight cut to the basic rate of social security since the foundation of the modern welfare state. It will plunge families into poverty, forcing them to rely on food banks. But it is the very definition of a false economy: it would remove £7.3 million from the economy in my Aberavon constituency alone. This money is not saved by families; it is spent in the shops and the businesses in my constituency, helping to stimulate the local economy and helping to create jobs. Without it, spending power will decrease and the economic recovery will be stymied. Government Members have rightly stated that we need to grow our way out of the recession, and yet they are promoting policies that will put a brake on growth. It beggars belief.
This squeeze on living standards is not inevitable. Poverty is a political choice. The squeeze on living standards is a political choice. The Government have made the choice of hitting hard-working families with a double whammy of cutting the universal credit uplift and hiking up national insurance contributions. At a time when food, fuel and energy prices are going up, this will place an enormous burden on hard-working people. It is the Government’s choices that have shaped an economy that has become less resilient and less secure. The Government’s botched Brexit and failure to plan for crises such as the pandemic have combined to expose our declining sovereign capability—our lack of supply chain resilience, the empty shelves in the supermarkets, the shortage of HGV drivers, and delays at our border and ports. All of this is combining to drive up prices, and it is hitting working families in their pockets.
Two hauliers in my Aberavon constituency, Frenni and Owens, have told me about the detrimental impact that the shortage of HGV drivers is having on their businesses. Owens estimates that they are 150 drivers short and that that is reducing their capacity by about 1,000 full trucks a week. They desperately need the Government to take urgent action to address the shortage. What that demonstrates is that the economy is interconnected and that the impact on supply chains impacts on prices, impacts on the cost of living crisis, and impacts on working families. The Government should be doing all they can to support families through these tough times, not pulling the rug out from under them. They must start by cancelling this cruel and self-defeating universal credit cut. Then they must build an economy that works for all, by tackling insecurity at work, lifting people out of in-work poverty and increasing the minimum wage to at least £10 an hour. Then they must tackle the cost of living crisis by sorting out the chaotic shambles of their botched Brexit.
If the Government’s levelling-up agenda is to be anything more than empty rhetoric, they must change course. They must stop this race to the bottom and strive instead to build an economy that works for all. They must stop their complacent, blasé approach to Government and get their act together to address the huge disruption that has been caused by their botched Brexit deal.
Alex Cunningham
The Tories are keen to talk up the importance of work, and I agree with them on the importance of work—good paid jobs must be the answer—but they also allow many firms to go to the wall. The latest in our area is the world-renowned Cleveland Bridge and Engineering Company, which built the Sydney Harbour Bridge and the Tyne Bridge. Hundreds of jobs in the main firm and in the supply chain have now gone, as neither the Tory mayor in the Tees Valley nor the Government were prepared to do anything to sustain those jobs, simply because the company had a cash-flow problem. Does my hon. Friend not agree that we need to protect the jobs that exist today and not just dream of jobs in the future?
Stephen Kinnock
My hon. Friend hits the nail on the head. Much of the debate today has been about the immediate impact of the universal credit cut and the immediate impact of the cost of living crisis, but we need to examine the fundamental structural weaknesses in the British economy that have seen a massive decline in manufacturing, and that has been turbocharged by 11 years of Tory neglect. We have ended up concentrating so much of our economy in London and the south-east around the financial services sector. The financialisation of the British economy has ended up driving inequality, with a very small percentage at the top being paid eye-watering bonuses while the rest of country is left behind. We have shifted from being a country that makes things to a country that consumes things—a country that is fuelled not by production, but by consumption, and which is floating on a sea of debt. All those structural weaknesses have been chipping away at the resilience of the British economy for 11 years now, and the pandemic and the botched Brexit are now combining to expose the profound lack of resilience in our economy. Therefore, although today’s debate is extremely valuable and important, it fundamentally needs to be seen in the context of 11 years of Tory failure, neglect and a failure to look at the foundations of our economy.
I have the largest steelworks in the United Kingdom in my constituency, and steel is a case in point. The hon. Member for Redcar (Jacob Young), who represents a steel constituency, is not in his place now. We have seen the act of industrial vandalism that saw the closure of the SSI works in Redcar on the watch of the Tory Government; the total and utter failure to address exorbitant energy costs, which are crippling the British steel industry; the failure to stand up to China and the dumping of Chinese steel on the markets, which has deeply undermined our competitiveness across the world; and the failure to have a patriotic procurement policy that would enable us to focus on buying British steel when those opportunities arose. If we are serious about the transition to a green economy, we will never get there without a resilient and vibrant British steel industry. Our steel industry is just one example of how the Government have allowed our manufacturing sector to decline over the last 11 years that they have been in power.
Alex Cunningham
There is some good news this afternoon, because I understand that the Government have actually helped out and we have some form of agreement with CF Fertilisers—the company that makes fertiliser from natural gas and produces 60% of the country’s CO2, which is so desperately needed for everything from beer to anaesthetic systems in hospitals. Will my hon. Friend welcome that, but also reflect on the fact that the company had to go to the brink of failure before the Government chose to act on energy prices and the other factors that were affecting it?
Stephen Kinnock
My hon. Friend hits the nail on the head; we appear to be in a constant state of crisis management, based on the fact that there has not been long-term planning. The gas crisis was foreseen by many people years ago, and it was based on a concern about the Government’s failure to deliver gas security by enabling the additional storage of gas. We do not have gas stockpiled in the way that most other advanced industrialised countries across the world have. This is another example of the Government being asleep at the wheel and not having that long-term planning in place.
We have a Secretary of State for Business, Energy and Industrial Strategy who does not believe in industrial strategy. He has closed down the Industrial Strategy Council at the very time that we need a partnership between the state and business to drive our economy forward. These fundamental issues have to be addressed. We have to look at the cost of living crisis, and develop a partnership between the state and business. We must have the long-term planning in place that we so desperately need.
Stephen Kinnock
I would very much like to give way to my hon. Friend again, but Mr Deputy Speaker is looking at me in a way that tells me that perhaps it is time to finish my speech.
Alex Cunningham
I am very grateful to my hon. Friend for giving way again. He will not know this, but I spent a long part of my career in the gas industry. I remember taking a group of women journalists offshore to the Rough field, off the Humberside and Yorkshire coast. Does he agree that it is extremely lamentable that the Government allowed that storage facility to close down and that that wonderful facility—the first of its type in the world—is no longer in use for gas storage?
Stephen Kinnock
There we have an absolutely spot-on illustration of precisely the problem that I was alluding to, which is that many of the issues that have been exposed by the pandemic are a failure of long-term planning. That is another example of a false economy. It is about the culture of looking at the immediate bottom line. Knowing the cost of everything and the value of nothing is the definition of the way in which this Government have been running the country for the past 11 years.
The value of resilience is about understanding the need for investment and about investing in order to save for the future. Prevention is always cheaper than cure. That is why, with the up-front investment that has been so sorely lacking over the past 11 years, those chickens are now coming home to roost. We therefore need to develop a new political culture, a new business culture and a new commitment in this country to security, resilience and partnership. On that basis, the issues that we are addressing today are the symptoms of the problem and not the cause.