Management of the Economy and Ministerial Severance Payments

Debate between Taiwo Owatemi and Gerald Jones

Tuesday 15th November 2022 Commons Chamber

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

I rise to speak in support of the motion in the name of my right hon. and hon. Friends. I will take the opportunity to raise some concerns on behalf of my constituents.

It is clear that the events of 23 September have had a far-reaching impact and that the damage done by the former Chancellor and Prime Minister will continue to cause hardship for some time to come. We know that the Government did not seek the benefit of an OBR impact assessment, so they had no clue about how the decisions they took would cause damage. It is incredible, extremely careless and quite frankly inexcusable of them to have allowed a Budget—financial statement, mini-Budget or whatever they wanted to call it—to be set out in that way.

Families in Merthyr Tydfil and Rhymney, and millions across the country, will continue to pay the price for the Government’s mismanagement of the economy. Recently, I was contacted by a mortgage adviser in my constituency who told me that they saw first hand, on the frontline, the effect of the Government’s management of the economy. Because of the recklessness of key people in Government, mortgage rates and terms changed by the day, and it was almost impossible to predict what was going to happen next or to try to guide clients on the best path to keep repayments at an affordable level.

The advisor did three re-mortgages for three families that totalled £330,000—lots of threes there—in the weeks following the mini-Budget and the monthly payments went up by around £550 to £600 a month. When that is added to the rising costs of gas and electric, that means almost £300 per household per month that those families will now not spend in the local economy.

One example highlighted a mortgage that was set in May this year and was due to complete shortly after the mini-Budget. In late September, the same £210,000 mortgage over 30 years would be a staggering £350 a month more. The adviser offered a few examples of what they felt was a very serious situation for the economy. These mortgage rates and rising utility costs, coupled with the cost of food and fuel, will cause great hardship for many.

Another mortgage adviser based in my constituency told me that they are also seeing first hand the hardship that the so-called growth plan caused. They said that the mini-Budget had already caused financial hardship, because their clients across the spectrum—single mothers, working professionals and retirees—are all feeling the burden of the cost of living crisis and that has been exacerbated by rising mortgage interest rates. They said:

“Having to sit in front of a client and tell them their mortgage has risen hundreds of pounds is quite frankly heartbreaking, especially at a time when finances are stretched already. Unfortunately given the lack of forecasts and figures from the OBR which would normally accompany a budget, I am finding it difficult to ease our clients’ concerns about the bigger picture and what, if any, plan the government has to rectify this situation.”

The trickle-down approach does not work. Unfunded tax cuts are reckless, given that they put the Government and the central Bank at loggerheads over control of inflation. People in my constituency and across the country want some stability and a more sensible approach, but they are not getting that with the constant chaos from the Government.

Of course, we know that these extremely trying financial uncertainties will also have a huge impact on people’s mental health and wellbeing. People coming off a two-year, three-year or five-year fixed mortgage rate in April 2023 could well face additional monthly mortgage payments of more than £500 alongside an eye-watering increase in energy bills. How does the Minister expect hard-working families to cope with that increase?

It is clear for all to see that this is the Government’s crisis: made in Downing Street, paid for by working people. They crashed the economy through enormous unfunded tax cuts, leaving people worried as they face higher mortgages and soaring costs. They have damaged the UK’s reputation on the global stage and left us all worse off. They reversed most of the mini-Budget, U-turned on most things, and abandoned their discredited and dangerous approach, but the damage was already done. The British people will now pay more in borrowing costs or through further Tory cuts to vital public services.

The average repayments for a first-time buyer with a two-year fixed-term mortgage have grown by £580 a month in the last year. Many prospective first-time buyers have had to abandon their hopes of getting on the housing ladder altogether, as we have heard.

[Taiwo Owatemi (Coventry North West) (Lab)]

My hon. Friend is making an important point. Many constituents have written to me with their concerns about being able to get on the housing ladder and get a mortgage, due to the fact that the Government damaged mortgage rates. Does he agree that the Government’s economic vandalism has had a significant impact on first-time buyers and their ability to get on the property ladder?

[Gerald Jones]

I absolutely agree with my hon. Friend; we saw many dreams shattered across the country. That crisis was made in Downing Street and paid for by families in her constituency, my constituency and many others across the country.

We now need calm and market certainty. Labour would put a windfall tax on energy companies’ excess profits, so that we do not have to borrow more than we need, and would abolish non-dom status, which would raise billions for the public purse. People who make Britain their home should pay their fair share. Crucially, we would also respect the independent institutions that are designed to provide stability for the British economy.

I am seeking answers for my constituents. One question from my constituents has come up a number of times this afternoon, so perhaps the Minister can explain why the former Prime Minister and Chancellor, who were in office for only a brief period of weeks and who crashed the economy in that time, should get to keep a severance payment worth thousands of pounds. Their actions led directly to hard-working families having to pay thousands more every year for their mortgages.

In the Minister’s opening speech, she said that this country was not unique in facing financial challenges. That may be the case, but this country is unique in having a governing party that put in place a Prime Minister and a Chancellor who were clearly unfit for office and who ended up crashing the economy, which will cause financial hardship for millions of families for many years to come. I support the motion and urge Members on both sides of the House to do the same.