William Bain
Main Page: William Bain (Labour - Glasgow North East)Department Debates - View all William Bain's debates with the HM Treasury
(10 years, 8 months ago)
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Stephen Crabb
I have just given the House the numbers of people who are benefiting from the steps that we are taking to increase the personal allowance. With that measure and the other steps that we are taking, such as strengthening the minimum wage, we are providing real practical tools to ensure that those on the lowest incomes start to see the benefit of the economic recovery.
Mr William Bain (Glasgow North East) (Lab)
The Minister omitted to mention that 279,000 people in this country go to work every day but do not even receive the minimum wage. I want to take him to the point he made about making work pay. What would he say to a low-income worker in Wales, England, Northern Ireland or Scotland who will see the work allowance of universal credit frozen this year, next year and the year after, taking £600 million away from low-paid workers?
Stephen Crabb
In Wales, when universal credit is rolled out fully, 200,000 households will see their entitlements increase. Alongside that are all of the incentives brought in to encourage work and more hours of work, so that people are not penalised for choosing to work rather than stay at home on benefit.
The hon. Member for Carmarthen East and Dinefwr started his contribution by referring to Hwyel Dda and the position of women in society in Wales in the 15th century, so I want to take a moment to look at the role of women in our society, which I expect will be raised more as we get further into the debate. There are more women at work than ever before. Nearly 14 million women are in employment—an increase of more than half a million since May 2010. Let us compare that with the record of the previous Government, who oversaw a rise in female unemployment of 30%. We recognise that for some women the work that is available might be part time or reduced hours, and we should not be tempted to fall into lazy thinking that women always prefer to work part time. A great many do not; a great many women want to work full time.
Mr Weir
The Scottish Government have invested much more in fuel poverty measures: more is now being spent than was spent in the last year in which Labour was in power, and much more is being spent there than is spent down here. As I have said, we have reduced fuel poverty at a time when it is rising in the UK as a whole, but we need to do more. We need to transfer fuel poverty measures from energy bills, which need to be reduced, and put money into a direct programme to increase the fuel efficiency of many houses in Scotland—particularly hard-to-heat houses of solid wall construction—which will help people.
Mr Weir
I am getting a bit tired of hearing that from the Labour party. I have explained our position on the energy price freeze time and again. The freeze will not work. There has already been a massive increase in bills prior to its coming in, and there is likely to be another after it comes in. We had a debate in the Chamber last week about inequalities in the system of billing by energy companies. Those inequalities will be frozen in place by an energy freeze, making things even worse for Scottish consumers. A freeze will also hit the investment needed to ensure that we have jobs for the future and can bring down energy prices through moving to renewables.
Jacob Rees-Mogg
Of course I will give way to a Member who represents a seat with “North East” in its title.
Mr Bain
What would be the hon. Gentleman’s answer to those well-known leftists in the International Monetary Fund who have published detailed research indicating that when the gap between rich and poor gets too large in an economy, it diminishes growth and therefore living standards for everyone?
Jacob Rees-Mogg
The IMF is not full of well-known leftists, but it does seem to be run, by and large, by the French, who have a very different understanding of economics, an absolutely rotten economy, and are the last people from whom I would take lessons. We will not in this Chamber go into the behaviour of the previous managing director—it would shock the viewers of the Parliament channel if they were to consider how Monsieur Strauss-Kahn had behaved. Anyway, I will not be told what to do by people who cannot behave.
I want to come back to the economic benefits of the spending and saving of the wealthy. That is what provides the employment and investment that leads to economic growth, and leads to the rising of living standards for the poorest in society. That is not done by the state. The state can indeed pass money around—it can reallocate money from pot A to pot B—but that does not increase the fundamental size of the pot. It merely reallocates what is already there, whereas the expenditure, saving and investment of individuals in the private sector grows the total amount that is available and therefore leads to cascading wealth.
This is where I must come on to the specific point in the motion calling on the Government
“to halt its further spending and welfare cuts”.
The spending cuts have been essential. The Government and the Chancellor of the Exchequer have been a model to other countries in how they have behaved. In a cross-partisan moment, I thank the Liberal Democrats for the role they have played. It must have been particularly difficult for them to take these tough decisions, having not been in government for so many generations and facing up to more serious responsibilities than parties in opposition sometimes have to deal with. I think they deserve a huge amount of credit for the support they have given to the Conservatives. Lots of economists, some of them quoted by the hon. Member for Na h-Eileanan an Iar, were saying that it was the wrong thing to do. Even the IMF had to eat its words a year after saying that austerity was not the right thing to do. The IMF was wrong and the Government were right. Why was that?
First, when the Government came into office there was a risk that there would be a funding crisis. There was a risk that the Government would simply not be able to raise the money in the gilt market that they needed to pay for the services that the British people wished to receive. That was the first problem. The second problem was that Government expenditure and very high debt crowd out private sector activity. If the Government had not reduced spending, businesses would not have been able to have access to the capital they needed to begin the recovery. The third problem was that by taking money out of the economy, there was a general depression of economic activity as individuals and their families had less to spend throughout the economic spectrum. It was being taken out of productive capacity and used unproductively merely on a money merry-go-round of the state.
This is, again, where I like the fact that the coalition has raised the basic threshold of income tax. I share the ambition of my hon. Friend the Member for Solihull (Lorely Burt) that this should be increased. It is absolutely barmy to tax people on low incomes and then give them their own money back in benefits. Not only do we want to get it to £10,000, we want to get it to the point where people on the minimum wage are neither paying national insurance nor income tax.
Mr William Bain (Glasgow North East) (Lab)
It is a pleasure to speak in this debate.
I agree with some of the analysis that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) presented in his opening speech. He was right to talk about the industrial policy successes that have been seen in Germany over the past few decades. Such successes are greatly needed in this country. I want to strike just one discordant note by reminding him of the record of the previous Government in reducing child poverty in the UK by 1.1 million and in cutting pensioner poverty by two thirds.
I turn to the speech of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). At one point, I thought that he might set a record in Parliament by exceeding the four hours and 45 minutes that Gladstone took to deliver his Budget in 1853. However, the hon. Gentleman curtailed his remarks to below an hour. He had some interesting things to say. Again, I will pick out the points of agreement. He was right to point to the work of the many esteemed economists who have said that the share of growth that goes to people in the lower half of the income scale has been insufficient over the past 30 years.
It was revealing that there was a philosophical difference between the hon. Member for Na h-Eileanan an Iar and the hon. Member for Angus (Mr Weir) in their approach to markets. The hon. Member for Na h-Eileanan an Iar pointed out that markets should serve the public interest, but the hon. Member for Angus did not seem to think that the reforms to the energy market that Labour Members want to see, which would give people a welcome freeze in energy prices to tackle the cost of living crisis that is hurting households across Scotland, were required. It was interesting to see that philosophical dissonance among the Scottish nationalist parliamentarians, who are usually a steely monolith.
The hon. Member for North East Somerset (Jacob Rees-Mogg), who is sadly no longer in his place, spoke about what has caused the reduction in the wage share. If he were in his place, I would direct him to the excellent report issued by the Resolution Foundation today, which demonstrates that 72% of the falling wage share over the past two decades has been down to growing wage inequality. The hon. Gentleman and his hon. Friends should reflect on that.
There was a fine speech by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who reflected many of the points that were made in the Social Mobility and Child Poverty Commission report that was published last year. Prolonged periods of income inequality lead to massive and dramatic health and educational inequalities. I see that in my constituency and across many parts of the United Kingdom.
As my right hon. Friend the Member for Doncaster North (Edward Miliband) set out in his Hugo Young lecture last night, the economic model that has persisted over the past 30 years is not fit to generate the sustainable growth shared properly across the whole of society that will be needed in the next 30 years. Oxfam showed only last week that the 85 richest people in the world have the same wealth as the 3.5 billion people who make up the poorest half of the world’s population. We need growth that serves the interests of people across the United Kingdom and the world. It is also important to put on record that there is absolutely no tension between tackling poverty and inequality in these islands, and our responsibilities to the poorest and most disadvantaged in other parts of the world.
The fundamental point of this debate is that when we look at the condition of our country, we see that people are working harder. The numbers of hours worked are higher than they were before the crisis hit in 2008, but people have a lot less to show for it. We know from the Institute for Fiscal Studies that, taking into account tax and benefit changes, on average people are £891 a year worse off under this Government. In 2015 this will be the first Government in decades who have to go back to the electorate, unable to answer the question about whether, during their time in office, they made people better off than they were before.
The reason our economy is not working for ordinary people and the recovery—welcome though it is—is not yet sustained and secured, and is different from those of the ‘80s and ‘90s, is that we have not seen the promised rise in business investment. Productivity has fallen in seven of the past nine quarters under this Government, and in 2012 this country saw the biggest fall in productivity in the EU, and the second biggest in the G20. We can begin to detect the reasons for that slump in productivity because people’s wages—even people in part-time employment—have steadily fallen in the past four years. That failure to have a wage, investment, and trade and export-led recovery poses severe questions about the durability of the economic model that the Government are following.
Under that flawed model, more than 13 million people are in poverty on these islands—more than half in working households—and two in every three children are growing up in poverty in a household where at least one adult is in work. Given that, it is no surprise that three out of four people are severely concerned about what rising inequality means for every person across our country.
Today, Shelter published data that demonstrate the impact that the lack of housing supply—a responsibility in my constituency of both this Government and the Scottish Government—is having on inequality. House prices are now 87 times what they were half a century ago, while wages have lagged way behind. Rising house prices in the past year have not been matched by the adequate supply of housing from either Government that is necessary to deal with the cost of living crisis.
The Joseph Rowntree Foundation pointed out last week that in Scotland poverty among workless households has reached 54%. In my constituency, and in many like it in west and central Scotland and parts of eastern Scotland, between 600 and 700 people who are under 25 or who have not worked for two years or longer would benefit from the right to work. They want to be in work but cannot find it, and it is incumbent on both Governments to ease those people’s personal cost of living crisis by implementing policies that will give them a proper jobs guarantee. That is critical in securing greater equality for the constituents I represent, who are on an average wage of £342 a week—5% less in real terms compared with 2012.
We have also seen the hollowing out of our jobs market, and a lack of jobs in the construction and manufacturing sectors. We have seen a welcome increase in jobs in business and the financial services, but nothing has replaced the jobs lost in construction in 2008 and 2009. It is incumbent on Government at every single tier to ensure that this hole in our labour market is repaired.
The banking sector also needs to be reformed, as the hon. Member for Carmarthen East and Dinefwr pointed out. We have not seen the degree of lending to small businesses in this country that we have seen in Germany, and that speaks to a structural flaw in our banking system. There are insufficient banks to provide the necessary competition. We do not have a proper and fully fledged investment bank to support firms that want to invest in infrastructure. The UK Green Investment Bank does not have the borrowing powers it needs to drive investment in the renewables sector.
Only a Labour Government, in the Scottish Parliament and in this Parliament, can get to grips with the root causes of this unbalanced recovery: the lack of a sectorally and regionally balanced industrial policy, weak business investment, skill shortages, poor exports, a worsening productivity crisis and the lowest number of new starts in housing since the 1920s. We need to earn and make our way to a real recovery in Britain with a long-term plan to raise living standards for all.
Dr Whiteford
Had the hon. Lady been here for the earlier part of the debate, she would have heard some back-and-forth chat about tax rates and such like. I will not rehearse those arguments. For Labour, there still seems to be a zero sum game in which rich and poor have to share out a very small cake. The fundamental point that my hon. Friend the Member for Carmarthen East and Dinefwr made earlier was that if we want to tackle inequality, we need to grow the economy. Once we have done that, we will be in a much better position to tackle inequality and poverty alike.
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.