I beg to move,
That this House notes that the Government has failed to meet its own economic goals over the last three years with prices rising faster than wages for 40 out of 41 months, average earnings for working people £1,600 a year lower in real terms than in May 2010, economic growth far slower than expected, the Government’s pledge to balance the books by 2015 set to be broken and the UK’s credit rating downgraded; further notes that growth of 1.5 per cent is needed in every quarter between now and May 2015 in order to catch up the lost ground from three damaging years of flat-lining growth; believes the Chancellor of the Exchequer’s Autumn Statement should take action to tackle the cost-of-living crisis which means that for most families there is still no economic recovery and to ensure recovery delivers rising living standards for all, is balanced and built to last; and calls on the Government to bring forward measures including an energy price freeze and long-term reforms to the energy market, an extension of free childcare for working parents of three and four year olds, action to boost long-term housing supply and a compulsory jobs guarantee for young people and the long-term unemployed.
On Thursday next week the Chancellor of the Exchequer will address this House in his autumn statement. My hon. Friends will know that we have come to expect a tin ear from this Chancellor, who in last year’s autumn statement cut tax credits and child benefit in the face of millions of people struggling to make ends meet while sticking firmly by his decision to deliver a millionaires’ tax cut for the richest 1%. This year, the time has surely come for the Chancellor to wake up to the chronic and unremitting cost of living crisis facing millions of households across the country. Never before have so many worked so hard for so little, working week after week only to find that their pay packet has shrunk in real terms and that they are unable to buy as much as the month before, with wages failing to keep up with prices and the pound in their pocket diminishing in value as everyday costs—rent, the weekly shop, child care, and gas and electricity bills—get higher and higher.
Does the hon. Gentleman welcome the fact that the Government have taken many people out of income tax, such that next April 4,041 people in Suffolk Coastal will no longer pay income tax, alongside the freeze in council tax that they have enjoyed for the past few years?
The hon. Lady makes her point. Unfortunately, a lot of Conservatives like to pretend that they are giving with one hand, yet they are taking away so much more with the other—not just the tax rises that they pretend never happened but the unremitting rise in the costs that people face daily.
Absolutely. In last week’s Opposition day debate, my hon. Friend the Member for Ashfield (Gloria De Piero) correctly highlighted not only the impact of the cost of living crisis on households up and down the country but how it is particularly hitting women.
On the subject of giving and taking, is the hon. Gentleman aware that in 20-odd years of Labour control of Staffordshire county council, Labour hiked council tax time after time, whereas this year the Conservative-controlled county council has cut the tax? Does that not show that Tories give money back and Labour takes it away?
The trouble for the hon. Gentleman is that an awful lot of Conservative councils have metaphorically stuck two fingers up to the Secretary of State for Communities and Local Government and, indeed, the Chancellor by deciding to increase council tax because the Government’s approach to local government finance has squeezed services. Even Conservative councils and authorities are finding themselves in a position where they are raising council tax.
My hon. Friend is correct. The fiscal consolidation is not only regressive but entirely the opposite of what the hon. Member for Spelthorne (Kwasi Kwarteng) shouted from a sedentary position, because it has not worked. I will be talking about him in a moment as I have given him a special place in my speech; several hon. Members will know why. The notion that fiscal consolidation has been successful is disproved by the fact that we now have an inordinate level of borrowing thanks to the lack of economic growth.
The hon. Gentleman should be shamefaced even to mention economic growth when for the vast majority of his esteemed time as a Member of Parliament growth has flatlined and he has failed to deliver. He needs to recognise that unless we get some serious and sustained economic growth, we will never deal with the deficit issues we have in this country.
Is my hon. Friend as surprised as I am by the amnesia among Government Members, bearing in mind that we were coming out of recession in 2010 but have since been flatlining and that they have failed to explain why prices have risen faster than wages for 40 out of 41 months?
This is the problem that Government Members, who seem to think it is funny that we have not had any growth for such a long time, do not understand. They think, “Oh, the cost of living—that’s nothing to do with the economy, it’s a completely separate issue.” Not only my hon. Friends but my right hon. Friend the Leader of the Opposition have relentlessly called on Ministers to act now to alleviate the pressures that are facing many families’ household budgets. They do not just need to make the case for a living wage and a 10p starting tax rate; they need to act now to stand up to the large corporations who know that customers have little choice but to cough up and pay higher prices for life’s essentials.
My hon. Friend is being extremely kind and generous with his time. Returning to Staffordshire, is he aware that a Money Advice Service report shows that in Stoke-on-Trent the number of people in debt has now reached the 35% mark? More than a third of people in Stoke-on-Trent are now suffering in debt because of this Government’s policies.
The report published by the Money Advice Service, which the Government trumpeted as an organisation that was set up some while ago, is very startling. Certainly, the number of people in my hon. Friend’s constituency who are suffering from indebtedness is exceptionally high. In my constituency, over 40% of people are struggling to make ends meet when faced with these crippling burdens and debts.
I do not know whether you voted against those measures, Mr Deputy Speaker, but we appreciate any efforts to help alleviate the cost of living. Does the hon. Gentleman believe that when people fill up their tank at the petrol station, they think, “How grateful we are to the Conservatives for the cost of petrol today”? When it comes to the cost of living—[Interruption.]
Order. The hon. Gentleman has been very generous so far, but he cannot give way to six people at once. Let us get our act together and try to get through the debate. There are 21 Members who want to speak, and I am sure that other Members will want to hear them.
Thank you, Mr Deputy Speaker. I am still on the first page of my speech. I remind Government Members that the profits of the energy companies, which in many ways are the drivers hurting many of our constituents, have risen astronomically in recent years. Since the general election, energy company profits are up from £2 billion to £3.7 billion. Members will have read in The Independent yesterday that profits were £30 per household at the time of the general election, that they rose to £53 per household in 2012 and that they are now expected to be £105 per household this year, and yet the Government continually cower in trepidation of the big six gas and electricity corporations. They are not just recoiling from any willingness to challenge their behaviour, but in their cowardice the Government defend the status quo as though nothing can be done.
Labour says that energy bills can and should be frozen while Parliament legislates to reset the energy market to one that provides true competition, reduces scope for excessive profiteering and offers reductions for customers when wholesale prices fall.
I will give way to Government Members if they can answer this point: what was the Government’s reaction to our call to take action on energy prices? They dithered and argued among themselves, frozen like rabbits in headlights, flailed around and attacked us for daring to stand up to excessive profiteering and then, finally, No. 10 Downing street said, “Wear a jumper.”
When the public faced difficulties, the previous Government took action to freeze prices and duty for petrol and diesel. The hon. Gentleman mentions a fictional 13p and seems to think that when people fill up their petrol tanks they say, “Thanks goodness these prices are so low; I must thank the hon. Gentleman.” He is living in cloud cuckoo land. The Government are not just out of touch; they are out of ideas and they are running out of time.
Order. Everybody else has sat down, but somehow the hon. Member for Vale of Glamorgan (Alun Cairns) feels he can hang around for another five minutes. I assure him that he cannot. The Minister will give way when he wishes to, not when the hon. Gentleman demands. [Interruption.] I do not need help from others, either.
I did not catch what was said, but we will see what Hansard records.
We know what will be in the autumn statement next week. The best we can expect is that the Chancellor will probably transfer about £100 or so off people’s energy bill and on to their tax bill instead. That is a ruse.
My hon. Friend is being incredibly generous in taking interventions. May I encourage him to continue taking them, because every time he does so he utterly destroys the weak arguments made by Government Members? Does my hon. Friend recognise, like the 5,000 people who signed the “freeze that bill” petition in Chesterfield, that the Conservative party has nothing to say on energy prices because it is utterly beholden to the very energy companies that are impoverishing my constituents?
My hon. Friend is correct. The Government are afraid of the energy companies. We are not yet sure why they are so afraid to stand up to the big six, but it is clear that the Chancellor’s solution of simply shifting £100 or so off an energy bill and on to the taxes of all our constituents will not convince people that they have the answers. The switch is so obvious it can be seen in the dark. It is a palliative that merely shunts the costs from a bill payer to a taxpayer. It fails to tackle the root cause of the problem, which, as my hon. Friend has said, is the excessive profiteering of the utility companies. Government Members are going to have to try a lot better than that next week.
I am grateful to the hon. Gentleman for giving way. He makes an extremely important point on the need to freeze bills, which is largely what has happened over recent years to council taxes in England. In Wales, however, where the Labour party runs the Welsh Government, there have been council tax increases of nearly 9% over recent years. That is a bill that can genuinely be frozen by politicians. Will the hon. Gentleman stand up to the Labour party in Wales to ensure that my constituents are not forced to pay 9% increases in council taxes?
Order. We can all make a judgment about that, but it might be helpful to remind Members that there are many speakers to come, so if we are going to have interventions they have to be short and not speeches. I will be honest with Members: anyone on my list of speakers who makes a long intervention will go down the list accordingly.
The hon. Member for Vale of Glamorgan (Alun Cairns) is short in his contributions on most occasions. I note that he wanted to change the subject from energy prices. The problem is that, time after time, the Conservative party has no answers for the public, who want politicians—their elected representatives—to take action on the cost of living, particularly on energy prices. As long as the hon. Gentleman and all his colleagues let the rip-off merchants and unfair profiteers continue with business as usual, the public will take exception to the deceitful claim that we are all in it together.
I want to make some progress.
For most people life is getting harder and for most people there is still no economic recovery, but that is not what they were promised. Before the election, the Prime Minister said:
“Our plans don’t involve an increase in VAT”
“I wouldn’t change child benefit”.
He also said that tax credits would be cut only “for families on £50,000” and that his party would
“not scrap the Education Maintenance Allowances”.
Those are the promises the Conservatives made before the general election. They famously airbrushed a poster of the Prime Minister and in their efforts to cover up their website pledges they are trying to airbrush the past.
I urge the hon. Gentleman to be cautious about questioning whether this subject is being taken seriously by Government Members, because the record should note that there are more Government Members than Opposition Members present to debate this important issue. On energy, will he now concede that Labour failed to ensure that the lights will be kept on in this country by failing to invest in nuclear energy? More than six nuclear power stations have closed down. That is why energy prices have gone up—because we are not making our own energy.
There are only another 18 months during which there will be more Conservative Members than Labour ones in this Chamber. I hope that the hon. Member for Bournemouth East (Mr Ellwood) is watching the clock, because they are running out of time.
The Prime Minister has broken not only that list of promises, but more records than most Prime Ministers over the decades, and not in a good way. How has he been a record breaker? Since entering No. 10 Downing street, he has delivered a record-breaking cost of living crisis, with wages failing to keep pace with prices for an unprecedented 40 out of his 41 months in office. That is the longest period of diminishing real wage values since records began.
A record-breaking number of people now rely on food banks just to get by—it has tripled in the past year alone—with more than 350,000 families requiring food parcels in the past six months.
On the cost of living crisis that is driving people to food banks, does my hon. Friend share my shock at the hon. Member for Vale of Glamorgan (Alun Cairns) saying that people use food banks because they are drug addicts and cannot manage their money, rather than because of the cost of living crisis?
I will happily give way to my hon. Friend in a moment, so that he can relay the quote that he has to the House. Perhaps a journalist wrote it down incorrectly, but I am sure that there is an explanation.
The point about food banks is that the crisis is so bad that the Red Cross has launched an emergency food appeal right here in the United Kingdom, something that has not happened since the second world war.
The Prime Minister’s broken records include real-term wage levels plunging to a new low and average weekly earnings at their lowest level since the Office for National Statistics started to record the figures in 2001. Not only has he hit record lows on incomes, but he has delivered record fuel bills and average household energy costs—
Order. Let me reassure both hon. Gentlemen that I am not going to decide who is right. You have each claimed that you are right and that the other is wrong. It is on the record, and people can make up their minds tomorrow. I want to continue with this debate.
My hon. Friend is absolutely right to list this Government’s catalogue of broken promises on the cost of living crisis, but the crisis is far worse than the spiralling energy bills and the rising cost of living. He was moving on to make the serious point that, at the same time as prices are increasing, people’s wages have plummeted since 2010 by about £1,600. Is that not the real cause of this cost of living crisis?
Will my hon. Friend allow me to make a little more progress on housing? The Prime Minister is also a record breaker because he is presiding over the lowest net supply of housing since records began. The Government’s own figures show that the number of dwellings added to our housing stock fell by 8% last year, which is the lowest level since such statistics were first collected. That is quite some achievement. It does not bode well for the affordability needed by many first-time buyers in this country. By the way, a record number of people are seeking help from the housing charity Shelter, which has reported an all-time high of almost 175,000 calls in the past year, up 10% on the previous year.
Government Members even like to portray the jobs market as wholly positive, but a record number of people are working part time because they cannot find full-time jobs. Nearly 1.5 million people say that they need to find full-time work, but cannot, which is the highest figure since records began.
That is precisely what baffles Government Members so much: they cannot understand the ingratitude of the British people, who somehow seem not to recognise the work that the Government are supposedly doing. The reality is that these are the pressure points—the points of stress and anxiety—faced by so many people up and down this country.
It has taken the hon. Gentleman 20-odd minutes to talk about one of the keys to solving the cost of living crisis, which is the creation of new jobs. I presume he welcomes the 11% fall in unemployment in his constituency during the past year, with a 15% fall in youth unemployment. Is that not absolutely key to our recovery and to solving the cost of living crisis that he has taken so long to talk about?
The hon. Gentleman, whose name is sometimes mixed up with that of others, should do better than to pick on my constituency of Nottingham East, where unemployment has been a persistent and long-running problem. Of course there have been fluctuations in the past few months, but I must tell him that the number of young people out of work for more than a year on jobseeker’s allowance has rocketed astronomically in this country: it is up 127% since the last general election. The number of long-term unemployed, who have been out of work for two years or more—we must turn our attention to that persistent problem—has gone up 374% since the last general election.
I just want the House to hear a few more record-breaking facts about the Prime Minister. Do my hon. Friends remember, from a Budget some time ago, the Chancellor of the Exchequer’s poetic declaration that he would create
“a Britain carried aloft by the march of the makers”?—[Official Report, 23 March 2011; Vol. 525, c. 966.]
We now have a record-breaking trade deficit with the European Union of £6 billion, which is a sign that the rebalancing of our economy has tilted in the wrong direction. The “Guinness Book of Records” is already familiar with the Prime Minister’s achievement in delivering the slowest ever, snail’s pace recovery out of an economic downturn since records began, taking Britain longer to claw our way back than after the great depression. That record-breaking performance is thanks to the drag anchor policies that have held back growth for the past three years.
The record-breaking let-down on growth has of course led to the Prime Minister’s biggest failure of all—more borrowing than any peacetime Government in history. The Prime Minister and the Chancellor have added £430 billion to our national debt in the three years since May 2010, which is more than the last Labour Government did in 13 years and more than any previous Government have done in peacetime. They are record-breaking borrowers, because no Government have ever neglected economic growth quite like this one.
Is it not a fact that the economy will have to grow by 1.5% every quarter to make up for the lack of growth since 2010?
Government Members see what they regard as green shoots for our economy. They hope that the public will just forget what has happened for the past three and a half years, but the public have long memories and will remember the harm and anxiety that the cost of living crisis is now causing them. Perhaps those record-breaking extremes from this Prime Minister and Government reflect the new extremism in the Conservative party and the drift away from the centre ground of British politics.
I will come to the Liberal Democrats in a moment. I am talking about the Conservative party.
The Conservatives and the Prime Minister like to pretend that they understand the concerns of hard-working people. When they finally realise the strength of public opinion, they will grudgingly come up with a half-baked effort on energy bills, just as they finally caved in with a long overdue cap on payday loans. The trouble is that they just don’t get it, because their hearts aren’t in it. As with the action on payday loans and banking reform in this week alone, why does the Chancellor always have to be pushed into doing the right thing?
The forces of moderation in the Conservative party—I am looking around desperately to see them; perhaps there are a couple of them here—complain that they are seen as the party of the rich and that voters do not trust their motives. Twenty-five of the dwindling number of those anxious Conservative Members of Parliament had a meeting with the Prime Minister to express their concerns, although that was before some of them announced that they were standing down from Parliament.
The moderates—there is one opposite me—are right to worry, because the Prime Minister’s pretence that he represents the middle of British politics has finally stretched beyond belief, as time and again his true instincts shine through. In the lord mayor’s banquet speech a fortnight ago, the mask slipped as the Prime Minister proclaimed the need for permanent austerity and the shrinking of public investment in perpetuity. The true ideological intentions of the Conservatives are there for all to see. Perhaps that is why the party’s Free Enterprise Group published its plans—
I have no idea what the hon. Gentleman is talking about. I am very pleased and somewhat flattered that he should be referring to the Free Enterprise Group on the Floor of the House. What was the size of the deficit when his party left government in 2010? What was the absolute size of the deficit and what was the proportion of the deficit—
The national debt was about £800 million. The national debt—[Hon. Members: “The deficit.”] I know what the hon. Gentleman said. I could hear what he said. I am giving him the figures. The national debt—[Interruption.] It seems that Government Members do not want to talk about the national debt. The national debt was about £800 million. It is now £1.2 trillion. As Brucie might say, “Higher, higher!”
It is a point of order, Mr Deputy Speaker. The hon. Member for Nottingham East (Chris Leslie) was asked a question about the deficit. Unfortunately, his answer was about debt. Rather like Rev. Paul Flowers, he does not know basic economics. [Interruption.]
Order. I will let that go. It is up to the shadow Minister how he wishes to answer the question. It is not for you, Mr Newmark, to waste the House’s time on an irrelevant—[Interruption.] Order. On an irrelevant point of order. If you do not mind, we will have no more.
I have not even said a word in response to the point of order. I will do so if the hon. Gentleman will allow me. It just goes to show that the Conservatives will do everything they can to distract attention from the cost of living crisis that is facing this country. As Corporal Jones might have put it, “They don’t like it up ’em!”
The hon. Member for Spelthorne (Kwasi Kwarteng)—
Order. You also want to speak, Mr Davies. You are constantly on your feet. I want to hear Mr Leslie. I also want to hear what the Government have to say. I will not hear either of them with the amount of time we have taken so far.
That is a good point, Mr Deputy Speaker, so I will be brief in talking about the hon. Member for Spelthorne and the Free Enterprise Group. The Free Enterprise Group published plans to slap a 15% increase on essentials such as food and children’s clothes through VAT and to triple the tax on heating bills. A number of hon. Members who are in the Chamber today are members of the Free Enterprise Group. They might be shuffling away from the hon. Member for Spelthorne now.
There is no answer to my question from the hon. Gentleman. I have given him the figures for the national debt.
The extremism and rightwards shift in the Conservative party are visible for all to see. As we can tell from the tactics that they are using, the Prime Minister, the Chancellor and all the Conservative Back Benchers are scraping the barnacles off the 1992 election strategy. They have a barely disguised plan to fight the next election in the gutter. Their tactics are visible for all to see.
The Prime Minister once spoke fondly of environmentalism while hugging the huskies. Perhaps I should ask this on a point of order, Mr Deputy Speaker, but is it using unparliamentary language to quote No. 10 when it allegedly said that it wanted to cut out all of the “green crap”? I know that that is appalling language, but it is a quotation from No. 10 Downing street. The Government are certainly cutting some things out: 578 Sure Start children’s centres have been cut, 76 NHS walk-in centres have been cut, 48 accident and emergency departments have been shut, 200 ambulance stations have been axed and 6,000 nurses have gone from the NHS, but 707 food banks have opened. Perhaps Government Members regard that as a success.
Does my hon. Friend realise that the reason why some of us worry about the proposals of the Free Enterprise Group is that they are all of a piece with what the Tories have done already, including a drop of £35 a week in real wages in my constituency, the imposition of the bedroom tax on the poorest people and, contrary to what they say, increases in council tax for the poorest people? The reason Tory Back Benchers worry about being seen as the party of the rich is that they are the party of the rich.
I want to draw my remarks to a close, so I will not take any more interventions.
In a moment, my hon. Friends will be subjected to the Minister claiming that the Government alone are responsible for the long overdue return of economic growth. What he cannot grasp is that growth is appearing despite his policies, not because of them. As the Nobel prize-winning economist, Paul Krugman, said of the Government’s attitude just the other day,
“It’s like hitting yourself over the head with a baseball bat for years. Then, you stop hitting yourself with the baseball bat and say, ‘See? I feel much better now—hitting myself with a baseball bat was clearly the right thing to do’.”
That sums up their view perfectly. They do not understand that only the return of strong economic growth will tackle the deficit in any meaningful way. Three years on, they still have not cottoned on.
The reason we have a cost of living crisis is that the historic connection between economic growth and household wealth has been severed. Even though it looks like we are finally seeing some growth in some parts of the economy, that growth is not being shared fairly. Indeed, GDP per capita remains flat. I pay tribute to the companies and households that have managed to keep it together despite the Chancellor’s inaction. What we need now is help for those who are trying to do their best—the people who never complain, who never say that they should be at the front of the queue, who go to work and who manage as best they can. Those people need real help with their energy bills and child care costs. They need us to tackle low pay and to freeze business rates for small firms.
The challenge for the autumn statement is to take action now on the cost of living, not to use sleight of hand to pile more burdens on the taxpayer. We need long-term reforms that ensure that there is a balanced recovery that is built to last, not short-term, knee-jerk flip-flopping. We need fairness for the many, not tax cuts for the few. The Government are out of touch with the mood of the public—the wealthy elite are looking after the wealthy elite and are all in it together. They are timid in the face of excessive profiteering from big energy companies, while the rest get broken promises on the economy and the deficit from a Government who are lurching to the right and reverting to type. The British people cannot afford this Government any longer. Britain deserves better.
When the Opposition first tabled this motion, the title referred to the Government’s “economic failure”. The word “failure” has been mysteriously removed and replaced with “policy”. Perhaps the Opposition originally asked the Rev. Paul Flowers, who was their economic adviser, to help draft the motion. Now that they have been forced to sack him, they have had to amend the deluded original title of the motion. Even before the debate started, the Opposition have had to back down.
The Government recognise that many people up and down the country are facing living standards challenges. Each and every week I speak to many hard-working people in my constituency who are still suffering from Labour’s recession, and whose businesses or employers were hit hard in 2008 and 2009 and are still feeling the impact. Of course we all want the situation to improve.
On failure, does the hon. Gentleman accept that the movement of debt to GDP from 55% when he came into office, to 75% now and 85% by 2015, is a sign of failure both in increasing debt to a higher level than we borrowed throughout our term, and through not getting any growth?
I accept that the sharpest move in debt to GDP that this country has seen in recent times was under 13 years of Labour rule when national debt more than doubled. We will take no lectures from the Labour party about growing public debt. Allow me to remind the House, especially Labour Members, why people are facing such challenges.
I was concerned that the shadow Chief Secretary to the Treasury did not seem to understand the difference between deficit and debt, which I thought would be a prerequisite for talking about economics. Will my hon. Friend explain to the House what the circumstances were when this Government came to office?
The shadow Chief Secretary to the Treasury did not want to take an intervention from a Liberal Democrat, perhaps because it used to be a Labour Member who sat here and now it is a Liberal Democrat. Will my hon. Friend comment on the fact that in 2009 Burnley was classed as a basket case under the Labour Government with a Labour MP, but it has now won an award for the most enterprising town in the UK? Unemployment has collapsed under this Government.
The Minister asks why people are suffering a cost of living crisis, and he referred previously to Labour’s recession. Labour’s recession was over by the time he became a Member of Parliament, and it was a recession caused by the bankers. Will he remind the House what he was doing when Labour’s recession finished?
What I can do is remind the hon. Gentleman what was going on in his constituency during Labour’s recession. During Labour’s last term, unemployment in his constituency increased by 56%. So far, under this Government it has declined by 26%, which I think he would welcome.
I will give way to my hon. Friends in a moment. The Opposition spokesman talked about breaking records, so let us take a quick look at Labour’s record breakers—they are enough to make Roy Castle jump up and down with excitement. Labour gave this country the deepest recession in living memory, and the biggest budget deficit in our post-war history, and the largest in the G20. To answer the question from my hon. Friend the Member for Bedford (Richard Fuller), Labour was borrowing almost £160 billion—£300,000 a minute, or £5,000 every second. Labour gave this country the largest bail-out the world has ever seen. [Interruption.]
The Minister, who worked for Deutsche Bank before the general election, might wish to explain and answer a specific question on borrowing, the deficit and national debt. Can he tell the House how much the Chancellor has borrowed and added to the national debt since the last general election? What is that amount of money in cash terms?
We know that if we had continued the plans recommended by the Labour party, the country would be borrowing a lot more. According to the independent Institute for Fiscal Studies, Labour plans to borrow at least £200 billion more, which would push up borrowing costs for many hard-working families up and down the country.
Does the Minister agree with the North East chamber of commerce, which said that the most important factor in raising living standards is to increase skills levels with an increase in skills funding and a doubling of apprenticeships? Is that not the true foundation of a long-term recovery?
Will the Minister accept that a number of the jobs brought into the economy are part time? Would it be better for the Government to calculate the number of jobs in terms of hours worked by individuals, and would they find that the number of jobs has actually dropped in real terms if those hours are taken into account?
The hon. Gentleman tempts me and I will come to jobs shortly as there is plenty to tell. He should recognise that employment is at its highest level since records began, and that most jobs created are full time. Also, there is nothing wrong with part-time work.
Because the Government have taken the difficult decisions necessary and stuck to a long-term plan, the claimant count has fallen by more than a third in my constituency, where 730 more people are in work than when the other lot were in power.
The hon. Lady is still fairly new to the House, but she will know that the Government changed hands in 2010. There is no point making comparisons with 2008. She will be interested to hear that unemployment in her constituency increased by a shocking 119% during Labour’s last term. I will say that again, because Labour Members have a hard time believing it: unemployment increased in her constituency by 119%. Under this Government, unemployment in her constituency is down by 24%.
The Government have increased the number of private sector jobs by 1.4 million, and 88% of those jobs in the past six months were full time. Does that not illustrate that we are rebalancing the economy towards manufacturing and engineering, which we definitely need to do? That is part of an economic plan to recover this country from the disastrous situation in which we found ourselves in 2010.
I agree completely with my hon. Friend—I shall make further remarks on that in a moment.
In short, Labour left our country a lot poorer, and it still has not apologised for the damage it did, despite many opportunities, including this afternoon. The Labour Government destroyed the aspirations of millions of hard-working people up and down the country. Instead, Labour Members sneer over the Dispatch Box and oppose every single measure the Government take to clean up the mess they left behind.
I say in all sincerity that it would have been nice to see the Minister’s boss in the Chamber—where is he?—but will he answer this question? A moment ago—[Interruption.] Conservative Members should listen for a moment. A moment ago at the Dispatch Box—Hansard will show this—the Minister criticised the Labour Government for bailing out the banks. Is he saying we should not have done that?
The hon. Gentleman needs to listen more closely to my remarks. He will be interested to know that unemployment increased by 104% in his constituency during Labour’s last term. The bail-outs and the other action the previous Government took did not help unemployment in his constituency but, thankfully, under this Government, unemployment there is down by 24%.
It is good to remind ourselves that office and government are a privilege given to us by the people of the United Kingdom. We are the tenants; the British public are our landlord. The Labour party was the tenant who trashed the house. It is left to this Government to clean up its mess.
We need to treat the public with the respect they deserve. We know that times are tough. Labour left our country a lot poorer, and families are feeling it. That is why we had to put in place a long-term, sustainable economic plan to fix things.
My hon. Friend makes a good point. He reminds the House that the previous Government began running a deficit from 2001, way before any financial crisis. They ran a structural deficit from 2006 onwards. Hon. Members will remember that the shadow Chancellor, the right hon. Member for Morley and Outwood (Ed Balls), tried to deny that until he was corrected by the International Monetary Fund.
Without a credible economic plan, we cannot have a plan for helping families with living standards challenges. Anyone, including the Labour party, can come up with a list of interventions, but they are completely meaningless and unsustainable if there is no long-term economic plan to back them up. Labour’s only plan is for more spending, more borrowing and more debt, which is exactly what got us into this mess in the first place.
I have a deep concern that many hard-working people lost earnings when interest was suspended on Co-op bonds in March. I am concerned that, 11 days later, it lent substantial amounts of money to the Labour party. Will the inquiry cover the bank’s relationship with the Co-operative party and whether the bank was unduly influenced by the national executive committee?
My hon. Friend raises a good point, but he will know that I am not in the best position to answer his question in detail. Perhaps the shadow Chief Secretary will rise to his feet to do so. I understand that he is a Labour and Co-operative Member and receives money from the Co-op. I am happy to give way if he would like to answer the question.
I am proud to be a Co-operative Member and a supporter of mutuality—I thought Conservative Members supported that, too. Will the Minister tell us the number of occasions on which his Treasury had meetings to discuss the Co-op Verde deal and the takeover of those Lloyds branches? How many times did Treasury Ministers have those meetings after the general election? Can he give us that fact now?
I am very grateful to the Minister for giving way—he has been gracious throughout the debate. It is appropriate that we follow Madam Deputy Speaker’s advice and listen to him carefully. I would reinforce his point from my experience in Gloucester. Under the previous Government, 6,000 people in business lost their jobs, but since the last election, 3,000 new business jobs have been created and four times the number of apprentices have been employed, and unemployment and youth unemployment are lower. Does the Minister agree that this debate should not be about the cost of living, but be about the cost of having a Labour Government to people with jobs in my constituency?
My hon. Friend is right. Hon. Members know—I am highlighting this as much as I can in the debate—just how many lives and aspirations the Labour Government destroyed in their time in office.
The House has just heard the shadow Treasury Minister. His speech was more interesting for what was not in it than for what was. There is no talk today of plan B—[Interruption.] What the shadow Treasury did not mention was predictable. Let me say what it was, because four or five months ago, we heard what he did not say today in virtually every single speech from Labour Front Benchers. We heard no talk today of plan B. I did not hear anyone say, “Too far, too fast.” There was no mention of a double-dip, let alone of a triple-dip, because Labour Members know that there has been only one dip in recent times: Labour’s dip. They have comprehensively lost the economic argument. They have no plan and no answers for the problems they helped to create.
Let us talk about the growth in Middlesbrough South and East Cleveland. Is the hon. Gentleman referring to the record 92% increase in unemployment in his constituency in Labour’s last term? I notice that he did not refer to the 18% decline under this Government.
My hon. Friend refers to what the Labour Front-Bench team will not mention. In the past two years, export growth in the west midlands has gone up by 30%—the best performance of any region. Is that not further evidence that the Government are on track with a sustainable, long-term plan to rebalance the British economy?
My hon. Friend is right. As a fellow west midlands MP, I have seen at first hand record growth, particularly in manufacturing and in the car industry.
Enough on the mistakes of the past. This Government are working hard to secure the country’s future. The only way we can deliver a sustained improvement in living standards is to continue to tackle the economy’s problems head-on and to deliver a recovery that works for all.
My hon. Friend talks about the future. How does he respond to the approval, given by the Labour party yesterday, of a 5% increase in council tax in my constituency—a decision made with no consideration of the cost of living for my constituents?
My hon. Friend makes an excellent point. What goes on in Wales is an excellent example of what a Labour Government would do, if they had the chance, in the United Kingdom. As well as increases in council tax, there has been a 10% cut in the NHS budget in Wales. That tells us exactly what Labour’s priorities are.
On exports, in 2011 the deficit for trading goods was £100 billion. In 2012, that rose to £110 billion in the red, and has been running at about £20 billion in the red every quarter this year. I am not sure if I am seeing the green shoots of export recovery that the Minister is seeing.
I will speak on exports in more detail shortly. I am not sure that Scottish independence would help the record on exports.
Under this Government, Labour’s record budget deficit is down by a third, confidence and investment is on the rise, and the economy has turned a corner. The UK is growing faster than any other developed economy, including the US, Germany and Japan. Just last week, while downgrading global growth the OECD revised up UK growth by more than any other developed country. That growth is spread broadly across all sectors of the economy. Recent survey data show that construction is at its strongest level in six years and that activity in the services sector has not been this strong since 1997. New orders in manufacturing have risen to their highest level since 1995, according to the CBI.
The Financial Secretary is taking pains to show that there is a long-term economic plan. What sort of plan is it when the number of young people on jobseeker’s allowance has gone up by 174% in a year? He and his colleagues have failed to provide 19 to 24-year-olds in traineeships with any funding to continue, JSA or otherwise.
I can tell the hon. Gentleman how our plan is panning out. Under the previous Government, he saw a 91% increase in unemployment in his constituency. Unemployment in his constituency is down by 7% under this Government. Youth unemployment is down by 24%. Rather than making cheap political points, he would do well to welcome the economic improvement in his constituency.
The US did not have a Government as incompetent as the one we had in Britain, who boasted the sharpest decline in GDP in this country in living memory and in our post-war history. When I said earlier that Labour left this country poorer, I am sure the hon. Lady realised—if she did not, I am happy to repeat it—that we saw the sharpest decline in GDP of any major developed country during Labour’s term in office.
Our economic plan is pulling in growing inward investment, with inflows into the UK in the first half of this year greater than any other country in the world except China. As I mentioned earlier, we are increasing exports to growing economies. From 2009 to 2012, exports to Brazil were up by 49%, to India by 59%, to China by 96%, and to Russia by 133%. We have become a net exporter of cars for the first time since 1976.
The hon. Gentleman will know that SME lending was hit from 2010 to 2011 because of Labour’s banking crisis. We had the deepest banking crisis and the largest bank bail-out the world has ever seen. What did he think the impact was going to be? He should welcome the Government’s action to help SME lending, including the funding for lending scheme, which has helped thousands of companies.
The Opposition claim that economic growth is not felt by people across the UK and that living standards are falling. The truth is that the previous Labour Government left the country a lot poorer and, as a result, many hard-working families are finding it difficult. Our long-term plan for the economy, the plan that has put our country on a path to prosperity, will help those families. What better way to increase standards of living than by making sure that as many Britons as possible can take home a steady wage at the end of each month? With more than 1.4 million private sector jobs created in the past three years—more private sector jobs created in three years of this Government than in 13 years of the previous Labour Government—we now have more people employed than at any time in our history.
We are also taking measures that help to keep more cash in the pockets of hard-working people up and down the country, while economic confidence has helped to keep mortgage bills low. If mortgage rates rose by just 1%, the average mortgage bill would increase by about £1,000 a year. We are also letting people keep more of their hard-earned income. Our increases in the personal allowance are worth £700 each year to every average taxpayer—a tax cut for more than 25 million people—while 2.7 million people on low incomes have been taken out of income tax altogether.
My hon. Friend is right to make that point. I think every MP in this illustrious House could share similar numbers. Indeed, in the shadow Chief Secretary to the Treasury’s constituency, 4,000 people have been taken out of income tax altogether and more than 38,000 have had an income tax cut.
Our changes to the personal allowance mean that someone working full time on the minimum wage has seen their income tax bill more than halved under this Government. It also means that for any income on which people would pay Labour’s 10p tax rate, which it previously abolished, they pay a 0% tax rate under this Government.
Is the Minister still a member of the Free Enterprise Group of Conservative MPs and does he agree with that group and the hon. Member for Spelthorne (Kwasi Kwarteng) that VAT could be increased to 15% on food and children’s clothes, which are currently zero-rated? How would that help with the cost of living crisis for my constituents?
I am grateful to the Opposition for pointing out earlier that before the election the Minister worked for a bank that the British Government did not need to bail out, whereas the shadow Chief Secretary to the Treasury ran the campaign of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). Nevertheless, does my hon. Friend agree that the Prime Minister made it absolutely clear at the Dispatch Box only last Wednesday that he did not agree with putting VAT on children’s clothes and food?
This proposal has been ripped out of context and completely distorted by the Daily Mirror and some of Labour’s other friends in the media. Let me be clear: this proposal was designed as a tax simplification measure that would cut the VAT rate and allow the savings to be targeted at people who really needed the money. It was a complex proposal whose details, I am afraid, got lost in the Labour spin machine.
My hon. Friend has made his point well, and I will not dwell on it further, in the interests of time.
We have also frozen fuel duty. Petrol is now 13p per litre lower than under Labour’s plans. Each time the average motorist fills up their car, they are saving £7 because we have refused to implement Labour’s fuel duty escalator. We are also helping local authorities to freeze council tax, and our tax-free child care plan will mean savings for parents of up to £1,200 per child.
For Wales? [Laughter.]
My hon. Friend makes an extremely important point about council tax, highlighting the freezing of council tax here in England. Sadly, in Labour-run Wales, council tax has risen by nearly 9% over recent years, in the same time as it has been nearly frozen here. Will he join me in calling on the Labour Front-Bench team to pressure their colleagues in Cardiff Bay to freeze council tax for my constituents in the same way that he is doing for constituents in England?
My hon. Friend has made his point very well, and the shadow Front-Bench team will have heard it. If they really cared about citizens in Wales, they would pressure their Government in Wales to take action on council tax.
We are also making it easier for hard-working people to put some of their savings towards buying their own home. Our Help to Buy mortgage guarantee and equity loans are making home ownership a real possibility for aspiring people. Just one month since its launch, more than 2,000 people have put in offers for homes under the mortgage guarantee scheme. More than three quarters of the applicants were first-time buyers, many of them in their early 30s. Since the launch of the equity loan scheme in April, 92% of the 5,000 new homes built have been bought by first-time buyers. This is how we are helping to raise living standards: we create a business environment in which more people can go to work every day; we create a tax environment in which people can keep more of the money they earn every month; and we work with the banks so that every year more people can secure the dream of their own home.
Our plans are improving living standards, but what is the Labour party’s solution? I am sure it will tell the public that the only way is up—and they would be right: under Labour, taxes would go up; mortgage rates would go up; inflation would go up; and unemployment would go up. That is what economic failure looks like.
As I said at the outset, the shadow Minister needs to give the British public more credit. They are a lot smarter than he realises. They recognise that it was the Labour party that got the country into this mess, and that it will take time and difficult decisions to clear up that mess. We, the coalition Govt, have put our faith in the British public, and because of their hard work over the past three and a half years, jobs are being created at a record rate, the economy is growing faster than in any other developed country, and as Governor Carney said just last week, the recovery has finally taken hold. There was never going to be a magical short-term fix, but our sensible, sustainable economic strategy will raise living standards, so let us not lose ground on the progress we have made; let us not allow Labour to take Britain back towards economic ruin. I beg the House to oppose this motion.
Order. Before I call the next speaker, the House will be aware of the high demand for time to speak and the lack of supply of it before we reach the end of the debate. I therefore impose with immediate effect a limit of eight minutes on speeches from Back Benchers.
No subject impacts more on my constituents than the cost of living. Wages are dropping—in the north-west by 7.8%, a loss in spending power of nearly £1,700 a year—while more people are being given part-time hours or zero-hours contracts. That is not their choice, yet food and fuel prices continue to rise.
People in my Makerfield constituency are “doing the right thing”: they are working or looking for work. For those looking for work, a quick glance at the universal jobmatch site will superficially show that many jobs are available after searching for retail jobs in Wigan. Let us look a bit deeper at these “jobs”, however. In the three pages I checked at random, 67 of the 75 jobs available were for self-employed catalogue distributors—jobs that the site stated it had been assured “may” enable people to earn a wage equivalent to the national minimum wage. Really? How many people have tried these jobs, paid up front for their catalogues—about £150—and found that they consistently earned the national minimum wage after paying all their contributions? It certainly does not include the people who have been to my surgeries after trying these non-jobs and finding that they could make very little—not even enough to heat and eat.
Domestic energy bills have risen by an eye-watering average of 37% over the last three years. In 2012-13, citizens advice bureaux received 92,000 inquiries about fuel debt alone, while Which? estimates that flaws in the market have left consumers paying £3.9 billion over the odds since 2010. We intend to stand up for consumers in this failing market and break the stranglehold of the big six. What have this Government proposed? Nothing. It is no wonder that citizens advice bureaux saw a 78% increase in the number of people having to use food banks last year. Many of those people were in work, yet were unable to pay their bills and could not afford to eat.
I am grateful to the hon. Gentleman for mentioning the unemployment figures in my constituency. I recently received an e-mail from the Audit Office telling me that the figures were not reliable because the constituency was a pilot area and people were coming off the register.
Admitting that you cannot feed your family is not easy or comfortable. For many people, going to a food bank is a last resort and a source of shame, although it is not their fault but is due to an accumulation of Tory-led policies that are punishing, not rewarding, hard-working people.
I would not be doing justice to my constituency postbag, or to the people who attend my surgeries, if I did not mention the economically unsound bedroom tax. As I have often said before, in Wigan we have a shortage of one and two-bedroom properties and a surplus of three-bedroom properties. People are being forced either to move to the more expensive private rented sector, uprooting their families and incurring further expense, or to pay the difference. Given that 4,200 people in my constituency are affected by reductions in housing benefit ranging from £517 to £1,273, it is no surprise that in October, 2,500 people contacted Wigan and Leigh Housing about rent arrears and debt. That represents an increase of 50% in the last three months.
The bedroom tax means yet another cut in the available income of many of my constituents, forcing them to make stark choices about how they spend their money. Far from being a case of what luxury item they must do without, it is a case of “Can we afford to have the heating on, or should we shiver and buy food—and what about that new pair of school shoes? Heaven forbid that the washing machine or the fridge should break down!” There is certainly no money to save for a rainy day. In fact, many of my constituents are already swamped and drowning in debt.
No wonder the payday lenders, the home credit providers, the log book loan companies and the rest are proliferating. According to a recent report, 48% of people who go to payday lenders are female, and the majority of females have borrowed for everyday necessities. They have borrowed to buy food for the family, or to pay the heating bills. Capping the cost of credit constitutes a welcome recognition that these companies are making profit from despair, but there is much more to be done. The root cause of rising prices and low incomes needs to be addressed if people are to be saved from being dragged into a spiral of debt.
The people I represent are hard-working people who want the best for their families and who are doing the right thing, but they are being let down by this Tory-led Government in so many ways. Every time they go to the supermarket, every time they receive a fuel bill, and every time they turn on the television or walk down the high street and see more advertisements for payday lenders, they are reminded of the Government’s failure to address the issue that is most important to them: the cost of living.
Thank you for calling me, Madam Deputy Speaker. This is the first time I have spoken in front of you, and it is an honour to do so.
I am delighted that the Labour party has initiated this debate. I say to Labour Members “Bring it on!” I am glad that they have at last woken up to the cost of living crisis. While many of us were going on about it for a number of years, they were talking about predistributions or other “chattering classes” subjects that no one understood. While we were cutting and freezing fuel duty, cutting taxes and raising thresholds for lower earners, and increasing taxes for the rich by, for instance, increasing capital gains tax, they were voting against all those measures. They created a handout society, whereas we want to create a “hand back” society, and to give people back their own money through lower taxes. They created a society of dependency: a society of high tax, high debt and high borrowing.
My hon. Friend is making a very passionate speech. I know that he feels strongly about these matters, and has campaigned strongly on them in the past. Does he agree that, although our hon. Friend the Financial Secretary made an outstanding speech, what was omitted from it was a reference to the importance of the employment allowances that will allow a first-time employer to take on a new employee, thus helping even more people into the workplace?
My hon. Friend is absolutely right. That is another example of why we are the party of small business. Labour showed during its years in office that it was, as Peter Mandelson said, the party of the filthy rich and of big business, sucking up to bankers in the City—Fred the Shred, Flowers and all those kinds of people.
The main elements of the cost of living are jobs, pay and energy. Let us look at the Labour Government’s record. They scrapped the 10p rate of tax under Gordon Brown in 2008. They talk about wages, but median wages stopped rising in 2003, in times of plenty, and hourly pay rose at only a quarter of the rate of economic growth. They increased fuel duty 12 times while in office, and the cost of bus travel increased by 59%. Council tax increased by 67%, and energy bills doubled. That is the record of the Labour party, which says that it wants to help with the cost of living. Sadly, it has nothing to show for it at all.
Energy and fuel prices are among the key indicators of the cost of living. As we have heard from the Minister, this Government have cut fuel duty and said that they will freeze it for the lifetime of this Parliament—an historic move. Of course, I would like the Government to do more and to cut fuel duty further, and I hope that when economic conditions allow, that will be the No. 1 tax cut. We need to continue to help hard-pressed motorists.
On energy, let us remember that there were about 17 energy companies under Labour; now, there are only six. Labour decreased competition, but we are doing things to increase it. I believe that the Government should do more on VAT, particularly through renegotiating our VAT rates with the European Union. They should also consider imposing windfall taxes—de facto fines—on some of the energy companies and passing the money back to the consumer. They should also cut Labour’s green taxes, which make up 17% of the average energy bill.
My hon. Friend is making a powerful speech. I understand that Labour intends to make energy its focus in the forthcoming EU elections. I intervened on the hon. Member for Nottingham East (Chris Leslie), but he declined to answer my question. Does my hon. Friend agree that we should look not only at the six energy companies but at how we make energy in this country? We now need to import it, and we are over-reliant on expensive energy imports because the previous Government failed to replace the nuclear fleet in time. They did nothing during their 13 years, and that energy offering went down from 25% to 15%. That is why we now have to pay more for expensive oil and gas from abroad.
As always, my hon. Friend hits the nail on the head. It is funny how we hear in the media that energy prices fell under the right hon. Member for Doncaster North (Edward Miliband), because they actually doubled during Labour’s time in office.
There were 2.5 million people, including 1 million young people, unemployed when Labour left office. That did not happen over 18 months solely as a result of the recession; it was happening even in times of plenty. Under this Government, youth unemployment in my constituency has gone down by 7.6%, long-term unemployment by 4.3% and overall unemployment by 4.4% over the past 12 months. This Government are helping with the cost of living and helping people to get back into work. I met a chap who was helping me with my car at Halfords, and he told me that he was going to vote Conservative for the first time in his life. When I asked him why, he said it was because the Conservatives helped people who work. That is what this party is all about. We are the party of hard-working people. We are the party that helps people with the cost of living.
Pay and taxes are another indicator of the cost of living. There are 3,749 people in my constituency who have been taken out of tax altogether. They are on low earnings. A total of 36,861 lower earners have had a tax cut. I want the Government to do more, however. I want them to raise the threshold at which people pay national insurance, because that would make a huge difference. Let us take people on low earnings out of all tax altogether, not just out of income tax. Nevertheless, the Government have made huge progress, which has been opposed massively and has been voted against by the Labour party. We have to remind our constituents that Labour voted against people on lower earnings getting lower taxes. As I said, median wages stopped rising in 2003, so the previous Government’s record on wages is nothing to shout about. We need to improve the minimum wage; we should have a regional minimum wage top-up, on top of the national minimum wage. We need to reform national insurance as I have described, but at least this Government have started doing the things that are helping to address the cost of living most; we have taken action on energy, jobs and national insurance.
A thing that gets my goat is that the Labour party claims to have the monopoly on compassion. As my constituents found out, the reality is that Labour had a monopoly on failure—on the cost of living, on taxes and on the economy. Through our history, the Conservative party has always been on the side of hard-working people; we have always helped lower earners. Despite the very difficult economic conditions that the Labour party left us, this Government have done everything possible. The Conservatives do not have a monopoly on compassion, but we are the party of aspiration. We give people ladders of opportunity; we give them skills and apprenticeships, the number of which has increased by more than 80% in my constituency. We are giving people jobs, and we are creating a new nation of property owners through the right to buy and the Help to Buy scheme. We recognise that the best way to help the poor and lower earners is not through the dependency culture and welfare society so beloved of Labour Members, but by cutting taxes, cutting fuel duty, freezing council tax, restoring the link between pensions and earnings, and helping hard-working people.
I wish to say a little about the motion before I start my speech proper. The motion is in two parts, the first of which describes the failure of the Conservative Government—I intend to say most about that—and the second calls for action to mitigate the cost of living crisis. Although the Scottish National party does not agree with the Labour party on the precise mechanism of its fuel price freeze—we would prefer to see a cut—the principle of taking action on fuel is important in tackling the cost of living, so we will certainly be able to support this tonight.
I wish to start by discussing tax, because that clearly has as much of a bearing on people’s ability to cope with rising prices as do earnings or the prices themselves. The Government are right to try to take as many people on low and modest wages out of tax as possible. The saving of £595 a year for basic rate taxpayers through the change in the basic allowance from £6,500 in 2010 to £9,440 this year makes sense. However, a saving of £595 for basic rate taxpayers makes rather less sense when the same Government are embarked on a £40,000 tax give-away for millionaires.
The people I really want to talk about are those in the middle, who are paying some of the heaviest price for the mistakes this Government have made. These people have seen the tax relief before they pay the 40% band fall from £37,500 in 2010 to £34,700 last year and to £32,000 this year. So for every £595 saved as a result of changes to the basic rate, they have had to shell out an extra £2,000 at 40p in the pound. That does not make people better off; it exacerbates the crisis faced by people, particularly hard-working people on middle incomes. I am not talking about the very poorest and I am certainly not talking about the very wealthy; I am discussing those on genuinely middle incomes. It means that this Government have taken the number of people paying 40% tax to a whopping 4.3 million; whereas barely 5% of taxpayers did so 25 years ago, the figure has rocketed and 16% of all taxpayers now pay a 40% tax rate—even a quarter of a century ago this was a band only for the rich. They are not paying that because they are wealthier or even because the economy has come out of the austerity period. Indeed, people feel poorer because they are poorer.
Last year, the Office for Budget Responsibility changed its forecast—I think this contradicts what the Minister said—by reducing household disposable income every year from 2013 onwards in the forecast period. In the March economic and fiscal outlook, it marked down real disposable income again to be negative or zero every year until 2017. People will not simply be not wealthier but will feel the burden of higher costs and stagnating real disposable income year after year after year of this Government.
It is no surprise that households should feel poorer given that since the Government came to power inflation has constantly exceeded targets, pay has been frozen and benefits have been cut. Even the calculation of pensions, notwithstanding the much-vaunted triple lock, has changed from the retail prices index to the consumer prices index. People need to understand that the actions of this Chancellor have caused untold damage to, and put pressure on, families throughout the UK, and much of that is because, as the motion says, he has failed to meet any of the economic targets that he set himself.
When the Government came to power in 2010, they told us that the current account deficit for this year would be a mere £40 billion. This year, in the Budget, the Chancellor told that it would be £84 billion, which is more than double the original figure. In 2010, the Chancellor told us that public sector net borrowing for this year would be barely £60 billion. This year, he told us that it was £108 billion, but when we add on the fiddled stuff with the pension funds, we find that it was actually £120 billion—again, more than double the figure.
I am suggesting that to try to remove the structural deficit and fail over a fixed time scale, taking no cognisance of external shocks, was a stupid thing to do and a daft economic and political decision, which the Government were warned about in advance. The warnings failed precisely because this Chancellor promised that national debt would peak at 85% of GDP on the treaty calculation, or at £1.162 trillion on the normal calculation. However, we were then told this year that it would not peak until 2015-16 at over 100% of GDP on the treaty calculation, or at more than £1.5 trillion on the normal calculation.
There is a comparison here with what those on the Labour Front Bench are saying. The hon. Gentleman said his speech was in two halves, but his argument is in two halves. He has just said that he is upset that the Government are taxing people too much, and now he is complaining that targets have not been met. Will he at least join me in welcoming the IMF’s upgraded forecast, which suggests that for this year growth will move from 0.9% to 1.4%, and next year from 1.5% to 1.9%? That must be welcome news.
I always welcome growth in the economy, but the error that the hon. Gentleman and his Government have made is that by increasing tax and cutting to the extent that they have—the ratio of cuts to tax increases is four to one—they will have sucked out of the economy by 2016-17 roughly £155 billion a year. That is the equivalent of sucking 7.5% of GDP in terms of consumption out of the economy.
I will not give way, because we only get two minutes’ stoppage time, and I have had my two minutes.
This Government are also borrowing more and we are all paying the cost of failure. The Government’s main failure is on the fiscal rules they set themselves: that the structural current account deficit should be in balance in the final year of a future five-year programme—it will not be; and that debt should be falling as a share of GDP by the end of that period—it is not. Both objectives, were, and remain, highly dependent on GDP growth, which, as we have noted in previous Budgets, is massively dependent, at least according to the OBR, on extraordinary unmet and unmeetable levels of business investment. Let us remember that in 2010 the Government suggested, with a straight face, that business investment would have to grow between 8% and 11% a year between 2011 and 2015. By the time of the OBR fiscal outlook in November 2011, growth in business investment had turned negative again and the forecast had to be changed to show future projections of growth of up to 12%.
The Chancellor was at it again this year. Having failed to get the growth in business investment we needed, he is now suggesting growth in business investment of 8.6% in three out of the next four years. I hope that that happens, but based on the evidence we have seen so far and the inability of the banks to take their share in providing credit and liquidity to businesses, I fear that is a forlorn hope.
We have also been told—this point was mentioned earlier—that we will see the benefits to GDP growth of exports from the UK. In 2011, however, we had a deficit in trade in goods of £100 billion, which rose to £110 billion the following year. The deficit in trade in goods has been sitting at about £20 billion for every quarter of this year. The balance of goods and services was £23 billion in the red in 2011, and that figure worsened to £35 billion last year after four and a half years of depreciation in sterling. I would hope that at the very least the Government recognised that that part of the plan simply has not worked.
I hope that the Government will be less stubborn about recognising where they have failed and that their optimistic Budgets have simply collapsed into dust when faced with the stark reality of austerity economics, which strips consumption out of the economy in the way I have described.
I will not.
The pain of all that, as always, is felt by ordinary people, because, as I said earlier, we know this much from the Red Book: the Government intend to take £155 billion a year out of the economy in discretionary consolidation by 2016-17. They will do that for that year and every year, the equivalent of stripping consumption worth about 7.5% of GDP from the economy. Given that they have increased the ratio of discretionary consolidation to four to one—four cuts for every one tax rise—we can see where the Government’s priorities lie: not with jobs, not with growth, not with recovery and not with lifting the burden of the cost of living crisis off the backs of ordinary people, but with balancing the books on the backs of ordinary people in this country. If nothing else, they should recognise that it is not working. The pain is intense for communities throughout the UK and they should think again when we get to the autumn statement.
On a point of order, Madam Deputy Speaker. I am sorry to interrupt the debate, but have you have had any indication from Mr Speaker whether he intends to make any statement to the House about his speech to the Hansard Society this evening, in which he proposes to announce the establishment of a Speaker’s commission on digital democracy? Furthermore, briefing of the media on the speech and the announcement within it has been taking place for some four hours already without any announcement being made to the House.
It is always a pleasure to speak after the hon. Member for Dundee East (Stewart Hosie), for whom I have great respect. Unfortunately, he can sometimes be a little dour and sees a glass of water as half empty rather than half full. I would rather talk about a glass of water being half full than half empty, so my speech might have a more positive tone than his.
The Government have made huge strides to clean up the economic mess created in 2010. As the Governor of the Bank of England, Mark Carney, said on Wednesday 13 November:
“Inflation is now as low as it has been since 2009. Jobs are being created at a rate of 60,000 per month. The economy is growing at its fastest pace in 6 years. For the first time in a long time you don’t have to be an optimist to see the glass as half full.”
the Governor of the Bank of England says,
“has finally taken hold.”
If I may, I would like to begin by highlighting some of the economic achievements of this Government since 2010. The Government have cut the budget deficit by a third. The Government have helped the private sector create 1.4 million new jobs, offsetting any jobs lost in the public sector by 3:1. The Government have ensured that borrowing costs have fallen to record lows, saving money for taxpayers, businesses and families alike. The Government have helped bring inflation down to 2.2% as of October 2013. That is important because of the damaging effect that rising prices can have on the cost of living. The Government have helped bring back growth to the UK economy, with growth now projected to be 2.9% by year end 2014. The Government have ensured that the UK has more men and more women in work than ever before. The Government have seen the number of people claiming unemployment benefit fall at the fastest rate since 1997. Indeed, in my constituency of Braintree, both unemployment and youth unemployment are down 20% in the past year alone.
Furthermore, British manufacturing recently reported the strongest growth on record, exceeding that in every quarter since 1989, and Reuters recently reported that growth in UK services is the strongest in 16 years. The Government have indeed achieved much to rebalance our economy.
Finally on economic performance, as my hon. Friend the Member for Macclesfield (David Rutley) just mentioned, according to the OECD the UK has the fastest growth in the developed world, beating the US, Germany and Japan. So by almost every benchmark, the UK has made huge strides in turning around the UK economy, and the Chancellor and his team at the Treasury should be congratulated on sticking with plan A and ensuring that the UK is on the path to recovery.
The Government also have much to be proud of on the cost of living. The 2013 Budget raised the personal tax allowance to £10,000 from April 2014. That ensured a tax cut for 25 million people, with individuals paying an average of £705 less in income tax than they did in 2010. Indeed, 2.7 million people have been taken out of tax altogether, thereby reducing the cost of living.
The Government have already reduced energy bills by £193 by removing the green levies imposed by the Leader of the Opposition and are ensuring that energy companies offer the lowest tariffs to customers, thereby reducing the cost of living.
The Government have frozen fuel duty for the longest period in more than 20 years, with pump prices 13p per litre lower than when Labour was in power. Indeed, the average motorist will save at least £170, the average van driver will save £340 and the average haulier will save £5,200 each year as a result, thereby reducing the cost of living.
The hon. Gentleman and his party must be greatly relieved to be able to report an increase in GDP, given that in June 2010 the Office for Budget Responsibility was predicting that it would be 2.5%, 2.5% and 2.6% in the three years coming. So it must be a big relief to have at last turned the corner.
Yes, it is a big relief, but as anyone in business knows—I had been in business for 20 years before I came to this place—turning around a business, particularly in an economy that was as messed up as that created by the Labour Government, takes a while. Progress is not necessarily linear. What we do have is growth returning. That is recognised by the Governor of the Bank of England, the OECD and the International Monetary Fund.
I cannot give way; I have allowed the two interventions I am permitted.
Furthermore, the Government froze council tax in 2013-14 for the third year in a row. The combined effect of the Government’s actions means that council tax bills, which doubled under the previous Government, have fallen by 9.5% since 2010, thereby again reducing the cost of living. The Government have increased child care support for low-income working families on universal credit, thereby reducing the cost of living. In 2011, child tax credit increased by £225—the largest increase ever—and in April this year, it went up by 5.2%, a further increase of £135, thereby reducing the cost of living. The Government introduced the triple lock, which means that pensions increase every year by price inflation, earnings growth or 2.5%, whichever is highest. Over the course of their retirement, the average pensioner will be about £12,000 better off under the triple lock, which helps with the cost of living.
Furthermore, the Government introduced the warm home discount scheme, which gives pensioners a £120 rebate on their electricity bill, thereby reducing the cost of living. The Government have increased cold weather payments permanently from a measly £8.50 under the previous Government to £25, thereby reducing the cost of living.
In conclusion, the Government have much to be proud of. The Chancellor made some difficult decisions in 2010 to ensure that the country could have a long-term sustainable economic recovery. As the Governor of the Bank of England reiterated in the Treasury Committee yesterday, the economic recovery has finally taken hold. We should not jeopardise all this by returning to Labour’s tax and spend policies, which created the financial mess that we have finally begun to clear up. The Government must stick with their long-term economic plan, as that is the only sustainable way to raise living standards. I therefore oppose the motion.
It is always a pleasure to follow the hon. Member for Braintree (Mr Newmark), but rather than him being positive, I think that he looks at the world through extremely strong rose-tinted spectacles. The Government’s record is failing the country, and nowhere is that failure felt harder than the north-east, which is where my constituency of City of Durham is located.
Last month, the Office for National Statistics confirmed that the north-east had the highest regional unemployment rate in 2013. It said that the unemployment rate in the region was the highest in the UK at 10.3% in the second quarter of 2013, compared with 7.8% for the UK. The employment rate stood at 66.5%, lower than the UK rate of 71.5% for the same period. Almost a fifth of children in the north-east lived in workless households in the second quarter of 2013. At 18.7%, that was the highest proportion in the regions, compared with an average of 13.6% for England.
I do not know where the hon. Gentleman got his figures, because I looked at the drop in unemployment and the numbers for youth unemployment in Durham showed a reduction of 19 in the last quarter. Although we welcome any increase in employment, he must pay attention to the quality of jobs that have been created. In Durham, a lot of people have lost good, stable, well-paid jobs in the public sector, and have taken insecure, low-paid, zero-hours-contract jobs in the private sector, if any employment at all.
As I was saying, the Government’s failure on living standards is impacting on people in the north-east. I shall go briefly through some of the issues that we are facing. With the current cost of living crisis, people are working longer hours for lower incomes, and despite being in work, many people find themselves in poverty. Government Members seem unable to grasp that.
As a fellow north-east MP, does my hon. Friend agree that for young people in particular, the often unsuitable and unstable employment that is out there if they manage to get a job—as she said, they are probably on zero-hours contracts—means that in many cases they have to do a variety of small jobs to make up some kind of income. That is not a long-term way to plan their future careers, is it?
I am sorry, but I will run out of time if I give way. I apologise to the hon. Gentleman.
The north-east has the highest proportion of people paid below the living wage—32% of workers are paid less—and research published by the Resolution Foundation has further confirmed that the north-east was the region where workers were most likely to be trapped in low earnings. The Office for National Statistics said:
“In April 2012, median gross weekly earnings for full-time adult employees in the North East were £455, joint lowest with Wales and lower than the UK median of £506.”
So people in the area that I represent are having to contend with lower wages, but they are also having to deal with rising prices. They are being burdened with not only increasing energy costs, but increasing costs for child care, for example. Energy prices have angered people throughout the country and all we have heard from the Government is excuses for the actions of the big six. When npower recently announced an eye-watering rise in electricity costs of 9.3% and in gas of 11.1%, The Journal, our local newspaper, reported that Dorothy Bowman, a campaigner for elderly people from County Durham, said that the price hike would leave householders with a stark choice. She said:
“They will have to choose food or heat, it will be too expensive for both. This is at the wrong time for people”.
She went on to say that npower did not care at all
“about their customers and the dire misery they are subjecting them to, they just care about their profits. If they were going to do this why not do it in spring, now people have no choice.”
She said the elderly would suffer, but so would young families living on a tight budget. I think she makes the point very strongly indeed.
In addition, The Journal reported on 25 October that an official at thinkmoney said:
“Regionally, problems with utility bills appear most severe in Northern Ireland, London and the North East.”
That is why we need Labour’s energy price freeze and long-term reforms to the energy market.
As an example of how dire things are in the high street and the household, Citizens Advice reported that 92,000 people had made inquiries about fuel debt, 81,000 people had made inquiries about water debt, and that there had been a 77% increase in child care costs over 10 years and a 78% increase in the use of food banks. Surely that is the reality of the high street and what is happening at present.
The hon. Gentleman makes an excellent point and I hope to be able to come to some of those issues myself.
On child care, the cost of nursery places has risen by 30%—five times faster than pay for people on average wages. I opened a new nursery in my constituency a couple of weeks ago—Do Re Mi nursery—but without action from the Government many families will not able to take up places there. It is not good enough for Government Members to say that there is help for people and that there is universal credit. No one is on that at present and many are not getting any help with child care.
As the hon. Member for Strangford (Jim Shannon) said, there are huge problems with debt. The charity StepChange in my constituency said that almost 2,000 people in the Durham area had been referred to it with debt problems from January to June this year. R3, the insolvency trade body in the north-east, found that almost a quarter of survey respondents were extremely worried or very worried about their debts, while 56% were worried about their credit card payments.
For some time, Labour Members have been raising issues about payday lenders and the extortionate rates of interest they have been charging. We obviously welcome the Government’s announcement on this, but as yet there has been absolutely no information about what will be in place to help people who have already taken out loans that they are unable to pay back. That situation is seriously compounding the problems that many families are facing.
Moreover, food poverty is increasing in Durham. The website of Durham food bank states:
“Durham foodbank has now completed two years of distributing food to local people in crisis. In our first year we fed 3686 people, our second year total is now in excess of 10,600.”
It thanks the army of volunteers who are helping it to meet this need, but makes the point, as I do, that that demonstrates a huge increase in the number of people requiring food banks. Indeed, the local citizens advice bureau has reported a 78% increase in the number of inquiries about the use of food banks. This flies in the face of the Government’s claims that they are turning the corner. Lots and lots of families in my constituency have a genuine cost of living crisis, and things are getting worse for them because of increasing prices and, at best, flatlining wages. They simply cannot afford to make ends meet.
Labour is calling for the Government to take real action to make a difference to families in Durham and across the country. We want a list of measures to be included in the autumn statement, including an energy price freeze, an extension of free child care, action to boost long-term housing supply, and a compulsory jobs guarantee—real action that would help people who are struggling out there in our communities. The Government are standing by and doing nothing to tackle the serious pressures on families right across the country, and we cannot let them go on and on doing the same thing. We need real action from the Government to support hard-pressed families. I support the motion.
I am grateful to you, Madam Deputy Speaker, for calling me to speak in this important debate. We have had such debates on a number of occasions, but it is important that we have this one now, when the economy is growing. All the indicators from the IMF, the OECD and other estimable bodies suggest that the worst is over in the British economy and that we are encountering some sort of recovery.
More important than recovery in itself is understanding how we got into this position in the first place. The economy will be a very important issue in the next election. I was interested to hear the hon. Member for Dundee East (Stewart Hosie) criticise the Chancellor and the Government for not reducing the deficit fast enough. When I asked what his solution was to this conundrum—whether he wanted to borrow more—he failed to answer. I still do not know what his answer is; perhaps he will care to enlighten us in the course of my speech.
It is true that the UK economy has faced a difficult few years given our reliance on financial services and, more importantly, the appalling fiscal legacy of the previous Labour Government. It was insane for them to borrow money in every fiscal year from 2001, even when the economy was growing. I have never heard of an economy growing at 3% while running a deficit of 3% of GDP. Not even Lord Keynes would have advocated such a policy. Yet we lived through a period in which we had year after year of deficit even when the economy was growing.
That is absolutely right. I was as shocked and appalled as my hon. Friend that, when I asked the shadow Chief Secretary what the absolute level of the British deficit is—it was a very simple, general knowledge-type question—he did not seem to know. I then asked him whether he knew what the deficit-to-GDP ratio is, but he flannelled away that supplementary question and did not even pay me the courtesy of answering it.
We have to look very carefully at the legacy of the previous Labour Government, because it has a direct impact on living costs and this cost of living debate. People in Britain—people in my constituency and, I am sure, in other constituencies across the country—intuitively understand that after a period of excessive spending in which, to borrow a metaphor, the national credit card went way beyond its limit, it is necessary to have a period in which spending is reduced. Nearly everyone understands that and, as a consequence, any poll that Members may care to look at shows that the Government and coalition parties have a considerably better rating on the issue than that of the Labour party.