Family Incomes

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 10th September 2013.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs) 11:30 am, 10th September 2013

What recent assessment he has made of the effect of fiscal policy on family incomes.

Photo of Stella Creasy Stella Creasy Shadow Minister (Home Affairs)

What recent assessment he has made of the effect of fiscal policy on family incomes.

Photo of Pat Glass Pat Glass Labour, North West Durham

What recent assessment he has made of the effect of fiscal policy on family incomes.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The Government have published distribution analysis for all our fiscal policies at each fiscal event, and we are the first Government to do so. The most recent assessment was at the 2013 spending review, and the analysis showed that the richest 20% of households continue to make the greatest contribution to reducing the deficit, both in cash terms and as a percentage of their income.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs)

I thank the Minister for that reply, although he completely failed to talk about the real issue that I was hoping to raise: the extent to which ordinary families are being hit incredibly hard by the Government’s policies. We are hearing from Citizens Advice that inquiries about food banks have risen by 78% over the past six months, and one in four families is having to borrow to provide school uniforms. What are the Government doing about those real issues affecting real people?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I must say that if the hon. Lady is genuinely interested in the challenges that families face, she should recognise the causes: Labour’s recession, the deepest in our post-war history; Labour’s record budget deficit, the deepest in our post-war history; and Labour’s bank bail-outs, the largest the world has ever seen.

Photo of Stella Creasy Stella Creasy Shadow Minister (Home Affairs)

With working families’ incomes on average 1,500 quid down and millionaires taking tax cuts, does the Minister really think that we are all in this together?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

As the hon. Lady has already heard, all millionaires will be paying a higher tax rate under this Government than they did for the whole 13 years that the Labour party was in power. She should also welcome the tax cut we provided for the lowest income families, 25 million people, with 2.7 million taken out of taxation altogether. I note that the Labour party has recently talked about reintroducing the 10p tax rate, which they abolished. Well, I have news for it: all those people are now paying a 0% tax rate on that income.

Photo of Pat Glass Pat Glass Labour, North West Durham

The Times leads this morning on yet another banking scandal that has cost savers in this country billions of pounds. At the same time, bonuses in the financial sector have risen by 90% and ordinary families are really struggling. It is simply not working, so when will the Government step in and do something about the regular obscenities in the banking industry?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The hon. Lady should look up the facts. Bank bonuses reached their peak when the shadow Chancellor was City Minister; today they are almost one seventh of what they were at that time. The hon. Lady should welcome the measures we have taken to help working families. They have helped reduce interest rates and keep mortgage rates low, meaning that the average family with the average mortgage are paying £2,000 less per year than they did under the previous Government.

Photo of James Morris James Morris Conservative, Halesowen and Rowley Regis

If it had not been for the Government’s council tax freeze, and if council tax had continued to rise on the trajectory set under the previous Government, the average bill would now be £200 higher. Does the Minister agree that the steps taken by the Government are helping hard-working families keep their council tax bills down?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

My hon. Friend is absolutely right. That council tax freeze is helping families up and down the country, as are many other measures we have taken, such as the cap on rail fares.

Photo of Mark Garnier Mark Garnier Conservative, Wyre Forest

Household debt peaked in 2008 at 170% of household income. Since then it has come down, but households are still very vulnerable to rising interest rates. Does my hon. Friend agree that any fiscal policy must give comfort to the bond markets in order to help the Governor of the Bank of England keep interest rates low and mitigate the effect of rising rates on households?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

My hon. Friend is obviously referring to the fact that when this Government came to office, we had the biggest deficit in our post-war history. The previous Government were borrowing £5,000 a second—£300,000 each and every minute. We have reduced that deficit by a third and, as my hon. Friend suggests, that has brought confidence, investment and jobs.

Photo of Andrea Leadsom Andrea Leadsom Conservative, South Northamptonshire

Does my hon. Friend worry, as I do, that the worst outcomes for children are in those families where nobody is working? If so, is he as delighted as I am that our economy has generated 1.25 million new private sector jobs since 2010, thereby improving the prospects of millions of children?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

My hon. Friend correctly highlights that the best way out of poverty is through work. As she says, the private sector has generated almost 1.3 million jobs over the past three years. In fact, it is the fastest rate of job creation in the G7.

Photo of Susan Elan Jones Susan Elan Jones Opposition Whip (Commons)

The Chancellor said recently that he knew that times were tough and that family budgets were being squeezed. Why, therefore, did this Government choose to prioritise a tax cut for those on the 50% rate?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

Perhaps the hon. Lady missed it, but we have made sure that the people who earn the most in our society are making the biggest contribution to the necessary measures we have to take to make sure that the country lives within its means. In each year of this Government, the richest will pay a higher tax rate than under the Government she supported.

Photo of Stephen Williams Stephen Williams Liberal Democrat, Bristol West

Does the Minister agree that, come next April, a family where both parents earn wages will be £1,400 better off than they were in 2010, and that a child of theirs who works on the minimum wage—perhaps in the city centre of my constituency—will be lifted out of income tax altogether?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

My hon. Friend is absolutely right. That is a big boost to family incomes. In fact, someone on a minimum wage who is working full time will find that their tax bill is more than halved as a result of this Government’s policies.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

The reality is that, because of this Government’s warped priorities, women are paying three times more than men to bring the deficit down. Will this all-male Treasury team explain how that is helping families manage the cost-of-living crisis?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The hon. Lady knows all about unemployment, because she is probably thinking about the record rise in unemployment that took place in her constituency during the last term of the Labour Government. That record rise included men and women. In all categories it has fallen under this Government, and today more people, including more women, are employed in Britain than at any time in our history.

Photo of George Freeman George Freeman Conservative, Mid Norfolk

Does my hon. Friend agree that the single most important contribution to household earnings is having a job? Has he seen the latest data that show that the claimant count is now lower than in May 2010, that there are 500,000 vacancies, and that five jobs are being created in the private sector for every one lost in the public sector, leading the ManpowerGroup to say that this is a “game-changing year” for the UK jobs market? Is it not the truth that plan A is working and plan B is redundant?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

As always, my hon. Friend speaks the truth very eloquently. The economy is growing. Of course there is a lot more work to do, but there is plenty of evidence that we have turned a corner.