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Amendment of the Law

Part of the debate – in the House of Commons at 4:19 pm on 20th March 2014.

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Photo of Alex Cunningham Alex Cunningham Labour, Stockton North 4:19 pm, 20th March 2014

When the Chancellor rose to his feet yesterday, people across the country hoped he would have something to offer on the escalating cost of living and an economy that has seen the value of wages shrink. People in the north-east hoped he would offer help to do something about the highest unemployment levels in England. Nearly 1 million young people out of work, many for more than a year, hoped for some kind of job guarantee that would see them earning a living and learning along the way, and public sector workers hoped for a better deal and a fair reward for their work, but it was not to be. Instead, as we heard my right hon. Friend the Leader of the Opposition say, we have a Government who are able to give millionaires a £200,000 tax cut but cannot increase nurses’ pay by £250 a year. This is a Budget with inequality written all over it.

By failing to address the growing problems of inequality, higher prices, falling real wages and catastrophic housing shortages, the Chancellor has confirmed that any recovery that exists is being felt only by the privileged few. I have already alluded to the comments from Citizens Advice chief executive, Gillian Guy, who said:

The Chancellor talked about making, doing and saving. This Budget needs to work for those who are making do and can’t save.”

She continued:

“We’re halfway through the austerity programme and many spending cuts have yet to bite. Families are feeling the cumulative impact of the stripping away of support and services from all sides.”

Citizens Advice tell us that

“3 in 5 people worry about the effect rising household bills will have on their finances over the next year…Half of UK adults— 27 million people—will have to cut their spending to cope with household costs. 1 in 4 people coming to Citizens Advice have some kind of debt problem” and that 40% of them have dependent children.

That tells a tale not of a country where people are benefiting from the Government’s policies, but where inequalities are growing and families are suffering. Nowhere is that more the case than in the north-east, which, having contended with colossal cuts in the public sector and minimal investment, continues to have both the highest rate of unemployment and the lowest average weekly earnings in England.

Working people are already £1,600 worse off under the coalition Government than they were before the general election in May 2010, but that is exacerbated in the north-east by wages that are about £50 per week less than the UK average and almost £200 per week less than wages in London. Yet the Chancellor’s announcements yesterday do nothing to address this unfairness. While some will feel the marginal effect from the tweaks made to the personal tax allowance, thousands of hard-working and low-paid people across Teesside, striving to eke out a living for their families, will be even worse off as their limited incomes are stretched even further to meet rising energy, food and other bills. Many in my constituency simply earn too little to benefit from the Chancellor’s tax cuts, and can only dream of earning the £1,250 per month that can now be saved tax-free in ISAs, let alone being able to save this amount.

Let us not forget that while the Chancellor was making heedless efforts to encourage saving, Britain’s household borrowing is at a record high, equivalent to an average household debt of £54,000. So while the chairman of the Conservative party tediously patronised hard-working people by lauding minuscule cuts to the costs of beer and bingo, more families owe more money than ever before. This low-wage recovery means many have to deplete any savings they may have had, driving greater inequality and fuelling a growing demand for extra support—most worryingly, in the form of food banks.

Such naivety is just another demonstration of exactly how out of touch the Conservative-led coalition is with hard-working families. But too often the north-east is characterised precisely by the challenges that inequality poses, and not by the potential that exists in the region were it to be given the right opportunities to thrive and flourish. It is those opportunities that the Chancellor failed to deliver. Enhancing the mix of skills and knowledge within the regional economy, aligning them with those needed by businesses in the north-east, would be the first step to closing the skills gap.

While businesses such as Sembcorp on Teesside are managing to create jobs and recruit apprentices, many smaller firms struggle to share their expertise and skills due to the lack of support they need to make a real impact. We have had some help from the regional growth fund money and an enterprise zone, and the Budget contains some welcome, albeit limited, positive news for energy-intensive industries on Teesside. But welcome as those things are, their value pales into insignificance in comparison with the support and investment for the north-east each year from 1997 to 2010. We really could have done with something in the Chancellor’s Budget to stimulate growth in the green economy on Teesside, an area that holds great potential both for growth and investment. Companies such as Air Products and INEOS are investing on Teesside, despite ongoing and tedious regulatory hurdles, but the Chancellor yesterday offered no incentive for others to follow suit. As a result, potential investors have been deterred and we have seen a large-scale investment slump from an all-time high of £7.2 billion in 2009 to £3 billion in 2012. This Budget comes back to one word: inequality.