I beg to move,
That this House
believes the Government has failed to deliver rising living standards and a recovery that works for the many, with working people on average £1,600 a year worse off since 2010; notes that the Office for Budget Responsibility has said that stagnant wages and too many low-paid jobs are leading to lower tax revenues and more borrowing, with the Chancellor of the Exchequer’s pledge to balance the books by 2015 set to be broken;
calls on the Government to bring forward a plan in the Autumn Statement to deliver a recovery for the many, not just a few at the top, with proposals for a minimum wage rising as a proportion of average earnings, an expansion of free childcare for working parents, a cut in business rates for small firms, an independent infrastructure commission, and the building of 200,000 new homes a year;
believes that a tough and fair plan to deliver a current budget surplus and falling national debt as soon as possible in the next Parliament would include reversing the Government’s £3 billion a year tax cut for the top one per cent of earners and introducing tougher measures to tackle tax avoidance;
and further believes that the Autumn Statement should use £1 billion of fines from the recent foreign exchange manipulation scandal for an immediate boost to health and care, and announce a £2.5 billion a year fund to help save and transform the NHS, including funding for an extra 20,000 nurses and 8,000 GPs.
The Government deputy Chief Whip will have spotted that, next week, the Chancellor is bringing forward his autumn statement, which gives the Chancellor a chance to reflect on his nearly five years in office and on the impact made over that period on the living standards of millions of our constituents who have, of course, been following so carefully the choices he has made. I have taken the liberty of digging out the 2010 autumn statement of
“will meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”—[Hansard, 29 November 2010; Vol. 519, c. 531-2.]
“Britain is on course…to…balance the books, something that some people repeatedly said could not happen.”—[Hansard, 29 November 2010; Vol. 519, c. 530.]
Well, I am afraid to say that it has not happened. In fact, last year the deficit was £102 billion and so far, during the first seven months of this year, it is heading even higher.
The hon. Gentleman has put a motion before the House on the performance of the economy. I have read the motion carefully, and before he starts reflecting on previous speeches, I wonder whether he could explain why unemployment is not included in it and why we now have the lowest unemployment and the highest rate of employment in our history?
I have only just started my remarks. I shall come on to employment, the levels of under-employment in our economy and the changing nature of the employment market because that is crucial. It links in particular to the health of our public finances and I want to touch on some of those issues, but I wanted to make sure that the House was aware of the Chancellor’s promises made in the autumn statement of
I will come to the hon. Gentleman in a moment, but it is not just on the deficit that we have seen difficulties, as there is a second aspect of the Chancellor’s promises back in 2010. He promised that by this financial year, he would
Yet it turns out that he has failed on that, as well. In fact, he is now saying that debt is not going to start falling as a percentage of GDP until some time in the middle of the next Parliament. It is really important to pin down the Chancellor’s promises and the failure to deliver on them.
This morning, 30.8 million people went to work—a record in our country’s history. That is no mean feat after Labour’s crash. With the storm clouds gathering again in the eurozone, why would we ever want to go back to where we were four and a half short years ago?
When it comes to the nature of our recovery, the fact is that most people are not feeling the great benefit that the hon. Gentleman espouses. The vast majority of people—confirmed in opinion polls just last week—are reporting that, as far they are concerned, life is getting harder and their living standards are falling, not rising.
I listen avidly to the “Today” programme, but I did not hear that interview. It is important that we pin these Tories down on their failure to deal with borrowing and the deficit. This situation is going to continue well into the next Parliament, and we need to address it in a serious way, not with more of the politicking that we have seen from the Chancellor.
The Prime Minister likes to say—the Tories have said it in party political broadcasts and keep repeating it—that the national debt is somehow falling. The national debt has got larger and larger—[Interruption.] No, let me correct Mark Garnier—there is a difference between the national debt and the deficit. The national debt has got higher and higher and higher. My hon. Friend Mr Mudie was right to say that it now stands at more than £1.4 trillion. He knows that the Prime Minister and the Chancellor have added more to the national debt in their four and a half years in power than the previous Administration did in 13 years.
The hon. Gentleman is clearly struggling a little with the definitions of how we run the public finances. The reason why the national debt is going up is that in 2010 this Government inherited a deficit, which is the difference between income and outgoings, of £156 billion. That had been set in place some time before. If the hon. Gentleman remembers, the deficit in 2005—fully two or three years before the financial crisis—was already around £50 billion a year. The previous Government, then, were increasing the national debt. It is going up because the only way to account for the deficit is by putting it on the national debt. The hon. Gentleman must understand the most basic facts of fiscal policy.
We have an admission there—that the national debt is rising and has risen more in the past four and a half years than it did in the 13 years of the previous Administration.
I will give way to hon. Members in a few moments, but there are other facets of the Chancellor’s promise in that 2010 autumn statement we have to nail down and put on the record. In that statement, he also promised that he would cut the interest charges to service the national debt by £19 billion. Do hon. Members know where we are when it comes to the national debt’s servicing costs? This year, debt interest has hit £52 billion and is forecast to be £75 billion by 2018-19—a situation compounded, of course, by the Government’s failure to tackle the deficit. Each year that they add another £100 billion to the deficit, they have to fund and service the debt levies accrued.
What the hon. Gentleman says is all very sanctimonious, particularly given that his leader could not even mention the word “deficit” in the speech he made at Labour’s party conference. Furthermore, the hon. Gentleman’s party has set out £166 billion more in spending than the Government have, so how will he pay for that?
The hon. Gentleman is slightly deluded in his understanding of our position. We have made it absolutely clear that we will not have any manifesto commitments funded by additional borrowing, yet we have not heard the same promise from Conservative Ministers, so I invite the Exchequer Secretary to stand up and tell us how the Conservative Front-Bench team are intending to pay for the £7 billion-worth of pledges that the Prime Minister has made. Opposition Members have to conclude that the Government are going to add it to VAT. That is what they have done in the past; it is their track record. Ducks quack, the sun comes up in the morning and Tories increase VAT. It is what they always do.
I thank the hon. Gentleman for stating his party’s position so clearly. Just to restate it, he did not question the £116 billion-worth of extra commitments, but he did say that Labour has a commitment not to increase borrowing to pay for all these spending commitments. Will he now take the opportunity to clarify that point by saying which taxes he intends to put up to pay for his spending commitments?
I shall come shortly to the particular changes that we believe need to be made for our economy. For example, we believe that the national health service needs additional support and that we need to increase a levy on ultra-high-value properties to pay for such things. I shall come on to the specific details in a moment, but I want first to finish giving the Chancellor’s record and his promises in that autumn statement.
The Chancellor made other promises, too. He promised that business investment would zoom away over the four years, saying that it would be
“8% for each of the next four years”.—[Hansard, 29 November 2010; Vol. 519, c. 530.]
In reality, it has been barely half that. Back then, in autumn 2010, the Chancellor promised that exports would grow on average by more than 6% a year. In fact, in 2012 he promised that he would more than double annual UK exports to £1 trillion by 2020. The problem is that that would require 10% annual growth in exports and we have had barely 4%, leaving them £330 billion short of their target.
It was not supposed to be like this. The Chancellor set out with a totally different set of ambitions and made a series of promises to the electorate. He set out his pledges and he has failed to deliver on them. What is worse, and what matters to our constituents, is the promise that the Conservatives made on living standards. They said that living standards would rise and that was the solemn pledge in their manifesto:
“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”
These Tories—by which I also mean the Liberal Democrats—need to be held to account for the neglect they have shown and the distress they have caused, particularly to some of the poorest and most vulnerable people in society. After prices have been taken account of, wages have fallen in real terms by an astonishing £1,600 a year and prices continue to rise.
The shadow Minister talks about the Chancellor’s record, what he has achieved and what he has set out to achieve. One of the key planks of the proposals was a reduction in youth unemployment. In the hon. Gentleman’s constituency, youth unemployment has gone down from 6.1% to 4.2%, and in my own constituency it has gone down considerably. That clearly supports what the Chancellor set out to do by giving young people a chance and opportunity in life through work.
My constituency has the 10th highest youth unemployment of any in the country and I will not take any lectures from the hon. Gentleman. The Government have no answer for the 700,000 young people who remain long-term unemployed. They have a Work programme that sends more people back to the jobcentre than it puts back into work—[Interruption.]
Order. I am very uncertain quite what Mark Garnier had for breakfast this morning. Without wishing to be personal, I would simply observe that a close family relative of his lives in my constituency and he is a person of impeccable manners, as the hon. Gentleman usually is. My constituent would not approve of the hon. Gentleman’s ranting from a sedentary position. If the hon. Gentleman undertakes to behave in a seemly manner from now on, I promise not to report his bad behaviour to my constituent.
My hon. Friend is making a powerful argument about the appalling economic context that the country faces. Does he agree that the reduction in full-time jobs—there are 670,000 fewer full-time jobs in the economy since 2008—is an indictment of the poor health of the economy under this Government?
My hon. Friend is right: the labour market is changing, and not always for the better. The instability, short-term assignments and zero-hours culture that are now much more prevalent add to the insecurity experienced by so many of our constituents.
I do not usually chide my hon. Friend, but I am going to do so today for being too generous and kind to the Chancellor of the Exchequer. My hon. Friend has not mentioned the appalling performance of this country on productivity. We are 20% below our competitors. What is the Chancellor doing about that? My hon. Friend has to be tougher and nastier to the Chancellor.
All my hon. Friend will get from the Chancellor is the hollow slogan about the Government’s plan, but their plan contains nothing to tackle the productivity crisis in our economy. My hon. Friend hits the nail on the head. We need a plan that deals with those infrastructure challenges and with getting bank lending back on its feet again to help enterprises make the next move into growth and innovation. We must tackle the skills problem. They are all factors that would represent a genuine plan to tackle the productivity issue.
I would like to make a little progress, because I know that a lot of Members want to speak.
The problem with this Chancellor and the promises that he made back in 2010 is that he has failed abysmally to complete the deal and ensure that he delivers on those promises. It is not just about the record on the national health service or even on immigration, where the Government have failed to meet their target of reducing net migration to tens of thousands. They have failed to deliver a recovery shared by all, they have failed to eliminate the deficit, as they promised to do, and they have failed to detoxify their reputation on the NHS. The real question is whether the Chancellor and the Prime Minister, after nearly five years, are prepared to start taking some responsibility for the situation.
Will they do what I suspect the hon. Gentleman is about to do and blame Europe? They love to blame Europe, in particular, but they have also blamed the weather and even the royal wedding. Who is the hon. Gentleman going to blame?
Is the hon. Gentleman seriously arguing that the challenges we are addressing through our long-term economic plan have nothing to do with the fact that we had the deepest economic recession since the second world war—a recession over which his Government presided—which led to thousands of people being made unemployed, hundreds of businesses going bust and an absolutely devastating long-term effect on many people’s lives? Does he not take any responsibility for that?
Government Members want to airbrush the fact that there was a banking crisis, and a global banking crisis—[Interruption.] They do not like the fact that there was a banking crisis. They want to pretend that it was everybody else’s fault—there they go again.
I must tell James Morris that he has been in government—perhaps he has not been a Minister, but he has supported the Government—for nearly five years. The Government must start taking some responsibility for the state of the economy.
On living standards, in Wrexham median weekly earnings have fallen by 7.4% in the past year. The Government show a complete lack of comprehension of my constituents’ lives. For as long as they continue to do that, they will not even begin to address this country’s fundamental economic problem.
It is the complacency from those on the Government Benches that will, I think, shock our constituents most of all.
If we listened to the Government, we would never think that the collapse of Lehman Brothers and the collapse of Fannie Mae in America caused the last economic crisis. They continually blame the previous Labour Government, but they have to face up to the truth, which is that it started in America and no Government could legislate for it. They have now found out that there is an economic crisis and recession in Europe, so is that the next excuse for a punitive Budget?
The previous Government did the right thing after that banking crisis by getting growth moving forward—growth that had the rug pulled from under it by the lack of confidence shown by the Chancellor and the measures he took in that autumn statement back in 2010 and in his emergency Budget.
The Government’s long-term plan is little more than trickle-down economics, which has failed in the past and will fail again in the future. The share of national income held by 90% of earners has shrunk since this Government came to power, whereas the share of the cake held by the wealthiest 1% has—surprise, surprise—gone up.
We need a plan that genuinely delivers a recovery for the many, not just for the few. We do not need the slogan-heavy, content-light, trickle-down plan of Treasury Ministers, but we need action on house building, which is at the lowest level since the 1920s, with a goal of building 200,000 new homes each year by 2020. We need a minimum wage rising as a proportion of average earnings and real incentives for the living wage. We need the expansion of free child care for working parents, paid for by the bank levy that the Government failed so spectacularly to collect. We need a cut in business rates for small firms, rather than a reliance and a focus only on corporation tax cuts for big businesses. We need an independent infrastructure commission to deliver the transport networks that our economy needs, rather than what suits the Government’s short-term political needs. We need to tackle the abuse of zero-hours contracts, we need to hear the Government argue for Britain to play a leading role in a reformed European Union, and we need a real economic plan that can enable us to earn our way towards rising living standards for all, not just for the few. Those are the priorities for next week’s autumn statement.
I am interested to hear the hon. Gentleman’s words, but let us write some facts into the debate about living standards. Will he deny the statistic from the House of Commons Library which shows that real average weekly earnings were falling faster between 2008 and 2010 than they were after 2010? Will he deny the statistic which shows that the average earnings of those who had been in a job for over a year has risen by more than 4% in the last year? Will he deny the fact—this, too, is a statistic from the House of Commons Library—that 71% of all the jobs created in the last year have been full-time jobs?
I do not know where the hon. Gentleman has been, but did he not see the headlines in all the newspapers about the results of the annual survey on hourly earnings that the Office for National Statistics published last week? According to the ONS, the average weekly pay of full-time workers went up by just £1 between 2012 and 2013. That is a rise of just 0.1%, far below the rate of inflation. Prices continue to rise, but pay, wages and earnings do not keep pace with them. Government Members may not realise that. In the world that they inhabit, life is sweet—everything is fine in the world that they inhabit—but for most of our constituents, times are tough and life is getting harder.
This may even be the worst situation since the 1870s. Perhaps we should ask the House of Commons Library to go back in history, and tell us how bad things were in the 19th century.
I have set out our priorities for the autumn statement. However, we do not just need a strong economy to ensure that everyone gets a piece of the action; we need a strong and sustained economy to deliver strong and sustained public finances, which is why the autumn statement also needs a plan to balance the nation’s books in a fair way.
When will Ministers realise that the health of our economy shapes the health of our public finances? During the first seven months of this year, borrowing has been £3.7 billion higher than it was during the same period last year. Why? The Office for Budget Responsibility itself says that stagnant wages and all those low-paid jobs are keeping tax revenues down. The Chancellor has to realise that a low-wage, low-productivity economy will not deliver the goods. The OBR is predicting that growth will slow down next year, and yesterday the OECD cut its growth forecast for this year and next year.
The deficit has not been tackled effectively, and not just because of falling revenues. The Government like to sound tough on welfare inflation, but they do nothing to tackle the underlying causes of it. The Department for Work and Pensions has overspent by £25 billion since 2010. Let me give the House a few examples of where it has gone awry. It has spent £5 billion more than it planned to spend on tax credits during the current Parliament, because of the failure to tackle rising levels of low pay and insecurity. The number of working people—working people!—who are claiming housing benefit has risen by 50% since 2010 and is set to double by 2018, which will cost nearly £13 billion.
Whether the underlying issue is low pay, rising rents or the 700,000 young people who are in long-term unemployment, the Government have produced no serious, structural response. For them, tackling the deficit means little more than lopping off a fixed percentage from every departmental expenditure limit in each 12-month cycle. We need an economy that delivers higher-quality jobs, decent living standards, and robust and sustained growth, as well as tough decisions on spending and tax.
The Chancellor of the Exchequer caved in too easily to the lobbying of his friends who pushed him for that £3 billion a year tax cut for the top 1% who are earning over £150,000 a year. They must have been pestering him—“Give us that tax cut!”—and he did not have the will power just to say no. Instead, he piled higher VAT and cuts in tax credits on to millions of working people, because he did not mind that so much. I am afraid that a fairer plan for reducing the deficit must mean reversing the huge tax giveaway for millionaires—
Let me point out not only that a record number of people went to work this morning, but that both long-term unemployment and worklessness rose under the Labour Government. Thanks to this Government’s welfare reforms and long-term economic plan, long-term unemployment has fallen by 99,000, and worklessness has fallen dramatically. Does the hon. Gentleman not accept that the Government’s long-term economic plan and welfare reforms have worked extremely well?
How disappointed the hon. Gentleman’s constituents must be to hear his comments, which contained no reflection or recognition of any of the problems that they face, including their cost-of-living difficulties. No, as far as the hon. Gentleman is concerned, everything is fine and wonderful: it is all working totally as it should be. I must tell him that he will have to face his electorate in a few months’ time, and that he will face their anger and concern about his failure to deal with the living standards that they have been experiencing.
We had a global banking crisis, but, as I recall, growth was 1% in the first quarter of 2010. We had a strong level of growth as we came out of that crisis, because we took up the challenge to stimulate the economy and get it moving again. There was a VAT reduction at that time, and then what happened? What did the Chancellor of the Exchequer do? What did he do, with the help of the hon. Gentleman’s votes? He whacked up VAT to 20%, although the hon. Gentleman had not mentioned that in his election manifesto. He, too, will have to face his electorate and account for the decisions that he has made.
I do not want to take up too much time, because I know that many other Members wish to speak, but it is important for me to say something about the fiscal challenge. There will have to be other difficult decisions, which is why Labour is looking at every single Department and every item of expenditure, line by line, in our zero-based review, and identifying the different choices that can be made to enable us to live within our means. We have already proposed scrapping winter fuel payments for the richest 5% of pensioners, cutting Ministers’ pay by 5%, capping child benefit rises at 1% for two years, reviewing the value for money of assets and non-essential buildings owned by the Government, and making savings of £250 million in the Home Office budget—by, for example, scrapping police and crime commissioners—in order to better protect front-line policing. Over the weeks ahead, we will set out more of our early findings from other Departments.
Our plan is to balance the books and get the national debt falling as soon as possible in the next Parliament. While the Prime Minister and Chancellor think it is OK to make £7 billion of unfunded pledges—the Prime Minister said that again today at Question Time—although even the Secretary of State for Business, Innovation and Skills has described that as a “total fantasy”, our manifesto will not make commitments that would be paid for by additional borrowing. When we make promises, we will say where the money will come from. We would willingly put all our costings before the OBR so that it could check and validate them—but, of course, that would upset the Chancellor’s plan to smear our proposals and run a dirty election campaign based on fear rather than fact. If the Chancellor only had the guts to put his plans, and all our plans, in front of the OBR, perhaps we could let the public form a judgment based on the values and merits of the manifestos and their policy proposals.
How can the hon. Gentleman credibly expect the public to buy into Labour’s ability to balance the books? Every year, from 2001 onwards, the Labour Government spent far more than they took in, which is why they were left with one of the biggest deficits in the G7. You cannot spend more than you take in: that is the root cause of the problem, but Labour Members do not get it.
The hon. Gentleman and the Chancellor of the Exchequer were backing all the spending plans during those years. Moreover, the hon. Gentleman did not even mention the banking crisis. Where was he during that period? Does he really think that his constituents will be tricked by his airbrushing of the situation? The hon. Gentleman’s party has been in office for five years, but the Conservatives have failed on the promises they made to tackle the Budget deficit and get borrowing down. They promised that we would not have a Budget deficit, and they failed and it will be up to the next Government to finish the job.
Whoever wins the next election will have to pick up the pieces of this current mess. We will make sure that resources are channelled towards the issues that matter most to the public, but we should not have to wait until next May: the Chancellor has the opportunity to act now. That is why the third task for this autumn statement is to deliver a costed and funded plan to save and transform our national health service. In my constituency in Nottingham it is getting harder to see a GP; on cancer waiting times we still have a system struggling to meet the two-week target from GP referral to first outpatient appointment; and at the beginning of the month in Nottingham almost one in five patients had to wait more than four hours at our local emergency department. We have excellent staff and diligent management at our local hospital, but the pressures on their shoulders have been getting worse and worse, and Ministers have left the NHS to cope on its own, without finding the new sources of funding to put this situation right.
I therefore put this challenge to the Minister today: when she gets to her feet to respond to this debate, will she accept our suggestion to use £1 billion of banking fines from the recent foreign exchange rigging scandal and earmark this windfall for the NHS? More than that, will the Minister do what is required to tackle tax avoidance, and introduce a levy on tobacco firms and a tax on properties worth over £2 million to raise £2.5 billion a year—on top of the Government’s spending plans—for an extra 20,000 nurses and 8,000 doctors? These are necessary—and some of them are difficult—decisions, which focus relentlessly on supporting the NHS at this time of need.
These are the tests for next week’s autumn statement: a recovery for the many; a fairer approach to balancing the books; and a plan to save our NHS. Britain cannot afford another autumn statement of inactivity, neglect and the same old trickle-down economics. We need a Government who step up and take action to deliver a recovery shared by all. I commend the motion to the House.
Today the Opposition have reminded us why Labour can never be trusted with the economy again. So appalling is its reputation on all matters economic that even its former Chancellor, and now we hear its former Prime Minister, are seeking to join the exodus from the parliamentary Labour party, belatedly fleeing the scene of the economic carnage they helped to create. Chris Leslie spoke about the 2010 autumn statement. Back then the former shadow Chancellor, Alan Johnson, forecast that there would be a “jobless recovery”. Since then Labour have become a broken record, and over the past four years they have been proved wrong about the economy and sought to mislead and frighten the public at every opportunity. Instead of presenting a sustainable economic plan to the House today, they come here and use this very rare debate on the economy to talk down the economy, and sneer at those who want to work hard and to get on in life, which is why I would like to start by bringing the House’s attention to a few basic economic facts about their track record.
With a record peacetime deficit, increased unemployment and a welfare system that was broken, Labour left Britain’s economy in a mess. On top of that they doubled income tax for the poorest, and insulted pensioners with derisory levels of state pensions, not to mention the mean-spirited 75p increase in state pension; that is how the Labour party rewards our pensioners after a lifetime of work. Labour also oversaw a doubling of council tax, increased the rate of fuel duty 12 times, and failed to support parents with child care costs, yet they have the audacity to come here today and lecture us about child care costs. The Government are reforming child care through tax-free child care and sustainably helping hard-working and hard-pressed families up and down the country.
This Government have cut the deficit by over a third, so we will not take any lectures from the Opposition or the hon. Lady about that—notwithstanding the fact that when in office Labour failed to prepare our young to compete against the brightest and the best when it came to skills, jobs and education, and that was just the tip of the iceberg.
Since 2010, this Government have worked hard to turn this situation around. By working to our long-term economic plan, we have seen the deficit cut by over a third, income tax cut for over 25 million people, benefits capped to reward work, and 1.7 million more people in employment, while over 2 million more private sector jobs have been created and employment is the highest on record. We have created 1 million apprenticeships. The state pension has increased. More children are in good and outstanding schools. Over 50,000 families now have a home thanks to our Help to Buy policy. This is a good start, but we are the first to recognise that the job is far from finished.
I gather the Minister is visiting my constituency tomorrow, although her office was not prepared to tell us what she will be doing there; perhaps she can tell me now. May I urge her to meet some of my constituents, and go around some of the estates and find out what life is really like for those people, because it bears very little resemblance to what she is telling us now?
My hon. Friend is right that we have made a good start. The Opposition spokesman talked about opinion polls, but, interestingly, he did not talk about the opinion poll showing that the public saw we had done a good job, and that we have an economic competence lead of 26% over the Opposition and their plans.
My hon. Friend is absolutely right and this brings us back to the heart of this debate. It is about having a long-term economic plan that is tackling the challenges for our economy left by the former Government, while also looking ahead to the future and making sure we have a plan in place.
The hon. Gentleman will recognise that had it not been for Labour’s great recession, living standards in this country would be much higher. Thanks to our economic plan and policies, we are now seeing booming inward investment, often by more than the rest of the EU combined, with all the main sectors of the economy growing. A growing economy, a falling deficit, record numbers in work: those are the economic facts that Opposition Members seem to want to deny. They want to continue to scaremonger and misrepresent the economic reality. We said we would get the deficit down, and the deficit has come down. We said we would recover the economy, and recovery is taking place. The Opposition predicted that 1 million people would lose their jobs, but 1.7 million jobs have been created.
It would not be realistic to pretend that the job is done, however, or that the situation is perfect. We know it is not, and that is a result of Labour’s great recession, but I am sure that all Members will agree that responsible government means being straight with the public about the economic situation we are in.
While unemployment soared under the last Government, does my hon. Friend welcome the fact that youth unemployment is down 50% in my constituency in the past 12 months, and does she agree we should now work towards full employment, to make sure that none of our young people are out of work?
My hon. Friend is absolutely right, and that is, of course, the objective of this Government: we want to support and give a helping hand to the young in particular, as they start out in their careers and professional lives.
The Labour party created even more red tape, regulatory burden and excessive regulation on business, and I commend my hon. Friend and the businesses in her constituency on everything they are doing on job creation.
Britain tumbled down the international league tables under the Labour Government: from 11th to 23rd in the world in terms of our corporate tax regime; out of the top 10 in the global competitiveness league; and out of the top 10 in terms of the ease of starting a business and doing business—we were level pegging with Mongolia on that. Levels of Government spending under Labour were catastrophically higher than we could afford. We had the most over-indebted banks and households, and we were on course for having the biggest budget deficit of any major economy in the world.
The British public are still experiencing the impacts of the Labour Government’s economic policies but, rather than coming to the House to apologise for the economic carnage that they created, Labour Members have the audacity to come here today and ask us why we are not clearing up their mess quickly enough. I think we all know that the past four years have been hard, and we cannot magic up a better standard of living from the economic carnage that we inherited. The only way to deliver for people up and down the country is to put in place a lasting, sustainable and healthy recovery.
The Opposition are firmly against the reforms that we have brought in on welfare. We inherited a broken welfare system; let us get that on the record and be categorically clear about it. Our reforms are about making work pay and providing opportunities through work, training and employment.
Our welfare reforms have resulted in a jobs revolution that means that it is morning again in Britain. If we look out from Dover across the channel, we see the sun rising over the white cliffs but we also see the storm clouds over Calais and the rest of the eurozone. Does the Minister agree that the biggest risk to our recovery would be a Labour Government and their crazy spending plans?
The Minister is talking about taxes. She will know that the Prime Minister made pledges at his party conference involving a total of £7 billion. Does she agree that if the Government are making such pledges, they really should say where the money will come from? I should like to give her an opportunity to put on record now specifically how she intends to pay for the £7 billion-worth of promises that the Prime Minister made.
The answer is simple and straightforward: it is through sustainability in our economy. That means making hard choices, tackling the challenges of public spending and encouraging the economy to ensure that it grows more. It is about the creation of more jobs, not about higher taxes that penalise the wealth creators of this country.
Is not what my hon. Friend is saying confirmed by the fact that there are 670,000 fewer workless households in this country under this Government than there were under Labour, as a result of following our long-term economic plan?
My hon. Friend is absolutely right. The Labour Government consigned people to lifelong dependency, and it is our welfare reforms that have enabled us to ensure that work pays and that people are trained to get back into work. Britain would have been much better off, had we not had the mess of an economy on the brink of collapse, a banking system on its knees and a budget deficit in double figures. The only way to help people in this country is to grow the British economy. When we grow the economy, wages grow and living standards improve. The Governor of the Bank of England said last year that
“ultimately the growth in real wages is going to be determined by recovery in…this economy”.
My hon. Friend Chris Leslie asked the Minister about the unfunded £7 billion of tax cuts. They have been described by the Business Secretary as a “total fantasy”, and by the Chief Secretary to the Treasury, her colleague, as a “grand deception” of the public. Does she support the Chief Secretary to the Treasury? Will she withdraw her remarks about the Labour Government’s fiscal irresponsibility and accept that the Business Secretary and the Chief Secretary to the Treasury are accusing the Chancellor of fiscal irresponsibility by suggesting that £7 billion of tax cuts?
I say to the hon. Gentleman that, by growing the economy, we will see—[Interruption.] The hon. Member for Nottingham East is gesticulating with his hands, which is something I know the Labour party likes to do. The Prime Minister was very clear in his party conference speech. We are all about economic growth, growing the economy, getting our budget back on track and sorting out the finances, unlike the Labour party, which just wants to spend, borrow and tax more.
The hon. Lady is being very patient in allowing us to intervene on her. It is important that we pin this down. The Prime Minister has announced £7 billion of unfunded pledges, and she is standing there and saying, “We’ll pay for it through sustainable growth.” If the Opposition said that they were going to put £2.5 billion into the NHS through unfunded growth, what would she really say in response? It is our duty to ask her to be specific and to say what she is will cut to fund those pledges or how she will raise the money by raising other taxes such as VAT.
My hon. Friend’s point tells us everything we need to know about the economics of the Labour party.
We believe in a recovery that works for the many, and there are three ways of putting that recovery in place. First, we create the right macro-economic conditions. Cutting the deficit, restoring public spending to sustainable levels, ending the culture of Government excess—which the Labour party knows quite a bit about—securing inward investment, building, manufacturing, exporting and securing our place in the world are all key, and we are doing those things.
The Minister has touched on a crucial point. When this Government came to power, exports to the EU far outweighed those to the rest of the world. Our investment in UK Trade & Investment and the confidence of British investors in the macro-economic conditions that we have created have now turned that situation round. We are no longer as dependent on the struggling EU economy, following a 10% increase in growth outside the EU.
My hon. Friend is absolutely right. This Government made the right decisions. For a start, we do not vilify businesses; we work with them to help them grow, export, and expand overseas. We have also invested heavily in UKTI, which is working in partnership with businesses up and down the country.
My hon. Friend is talking about exports. Does she agree that this Government have set out the right conditions for exports? That is proven by the fact that we are now exporting more cars than we have imported since the 1970s.
My hon. Friend is absolutely right. In his constituency and his region, the motor manufacturing sector is doing incredibly well and demand is incredibly high. Long may that continue. That is all about creating the right economic conditions to allow that to happen.
I appreciate that we are entering the pantomime season and that this kind of political knockabout over whose spending plans stack up might play well to those in the gallery or to people outside, but the real way for the Minister to give confidence to the electorate that her £7 billion tax giveaway will stack up financially would be to allow her spending plans to be judged by the Office for Budget Responsibility. Labour has said that its spending plans will be put before the OBR; why does she not do the same?
We are confident about our plans; it is the Opposition who should be worried about theirs.
The second way to recovery is by securing jobs and employment, and supporting businesses and the private sector. There is no better route to opportunity and success in our economy than being able to get a job; it is perhaps the closest thing we have to a silver economic bullet. Someone in work brings home money and is contributing to the economy, as we have all seen across our constituencies, and this makes an enormous difference to all our constituents. The 2 million private sector jobs created since 2010 have transformed people’s lives, while offsetting the reduction in public sector jobs many times over. This is what it is about: creating the conditions of growth so that the under-25s at the beginning of their careers get the right start in their working and professional lives, as many hon. Members have said. That is why the number of young people claiming benefits has fallen by more than half.
The hon. Gentleman will know that child poverty is falling, and it is only by making work pay that we can reward the individuals who choose to go out to work and ensure that they are supported, not only through tax credits, but through the wider system, through child care—[Interruption.] The national minimum wage has gone up. Will Labour Members welcome that, because—[Interruption.] It went up last month. [Interruption.] The Opposition are belittling the fact that we have ensured that the national minimum wage has gone up, and that is part of sustaining families and helping them with the cost of living. This is not just about young people; it is about supporting parents as they return to work through our reforms to child care.
To those, particularly those in the Labour party, who point to some of the measures I have outlined as a sign of economic failure, I say two things. First, they should stop sneering at what this Government have done to give our young a hand up when it comes to employment opportunities. The apprenticeships schemes, training schemes, colleges and starter jobs are not to be sneered at—they are valued and welcome. This Government have rightly put out the helping hand to a generation abandoned by Labour by giving them the chance to train, get a profession and get on in life.
Secondly, job creation and wage increases do not happen simultaneously. If there is an exceptional rate of job creation—we have put one in place—of course that has an impact on average wages. Wage increases happen slightly later. However, as the Resolution Foundation, run by Gavin Kelly, a former special adviser to Mr Brown, has stated, when compositional changes in the labour market are accounted for, average wages for the first half of 2014 have grown in real terms. Encouragingly, the most recent monthly Office for National Statistics figures showed wage growth outstripping inflation, particularly so for the 84% of workers who were in continuous employment—those in exactly the same job as they were a year ago—who saw pay rises of 4.1%, which is double the rate of inflation.
The third way to get a recovery that works for the many is by allowing people to take home and keep more of the money they have earned: giving them more disposable income. That measure is conveniently not included in the £1,600 worse-off statistic frequently touted by the Labour party, which also does not take into account the huge increase in employment or a measure of inflation that has any credibility. Over the course of this Parliament, we will have cut the income tax of a typical taxpayer by £805, boosting the amount of money 25 million people take home, and taken more than 3.2 million of our lower earners out of income tax altogether. These are the biggest reforms of income tax in generations.
We are cutting the cost of living, helping to make families more financially secure. We are freezing fuel duty—the Labour party was happy to increase that at every opportunity; freezing council tax; and reducing the costs of child care. Those measures are helping with the standard of living of people up and down this country.
I do not know how much more the Minister has got to say, but I did not want to let the chance go by for her to address the discourtesy pointed out by my hon. Friend Kerry McCarthy. My hon. Friend does not know where the Minister is going tomorrow, and I am sure that such discourtesies do not please you, Mr Speaker. The Prime Minister came to my constituency and did not bother to tell me about it. An opportunity has been offered to the Minister and I wonder whether she will tell us before she finishes speaking whether she is going to take that opportunity to be clear about where she is going tomorrow.
Of course, Mr Speaker. No discourtesy is meant. I know that those in my office have been in touch with Kerry McCarthy and she has been notified of my visit tomorrow. After I have finished in the Chamber today, I will ensure that she is given full details of the location of the site that I am visiting.
We have heard quite a lot from the Opposition today, and I take issue with the implication that the recovery helps only the well-off. In every Budget since 2010 revenues from the most well-off have been raised. The increases in capital gains tax in 2010, the increase in stamp duty on high-value homes and limiting income tax reliefs are all measures that we have taken. We have been able to use those extra revenues to help the most vulnerable in our society wherever we can. We have done so through the introduction of the triple lock on the state pension, making pensioners £440 per year better off; through the pupil premium in our schools; and by supporting those on disability benefits by exempting them from the annual benefit cap. It is right that we safeguard those in need through such measures. It is not right, no matter what the Labour party says, to have a tax system in place that turns talented growth-creators away from the UK. The Opposition’s dogmatic stance on the 50p rate shows that they are willing to drive wealth creators out of this country and to risk our economic security. That is no way to help the poorest in our country.
Next week, the Chancellor will present the autumn statement to the House. As this motion notes several areas where the Government have taken action, and will continue to do so, I would like briefly to touch on some of those items. As I said, we are the Government who increased the national minimum wage in October, leading to a pay increase for more than 1 million people. That was the largest cash increase since 2008. We are also the
Government who are introducing tax-free child care, which will provide working families with 20% support for child care costs of up to £10,000 per year for each child. On tax avoidance, we have taken the lead on the international stage through the base erosion and profit shifting projects. Domestically, we have made 42 changes to tax law to close down loopholes and reform the system. After 13 years of Labour inaction on tax evasion, we are leading the world on tackling the issue.
We will take no lectures from the Labour party on small and medium-sized enterprises. It regulated, taxed and placed endless excessive burdens on SMEs when it was in government. This time last year we announced the largest package of business rates support for 20 years. More than half a million small businesses are benefiting from small business rate relief, with 360,000 paying no business rates at all. This Government back SMEs. We understand them and we pay tribute to them for their enormous contribution to our economy.
For the first time in a generation we have a Government who are committed to investing in our infrastructure. The national infrastructure plan has ended the corrosive stop-start cycle of infrastructure investment and enabled us to have some of the most ambitious infrastructure projects in generations, so that Britain can once again stand tall in the world. [Interruption.] No, we have enabled many infrastructure projects to take place across the country, and we are proud of the investment this Government are making in infrastructure. Housing has been mentioned, and we are investing £7.8 billion to deliver the most ambitious affordable housing programme for more than 20 years. The Conservative party is the one that has supported and championed the property-owning democracy, so we will take no lectures from Labour on home ownership and supporting the aspiration of those who want to own a home.
We live in a global economy and, as we have seen, not every country has had our laser-sharp focus on growth and economic competitiveness. In the 21st century no country is 100% master of its own economic destiny, and it would be naive to pretend otherwise. But the reforms we have carried out are making our long-term sustainable plan and our economy—this leads to the increase in living standards—so viable. Regaining the lost ground can be achieved only by backing growth in our economy, supporting those who back business and support job creation, and underpinning it with sound public finances and strong business investment. We have a plan in place and it is delivering. [Interruption.] It is interesting at this stage of the debate to see Opposition Members sneering and sniggering. We will carry on working through our long-term economic plan, which is securing a resilient economy and a better future for all.
Order. On account of the level of interest in the debate, I am afraid that there must be a time limit on Back-Bench speeches. We will start with an eight-minute limit, although it is not mandatory for Members to consume all of the available time. We will see how we get on.
I will try to be as quick as I can, because I appreciate that Members on both sides of the House take this debate very seriously and wish to participate in it.
Government Members should be reminded that they should not try to rewrite history. I listened to the tirade of the Exchequer Secretary to the Treasury over who did what in the lead up to the current economic situation. It is worth reminding the Government that in 2008 we saw the collapse both of the Lehman Brothers in America—it is always good to remind them of that—and of Fannie Mae. The conservative US President then pumped $260 billion into the American economy and introduced quantitative easing, which shows that the economic situation was international, because many countries depend on America for trade. We should start to set the record straight. Running alongside that is the fact that in the first two years of taking office in 1997, Labour paid off large chunks of our national debt. That is conveniently forgotten by those on the Government Benches. We should also remember that the current US President had to bail out the motor car industry in America. The Conservatives tend to forget that little one as well.
It is also worth reminding the House of what we achieved. We introduced quantitative easing and low interest rates, which facilitated growth and helped mortgage payers. We capitalised the banks for the dead simple reason that people were in danger of losing their savings. The Opposition had only one answer to that matter which was to cut red tape. How many Members of the House remember the Conservatives saying that?
When we left office, the economy had increased by about 1.8%, and we had managed to retain our three star credit rating, which is why we could borrow money to try to rejuvenate the economy and keep people in jobs. The Government must be reminded of those things, because sometimes, rather than giving us the reality of the situation, they sound more like an Administration from North Korea. People often say that politicians do not reflect what is happening to them on the ground. Anybody listening to the Government today would certainly have had that impression.
No matter what the Government say, no one can dispute the fact that people are worse off by £1,600 a year. It is worth saying that the purchasing power of wages has also been reduced by between 5% and 6%. In the public sector, pay increases have been kept at 1%, which means that workers have had a wage cut of something like 5%.
In one of the most astonishing episodes of this Government, the Chancellor of the Exchequer, last week or the week before, rushed off to Europe to get the cap on bankers’ bonuses lifted—unbelievable! That is how out of touch the Government are with public opinion. The public want us to hold bankers to account for causing the previous recession with their prolific spending. People want something done about the bankers, and we have the Chancellor running around trying to get the cap lifted on their bonuses to reward failure. It is astonishing.
Was it not made more unacceptable by the fact that this week midwives were here lobbying for a 1% wage increase that the Government had turned down? That same Government were taking Europe to court because the cap limited bankers’ bonuses to 100% of their pay. At the same time as taking Europe to court for stopping bankers getting bonuses above 100% of their pay, the Government were not allowing midwives a 1% rise, which was recommended by their pay review body. In other words, midwives were considered to be worth nothing.
My hon. Friend confirms what I have just said about the Government being out of touch. That is why the public think that politicians in general are out of touch with their constituents.
Before I reflect on some of my constituents’ concerns, let me talk about food banks, the number of which is at an all-time high under this Government. They were introduced to help asylum seekers; they were never intended to be used in the way that this Government are now using them. We should remind the Government of that, because it shows what is happening outside this House to people in this country.
Let me touch on the issues that affect the people of Coventry. Local government cuts are a concern. Coventry has to find £65 million over the next three years. We will have to lose 1,000 jobs. Services such as libraries and those relating to care could be cut. That is the reality of this Government’s policies; we cannot blame anybody else for the problems. Even the education service in Coventry, which backs up teachers and head teachers and gives advice, will be cut. Care for the elderly is also under threat. On a regional level—I am talking about the west midlands—we have seen cuts to the police force. The fire services have a big problem with pensions. A couple of days ago, we had a dispute in the west midlands in which people withdrew their labour. The whole of our public services has been under attack by this Government. The Government have also squandered between £3 billion and £5 billion on the reorganisation of the national health service—that is how out of touch these people really are.
When we look at the public sector in general, pay increases have been kept at 1% for three or four years, which has reduced the public purchasing power by between 5% and 6%. We have seen large-scale redundancies in the public sector. The Government call it rebalancing the economy, which shows just out of touch they are.
The last figure that I have seen suggests that 75,000 people are waiting to be assessed for the employment support allowance, which is astonishing. The citizens advice bureau in Coventry has dealt with something like 1,300 inquiries in the past 12 months, with the ESA accounting for about 25% of its inquiries. Some of the time spent on those inquiries could be better spent helping people. There are unacceptable delays in appeals, with 40% having negative decisions overturned. People who wait more than a year to be assessed suffer financial difficulty and stress. Terminally ill people are also facing long delays, and the Government are doing nothing about it. That is how out of touch they are.
Employment tribunal fees range from £160 to £250, and a tribunal hearing costs £950, which makes a total of £1,200. That has to be paid by people who cannot afford it. I have constituency cases in which people cannot get proper legal advice because of the cost. The TUC report shows that there has been a fall of 79% in overall claims, which includes an 80% fall in the number of women pursuing sex discrimination cases. That is what is going on under this Government. The CAB has reported that seven out of 10 potentially winnable cases are not being pursued. Then we have the issue of zero-hours contracts. I will not go into any of the details on those now as they have been well and truly rehearsed over the years. I welcome increases in employment, but what we have are jobs that do not even pay a minimum wage. With zero-hour contracts, people cannot plan for a holiday or get a mortgage. That is the reality.
More and more people in this country are in work but on very low wages. What good is work if a person is still in poverty? People should earn enough in their job to be able to live a decent life, and more should be done to make firms pay a living wage.
I am grateful for the opportunity to contribute to this debate this afternoon. It is a pleasure to follow Mr Cunningham. I listened carefully to his remarks, and feel sure that he would have wanted to put it on the record that unemployment in his constituency has fallen by 32% over the past year and youth unemployment by 48%. That fact goes to the heart of what we are talking about today.
I read the Opposition motion extraordinarily carefully last night. I do not want to use unparliamentary language, so I will speak in economic terms. When we talk about being economical with the truth, we should look at the great speech from the Opposition Front Bench. We had not only deficit denial but fact denial. This motion shrinks away from reality. It is economically and historically inaccurate and, as those on the Opposition Front Bench know, economically inept. I am pleased that the motion has at least one virtue: it gives us the chance to remind everyone in this country that Labour left the largest ever budget deficit in peacetime. They caused the mess that this Government are clearing up. Of course, it is historically the job of Conservative Governments to clear up the mess that Labour Governments leave behind.
It was extraordinary that the speech made by hon. Member for Nottingham East (Chris Leslie) included not only deficit denial, but a denial of facts set out by the Office for National Statistics about the rise in living standards that is beginning due to this Government’s long-term economic policy. We heard no apology from him for the economic mess. No one says that there was not a financial crisis and a banking crisis, but had he listened to my hon. Friend Nick de Bois—and responded to my hon. Friend’s point, rather than trying to deny the facts—he would have recognised that the previous Labour Government created a structural budget deficit over a full 10 years, which was why this country had a significantly worse budget deficit than any other European country.
The former Chancellor certainly abolished boom for much of the time, and he also created busts.
If the hon. Member for Nottingham East reads the ONS statistics, he will see that productivity fell so dramatically while Labour was in government that we had to redefine it. The Labour Government had to redefine long-term unemployment because the numbers were becoming so large. They put people on a course—any course; it did not matter whether it was relevant to a job—and did not create any apprenticeships.
One of the messages that will ring out from the Chamber is Labour’s failure to apologise. Until the Opposition accept that they were responsible for the economic mess, no one in the country will think that they have any credibility. The motion refers to
“a recovery for the many, not just a few”.
I know that the Labour party does not like to discriminate because while it was in power, it was not a question of the many or the few at the top, because we all undoubtedly suffered economic hardship. Labour Members do not want to face the fact that living standards were falling faster between 2008 and 2010 than they have since.
The wording of the motion is simply wrong. While it cites a “recovery for the many”, the many are recovering at the moment. More than 1.5 million people have been taken out of tax, while 26 million are paying less tax. People’s mortgage payments are underpinned by low interest rates. Some 1.3 million people are in new jobs, and although shadow Ministers do not like to accept this, in the past year, 71% of those jobs were full time. Unemployment among to 16 to 24-year-olds is falling faster than ever before. I do not think that the families who are experiencing such things would regard the economic recovery as something that does not benefit them.
I assume that the words “few at the top” in the motion refer to the cut in the 50% tax rate. Labour Members may wish to address that, but I suspect that, like with measures on bankers’ bonuses, they would spend the money raised many times over to fund a number of things. However, let us examine the supposed injustice about which they make so much noise. Does the hon. Member for Nottingham East wish to intervene to tell us for how long there was a 50% tax rate under the previous Government? It was 36 days in the whole 13 years when Labour was in government.
Would the 50p tax rate be so necessary if people such as the hon. Gentleman did not exploit complex offshore tax arrangements to minimise their tax bills? How can he lecture the rest of us in the House about ordinary families who are not able to afford accountants and offshore tax arrangements?
I say clearly to the hon. Gentleman that I pay every piece of tax that is due. I have never exploited anything. The Daily Telegraph wrote a story that was a lie, and he ought to be very careful about making such a remark outside the Chamber. I have made clear statements, which are on the internet, that show clearly that I pay every piece of tax that I am supposed to pay. I have never avoided tax and I pay it entirely. He should be very careful about making those accusations. He is using parliamentary privilege to do so, but that is cheap. He should be very careful because that is unfair. It is wrong, and he should apologise.
At the end of the article, quite rightly, The Daily Telegraph points out all the facts that my lawyers have made available, and it now recognises those facts. If the hon. Gentleman wants to make an apology, I shall happily accept it.
The motion refers to a
“tough and fair plan to deliver a current budget surplus and falling national debt”,
yet the Opposition’s spending plans involve £166 billion of extra spending. The hon. Member for Nottingham East talks about Labour’s tough and fair plan and its zero-based review of every pound spent, yet the shadow Chancellor’s article in last night’s Evening Standardsaid that Labour had so far identified £250 million of savings against that £166 billion of unfunded promises. We hear about unfunded spending promises from the hon. Member for Nottingham East, so will he clarify whether the zero-based review has identified any more savings than that £250 million?
Our zero-based review of all Government Departments is an ongoing process, but I want to ask the hon. Gentleman about the £7 billion promised by the Prime Minister. The hon. Gentleman is a man of integrity—he has been debating this with my hon. Friend Ian Austin—so surely he does not think that the Prime Minister can get away with saying that future growth will pay for that £7 billion. How should that £7 billion be paid for?
I am delighted to accept the hon. Gentleman’s word that I am a man of integrity and I hope that Ian Austin will also make that clear in the Chamber. It is perfectly reasonable to say that we will implement the policy when the economy allows. That was exactly what the Prime Minister said, as the hon. Member for Nottingham East knows.
The hon. Gentleman also knows that growth in our economy is at 0.7%, in line with data from the past eight or nine quarters, and that the OECD forecasts that the UK will be the fastest growing economy in the G8 this year and the second fastest next year. He also knows that the deficit has been cut and that our interest rates mean that mortgage rates remain low for many. There is long-term economic progress in an economy that is now 3.4% larger than when we went into recession. Under Labour, borrowing steadily rose throughout the period of economic activity, but this Government are starting to cut the deficit, which is benefiting the many. People have been taken out of tax and business investment is rising. It is clear that our long-term economic plan is delivering for the people of this county, and the only thing that would put that plan in danger would be the election of a Labour Government. The public see through
Labour’s plans, as an opinion poll shows that on economic competence, the Conservative party’s rate is, understandably, 26% higher than Labour’s.
We could spend a lot of time trading statistics about the economic recovery, the debt, the deficit and how much more the Chancellor is borrowing at this point in the economic cycle than he said he would. Those things are important but, frankly, they mean little to my constituents, who are tired of the blame game and of hearing the Government constantly saying that everything is the previous Government’s fault, given that they have been in charge for four and a half years. What matters to my constituents is their own jobs and living standards, and economic security for them and their families. It is about whether they can heat their homes, put food on the table, keep their cars running or afford the bus into the town centre to get to work, and keep a roof over their heads. The limited recovery that we have seen, which is barely bouncing along the bottom, is not being felt in east Bristol. That is why I asked the Minister, when she is in east Bristol tomorrow, whether she would be prepared to come and see some of that reality on the ground.
The unemployment figures seem to be moving in the right direction, which is good news. Labour has always had the ambition to move people from welfare into work as a route out of poverty. The right is fond of trying to caricature and misrepresent Labour and our voters as being wedded to welfare dependency. That is simply not the case. Labour has always been the party for workers; welfare for those who need it as an essential safety net and a support for those making the transition to work, and work for those who can and who, despite the misrepresentation, in 99% of cases desperately want to work. But under this Government we have seen a rising phenomenon of in-work poverty; a problem that is masked by the superficially encouraging trend in employment figures, but is undeniably there and is a feature of many people’s lives.
The Joseph Rowntree Foundation has just published a report on this year’s statistics. It says that it
“shows a real change in UK society over a relatively short period of time. We are concerned that the economic recovery we face will still have so many people living in poverty.”
It is estimated that about 13 million people in the UK are in poverty. Poverty among working age adults without children is at a record high, but about 40% of working age adults in poverty are working. So it is not simply an issue about moving people from welfare to work; it is about making work pay. Among children in poverty, most—more than 2 million—are in a working family.
My hon. Friend makes a powerful point. Is not this why we need a more concerted effort on the living wage? She will know that during this Government’s lifespan, the number of people paid less than the living wage has increased by 1.5 million, and that puts enormous pressure not just on those families and individuals but on the social security system.
I agree entirely with my hon. Friend. Nearly 20% of working people in Bristol East earn less than the living wage. According to the Joseph Rowntree Trust, two thirds of people who moved from employment into work in the last year are paid below the living wage. That is why in Bristol we have been running a living wage campaign. We have finally managed to persuade the mayor of Bristol to introduce that at the council level, and we want to encourage the organisations that do business with the council, with procurement contracts and so on, also to do that, and for the private sector to follow suit. That is incredibly important.
My hon. Friend is making an important speech about Bristol, and I was interested in her comments on the living wage. Will she accept that the living wage is equally important for seats such as mine in outer London, where those who travel into central London have recently been hit by a 38% increase in the cost of the tube as a result of the Mayor of London’s recent decision?
I entirely agree with my hon. Friend. I will come in a moment to some of the living costs that are hitting people’s pockets hard. In Bristol, First Bus announced this month that the price of a day rider ticket would increase by 10%. That may not seem a huge amount, but when people are squeezed to the last penny and are struggling to afford to go to work and for work to pay rather than being on benefits, such transport fare rises make a huge difference to their weekly outgoings. That is another part of the jigsaw puzzle of how people are struggling to make ends meet.
My hon. Friend Mr Cunningham mentioned zero-hours contracts, and constituents have come to see me recently about the uncertainty in which those place them. Usually people would be added to the payroll in the middle of the month and paid at the end of the month, but if people do not know until the end of the month how many hours will have been worked, they end up being paid a month in arrears. I had a woman come to see me the other day who had started work in September just too late to get on the payroll for that month. She could not be paid for the full month in October because she would not know until the end of the month how much she had worked, so she would not be paid until the end of November. Not only did she have to cover the period without an income, but it was impossible to plan ahead. It was impossible to claim in-work housing benefit and difficult to asses what she was entitled to in child care tax credits and other tax credits. It meant that she had to employ a childminder without knowing whether she needed that or could look after her child herself.
My hon. Friend mentioned season tickets. How does someone know whether it is worth buying a monthly season ticket to travel into work without knowing how many hours they will be working? All these things add up to make life incredibly difficult for people on zero-hours contracts. It is exploitation and it has to stop. Workers are being underpaid and underemployed. They are being treated as just another inanimate resource rather than the human beings that they are.
Some 1.4 million contracts do not guarantee a minimum number of hours and 1.4 million adults are in part-time work because they cannot find full-time work. In the last year, not a single employer has been prosecuted for paying below the minimum wage. The last successful prosecution was in February 2013, which was only the second prosecution under the coalition Government. Last year, the TUC estimated that 350,000 workers were paid less than the minimum wage. Again, that has to stop. These laws are there to protect workers and to ensure that work pays, and they are simply not being enforced.
The Joseph Rowntree report
“highlights the way the housing market has had a negative impact on people in poverty. There is not enough social housing”— as we all know—
“which means more people in poverty are living with insecure tenancies in the private rented sector. The number of private landlord repossessions is now higher than the number of mortgage repossessions.”
The number of working people claiming housing benefit is rising and the amount that they need to claim is increasing too. Last year, the south-west of England saw the biggest increases in rent, with a rise of nearly 5%. Bristol is second only to London in yearly house price growth, with average prices in our city increasing by more than 13% last year. On top of that are the increases in transport costs. Between 2010 and 2013 energy prices for households rose by 37%.
Finally, there is food poverty, which Madam Deputy Speaker will know is an issue dear to my heart. In the UK, more than 4 million people are affected by food poverty. UK food prices increased by 43% in the eight years to July 2013. We all know that more people are having to use food banks. According to the Oxfam and Church Action on Poverty report “Below the breadline”, the three main food aid providers gave more than 20 million meals in 2013-14, a 54% increase on the year before. Problems with the social security system, such as delays and sanctions, continue to be the biggest overall trigger for food bank use. About 45% of people who use the service do so because of problems with the benefit system. Despite repeated questioning of various Ministers, even the Prime Minister, the Government refuse to accept that it is the failings of their own welfare system that are driving people to the food banks in poverty.
Another emerging trend is the 22% of Trussell Trust food bank users referred because of low income—compared with last year 51,000 more people were referred due to low income. Again, this is in-work poverty. These are not people who are playing the system, who, as one Minister said, are making use of the food banks simply because they are there so that they can spend their money on beer and bingo. These people are doing their best to try to get by in work but simply cannot afford to feed their families without resorting to food banks.
My hon. Friend Chris Leslie has outlined some of the measures that Labour would take in terms of taxation and trying to raise incomes to address some of these problems, but above all it is a question of priorities. The Government have completely the wrong priorities—giving tax cuts to millionaires rather than tax cuts and support for people at the lower end of the income scale who are the ones who really need it. Cutting the 50p tax rate did nothing to help the people in my constituency who are struggling to get by. I urge the Government to rethink this because their priorities at this time are simply wrong.
It is a pleasure to speak in this debate. I want to concentrate on a few things that the shadow Minister, Chris Leslie, said. I hope that one day, while driving from London to Nottingham, he will decide to turn off the M1 and head towards Watford, because then I could show him that, in reality, many of the claims made in this lengthy Opposition motion are not quite correct.
If my hon. Friend Chris Leslie accepts the hon. Gentleman’s invitation, perhaps he will take him to Watford tube station, where they could discuss the impact of the increase of up to 38% in the cost of fares for outer-London commuters that the Mayor has recently imposed.
Just to correct the hon. Gentleman, some of the tube fares for areas outside London are set by the owner of the stations, London Midland, rather than by Transport for London. I know that he did not mean to mislead us on that point.
The shadow Minister claimed that working people are worse off today than they were under the magical mystery tour of the previous Labour Government. I am not sure where that claim comes from, but I imagine that he, like the shadow Chancellor, bases his statistics on the retail prices index, comparing it to wages, which most credible economic sources no longer use as an indicator because it does not include the huge increase in the personal allowance and tax cuts of £700 per person. To get back to reality, when somebody who has been unemployed for a long time, or indeed who has never worked, gets a job, it will not necessarily be a highly paid one. If the hon. Gentleman accepted my invitation to come to Watford, he could visit the local jobcentre—he might be hoping that I will be enrolling there next May—and see that long-term unemployment has fallen by 44% and youth unemployment has halved. Nobody could say that those working people are worse off than they were before 2010.
My hon. Friend makes a powerful point about getting people back into work and about youth unemployment, which has also been halved in Gloucester. Does he agree that the rise of apprenticeships provides an important opportunity for young people to develop skills sets that will enable them to have a bright future? There are 5,000 new apprentices in Gloucester, and I have no doubt there are many more in Watford.
Indeed there are. I totally agree with my hon. Friend and am fully aware of all the work he has done on apprenticeships in his constituency.
When I started running jobs fairs in Watford in 2010—I hope that the shadow Minister is listening—70% of the 2,500 people who came were unemployed and were looking for a job; the others were already employed but were looking for a better job. Last year, 70% of the 4,000 people who came were already in employment and were looking for a better job. To take a Watfordian lesson from that, those people’s real wages will go up in the normal progress of things, now that, as a result of the long-term economic plan, the economy is beginning to move and people are getting back into employment.
The Opposition have set a national minimum wage target of £8 an hour by 2020. Perhaps I have misunderstood —I hope the shadow Minister will explain when he winds up the debate—but on current trends the national minimum wage will be more than £8.10 by 2020 anyway. I do not think he is pledging to cut the national minimum wage in 2020 if he is in government. I recently met with Julia Unwin of the Joseph Rowntree Foundation and John Cridland, a former member of the Low Pay Commission, and in fact, they seemed to think that Governments planning to set a minimum wage target is exactly against what the Low Pay Commission does. When they explained to me how they calculate what the minimum wage should be, after negotiations with employers and all the different interested parties, they said that they really wanted the calculation to be taken outside of politics and that they were quite worried about the shadow ministerial team’s proposal.
I wish I had time to go through each point in this rather lengthy motion, but as my time will be up in five minutes—and, indeed, as there is an election in five months—I do not think that I have time to do the task justice. I will instead focus the rest of my remarks on some key points. The real raising of people’s wages is not done directly by the Government. Governments do not set wages in quite the way the Opposition imply. What really matters is making available the types of jobs that people are trained to do.
One Government policy that has not been mentioned today, but which I think is directly relevant to the debate, is the founding of the university technical colleges, one of which was recently opened in Watford. The good thing about the UTCs is that half of the curriculum is set and designed by local employers, so jobs are available in those fields. Hopefully, the children graduating from those schools—it is early days yet—in addition to getting the more formal academic qualifications, will be halfway into a job and not on the ground floor, because they will already have had years of training. In Watford’s case it would be in tourism and events management—Hilton Hotels is very much behind this—or in IT. They will not just be leaving school, looking for a job and getting in at the bottom.
I hope we all accept that the real problem is the skills shortage, which has been a problem since the second world war, if not before, so it has not been caused by a particular Government. The Education Act 1944 tried to do something about that, but it never seemed to happen. The UTCs might seem a small step, but they are an important way that more children can get into the right kind of employment from an early age. I realise, of course, that on its own, that really is not enough.
The real way to raise living standards is by having long-term stability and confidence in the economy. It might seem strange to hear me quote Bill Clinton. I do not think he has been to Watford, but if he happens to pick up Hansard and see my offer to the shadow Minister, I would be happy to make exactly the same offer to him—it is just off the M1. [Interruption.] Indeed, Mr Clinton probably has not been to Nottingham either. His speech to the Democratic party’s 2012 national convention in Chicago is one of the best political speeches I have ever heard, apart from the Minister’s response to the shadow Minister today. He said—you will be delighted to hear that I will not attempt an American accent, Madam Deputy Speaker—something along these lines: “So let me get this clear. You all agree that the last guys screwed it up. You may think that the current guys have made slower progress than you had hoped and have not done all the things they said they would do. It hasn’t happened as quickly as they wanted it to. So the answer is to bring back the guys who screwed it up, right?” That thought, for me and my constituents, is a very important one.
We go from Bill Clinton in Chicago to the shadow Minister in Nottingham. If both of them had been to Watford and seen the reduction in long-term unemployment, the doubling of apprenticeships and the 400 new businesses that have been created since 2010, they might both have cause to pause for thought. I hope that will be borne in mind when the Opposition wind up the debate.
So was it the Government’s long-term economic plan that average wages should fall by an average of 9% in real terms—the biggest fall since the depression of Victorian times in the 1870s—and that in the past year the rise in the average wage should be a pitiful £1 a year, which, after adjusting for inflation, is a chunky fall of 1.6%? Was it the Government’s long-term economic plan that UK productivity should now be the worst in the G7 leading high-income countries, and that while output per hour between 2007 and 2013 rose by 8% in the United States, by 5% in Japan, by 3% in Canada, by 2% in Germany, and by 1% in France, in the UK, uniquely, it fell by 3% and shows no sign of improving in the future?
Was it the Government’s long-term economic plan—this really is important—that six years after the crash, business investment should still be flat, at a level 10% below pre-crash, or that the FTSE 100 companies should still now be sitting on cash stockpiles of over £500 billion and not investing because they do not believe the Chancellor’s so-called recovery is sustainable? Was it the Government’s long-term economic plan that net exports in traded goods—that is, manufactured imports less exports—should now be chalking up the biggest deficit in British history, perhaps as much as £110 billion this year? To cap it all, was it the Government’s long-term economic plan that after nearly five years of austerity, the budget deficit should not be falling at all but rising again this year, when it is still a whopping £100 billion?
That then leads to the central question in this debate: what is the rationale for continuing with austerity when the consequences of austerity—the draining of demand out of the economy, as I have explained—are actually increasing the deficit, not reducing it? What is the answer to that central question? The Minister, in an exceedingly shrill, partisan and strident speech, made no attempt at all to answer it.
Nor is the situation just a glitch this year. With economic growth now slipping from 0.9% in the second quarter to 0.7% in the third quarter, and predicted to be
0.5% in the current quarter, and with household incomes continuing to fall—indeed, the 1.6% real-terms fall in the past year is the largest since records began—the Government’s tax take, which is crucial to the deficit, is likely to drop still further in future years. The only way the Chancellor can then start to get the budget down again is by even more draconian cuts in public expenditure and benefits than in his first five years—perhaps by even double the £25 billion that he has already announced, as the
Financial Times is predicting. Even if that were politically possible—that is highly doubtful, as polling evidence is clearly showing a public rapidly cooling towards any further austerity ravaging their livelihoods—it would only worsen the basic problem for the Government of making even deeper inroads into their tax income. The Government are finally ending up eating their own tail.
The truth is that the Government have only ever been able to point to two positive elements in their economic policy. One is the much-vaunted recovery, but that has always been over-dependent on a housing asset bubble. It has never rebalanced the economy from finance to manufacturing. It has never gained any legs because, as I have explained, all the potential sources of demand are now pointing firmly south and all the economic indicators show that it is beginning to fizzle out. The other is the unexpected increase in employment, which has been regularly mentioned in this debate, but there too the surface picture is very deceptive. Overwhelmingly, the jobs have come from self-employment, where the average wage has fallen by a massive 13%, or from part-time work.
But those are the details: what really matters about this awful episode of the past five years is that the Government have been pursuing a slash-and-burn policy that is ultimately self-destructive, as we are now seeing all too clearly. They are doing this because their primary motive is not to eliminate the structural deficit but to use the deficit as once-in-a-lifetime leverage to overthrow the post-war social democratic settlement and to shrink the state so that the public sector is transformed into a fully privatised market system.
It need not be like this. The Chancellor has handled the deficit appallingly badly, with maximum pain and minimum benefit, and it could have been so different. By comparison, the previous Labour Chancellor brought in two expansionary Budgets in 2009 and 2010 to counter the monetary collapse caused by the bankers. That cut the deficit from the peak of £157 billion to £118 billion—a reduction of nearly £40 billion in two years. The current Chancellor’s austerity Budgets then kicked in, and the rate of deficit reduction halved over the next three years. He had said that by this year the deficit would be £40 billion, yet it is actually about £100 billion.
What does the record show is the best way to cut the deficit? Is it by stimulating the economy to produce real jobs and boost incomes, as Labour did, or by slashing expenditure, degrading the foundations of our society, and delivering the biggest fall in average real incomes since Victorian times, as this Government have done? Frankly, it is a no-brainer. Continuing with austerity when it has ravaged the livelihoods of millions, destroyed so much of the social fabric of our society and is not now even cutting the deficit, which is supposed to be the whole object of the exercise, can only be described as a certifiable condition.
There is a better way of doing this. It can be funded, with no increase at all in public borrowing, by instructing the publicly owned banks—the Royal Bank of Scotland and Lloyds—to prioritise lending to British industry rather than financial speculation overseas, by having a modest further tranche of quantitative easing targeted directly on key industrial projects rather than wasted on the banks as hitherto, or by taxing the ultra-rich. That is the way we should go.
Order. I have to tell the House that it is necessary to reduce the speaking time limit to six minutes. Unfortunately, interventions are taking us well over the eight-minute time limit, so that will not enable us to get every Member in. Therefore, with effect from the next speaker, who is Brooks Newmark, the time limit will be six minutes.
Notwithstanding the opening remarks of Chris Leslie, the Government have made huge strides in cleaning up the economic mess they inherited in 2010. As the Governor of the Bank of England, Mark Carney, said on
“There are now over one million more people in work in the UK than at the start of the crisis. Total hours worked are some 4% above their pre-crisis level. The recovery has exceeded all expectations. It has momentum. The Bank’s latest forecast expects real wage growth to resume around the middle of next year and then to accelerate as the unemployment rate continues to fall to around 5.5% over the next three years.”
Does the higher employment not mean that the economy is healing as people’s wages start to rise?
Yes, my hon. Friend is absolutely right. I will get on to that a bit later on.
This Government have cut the budget deficit by a third. The International Monetary Fund says that the UK is achieving the largest reduction in the headline and structural deficits of any major advanced economy in the world. Furthermore, it is forecasting growth of 3.2% for 2014—the fastest growing economy this year. Moreover, the Office for Budget Responsibility forecasts growth this year of 2.7%—the biggest upward revision between Budgets for at least 30 years. Employment is up by 1.7 million since the election. In the past year alone, long-term unemployment has fallen by 206,000 and youth unemployment has fallen by 244,000. I was especially delighted that, in the 2013 Budget, the Chancellor adopted the Million Jobs campaign manifesto idea of cutting national insurance contributions for under-21s, which will help young people get into work and open up opportunities for school leavers.
A record number of women are in work. In addition, the annual fall in female unemployment is the biggest on record. This Government have ensured that the UK now has more men and more women in work than ever, and the number of people claiming unemployment benefits has fallen at the fastest rate since 1997.
It is worth noting that the number claiming jobseeker’s allowance has declined. In relation to the previous speakers, it has fallen by 20% in the constituency of the hon. Member for Nottingham East, by 32% in the constituency of Mr Cunningham and by 34% in the constituency of Kerry McCarthy. The right hon. Member for Oldham West and Royton will want to know that the number of JSA claimants has dropped by a whopping 50% in his constituency.
The Government have ensured a fall in borrowing costs to record lows, which has saved money for taxpayers, businesses, home owners and families alike. Inflation was down to 1.3% in October, helping to bring down the cost of living. By almost every benchmark, the UK has made huge strides in turning the UK economy around, 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 have much to be proud of on the cost of living. I welcome the significant increases in the personal income tax allowance, which rose to £10,000 from April this year. As has been mentioned, that has 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 their cost of living.
The Government have already reduced energy bills by £193 by removing the green levies originally imposed by the Leader of the Opposition. They 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 time in more than 20 years, with pump prices 20p per litre lower than if Labour were in power, thereby reducing the cost of living. Indeed, the average motorist will save £11 each time they fill up their tank, as a result of the Government’s actions.
Councils are getting help to fund council tax freezes for a fourth consecutive year, through a grant for local authorities that could be worth more than £700 for average bill payers. The Government’s new tax-free child care scheme will provide 20% support on child care costs of up to £10,000 per child per year, meaning that parents will receive support of up to £2,000 per child per year.
The Government have introduced the triple lock, which means that pensions increase each and every year by the highest out of price inflation, earnings growth or 2.5%. Over the course of their retirement, the average pensioner is about £12,000 better off under the triple lock guarantee, thereby helping with the cost of living. The Government have introduced the warm home discount scheme, which gives pensioners a £135 rebate on their electricity bills, thereby reducing the cost of living. They have permanently increased the cold weather payment from £8.50 to £25, thereby reducing the cost of living.
In conclusion, the Government have much to be proud of. The Chancellor had to make some difficult decisions back in 2010 to ensure that the country could have a long-term sustainable economic recovery. Although we inherited an unemployment rate of 3.4% in Braintree, I am delighted to say that it has now fallen to 1.5%. There has been a marked improvement in youth unemployment too, with the figure falling from 6.3% in May 2010 to 2.6% last month.
As the Governor of the Bank of England said in September, the economic recovery “has exceeded all expectations.” 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 clean up. The Government must stick with their long-term economic plan as it is the only sustainable way to raise living standards, help families to manage the cost of living, and offer a better and brighter economic future for our constituents and for our country.
May I welcome some of the news from the Minister today? The statistics show that there has indeed been an improvement in the economy. It is in the interests of none of our constituents to have an economy that is doing badly simply so that we can score political points. The fact that growth is higher than in the rest of the G7, unemployment has fallen, employment is up and productivity is up, which therefore helps competiveness, is good news and should be welcomed. I have no difficulty welcoming it.
The point of the motion, however, is that that news is not sufficient for smugness or complacency; for a simple acceptance that the plan is working, and that therefore we do not need to do anything more or make any improvements; or for somehow or other rubbishing suggestions just because they come from Opposition Members. The Minister and other Government Members who have spoken should look at some of the statistics.
I do not want to do the economy down. I have seen it happen in Northern Ireland, but people who do that simply talk themselves into a recession anyway, because if confidence goes down, businesses do not want to invest and consumers do not want to spend. Nevertheless, if there are warning signs, we ought to recognise them.
Despite what the Opposition have said, growth over the past few years has been predicated on Government spending. When we look at the figures for the composition of GDP, we see that the biggest increase has been in Government consumption. That is now shifting to consumer consumption, but the figures again show that that is predicated on increased consumer borrowing. Especially when wages are being squeezed in the economy, we ought to be worried about that. It will of course increase household debt, and if consumer spending is carrying economic growth, we should be worried. The Government have made much of wanting export-led growth. Again, the figures for this year show that exports are under pressure: they are not growing where they were growing in the past. There are therefore some warning signs.
Another warning sign is inequality. As has been highlighted, even those in work do not feel any better off. Rather than Government Members saying that it is good to have people in work, they ought to be concerned that even the benefits of their policy are not felt universally, and they ought to accept that something needs to be done about that.
On that issue, does my hon. Friend agree that the nation of the United Kingdom as a whole should prosper, and that wealth needs to increase—with greater inward investment and greater support for small and medium-sized enterprises—right across the regions of the United Kingdom, rather than disproportionately in the south-east of England?
Of course, one of the other inequalities is inequality between the regions. The economy in Northern Ireland has done better in this recession than we expected—we are increasing inward investment through some of the Executive’s micro-economic policies—but there are regional inequalities, as well as inequalities between economic sectors and individuals.
For that reason, we need to look at two issues in the motion. The first is that as the economy grows and the percentage of GDP that is attributed to profits rises, there is no reason why—through increasing the minimum wage or, indeed, through greater application of the living wage—we cannot start some degree of redistribution from those who hold capital to the work force. That would not be a bad thing; indeed, it would be good for the Government finances, because it would of course release an awful lot of the spending on tax credits. In a growing economy, we can afford to do that. It is not only those of us on the Opposition Benches who espouse that policy: the Mayor of London has been an advocate of it. He has argued that it is a Tory policy, and that it should not be captured by the Opposition. We need to look at doing that. Not only would it release some of the Government spending on tax credits, but it has been shown that it tends to increase productivity and leads to a lower turnover of staff, saving expense for employers.
The second issue is borrowing. I understand that we cannot simply borrow, borrow, borrow. However, as I have indicated, the Government are happy for some of the growth in GDP to be carried by household borrowing. Of course, businesses borrow for capital expenditure. Borrowing can provide a return and perform a social function. The motion highlights expenditure for a house building programme. That would have a big multiplier effect on the economy—a multiplier effect that would probably be greater than that of borrowing to pay for people to be on the dole. It therefore makes absolute sense.
Government Members are presenting the motion as one that simply says, “Oh, let’s borrow more money regardless,” rather than one that says, “Let’s borrow money to use where it will actually help the infrastructure of the economy; where it will provide a return; where it will pay for itself over a period of time; where it will deal with a social problem; and where it will perhaps increase the mobility of labour because, of course, more housing enables that to happen across the country.” That, to me, is a sensible policy.
For that reason, I am disappointed that the motion, or at least the ideas in the motion, has not been accepted. If there are warning signs that growth may falter, here are ways in which we can put money into the hands of those who spend most of their income—that is, the low-paid—and into capital investments that will have a return, which may, in turn, have an effect on economic growth. For that reason, I will support the motion this evening.
It is a pleasure to follow Sammy Wilson, who spoke passionately, as always.
I do not pretend to be one of the great economists of the House, but in my four and a half years as a constituency Member of Parliament, I have seen at first hand what a healing economy means in practice on the ground. Interestingly, the motion is all but silent on jobs, as other Members have mentioned. The shadow Chief Secretary referenced the 2010 autumn statement in his opening remarks. Strangely, he did not touch on the response that was given by the then shadow Chancellor, Alan Johnson, which predicted a “jobless recovery” in this country.
My constituency of Winchester has seen a 50% drop in the youth claimant count in the last 12 months and an overall fall of 64% in the number of people looking for work since April 2010, so when the Chancellor talks about hard-working families and people who do the right thing—the Prime Minister repeated those words today—I firmly recognise my constituents in what he says. Yes, Winchester is a wealthy place in relative terms: house prices are well above the national average and we have some high earners working in law, medicine and financial services. That is fuelled partly by our proximity to London and the City. However, there is another Winchester where the average wage is £26,000 per year and where every penny counts.
My constituents are not fooled by political rhetoric. They know what they have seen with their own eyes over recent years. They know that being in work, not so that they can enjoy an extravagant lifestyle where it is a disappointment if they do not ski at least twice a year, but so that they can live their lives and provide for their families, is what actually matters.
The fact that the Government have made it possible for Eastleigh borough council, Winchester city council and Hampshire county council, working together, to freeze council tax over the five-year period is a big deal to my constituents. It has saved about £1,000 for a family living in an average band D property in my constituency. The fact that the Government have frozen fuel duty has not gone unnoticed, either. That move has hit the bottom line of family finances, in a positive way, to the tune of some £570 for those who fill up an average family car once a week. My constituents also know what security in retirement means. Again, it does not mean having the means to spend half the year cruising the world, perhaps from nearby Southampton; it means being able to enjoy good health and to help their grandchildren with their swimming or ballet classes on a Saturday morning. They know that it is those things that really matter.
The working families I represent remember the last Government. They see that it is a Conservative Prime Minister, a Conservative Chancellor and a coalition Government who have raised the personal income tax allowance to £10,000. In my constituency, that means that about 40,000 people on lower and middle incomes are keeping more of their money in their pocket each month. As we know, a typical taxpayer saves about £800 a year under that policy.
The decent retired folk I represent in places such as Chandler’s Ford remember the last Government, with the 75p increase in pensions and the £5 billion a year raid on their pension pots, which was one of their first acts in office. More than ever, those constituents are not tricked by the sleight of hand of politicians in Westminster.
They have seen this Government introduce the triple lock pension guarantee, they have seen the largest ever rise in the state pension and they have seen that those important universal pensioner benefits have been protected throughout the lifetime of the Parliament, exactly as we promised.
I spent a year working at the Department for Work and Pensions with my right hon. Friend the Secretary of State for Work and Pensions and our superb Lib Dem Pensions Minister. I know, as do the people I represent, that this is a Government of work and pensions. That is very important. The employment figures that I read out earlier represent real people’s lives. The youth claimant count is especially pleasing because, as well as representing many people with families who are at the same age and stage in life as me, I represent many young people. There is a thriving university in my constituency and there are thousands of young people who need a bit of help.
The “dinkys”—dual income, no kids yet—are benefiting big-time from a growing economy that is creating jobs for them to find and settle into. They have the most to lose if this country goes backwards again next year. They have aspirations, such as owning their own home, driving a nice car and being able to afford a season ticket down at Southampton—although that would not be my choice—and I do not resent them for that. I do not scoff or sneer at their ambition just because that is not what everyone can afford.
Those people, whom I represent, are well-educated, global in their outlook and highly mobile. They love the fact that Winchester is now the self-employment capital of England, according to a recent study. It is a vibrant place, where start-ups are at a record high. Centres such as Basepoint in Winnall, which I opened early in my time as an MP, are full of new businesses that are bursting with energy. They commute to London when they have to, but they recognise that the city council has an ambition to reduce outward migration each day for work by keeping big companies, such as Denplan, in the city. They do not dismiss out of hand the redevelopment of Station approach in Winchester because they know that it will provide new commercial space so that employers can come to the city and provide new jobs.
Does my hon. Friend agree, as a fellow cathedral city MP, that there is a huge amount that can be done on the ground to help the growth in his city? He has done a lot to make the cathedral city of Winchester come alive with markets and skating rinks around the cathedral. Similarly, there were 200,000 people at Gloucester Quays last weekend for the Victorian market. Those are all ways in which growth can appear in our constituencies, but they are not recognised by speakers such as Mr Meacher.
Absolutely. We have such a positive go-ahead outlook in the Christmas city, which is how Winchester has branded itself. Judging by the number of people skating and shopping at the Christmas market, it is the Christmas city. I urge Members to come.
We might have had some fun with the Opposition motion, but I applaud them for putting the economy at the head of an Opposition day. I would argue that every Opposition day that they have called during this Parliament has been about the economy. In my constituency, Help to Buy has helped 65 families to buy a home and get themselves on the housing ladder, which is fantastic. School places were the biggest issue in my constituency when I became the Member of Parliament. Some £10.2 million of investment later, we have Hampshire’s first all-through school and new primary places. The local NHS in my constituency has an investment of £25 million coming down the line, which will bring world-class, 24-hour consultant cover for my constituents.
None of that, as the Prime Minister said today at Prime Minister’s Question Time, would be possible without a growing economy. That is what is at stake in our country next year. There is a pledge of much more to come because we will further raise the personal income tax allowance and change the 40p tax threshold if we are re-elected next year. Finally, Bill Clinton has been mentioned once today and here is something else that he said. When he was seeking re-election, he said, “What is our opponents’ case against us? It is that we’ve only cleared up half the mess they left behind.” We know how he felt.
I rather suspect that the few people who may be listening to this debate will feel that it is running a similar course to previous debates. Sometimes it feels as if we are talking about different countries and different experiences, but I genuinely think that we all want and support many of the same things. I take exception to some of the portrayals of Labour party policy and politicians as not wanting to see people in work or not supporting people in employment. That is simply not the case and never has been.
Some 350,000 single parents alone were enabled to work as a result of the introduction of tax credits in the early part of this century. All were grateful to a Government who enabled them to take jobs that they had previously been unable to do.
Notwithstanding the good intentions behind tax credits, is not the reality that that Labour party policy is encouraging and funding corporations to pay less in the full knowledge that the state will pick up their employment bill?
If I have time I will come back to some of those important issues.
The point I was making was that the policy of the last Labour Government focused on getting people into employment and making work pay, not on encouraging people not to work as is so often alleged. We do not get the chance to challenge some of the statements and generalisations that have been made as much as we want. Earlier in this debate, Ben Gummer said—and perhaps he misspoke—that unemployment is now the lowest in our history. That is slightly astonishing, given that unemployment was lower than it is now, by some considerable margin, in all years between 1998 and 2008, when the recession struck, and of course the 1950s and 1960s saw considerably lower unemployment rates. There is no need to exaggerate the position.
Nor is it true that long-term unemployment was much worse during the years of the Labour Government. I am glad to hear that in 2013-14, the last financial year, long-term unemployment—people unemployed for more than two years—fell for the first time since 2003. But in 2008, as the recession was striking, that level of long-term unemployment was 200,000. It peaked at 460,000 in 2013, and this is the first fall since then. That is a considerable increase in the number of people unemployed long-term for many years during the period of this Government.
We hear a lot about the fall in jobseeker’s allowance payments in various constituencies, and coalition Members are happy to throw those figures back at every Opposition Member who speaks. But not every reduction in jobseeker’s allowance translates into someone being back in employment—and certainly not back in full-time employment. Many people cease to be entitled to jobseeker’s allowance because they come to the end of their entitlement, not necessarily because they are in a job or eligible for any other benefit.
The Minister suggested that the last Government did not do much for older people, but pensioner poverty was slashed during that time. During this welcome—although slow—recovery, we are seeing some alarming issues for people attempting to work. The number of people who are self-employed is much higher than it has ever been—it was 15% in 2014—and indeed two thirds of the increase in the total number of workers between 2008 and 2014 has been among the self-employed. The problem is that a lot of that self-employment is not generating a high level of income. We have to ask what is happening. When those figures for the high level of self-employment are given, the assumption is that we are talking about thrusting entrepreneurs who are doing very well, but the average earnings of the self-employed have fallen. They are now getting £200 and some a week, which is less than half that of employees.
A lot of self-employed people are struggling, either because their businesses are very new or, possibly, because they have been encouraged to become self-employed as an alternative to unemployment, but find that their earnings and family income are very low. That is an important point to consider, as is much other low-paid employment, when we look at the tax take. The deficit will rise this year—having come down by one third, which was not the total reduction we were promised—and that has a lot to do with reduced tax take. We argue that that has a lot to do with the underemployment that people are suffering and self-employment on very low earnings.
People are in self-employment of a very dubious kind. I met a constituent last Friday. He is in his 50s and he has always been a construction worker. He cannot get permanent employment in that area, even in a city such as Edinburgh where unemployment is relatively low. He has signed up with an agency. Periodically, it phones up to offer him work—four days here or five days there, with gaps in between. Recently, he was phoned up at about lunchtime and asked if he could get down to a building site that afternoon. “How long will the job be?” he asked. “Oh, just today and tomorrow.” So that was one afternoon and one day’s work for someone who is a skilled tradesman and has worked all his life. That is having a devastating effect on his ability to pay his rent, remain in his home and hold his head up as a valued worker. If that is the kind of employment we are encouraging, we must do something about it.
The performance of the economy is a great debate for today. As a brief history of the problems that we face, we all accept that in 2009 the country suffered a catastrophic heart attack in its economy. We can blame the collapse of the banks or the incompetence of the previous Government—I think that both were responsible for the problem. But that is past. What we have to do now is repair the economy.
My belief is that the economy can be repaired only by prosperity. We have to create prosperity, but Governments do not create prosperity—they create the environment for prosperity. Prosperity is created by the thousands of companies that are creating jobs and the millions of people working in those jobs. There has been more prosperity created in a nanosecond outside than there has been in the Chamber since this debate started. Prosperity needs investment by companies. The Government do not invest, but they do provide the environment and the confidence for companies to invest. That is what has been happening over the last four and a half years.
Four and a half years ago, the country was basically bankrupt. We cannot turn that round in four and half years—it will take longer. As long as we create the environment to ensure that the turnaround takes place, I am confident that it will happen. Look at my constituency. When I became the MP in Burnley—[Interruption.] The shadow Minister may think this is funny, but I think it is very serious. I really hope that the Government create the environment for the prosperity that we all need.
Four and a half years ago, unemployment in Burnley was approaching 9%. It is now 3.5%. There has been massive investment by the Government and the private sector. Almost £100 million has been invested in the small town of Burnley. The hon. Ladies in the Chamber might know Boohoo, an online ladies fashion company. Boohoo came to Burnley in 2009 with 46 people. It now employs more than 700 people and is investing £20 million in a brand new factory. Hopefully, it will have 1,500 people by this time next year. It is so confident in the Government’s economic plan that it realises it can afford to invest £20 million of its own money, while giving the whole work force a 15% increase. It is investing for the future. [Interruption.] It may well not be happening in the shadow Minister’s constituency, but I can only say what is happening in Burnley.
The Government, thanks to the Business Secretary, are managing to rebalance the economy. It was way of out of sync when the coalition came to power, relying on the banking and service sectors while forgetting about manufacturing. What have we done? We have backed the aerospace industry with vast sums of money. It is the most successful industry in the country, creating hundreds of thousands of jobs.
Earlier, the hon. Gentleman said that in his view Governments do not create jobs, but he has just given an example of where Government investment has enabled jobs to be created.
I did not say that Governments do not create jobs; I said that Governments do not create prosperity. Prosperity is delivered by the people who are working outside this building.
We have rebalanced the economy. We have backed aerospace and there are now hundreds of thousands of people working in the aerospace industry. In Burnley, we have invested more than £20 million in the old Michelin tyre factory, which is now serving an advanced aerospace supply chain. Lots of new American and British companies have come in and created high skills jobs with higher salaries. We backed the automotive industry. As was said earlier, we now export more cars than ever before. In fact, we are plus on exports—we used to import more cars than we exported, but we now export more than we import.
I would like to thank my hon. Friend for highlighting the success of manufacturing in the north of England. If shadow Ministers actually came out of their London mansions and went up north, they would see that manufacturing is flourishing not only in his Burnley constituency but in Colne Valley and Huddersfield. The textile industry in Huddersfield has produced the green jacket for the Augusta national and the red carpet for the royal wedding of the Duke and Duchess and Cambridge. It is also producing the soft furnishings for the White House and the upholstery on Boris’s Routemaster London buses. They are all made in Huddersfield.
I am very grateful for that intervention. I am delighted that my hon. Friend’s area is doing so well. [Interruption.] The comments about “five months” really do not do this debate justice. We are talking about real people doing real things and creating the wealth for this country. That is what I want to talk about. I do not want to talk about who might lose a seat in five months. Provided I have done what I can do by then, that is fine.
The problem with the prosperity coming along through the aerospace, automotive, textile and chemical industries is that we have a desperate lack of skills. There has been no investment in skills for the past 25 years under various Governments. The previous Government were culprits as were the Tory Government before that. However, this Government have recognised the problem; we are working on it and are approaching 2 million apprenticeships. I am proud to be the apprenticeship ambassador for the Government. I travel to all sorts of different companies including Starbucks, Next and Rolls Royce—every aspect of business—to talk to young people who believe that they can create prosperity for themselves, the companies they work for and the country they live in. They are proud and pleased to be doing that. The Government have done a major thing in recognising the shortage of skills and giving those young people a chance.
University technical colleges were mentioned earlier. The new UTCs are fantastic. In secondary schools in my constituency the teacher used to say, “If you don’t work hard and pass your exams you won’t be able to go to university and you’ll have to go to the factory.” Let me tell hon. Members, if pupils do not work hard and pass their exams, they will not get a job in the factory. They will have to go to university. The skills we now need, particularly in my constituency and across manufacturing, are very high tech. I hope that the prosperity being created by the people of this country will deliver a future that I want—I am getting on a bit—my children want, and my grandchildren want. They do not want to be saddled with debt. They want to work their way out of our debt by delivering prosperity across the country. The young people of the future will be the ones to deliver that prosperity. We have to train them to be able to do that.
It is very important to have this debate today, a week before the autumn statement. It is very important that this House can show, through the debate, that we get it. We understand that offering people hope and having an economy where more ordinary people have more opportunities to get work, to progress in work and to get better wages, where there is more prosperity and more shared prosperity, is the only way we will have an economy that will work in this century.
This has been a very interesting debate. I was particularly struck by a couple of counter-intuitive contributions from Richard Harrington, who is no longer in his place, and Steve Brine, who quoted Bill Clinton. I am going to do something counter-intuitive as well, which is to quote Ronald Reagan. [Interruption.] I am not sure there will be cheering by the end of the quote, which I think goes to the heart of the problem that will face the Government when they go to the electorate next May. In the famous debate of 1980, Ronald Reagan said:
“Ask yourself, are you better off now than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago?”
We know that in every constituency in the land the answer to both those questions is a resounding no. That is the heart of the economic problems our constituents face on a weekly basis. Those problems are faced by the young man whose mother spoke to me in Springburn two weeks ago. She said that he had been offered insecure, part-time work that paid even less than the national minimum wage—he was being offered work at just over £2 an hour. They are the problems faced by the man I met in April on the doorstep in Blackhill in my constituency, who told me that despite working for 15 months with the same employer he had no guaranteed hours at work. An economy that fails those people is one that fails the entire country.
The Exchequer Secretary offered support for a particular industry: revisionist historians. She said that poverty was falling. I am not sure whether she has had time to look at the latest research produced this week by the Institute for Fiscal Studies on behalf of the Northern Ireland Executive. It states that in the years between 2012 and 2015-16 child poverty will have risen. It will rise in Northern Ireland and across the UK, so we are not seeing falling poverty occur with the economic policies followed by this Government. She appeared to indicate that the previous Government had made no difference at all on these matters. The truth is that we saw a massive fall in child poverty under the previous Government. As my hon. Friend Sheila Gilmore alluded to in her speech, pensioner poverty was halved under the policies of the previous Government. So we have done it before, and next May I hope we will show again that a change of Government can change many people’s circumstances.
The recent ONS data on public borrowing released last week showed that a Government without a proper industrial policy for creating sufficient high-skilled, high-paying jobs are a Government without a policy to decrease public borrowing on the scale required. It remains a great deficiency of the Government that they have not yet responded properly to last year’s damning report from the OECD on the skills deficiency and crisis across the country. Only when we have a Government prepared to reform the banks; set up institutions such as a British investment bank; boost our infrastructure planning; and tackle other such fundamental problems in the economy will we see the greater prosperity and equality that is so crucial.
In Scotland, there are some welcome signs—52,000 jobs have been created in the past year—but manufacturing is still 5.6% below its pre-recession peak, and there is a worrying surge in insecure, self-employed work that is simply not meeting people’s needs or paying the bills. We are also a seeing a worrying rise in household debt because people are coping with declining wages by running down savings or running up more debt. The debt ratio has risen to 170% in the last year. These are worrying statistics.
The upcoming autumn statement is the Chancellor’s last chance to show that he is listening and capable of change. If he is not—if we need to change our policies on living standards—it is becoming clearer that we need a change of Government.
Order. I am reducing the time limit to four minutes. I ask each speaker to bear it in mind that the winding-up speeches have to start at 20 minutes to 4. That means that interventions should not be taken, except at the risk of talking out other colleagues.
This debate has been fascinating, because there seems to be a parallel universe—Labour’s imagined panacea of brilliance when they were last in power, which they have failed to connect to reality. We are filling the gap by dealing with the deficit, the skills deficit and the infrastructure challenges. I want to concentrate on the last two points.
First and most importantly, it is only through skills that we will deal with the cost-of-living crisis; it is only by empowering people to better themselves that they will generate the necessary additional productivity and earn the higher wages and salaries they need and want, and that is most likely to happen through manufacturing and engineering, as is proved by the facts. While the economy is growing by about 3%, manufacturing is growing by 1.3% or more per quarter, so we should be focusing our skills on that sector.
If we do not rise to the challenge of advancing our manufacturing, turning ideas into deliverable products and always being at the cutting edge of technology, we will fall back. To ensure that we move forward, we need to encourage the Aerospace Technology Institute, for example, which has invested millions of pounds in Airbus, prompting Airbus itself to invest millions more, yielding 791 new orders for aircraft. This Government have encouraged such developments, and I salute them for that.
The other element of the skills strategy concerns schools and colleges. We have heard about university technical colleges already. I say yes to them because they are exactly what we need in our communities: young people continuing with academic study while spending two days a week doing something really useful and learning about engineering. I have been to a few and I want one in my constituency, because I know they will deliver.
The second point concerns infrastructure. In 13 years, Labour only managed to electrify nine miles of rail track, whereas we will have accomplished 880 miles. It is a fabulous achievement and a boost to the economy in terms of activity and investment, and the movement of people and resources. With such projects, the Government have found a way to invest in infrastructure and in doing so have signalled that we are ready for business and investment—and that investment is coming—and that we are upskilling and creating areas of expertise where there were previously none. That is happening not only in the north of England, but in my constituency, where £5 million has converted a decommissioned power station into a centre of excellence for energy and engineering training. That is great, and it is what we need to do.
I want to finish by mentioning the festival of manufacturing and engineering that I run in my constituency. I run it over a week because I know that people need to be clear about the opportunities that engineering and manufacturing provide. There are many firms in my constituency, such as Renishaw, Delphi, Airbus, Lister Shearing—I cannot name them all because I am running out of time—and they understand that message; we must as well.
It is a pleasure to say a few words in this debate, which I thank the Opposition for initiating.
There are many good things to say about the economy and job creation, but as the motion points out, there remain issues with living standards and living costs, and despite the many job opportunities, which are good news, we need to see more money in people’s pockets. The Northern Ireland Assembly and the Department of Enterprise, Trade and Investment are responsible for the economy in Northern Ireland. We have seen growth in the agri-food, pharmaceutical and aerospace industries —in my constituency, Shorts Bombardier provides continual job opportunities—and in the software and medical device industries. The pharmaceuticals company T.G. Eakin, in Comber, has created more jobs in my constituency and has bought factories on the mainland as well.
In addition, the 2014 knowledge economic index has grown by 33% in the past three years, so there are lots of good things happening. However, we have not seen the money in people’s pockets, and that is what the motion is about. Although lots of progress has been made, certain things still need to be done. Here, I am thinking of Arlene Foster’s Department of Enterprise, Trade and Investment. Citibank has announced 600 new jobs in its Belfast office. PriceWaterhouseCoopers has announced 807 new jobs. Concentrix has announced 1,000 new jobs. Youth unemployment across the UK and in my constituency has continued to fall. These are all good points, and the Government deserve credit for what they have done.
Young graduates are gaining employment in places where they previously might not have. Indeed, that is happening just this week—the number of people claiming jobseeker’s allowance in my constituency fell by 260. It is all good news. However, that money is not getting to those on the minimum wage or restricted hours.
Child care is important to the performance of the economy. The motion before us refers to child care for working parents. It is an issue that affects every working parent, and one we must try to address.
We had a housing and building boom in Northern Ireland. It went extremely well at first, but when the crash came, we felt the pain dramatically. Things are returning to some normality, however, with job opportunities coming through, particularly in the construction industry, which has helped those who lost jobs over the years. At long last, the banks are starting to lend a wee bit of money again, and perhaps an indicator of an economy on the turn is the number of houses coming up for sale. We have competitive prices—the average house price in Northern Ireland is £141,000. Young people in my constituency can buy a house—a good three-bedroom house, too—for between £105,000 and £189,000. The opportunities are there, but people need job security and a decent wage. In most cases, families need two wages coming in.
When we fly, the aircraft seats on which we sit are often made by a firm in Kilkeel; and people driving within or around the outskirts of London are likely to be doing so on stone from Ballystockart and Carryduff, in my constituency. That is a fact. We have 100 international investors in Northern Ireland in the ICT sector. This is all good news, as are the creative industries that have highlighted Northern Ireland on the world stage over the last year.
What we need to see is more money going into people’s pockets to ensure that they have enough to live on and can gain higher living standards. We want people to be given the opportunity to work more hours, the minimum wage to go up, and greater confidence to be created in the economy. We welcome what has been done, but we want more to be done to help our young people.
I listened with interest to the opening speech by Chris Leslie, who relied a good deal on the forecasts made by the Chancellor in 2010. I shall not dwell on them, but the response to that autumn statement was made by Alan Johnson, whose own forecast then was that this would be a jobless recovery. When it comes to examining forecasts, we should perhaps recognise that as well.
I share something else in common with the right hon. Gentleman, who by his own admission is not an economist: I am not one either. Looking broadly at the key issues, it strikes me that we have a little bit of “Dad’s Army” from the Opposition Front-Bench team, in that they are trying to create a panic and harm confidence. I would take the advice of Corporal Jones: “Don’t panic, Member for Nottingham East!” Public sector net borrowing fell by £200 million to £7.7 billion compared with the previous year. Although there has been a slight increase in the current budget deficit in the year to date, let us be clear that this coincided with a £3.2 billion increase in net public investment. Income tax revenues on the margins may be 0.4%, but, on the question of being confident about collecting revenue, Labour Members have talked at length about the increase in the self-employed and made some disparaging remarks, the idea being that self-employment is a last resort. It is not. There will probably be a boost in tax revenues as the taxes of the self-employed are collected in January. I would proceed with caution before reading too much significance into a statistically not too significant adjustment in the figures. Forecasts will be important. Even if the tax estimates were slightly down on the revenues, that would be a sign that a growing number of young people are going into jobs at lower salaries, which bodes well for the future—and we are here for the long-term, not for the short-term, recovery. That is important.
What most troubles me about this debate and the Captain Mainwaring approach to economics is simply this: we have set about focusing not just on the pure statistics of economic recovery because we believe it is crucial to create the environment for the entrepreneur to thrive and succeed, and for people to go back to work. That is what will drive the economy, given that more than 95% of our businesses are in the small to medium-sized sector.
Government intervention has driven change on the ground. In my constituency, for example, the employment allowance has reached 930 employers, the enterprise allowance has reached 200 people and, above all, since their inception, start-up loans of £500,000 have helped 100 new businesses. That is a return to the economics of the entrepreneur, making this a country to do business in. It is the growth of the SMEs on which we are focusing our policies that will drive the recovery, reduce unemployment and create employment opportunities. That is the key fact. We have more people in work than ever before. The situation in my constituency matches that across the country: youth unemployment is down 40%, and 38% down on the 2010 statistics. That is what counts for most people: delivering a regular pay packet and the security that comes with it.
I thank the Opposition for affording us the opportunity to laud the success of the Government’s economic policy. I do not think we debate economics and how the economy is doing enough, and this is a useful opportunity.
The trick in running an economy is to ensure, as the world economy goes up and down, that the downs are small and the ups are large. We had the biggest downturn in our history at the end of the Labour Government, some of it down to the facts of world economics but some of it down to the fact that you spent rather more than you should have done and did not regulate the banks as well as they should have been regulated—
Order. I do not think I was responsible. Others might wish to take the blame, but I certainly do not.
I am sorry, Mr Deputy Speaker. I have not been in the Chamber for a while, as I have been on a Bill Committee.
We have a coalition that has set out a firm framework for managing the economy and a long-term economic plan. The result is that we have pretty good employment figures, but we all know that many of those jobs are low paid. That is the start of a recovery. The main benefit of people getting jobs is that they are afforded the opportunity to upskill and move into better-paid jobs as the recovery takes hold.
The economy is healing, but it is a long-term project and it will take a while before we get back to what most of us would consider normal economics. Indeed, interest rates will have to go up at some point so that my retired constituents can also get some benefit from the economic recovery. Good progress has been made and the Government have taken a sensible point of view.
The reality is that it is difficult to export if one’s main export markets in the eurozone have trashed their economies by running stupid economic policies, and if the far east is going into recession as well. If we compare Britain and the United States with most of the world, we can see that we are doing better. We have created more jobs in the past four and a half years than the rest of the 27 European Union states combined. Clearly, there is more to do, but Britain has proved that it has an open and resilient economy. We still have some excellent companies. The car industry is reviving and we still have extremely good educational establishments. Ours is an open economy and the City of London is one of the major financial centres. So long as we provide the framework for a decent economy, I am sure the British public will rise to the challenge by producing jobs, wealth and prosperity.
We have all seen an improvement, but there is more to do. We appreciate that many people are struggling on low pay and having a difficult time of it. We do not deny that, but we must set out that we need to stick with the economic policy, and people’s living standards will start to rise. Wage increases are picking up over and above inflation, which is the start of a slow march towards improving living standards.
We should stick to what we are doing, have confidence in our economic policy—
I had better not, because time is limited.
The British economy will benefit from that confidence. I look forward to hearing the Minister’s reply. There is a good story to tell, but we are only part of the way there. There is more to do, and certainly more to do for the many of our constituents who have been hurting over recent years. That is the consequence of a pretty big downturn and a big adjustment. The British people have gone through the period of adjustment pretty well and have accepted the realities. Now, they are looking forward to a sunny upland, and I hope the Government can provide that as the economy strengthens over the next year or two.
As always, we have had an interesting debate this afternoon. I remind the House of what my hon. Friend Chris Leslie, the
shadow Chief Secretary to the Treasury, said when he opened the debate. He suggested that the autumn statement would give the Chancellor some time to pause for reflection, giving him the opportunity to think about his nearly five years in office and the impact his decisions and choices have had on the living standards of millions of our constituents. It did not strike me during the Exchequer Secretary’s opening speech that she was particularly in reflective mode, but perhaps the Chancellor will be by the time we reach the autumn statement. I am sure that the Economic Secretary, who is going to respond to the debate, will have carefully considered all the points that we have made this afternoon.
We have heard about the glaring disparity between what the Chancellor promised in the autumn statement nearly four years ago and what has been delivered. As my hon. Friend the Member for Nottingham East pointed out, the Chancellor said that he would
“meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”
In reality, deficit reduction has stalled and borrowing is rising. He said that by this financial year he would
In reality—as he has admitted—debt will not start falling as a percentage of GDP until the middle of the next Parliament. He said that
“business investment…is set to grow by more than 8% for each of the next four years”.
In reality, he has delivered barely half that. He also said that
“exports are set to grow by an average of more than 6% a year.”—[Hansard, 29 November 2010; Vol. 519, c. 542.]
In reality, they grew by an average of 4.2% in 2011, 2012 and 2013. Moreover, he is set to miss his 2020 target by £330 million. That illustrates the chasm between the rhetoric and the reality—between what the Chancellor promised and what he has actually delivered.
Today’s debate could be described as a game of two halves. Speaker after speaker on the Opposition Benches talked about the impact of the Government’s programme on the real lives of our constituents, while a number of Government Members—although not all of them; we heard considered speeches from some—seemed to be living in a parallel universe that Labour Members may not recognise, in which things were now so much better.
Some of the speeches that we heard did reflect the reality of life for ordinary people. My hon. Friend Mr Cunningham reminded us of the nature of the global financial crisis, and described the impact that it would have had if the last Government had not taken action to protect banks and savers. My hon. Friend Kerry McCarthy spoke about the impact on jobs and living standards of the Government’s programme. She said that her constituents were finding it difficult to put food on the table, and referred to the costs of transport and energy. She talked about the issues that mattered to her constituents, which they brought to her every day. She also talked about food poverty and the importance of the living wage.
My right hon. Friend Mr Meacher spoke about the impact of the fall in average wages, the problems caused by the fact that UK productivity is worse than that of other countries, and the lack of deficit reduction. My hon. Friend Sheila Gilmore spoke of the importance of the tax credit scheme, which had caused many people to take employment. Lone parents in particular had obtained work and were making work pay—in some instances, for the very first time—owing to initiatives introduced by the last Government.
My hon. Friend also referred to the plight of the self-employed, as did Nick de Bois. I do not think any Opposition Member suggested that self-employment was not worthy, and could not provide a good standard of living. However, the harsh reality for many of those who are self-employed is that they, too, may be under-employed. Because disposable incomes are lower now, they may find it difficult to sell their services and to earn enough to make ends meet. As we know, that can mean difficulties and long working hours for self-employed people and their families.
I was pleased to hear Sammy Wilson—who made a very good speech—point out that, although some developments had benefited his constituents and he did not want to talk down the economy, we should recognise the warning signs. Not all his constituents had experienced a recovery. I am glad that the hon. Gentleman supports the motion. Jim Shannon said that new jobs had come to his constituency, but more money needed to be put into people’s pockets.
My hon. Friend Mr Bain spoke passionately about the experience of both young and older people in his constituency who were trying to get back into work, and about the impact of child poverty. Interestingly, he also talked about the need to boost Scotland’s manufacturing sector—which has not always seen the benefit of the growth that the Government are talking about—and the need to boost infrastructure spending.
As I said at the outset, we heard some considered and carefully thought out comments from those on the Opposition Benches, and I am glad Members were able to express their constituents’ points of views. The thread running through all of them was very clear: we need a genuine economic plan that can deliver that recovery for the many, not just the few at the top. It must be a coherent and credible plan; it cannot be something that is just full of slogans but with no content, supposedly trickling down—like, indeed, the so-called long-term economic plan Treasury Ministers continue to boast about.
We need action on house building, currently at its lowest level since the 1920s, and we need to set the goal of having 200,000 new homes each year by 2020. We need the minimum wage to rise as a proportion of average earnings, and we need real incentives for a living wage. We need the expansion of free child care for working parents, paid for by collecting the bank levy in full. We need the cut in business rates for small firms, rather than focusing only on corporation tax cuts for big business. We need an independent infrastructure commission to deliver the transport networks our economy needs, rather than simply something that suits the Government’s short-term political needs. We have to tackle the abuse of zero-hours contracts, too. Speaker after speaker talked about the jobs that have been created, but the reality is—we heard this time and again from my hon. Friends on the Opposition Benches—that many people are under-employed, many people cannot get the hours they need to make a living, and many people are suffering from not knowing how many hours they are going to work each week. We need a real Labour economic plan that can earn our way to rising living standards not just for the few, but for all.
I am disappointed that we did not have an opportunity to speak a little more about some of the issues in the motion, and in particular about our proposal that the fines arising from the forex scandal should be put towards national health service funding. I was surprised that more Members did not pick up on that issue. I do not want it to be forgotten in this whole debate, so it would be helpful if the Minister in her summing up could be very clear about the following points. She has considerable experience in the banking sector and likes to listen and give careful consideration to any points made, and she is not afraid to act when she has to. Does she share my concern about the appalling situation in respect of the rigging of forex? Is she pleased to see that those record fines have been imposed, and will she give the commitment that that money ought to be used for our NHS? If she is able to do that today, it will at least give some indication that the Government understand the issues affecting ordinary people, and listeners will not leave this debate thinking that there is a parallel universe where the Government think everything is absolutely perfect, while we on this side of the House keep having to raise issues brought to us by constituents who are not feeling that recovery in any shape or form.
I want to conclude on the following point. I do not know how many times I heard the term “long-term economic plan” used during the course of the debate. The test for next week’s autumn statement—and, to an extent, the Government’s own long-term economic plan—will be whether the autumn statement delivers a plan that brings a recovery for the many, a fairer approach to balancing the books and a plan to save our NHS. I have to say, however, that I suspect it is only going to be a Labour economic plan that delivers that, because the Government only have until the end of March and that is not long term.
During this debate we have heard some extraordinary assertions. We have heard that the economic crash of 2008 did not really happen, that we can simply spend, spend, spend our way out of a recession, and that we can somehow be insulated from the global economic outlook. However, British voters are pretty savvy. We cannot pull the wool over their eyes or fool them into thinking that we can go on borrowing and spending for ever. We have to be up front about the facts, so I should like to inject some clarity into the debate. I shall go through the motion point by point.
First, I completely agree with the many Members who said that living standards and fairness were critical to our economic recovery. Labour’s great recession has been tough. Many people have genuinely suffered as a result of the disastrous 5% drop in our nation’s GDP, which was brought about by far too much borrowing in the years before the financial crisis. It is too simplistic to say that working people are, on average, £1,600 a year worse off than they were in 2010. That figure ignores changes in employment. It ignores the big change we have made to cut income tax and duty on household goods. It also ignores the increase in household disposable income.
There is another story to tell, a positive story about how the economy is offering hope and opportunity as it recovers under our reforms. It is a story that involves more people being in work than ever before, and 2 million private sector jobs being created since 2010. It is a story that involves the number of young people on unemployment benefits halving since 2012, and a story that encourages work by ensuring that a typical taxpayer has had their income tax cut by £805 a year, boosting the money that 25 million people take home from work and taking more than 3.2 million of our lower earners out of income tax altogether.
It is this Government, through our long-term economic plan—for which I make no apology—who are creating the right environment for opportunity and aspiration for more people than ever before. Opposition Members have pointed out that many of those jobs are starter jobs for young people, part-time jobs for people getting back into work or self-employed jobs. Well, we on this side of the House applaud those entrepreneurs who are starting a business, who are taking on apprentices and who are offering flexible and part-time jobs to those who need them.
The latest figures show that regular pay rose by 1.8% in September, which is 0.6% above inflation. Workers who are in continuous employment—that is, those who are in the same job that they were in a year ago—saw their average earnings rise by 4.1%, which is more than double the rate of inflation. This is
“the start of real pay growth”,
as Mark Carney put it. Our long-term economic plan is delivering the highest growth in the G7. It was confirmed just yesterday at 3%. It is delivering more business investment than in the peak before the recession and creating a record number of private sector businesses. It has cut the deficit by over a third, and it stands to deliver the first surplus in 18 years by 2018-19.
My hon. Friend is absolutely right to say that the public will not allow the wool to be pulled over their eyes. Does she agree that every survey imaginable shows that this Government have a very high rating for economic competence, whereas Labour is absolutely nowhere?
My hon. Friend is absolutely right. In particular, our achievements must be seen against the backdrop of our inheriting the toughest economic conditions in living memory.
I do not accept that we have broken our pledge to balance the books; nor do I accept that the recovery has somehow insulated the richest. What total nonsense! The richest are contributing more in income tax than they ever did under Labour, with over 28% of income tax revenue coming from the top 1%. In every single Budget, we have raised revenues from the most well off, and we have used those extra revenues to help the most vulnerable in our society. It is a sad fact that many have been hit hard by this recession, and I know how genuinely difficult many people have found it. We owe it to them not just to improve their living standards through an economic recovery, but to make sure we never get into this mess again. That is why it is all about finding the right balance: between ensuring that those with the broadest shoulders take the biggest burden and ensuring the UK remains internationally competitive and open for business.
This Government have looked to strike the right balance. That is why our above-inflation increase of the adult national minimum wage came into force on
However, it is not our plan to reinstate the 50p tax rate. That rate was crudely thought out, distortive and economically inefficient. It failed to raise the £2.5 billion Labour claimed it would and it gave a damaging signal that the UK was not open for business. We have instead raised far more from tax changes targeting the richest, including the bank levy, which will raise £8 billion during this Parliament. We have also taken tough measures against tax avoidance: we have closed loopholes; we have clamped down on stamp duty avoidance; we have given Her Majesty’s Revenue and Customs new powers to collect disputed tax; and we have led international tax reforms through the G20.
The motion's final point related to creating new funds for health and care. Since 2010, the Government have increased the NHS budget in real terms every year. Health funding will continue to grow in real terms in 2015-16, which means an additional £2.1 billion for the NHS next year. But a strong NHS needs a strong economy, and our long-term economic plan is designed to provide both.
As the hon. Gentleman will appreciate, a strong NHS needs a strong economy. In answer to the point raised by Cathy Jamieson about foreign exchange fines, she is absolutely right to say that we are talking about disgusting, appalling behaviour, which represented extreme arrogance on the part of the bankers who thought they could rig foreign exchange. Our Chancellor decided that those fines for misdoing would no longer go back to reducing the levy for the industry’s own regulation, but would instead be used for the public good. This is a big sum and we intend to think carefully about how we use it, but it will be used for the public good.
Whatever happens, we cannot go back to the bad old days. What a shocking mess we were left with—total economic carnage. The Opposition’s motion, calling for a current budget surplus and falling national debt as soon as possible, shows complete economic illiteracy. They want to keep on borrowing, hiding behind so-called “capital spending”, as if, somehow, one type of borrowing does not count. I do not see how voters can be fooled by that; it is the equivalent of saying, “I will spend my wages on food, clothes and petrol, but if I buy a car or a house, that’s investment and so borrowing to fund it doesn’t count.” It is this Government’s plan that will get our debts under control; eliminate borrowing over time to ensure that our debts fall as a share of GDP; and allow future Governments to respond much more quickly to any economic shocks, while continuing to support individuals and businesses across the country.
We know that the job is far from finished. As storm clouds gather once again over the world’s economies, we need to be clear about the scale of the task that we face. When a country loses control of its finances, it loses control of everything, and it is the poorest who are hit the hardest. Labour’s recession proved that only too clearly. This Government have taken the tough decisions to pull our economy back from the brink and, through our long-term economic plan, to put an economic recovery in place, so now, more than ever, it is a plan that nobody can afford to abandon.