4 Sep 2013 : Column 337

Rachel Reeves: Of course, since the Government came to office, 400 children’s centres have closed and the child care element of the tax credit has been cut, making it harder and harder for ordinary families to afford child care.

Under this Government, the situation is getting worse for families such as the one I mentioned and those in my hon. Friends’ constituencies. One in 10 people who want to work more hours cannot get more shifts; 700,000 people are working more than one job, most of them out of desperation rather than choice; and 1 million people are thought to be on zero-hours contracts. Incidentally, zero MPs from the Government side turned up to the Westminster Hall debate on zero-hours contracts organised by my hon. Friend the Member for Sunderland Central (Julie Elliott).

Lisa Nandy (Wigan) (Lab): My hon. Friend is making a strong case. The workers at the Hovis factory in my constituency recently rejected the replacement of full-time staff with agency workers on zero-hours contracts, but does she share my concern that so few people are able to stand up against that and that increasingly it is young people who are trapped in insecure, low-paid work, which means they have no ability at all to plan their lives or to budget?

Rachel Reeves: I thank my hon. Friend for that intervention; she is absolutely right. The Resolution Foundation produced an excellent report, published this morning, warning about low pay becoming entrenched. It does not just affect workers at the start of their careers; low pay this year results in low pay the next year and the year after that, which is particularly worrying.

Zero-hours contracts often mean that workers are vulnerable. As my hon. Friend the Member for Wigan (Lisa Nandy) said, they are unable to plan for the future and unsure of their ability to pay the rent or the bills each month. Let it be remembered that no Tory MPs or Liberal Democrats, apart from the Minister responding, could be bothered to turn up to debate that issue.

As my hon. Friend the Member for Westminster North (Ms Buck) mentioned, we learnt today that 4.8 million people are now earning less than the living wage. Figures I commissioned from the House of Commons Library show that almost 60% of new jobs created since the spring of 2010 have been in low-paid sectors. This is the economy that the Tory-led Government are building: low-paid, part-time and insecure, making life tougher for families.

Mr William Bain (Glasgow North East) (Lab): Three in 10 of my constituents who are in work earn less than the living wage. Two weeks ago I spoke with a constituent from Robroyston. He had been a construction worker before the crisis started but is now in insecure, part-time work and facing child care bills of £200 a week. Is it not the case that under this Government the economy is just not generating the number of good-paying jobs that allow families to meet the cost of living?

Rachel Reeves: Two thirds of children growing up in poverty have parents who are in work. I think that goes to the heart of the issue of low pay and its impact on families. It is no wonder that payday lenders are among

4 Sep 2013 : Column 338

the fastest growing businesses on the high street. Some of them charge interest rates as high as 7,000%. Families, desperate to pay the rent and provide for their children, are being dragged into debt because they are not being paid enough.

The use of food banks—I am not sure whether the Minister has visited one—continues to rise. In my constituency the main food bank is struggling to find larger premises because demand has outstripped all expectations. St Bartholomew’s church in Armley in my constituency is now distributing food parcels to many desperate families. Its work, and that of St George’s Crypt, is a wonderful example of the active citizenship and community spirit in Leeds, but food banks are damning evidence of the Government’s record on living standards.

Gavin Barwell (Croydon Central) (Con): The hon. Lady is right to focus on the issue of low pay. Will she tell the House what has happened under this Government to the level of income tax paid by someone working full time on the minimum wage?

Rachel Reeves: I will tell the hon. Gentleman what the IFS says: the average family is £891 worse off as a result of changes to taxes, tax credits and benefits. That takes into account not only the change in the personal allowance, but the cuts to tax credits and all the other changes, such as the VAT increase, that have put pressure on families. Taken in the round, that is the impact on ordinary working families. The Prime Minister says that he is trying, but that is not enough for a family struggling with the bills and the rent and worrying about the increasing gap between what they take home in pay and the cost of some of the basics.

Alison McGovern (Wirral South) (Lab): Given what my hon. Friend is saying, did she share my surprise at the Prime Minister’s response to the issue of school uniform costs raised at Prime Minister’s questions today? It was bizarre to hear him dismiss so quickly the cost of school uniforms, which every parent in my constituency knows is a massive issue.

Rachel Reeves: I often hear about that from constituents, particularly this week, when children go back to school. The costs of the summer holidays are past, but those can be very expensive for many families, especially if they receive free school meals and have to provide an extra meal a day during the holidays. The cost of going back to school is also expensive. There is the cost of school uniforms, a new pair of shoes and a school coat—all the basics which sometimes I think the Government just do not understand.

In the face of such challenges, there is a distinct lack of urgency from the Government. For all the warm words, they do not get the reality facing families. Energy bills are up £300 a year, while energy companies enjoy huge profits.

Mr John Redwood (Wokingham) (Con): I am glad that the hon. Lady is highlighting this issue. She is right that in the last couple of years under Labour there was a huge reduction in living standards, and the coalition Government have not yet reversed it. Does she now

4 Sep 2013 : Column 339

think that her party was wrong to implement policies of very high and rising energy and fuel prices, which are one of the main reasons people are in this bind?

Rachel Reeves: We have said that we would abolish Ofgem and create a new energy watchdog with real teeth to force energy companies to pass on price cuts when the cost of wholesale energy falls. Meanwhile, under this Prime Minister’s watch, energy giants are enjoying a £3.3 billion windfall. That shows the warped priorities of this out-of-touch Government. Rail fares are another example, increasing by up to 9% a year. We would apply strict caps. We have said that we would introduce a new legal right for passengers to be entitled to the cheapest ticket for their journey; this Government are giving powers back to train operating companies to increase some fares by up to another 5% beyond the cap. Again, that shows the warped priorities of this out-of-touch Government.

On housing, there are now 3.8 million households in the private rented sector, including more than 1 million with children. Research shows that many are being ripped off through hidden fees and charges costing tenants £76 million a year.

Seema Malhotra (Feltham and Heston) (Lab/Co-op): Does my hon. Friend agree that the atrocious slowdown in house building led by this Government has contributed to rising rents, making life incredibly difficult for families and meaning that they cannot do the extras such as getting broadband in their homes, which is vital for their children’s education and their own social inclusion?

Rachel Reeves: We have said of the private rented sector that we would require a new national register of landlords.

This Government are presiding over the lowest level of house building since the 1920s. We have said that we would build new affordable homes, and the IMF has said that the Government should bring forward investment in infrastructure. Perhaps we should listen to the IMF.

The Prime Minister and the Chancellor now claim that their economic plan has worked after all, but two quarters of positive growth do not begin to repair the damage from three years of flatlining. Three wasted years have left permanent damage as businesses have lost vital investment opportunities, and almost 1 million young people are out of work. That is why families are suffering; that is why deficit reduction is so far off track. Yet we have a complacent Government. They have no idea of what they have put families through, no idea of the damage they are still doing, and no plan to put things right. Three years in government and still no British investment bank; three years in government and banking reform is being watered down; three years in government and one in five apprentices say they have received no training; three years in government and the number of 16 to 18-year-old apprentices is down by 13% this year; three years in government and major infrastructure projects are stalled; three years in government and life is getting tougher for ordinary families.

Stella Creasy (Walthamstow) (Lab/Co-op): My hon. Friend is making an incredibly powerful case about the warped priorities of this Government and the consequences and costs for households. It is little wonder that 80% of

4 Sep 2013 : Column 340

payday loans are for the basic costs she is talking about—housing, travel, rent and food. Is it not another example of this Government’s warped priorities that in three years of clear warnings they have done nothing about the legal loan sharks in our society, and is that not why we would make a difference in government?

Rachel Reeves: She has done fantastic campaigning work on that issue. Labour has said that we would cap the cost of credit, as she has called for.

A one nation Labour Government would be taking action now to secure the recovery and to build a more balanced economy that boosts the living standards not just for the few at the top but for the many. We would act on the recommendations of the IMF to support and secure the recovery by bringing forward £10 billion of infrastructure investment. We would build 400,000 affordable homes, creating more than half a million jobs and making our economy stronger for the long term. We would support house building, encourage private sector investment, and create apprenticeships. A one nation Labour Government would be confronting the scandal of youth and long-term unemployment by introducing a compulsory jobs guarantee.

Geraint Davies (Swansea West) (Lab/Co-op): I am sure that my hon. Friend knows that household lending from banks is at the same sort of level—3% lower than in 2008—but lending to businesses is 30% lower. Is not the real problem that three quarters of new jobs are low-paid because businesses are not being given support by the banks and the Government are not forcing them to act in the interests of high-paid jobs and growth for the future?

Rachel Reeves: We have had Project Merlin and the funding for lending scheme, and yet lending to small businesses falls and falls.

A one nation Labour Government would offer guaranteed work for young people and those who have been unemployed for over two years—work that they would have to take. We would cut the welfare bill and help people to gain the skills and experience they need to join the work force for the long term. A one nation Labour Government would reform our banking and energy sectors, improving our infrastructure planning and building a skills system that ensures that everyone can play their part. A one nation Labour Government would make fairer choices to ensure that the benefits of growth are fairly shared. We would reintroduce the 10p tax rate, helping 25 million basic-rate taxpayers; and we would not be cutting income tax or increasing pension tax relief for the very wealthiest while cutting tax credits for hard-pressed families. Different choices, different priorities: this Government and this Prime Minister do not get it.

As the LSE growth commission said earlier this year:

“prosperity is strengthened when everyone has the capacity to participate effectively in the economy and the benefits of growth are widely shared”.

Alok Sharma rose

Rachel Reeves: I will not give way to Members who have already intervened, but I will give way to those who have not yet made an intervention.

4 Sep 2013 : Column 341

That will be the difference between us at the next election. We have a Tory party that is out of touch with the challenges facing families and that believes in the outdated orthodoxy that if the rich get richer, the wealth will trickle down; a Tory party that will not stand up to vested interests or stand up for British families; a Tory party that has overseen three years of falling wages; and a Tory party that offered warm words about the living wage at the time of the election, followed by a surge in the number of people working for less than the living wage over the past three years.

Meanwhile, one nation Labour, even in opposition, has driven forward this campaign. Labour councils are paying the living wage to their staff and extending it through procurement chains. Fifteen Labour local authorities are now accredited living wage employers, with another 80 in the pipeline. Labour is committed to doing all it can in government to support the spread of the living wage, and is now working with Alan Buckle, deputy chairman of KPMG International, to look how this can best be done.

All the examples that I am sure we will hear in this debate about the rising numbers of food banks, payday loans, part-time jobs and zero-hours contracts make it all the more galling for the Chancellor to have claimed earlier this summer that wages were rising.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): The hon. Lady is making a very powerful speech, to be fair, and she has made some important points about zero-hours contracts. Is she aware that Rhondda council is implementing zero-hours contracts for some of its workers, and it is a Labour-run council? Will she join me in condemning its actions?

Rachel Reeves: Zero-hours contracts can work for some people, but their growth has led to far too many people not having the flexibility they need. No one has said that zero-hours contracts should be banned, but the exploitation of far too many workers is resulting in all the power shifting to employers and not to employees.

The most recent figures show that real household disposable income fell by 1.7% in the latest quarter—the biggest fall for 26 years. The Chancellor claimed that living standards were improving and that incomes were rising. We all know why he made that desperate claim. [Interruption.] The Secretary of State for Education says that disposable incomes are rising, but the figures show that they fell by 1.7% in the latest quarter—the biggest fall for 26 years. People will find it very surprising that he claims that living standards are improving when for so many families across the country exactly the reverse is happening. We all know that Lynton Crosby, the head of Conservative electoral strategy, a job he shares with the part-time Chancellor, has told the Prime Minister—just one of the things he has been telling him—that he should be relentlessly focusing on living standards. Yet, as the Secretary of State for Education has shown, the Government are out of touch on living standards, leaving ordinary families out of pocket. It is one rule for millionaires, another for our ordinary workers; one rule for train companies, another for the hard-up commuter; and one rule for the energy companies,

4 Sep 2013 : Column 342

another for people getting higher bills through their letterboxes. Rents are up, house building is down. We have the worst Prime Minister on living standards since records began. The Prime Minister is out of touch, and hard-working families are out of pocket.

1.49 pm

The Financial Secretary to the Treasury (Greg Clark): May I begin by welcoming, on behalf of the whole House, the hon. Member for Leeds West (Rachel Reeves) back from maternity leave, and congratulating her and her husband on the birth of Anna? We wish them much joy in the years ahead. Now that she has become used to being interrupted by someone making loud, insistent and sometimes incomprehensible demands, I am sure she is glad to have returned to the House of Commons, where such things never happen.

The necessary condition for rising living standards is, of course, a sound economy. The hon. Lady will be aware that during her absence the economic policy of the Labour party has collapsed. It has spent three years opposing every reduction in public spending that this Government have made; three years calling for more borrowing and more debt; three years denying any responsibility for its failings in government; and three years warning that unless the Government changed course and adopted its so-called fiscal stimulus, the economy would not grow and unemployment would rise. However, because we followed the right policy and did not follow the shadow Chancellor’s advice, and because of the grit and hard work of the ordinary working people of this country, the economy is on the road to recovery.

Mr Redwood: Does the Minister agree that President Obama’s economic policy, which has been much misrepresented and much praised by the Labour party, has included a far bigger budget deficit reduction, through spending cuts and tax rises, than anything done here, and that the American economy is growing faster for longer?

Greg Clark: My right hon. Friend is right that there is a global consensus, if I could put it that way, that responsibility in fiscal matters is the necessary condition to revive the economy. The only exception to that consensus continues to be Opposition Front Benchers.

We have cut our structural deficit by more than any G7 country. The deficit is forecast to fall this year, next year and the year after that. We have record low interest rates. We are investing more in infrastructure during this Parliament than the previous Parliament.

It is still a world of economic turbulence—let us be clear about that—but the evidence throughout the past few months is that Britain is on the mend. National income has grown for two successive quarters.

Alison McGovern: The Minister is talking about economic success and sound economic policies. Would he like to come to my constituency in the Wirral and tell my constituents why sound economic policy and a successful economy have led to their wages being cut by £30 a week under his Government?

Greg Clark: As the hon. Lady knows, I spend a lot of time in Merseyside; we met on the other side of the water in Liverpool recently. I would be very happy on one of my visits to Merseyside to meet her and make

4 Sep 2013 : Column 343

the point that making the economy competitive, including in the north-west and her constituency, and getting people into jobs and bringing unemployment down is the best way that people can build living standards that are sustainably high. I will come on to say a bit more about that.

There have been 1.3 million jobs created in the private sector, but what has been the Labour party’s reaction, including today, to that news? The first reaction was silence. The entire Labour Front-Bench team went to ground for the summer, although the hon. Member for Leeds West had an excuse. However, three years have passed since she stated in her excellent maiden speech:

“It would not be responsible or sensible to oppose every spending cut or tax increase.”

It was in that same maiden speech that she told the Chamber that she would

“encourage this Government when they get it right”.—[Official Report, 8 June 2010; Vol. 511, c. 239.]

Now would be a good time for her to do what she promised. I would be more than happy to give way to her if she acknowledges that the hard work of the British people is showing success that she did not predict. No answer.

Geraint Davies: Does the right hon. Gentleman accept that since his Government took office, GDP per person—productivity per person—and average wages have fallen? We are seeing a glimmer of hope, but the reality is that the 1 million extra jobs are on the same baseline. In other words, that is not success; it is failure. There would have been growth under Labour, as was the case up to 2010.

Greg Clark: The hon. Gentleman parts from his Front-Bench colleagues and at least acknowledges that there is progress. He calls it a glimmer of hope, but I think the 1.3 million people employed in new private sector jobs regard it as much more than that. The hon. Gentleman will know that the first step to creating sustainably high living standards is to get people into work and into good jobs. I will say more about that in a moment.

Chris Williamson (Derby North) (Lab): May I take the right hon. Gentleman back to the Conservative manifesto from 2010? It said:

“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”

Is it not a fact that 20% of the British work force are paid below the living wage and that 60% of the jobs that the right hon. Gentleman is referring to are themselves low paid? How is that a mark of success when people are being forced into poverty wages?

Greg Clark: The hon. Gentleman should pay attention to the more thoughtful members of his party. If he looks at the work of respected think-tanks such as the Resolution Foundation, which does some excellent work, he will see that the problem of low wages is affecting many western countries and has been for some time. In fact, the right hon. Member for Southampton, Itchen (Mr Denham) pointed out in the summer of 2010 that the problem under the previous Government was that hard-working families who played by the rules and paid

4 Sep 2013 : Column 344

their taxes did not get a great deal back, that their pay had not increased much and that they thought there was fundamental unfairness in the system. This is a problem that afflicts many western countries. It started under the previous Government. I will come on to explain how the best way to pursue the matter is to raise sustainably high living standards.

Ms Buck: Does it cause the Minister any concern at all that since his Government took office in 2010 there has been a 50% rise in the number of working people who require help with their housing costs and that this Government will spend £14 billion more on supporting private tenants with their housing costs than the previous Labour Government?

Greg Clark: The hon. Lady and my party share the ambition of ensuring that people can earn a living that allows them to pay their and their families’ costs, but the question is how we get there. If Members oppose the reforms necessary to create that possibility they will not make any progress, given the financial situation we inherited.

Mr Redwood: I am glad that the Minister has said that we share Labour’s ambition for more people to have better paid jobs. Of course we want people to be better paid, but is not the best way for people to get a better paid job to start with a low-paid job and work their way up and get mentored and trained in the workplace?

Greg Clark: My right hon. Friend makes a powerful point. Opposition Members should not be so disparaging about the chances that are being given to millions of people to find work, make progress, learn skills and acquire the necessary experience.

Several hon. Members rose

Greg Clark: I want to make some progress.

The Labour party’s policy, according to the Institute for Fiscal Studies, is to increase Britain’s debt by £200 billion. That would be ruinous, because—this is linked to living standards—that borrowing would fall to the ordinary working people of this country. They would suffer a double hammer blow: more money would be taken out of their incomes to repay debt and there would be higher interest payments on mortgages and business loans. A 1% increase in interest rates would cost householders with a £100,000 mortgage £1,000 a year.

Today and throughout the past three years, the Labour party has persisted in talking down the economy, but its policies would take down the country. In fact, one of the biggest sources of concern in the British economy today is the total absence of a credible economic policy from the people who in 20 months’ time aspire to be the Government of this country. That is of concern even to people in the Labour party. Even the noble Lord Mandelson said recently that the risk of pursuing Labour’s economic policy was too great:

“I don’t think you can really take a chance, I think the markets, whose confidence in us to pay back what we borrow—that confidence is the determining factor.”

4 Sep 2013 : Column 345

He went on to say that

“a lurch in policy…would be quite a risk which I would not blame the chancellor for refusing to take.”

By the way, Lord Mandelson is a friend of the shadow Chancellor. He said:

“I also happen to like him…well, more than I used to.”

We are here to discuss the cost of living and the cost of living is Labour’s legacy. Of course families are finding it tough. The Labour party talks about the cost of living without any mention of its record in government on living standards. It was the Labour Government who doubled council tax. Even in the depths of the recession, when my hon. Friend the Member for Peterborough (Mr Jackson) presciently asked them to consider freezing council tax, as this Government have gone on to do, they flatly refused.

Andrew Bridgen (North West Leicestershire) (Con): On that point, will my right hon. Friend join me in congratulating Conservative-run North West Leicestershire district council, which has frozen council tax for four years running, and in condemning the leader of the Labour group, who suggested that we should raise council tax by 2% this year?

Greg Clark: I congratulate my hon. Friend’s council. We know that council tax is an important bill that people face. That is why when we came to office, knowing the pressures faced by ordinary working people and families, we froze it.

The same is true of the Labour party’s record on fuel duty. Its fuel duty escalator meant that what working people paid to fill up their car rose by more than inflation every year. Petrol would be 13p a litre more if Labour had stayed in office.

Energy prices for the home escalated under Labour. Between 1997 and 2010, the average domestic gas bill doubled. These matters were raised in our earlier exchanges, but the hon. Member for Leeds West omitted to say who the Energy Secretary was in the last Government. It was the current Leader of the Opposition. When I shadowed him across the Dispatch Box, these issues were not addressed, despite our urging him to do so.

In its 13 years in office, the Labour party failed to safeguard pensions. In one notorious year, it increased the state pension by 70p. This Government have restored the link to earnings. Labour presided over the biggest fall in the number of homes being built since the 1920s, with the consequence that rents have risen and, for the first time in 100 years, the proportion of people who own their own home has fallen.

Gavin Barwell: My right hon. Friend is doing a very effective job of comparing the record of Labour in office with the rhetoric that we have heard today. The shadow Chief Secretary talked about priorities. Will my right hon. Friend tell the House what was the effect of the Labour Government’s abolition of the 10p rate of income tax? Which sections of society were made worse off by that decision?

Greg Clark: My hon. Friend makes a very good point. Of course, it was the ordinary working people who were struggling to get by who were penalised by that change. We have not had an apology for that.

4 Sep 2013 : Column 346

[

Interruption.

]

The hon. Member for Nottingham East (Chris Leslie) talks about raising VAT. It would be interesting to hear from him whether the Labour party would reverse the rise in VAT.

Chris Leslie (Nottingham East) (Lab/Co-op): Will the right hon. Gentleman explain how much the rise in VAT has cost the typical family?

Greg Clark: It is 20 months before the election and the Labour party cannot say whether it would keep or reverse the rise in VAT.

The Labour party established the beer duty escalator, the council tax escalator, the fuel duty escalator and the biggest escalator of them all—the deficit escalator. The deficit trebled in its last two terms in office and that all has to be repaid by the hard-working people of this country. The facts are stark: the deficit that we inherited equates to about £6,000 per household every year. Of course it is painful to find an average of £6,000 per household in revenues and savings, but that is the effect of the previous Government’s profligacy.

Emily Thornberry rose—

Debbie Abrahams (Oldham East and Saddleworth) (Lab) rose

Greg Clark: I will give way to the hon. Member for Islington South and Finsbury (Emily Thornberry) because she has been patient.

Emily Thornberry: I wonder whether I might drag the right hon. Gentleman back from the political knockabout to the realities of life. A point was made earlier about the number of working people who are now dependent on housing benefit. Is he aware that the cheapest four-bedroom flat to rent on Rightmove yesterday cost £440 a week? Given that the minimum wage is £212 a week, how can people live?

Greg Clark: Where has the hon. Lady been for the past three years? We have reformed the planning system. Since the national planning policy framework was adopted, which I had something to do with, planning permissions for new homes have risen by 22%. That is the action that is required if the problems that she identifies are to be solved.

The Labour motion talks about the standard of living, but no Government in living memory have done more to scupper the standard of living of ordinary working people in this country than the last Labour Government.

Stella Creasy: The Minister wants to talk about his Government’s record, so let us talk about the last six months alone, during which the proportion of people in this country who are worried about their personal debt has risen to 50%—20 million people in this country are desperately worried about the level of personal debt that they are in. Does he accept that his low-wage economy is part of the reason why so many families in this country are lying awake at night, frightened about how they will put food on their table and make it through to the end of the week?

4 Sep 2013 : Column 347

Greg Clark: The hon. Lady is an experienced and effective campaigner on debt issues, but she will know that the explosion in debt happened under the last Labour Government. The reforms that we have made in financial services, the line-by-line scrutiny of which the hon. Member for Nottingham East participated in, have improved the regulation of such matters. She is right in the sense that the only way of ensuring that people can confidently earn enough to support themselves and their families is for them to be in work and in a good job. That is the purpose of our reforms.

Gavin Barwell: The hon. Member for Walthamstow (Stella Creasy) is right to identify low wages as a problem. They are a particular problem in the parts of the country that have the highest living costs because we have a national minimum wage. The second part of the problem is the high level of tax that the Government levy on people who are in low-paid work. Will my right hon. Friend therefore answer the question that the shadow Chief Secretary ducked and tell us what has been the change in the income tax bill for somebody who works full time on the national minimum wage?

Greg Clark: Of course, the amount of income tax that is paid by somebody on such modest earnings has been halved. That is the purpose of our reforms. Those people are better off.

Every Member of the House wants the standard of living enjoyed by the people of this country to rise. That is the purpose of economic policy. Let us therefore have a serious analysis of how that can be achieved.

Several hon. Members rose

Greg Clark: I will make some progress, then I will give way.

We must have a serious analysis of how that can be achieved in a way that is substantial and sustained. The first requirement is to do everything that we can to ensure that people are able to earn a good living. The second is to do everything that we can to reduce the costs that people face—especially those that are imposed by the Government.

On the first requirement, if people are to earn enough to generate a good standard of living, our country needs to be competitive against its rivals. The UK is at the top of KPMG’s league of the best countries in which to do business, ahead of Switzerland, the USA and France for the first time ever.

Kwasi Kwarteng (Spelthorne) (Con): I am grateful to the Minister for the point that he is making about international competitiveness. How did Labour’s 12 increases in fuel duty improve competitiveness and the living conditions of British families?

Greg Clark: Those increases hit people in two ways: they hit the people who paid the duty when they filled up their tanks and they hit small businesses who employed people. It was a disastrous policy, which is why we scrapped it.

We will shortly have the joint lowest corporation tax in the G20. Last year, Britain was the biggest destination in Europe for inward investment. That competitiveness is creating jobs—jobs that give people incomes. Since

4 Sep 2013 : Column 348

2010, 1.3 million jobs have been created in the private sector. More people are working in Britain than ever before and we have the lowest proportion of workless households for 17 years. There have been more net new private sector jobs in the past three years than there were in the previous 10 years under the Labour party.

People’s living standards are higher if they are in work, but I also want people to be able to earn higher wages. The only way to achieve that is to improve the levels of education and skills in the workforce. That is why the reforms of my right hon. Friend the Secretary of State for Education are so vital. It is why we need rigour in the exam system. It is why his announcement this week that we must ensure that people leave school qualified and skilled in all ways, but especially in maths and English, is so important. It is why the 86% increase in new apprenticeship starts between 2009-10 and 2011-12 is so important.

Barbara Keeley (Worsley and Eccles South) (Lab): I would not want to waste the opportunity, with the Secretary of State for Education in his place, to raise again the cost of living issue of school uniforms, which the Prime Minister ignored earlier as though there were no issue to consider. In Manchester, one of the new academy secondary schools is charging £300 for a boy’s uniform. Families are really struggling, as I mentioned to the Prime Minister, although he did not seem to take the point on board. That cost is pushing a lot of families into debt and payday loans. The Financial Secretary talked about families struggling to get by, and this month some families are struggling to get by because they have had to shell out £300 to send their children back to school. What does the Secretary of State for Education have to say about that?

Greg Clark: I suggest that the hon. Lady turn up to Education questions if she wants to question the Secretary of State, but since her question refers to the cost of living, I hope she would not want the policies on such matters for every school in the country to be set from the Department for Education. It would be an interesting statement from the Labour party if it did want that. My experience of good schools in my constituency that have a uniform code, which parents welcome, is that they typically have schemes and mechanisms to help people obtain uniforms if they find themselves in financial difficulties.

Getting good jobs requires investment in skills and education for those in work. For those who are retired, incomes have been helped by the biggest ever increase in the state pension.

Several hon. Members rose

Greg Clark: The hon. Member for Leeds West did not give way to Members who had already intervened once. Given the number of Members who want to speak, I think I will do the same thing. However, I will give way to my friend the hon. Member for Birmingham, Erdington (Jack Dromey) before I make some progress.

Jack Dromey (Birmingham, Erdington) (Lab): I am grateful to the right hon. Gentleman. May I first correct the figures that he gave earlier? Under the Labour

4 Sep 2013 : Column 349

Government there were 2 million new homes; it was under the current Government that house building fell to its lowest level since the 1920s.

This is “Yes to Homes” week, and housing organisations all over Britain have predicted that without fresh measures by way of investment in housing supply, rents will rise by 46% by 2020 and the price of buying a house by 42%. Why not heed the advice of the International Monetary Fund, which has said that if we want a serious, sustainable economic recovery, £10 billion should be invested in our economy? Why not invest that in building 400,000 affordable homes and creating 600,000 jobs and apprenticeships?

Greg Clark: I have enjoyed debates with the hon. Gentleman over the years, and he will know that no one in the Government is more committed than I am to increasing the number of homes. He knows that our reforms to planning—I have heard some recent statements suggesting that the Labour party may wish to resile from them—are increasing the number of planning permissions given for new homes. I would have thought that he would welcome that.

The Government are relentless in driving up employment and the quality of skills, which are the foundations of high living standards. However, we must also act to reduce the costs that people have to pay, where the Government can influence those costs. A credible plan for reducing the deficit has kept interest rates low, as the IMF has acknowledged. We must not underestimate the importance of those low interest rates to the monthly budgets of thousands of families. Indeed, as I said, if mortgage interest rates were to rise by just 1%, average mortgage bills would increase by about £90 each month.

We have enabled local authorities to freeze council tax for five years, meaning that the average person pays £200 less each year than they would under the Opposition’s plans. We are increasing the tax-free personal allowance to £10,000 from next year, meaning that the average person will pay nearly £500 less each year than they would under the Opposition’s plans. We have frozen fuel duty, meaning that the average person pays nearly £170 less each year than they would under the Opposition’s plans.

On top of that, we have capped rail fares, extended free nursery care, taken action to reduce energy costs and cut the tax paid on a pint of beer. Under the Opposition’s plans, it would cost more to drive a car, more to take a train, more to heat a home and more to drink a pint. In fact, if we add it all up, someone with a car to run, a mortgage to pay and a home to heat would be about £2,000 worse off every year under the Labour party, yet it has the audacity to claim that things are getting worse for millions of working families.

The combination of rising employment and the increase in the personal allowance meant that last year, real household disposable income rose by 1.4%. However, there is more to do, and as the recovery continues we want to see living standards rise. The people of Britain know that there is no shortcut to higher standards of living and no magic money tree. They know that the only way is for us to live within our means; invest in education and training; spend prudently, not profligately; and exercise the same values in government as people do in their own lives. That is what this Government are

4 Sep 2013 : Column 350

doing, that is the path to prosperity for all, and that is why a good future awaits the people of this country.

Several hon. Members rose

Madam Deputy Speaker (Dawn Primarolo): Order. A large number of Members wish to participate in the debate, so there will be a time limit of six minutes on all Back-Bench contributions, starting with the next speaker.

2.15 pm

Mr Geoffrey Robinson (Coventry North West) (Lab): The Government’s response to this timely Opposition motion is becoming clear already. They intend to airbrush the past three years from history as far as they can, as if they did not exist, and say, “We are now finally on the road to growth, and all will be well.” I have two comments to make about that.

First, today’s debate is about what has happened to those on average and below-average incomes over the past three years. It is clear that whatever recovery is eventually secured—all economies eventually recover, even though we maintain that the cuts have been too far, too fast and too deep—the essential thing is to see that the excessive burden that has been borne by those on average and below-average incomes is rectified.

Let us look at the incontrovertible facts about what has happened to wages under the current Government over the past three years. Wages are down by an average of almost £1,500 a year, prices have risen faster in the UK than in any other major economy and energy bills have risen by more than £300 since the general election. Those are facts, and I do not think anybody in the House would dispute them. Government Members may argue that it was all necessary, and that even though the burden has fallen heavily on those least able to bear it, it was all part of a plan that had to be implemented. We do not accept that, and we maintain our criticisms.

Harriett Baldwin (West Worcestershire) (Con): During the summer, in one of his many mansions, was the hon. Gentleman able to read the book published by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)? It states that

“From 2004 onwards”,

median families

“were feeling the strain…people were working just as hard as ever—but were not getting on.”

This is not a new issue, and the hon. Gentleman may recall that Treasury officials were examining it during his party’s time in government.

Mr Robinson: I hope that the Treasury is examining how we can ensure that there is a fair spread of the benefits that will come in the recovery, and how we can sustain that recovery. I will come to that in a moment.

In the global race on living standards, the UK is doing worse than any of our competitors and has had the biggest fall in worker income of any country in the G7. Why is that? Because none of the forecasts made for the past three years has been met, since the Chancellor announced with great fanfare the plan for the rectification of the deficit and the return to growth. He has not come anywhere near fulfilling a single one of the predictions he made then for any year on investment, growth or

4 Sep 2013 : Column 351

employment, which I will come to in a moment. It is clear that the failure of the Government’s policy has caused terrible burdens to fall on those least able to bear them. They have failed in their policy, their objectives and the tasks that they set for each sector of the economy. I do not know whether it had to be that way or whether they will repeat that failure, but personally I think it was unnecessary.

We all hope—no one more fervently than the Opposition—that that is behind us now and we can look forward to a recovery that can be sustained. We do not want the Government killing off this recovery like they killed off the one that they inherited from us back in May 2010. [Interruption.] They killed it off. The economy was beginning to grow, under a stimulus. They killed off that recovery, so let us see whether they can kill off this one. No doubt they will try. To avoid that happening, the Government must change course on several fronts, and they must do it quickly, even now.

Richard Graham (Gloucester) (Con): Will the hon. Gentleman give way?

Mr Robinson: In a moment. The Government cannot just sit back, say it will all be glorious, accept the fine new forecast in the way they accepted the previous one, and think, “That’s going to happen.”

Before we come back to the inevitable party points that each side will make, I wish to raise one serious issue before the House, which is the role of real wages in economic recovery. As has been said, and as the figures bear out, the burden has been borne heavily by those on average and below-average wages. The fall in wages is significant; it is the largest in any of the major economies and I think the largest in the UK for probably 100 years. That must be rectified because it will be a drag on our ability to recover if we remain in a low-wage, low-skill economy. I hope that point is taken up by the Treasury in all seriousness, as well as by British industry. We have got to upskill unless we want to engage in a race to the bottom of a low-wage economy, which we will never win.

Richard Graham: Will the hon. Gentleman give way?

Mr Robinson: I will give way in a moment as I said I would. There is time enough. Even China is now coming under pressure from Indonesia and Vietnam. If we try to get down to the levels of wages there, we will not do it; the recovery must be about a higher skilled, more productive economy in which rising incomes play a vital role. Rising incomes, particularly at average level, will be vital in sustaining the recovery. I hope that point is taken and will receive a serious reply.

Richard Graham: I am grateful to the hon. Gentleman for giving way. He has provided various revisionist explanations for what his Government did for 13 years. Is he aware that in my constituency of Gloucester, some 6,000 jobs in business were lost during the 13 years of the Labour Government? Since the last election, some 2,000 jobs have been created and 1,240 new apprentices started last year alone. He is right to flag up that some wages are low, and we would all like them to be higher, but what does he say about the prospects for those 6,000 people who lost their jobs, and for the 2,000 new jobs created since the election? Surely that is the starting point for an improved life.

4 Sep 2013 : Column 352

Mr Robinson: The hon. Gentleman represents Gloucester, which is quite a successful manufacturing base in that part of the world. Manufacturing got hit, and if we do not support it through our policies more directly than we have before, it will continue to be hit as is happening under this Government. Let us look at the 1.2 million jobs. That is something of an achievement, but 60% or 70% have low pay. There is no long-term future in having low pay in those jobs; we must start to move away from that.

I am pleased that apprenticeships are doing so well for those aged over 20, but among the crucial group of those aged 16 to 20, as the shadow Chief Secretary to the Treasury said, there has been a 13% fall in the number of apprenticeships. That is a terrible figure and we need more skills and more apprenticeships where it matters. Meanwhile, as we all know, unemployment among the young has risen. When we were in government we created 2 million new jobs and had the highest level of employment ever in the country. The trouble was, quite honestly, that too many went to immigrants, and nothing was done to bring up the skills, willingness and ability of our youngsters to take on a higher proportion of the jobs created.

Debbie Abrahams: I am grateful to my hon. Friend for giving way given that the Minister refused point blank to let me intervene, even after several attempts. Does my hon. Friend agree that the employment rate is still lower now than it was in 2008, for all that Government Members like to claim that we are on the road to recovery?

Mr Robinson: I entirely agree and my hon. Friend makes a very telling point. There has been one area where we can honestly say the Government appear to have done better than we might have expected. On every other economic front, including that raised by my hon. Friend, their record is worse.

Let us look to the future. What do we need to ensure we sustain this recovery? First, we need the Government to accept the role of real incomes rising—a vital element in sustaining the recovery—and higher productivity to accompany that. Although we have done well in some areas of employment, productivity has gone down. We need the Government to accept the £10 billion infrastructure recommendations by the International Monetary Fund, and we need a housing programme and for building to get under way. All those things remain to be done. We need direct action. We should get rid of Ofgem, bring in a new regulator, and have direct action on energy and transport prices. Such a programme could sustain the recovery and we would see a slow build-up of real wages, which have been so devastatingly hit by Government policies.


2.24 pm

Kwasi Kwarteng (Spelthorne) (Con): Living standards, of course, form part of a context in which the wider economy must be considered. I notice that the shadow Chief Secretary to the Treasury is leaving the Chamber, but I wanted to address some of her remarks. She was, I felt, very ungracious in the way she took interventions from Government Members. I am pleased to see her back after her long break and I wish her all the best, but

4 Sep 2013 : Column 353

she did not do enough to observe the courtesies of the House in listening to other points of view.

The first point to remember is that the economy is recovering, despite the protestations, gloom and doom and talking down of the economy by Opposition Members. The OECD and Office for National Statistics have doubled their forecasts for 2013 growth, and the OECD is even suggesting that Britain will outstrip her competitors in economic growth. That should be welcomed on all sides of the House.

On living standards, the Labour party has engaged in a series of speeches that have shown collective amnesia, and it has been deeply hypocritical, complacent and unapologetic about the appalling record it left us in 2010. You will remember, Madam Deputy Speaker, that the Chief Secretary to the Treasury in the previous Labour Government left a note that suggested there was no money, simply because they had spent it all. They spent and spent and spent, and that is the context in which our debate about living standards in Britain must take place.

Fiona O'Donnell (East Lothian) (Lab): Perhaps now the hon. Gentleman can prove that he does not suffer from short-term memory loss and tell us by how much wages have fallen in real terms since his Government came to power.

Kwasi Kwarteng: What I will tell the hon. Lady is that it is particularly nauseating to listen to Labour Members talk about increased living costs when under their Government fuel duty was increased 12 times. It is not right for members of the public and people listening to this debate to look on those remarks, when Labour increased fuel duty 12 times without any respite.

Gavin Barwell: The hon. Member for East Lothian (Fiona O'Donnell) makes a perfectly fair point about wages, but does my hon. Friend think there is some hypocrisy there, given that just about the only cut that those on the Opposition Front Bench have supported is the freezing of public sector pay over a number of years? It is clear that even under Labour, many people would have seen a real-terms reduction in wages.

Kwasi Kwarteng: Absolutely right. My hon. Friend mentions hypocrisy, and I think that has framed the approach of Labour Members on this issue. They have spoken really from either side of their mouths. On one hand they decry the difficult measures that we have had to implement and, on the other, they refuse to apologise or accept any responsibility for the appalling fiscal situation that they bequeathed to this Government.

Gloria De Piero (Ashfield) (Lab): How did the hon. Gentleman feel when he learned in April that bonuses in finance and business services rose by 82.2% compared with the same month a year ago?

Kwasi Kwarteng: The hon. Lady will remember that the bonus pool under the Labour Government was far bigger. It was outrageous. Indeed, it was Lord Mandelson who suggested that he was very relaxed about people getting “filthy rich”. That was the legacy of new Labour:

4 Sep 2013 : Column 354

debt, credit, massive bonuses and a totally irresponsible way of running the economy. Such irresponsibility is largely responsible for the situation we are in. We have had to follow a deficit reduction strategy. That is working and the deficit has fallen by a third over the past three years, from £160 billion to about £115 billion. That is a signal success. We see not only deficit reduction, but—the jury is out on this, but I am confident—economic recovery. This is very successful stewardship of the economy. It is not only Government Members who agree with that assessment. Let us look at the opinion polls. Even though it is true that Labour is maintaining a slim lead, on the economic question and the question of the credibility of economic policy, Labour, and the shadow Chancellor and Leader of the Opposition as a team, consistently under-poll the Chancellor and Prime Minister as economic stewards, because the public have not forgotten the appalling mess that Labour left behind. Despite three difficult years, the public refuse to accept that Labour has any ideas or solutions to our difficult problems. They are well aware of the appalling fiscal situation that Labour Members left behind.

Let us look at some of the figures on fuel duty increases. We have suspended the fuel duty escalator and prices have not gone up. We have taken many low-paid people out of the tax system. People will recognise that the Government’s efforts have been partly successful. We have not reached the promised land and the goal that we set, but we are getting there. People realise that any return to the Labour policies of spend, borrow and spend even more will be fatal to the recovery. The hon. Member for Coventry North West (Mr Robinson) mentioned killing off the recovery. The quickest way to kill off any recovery would be a return of the Labour party to government. In my view and the view of many of my constituents, that would be a form of national economic suicide. As a nation, we must address and debate living standards, but we must also put them in the context of the appalling economic and fiscal situation that Labour Members left behind. It is hypocritical and disingenuous of them to blame the coalition Government for the mess they created and bequeathed.

Finally, I should say a few words of optimism. It is clear that there is a renewed sense of optimism in the economic community. I am not rash enough to suggest that the path ahead will be smooth. There will be checks and times when there are doubts, but the general trend and direction is clear. The latest Office for Budget Responsibility forecast, from March—it seems likely to be upgraded—predicted that average earnings in 2014 would increase faster than consumer prices index inflation. It also predicts that, by 2016, living standards will be growing twice as fast as inflation. We might well have reached an inflection point that will prove the success and wisdom of the Government’s polices.

2.33 pm

Mr Russell Brown (Dumfries and Galloway) (Lab): Like other hon. Members, I congratulate my hon. Friend the Member for Leeds West (Rachel Reeves) on returning to her Front-Bench duties, although I appreciate that she has had to leave the Chamber for the time being.

When I first came to the House 16 years ago, people throughout the country and not just in my constituency, and especially women, were holding two or even three part-time jobs to make ends meet. The history is that

4 Sep 2013 : Column 355

1997, when Labour came to power, was not a good time. It is true—I suspect Government Members would agree—that people were looking for a change, which is what happened in 1997.

Individuals and families were looking for some security and certainty in their lives. In all honesty, that is no different from what businesses were looking for. Businesses were looking for confidence. At the end of the day, if there is confidence in the business world, businesses will in turn believe that they can take that little gamble and create jobs. That is what happened over a sustained period when Labour came to government. Here we are in 2013. Despite what the hon. Member for Spelthorne (Kwasi Kwarteng) has said, the country is looking again for those things. The country and businesses are looking for confidence, and families and individuals are looking for security and certainty, to take them forward through these difficult times.

I do not deny that the prospects are very good in some parts of the country, but that is not true of many areas. The situation in communities is patchy. Back in ’97, there was a rapid reduction in unemployment. Department for Work and Pensions staff at the time were able to assist individuals who had been long-term unemployed. People who suspected that they would never find a job were finding work.

Where are we on living standards? We can talk about incomes, but income is not the only aspect of a living standard. The equation must include what people need to spend regularly. That is why people’s living standards in many areas are falling. I regret to say that we are returning to people, especially women, having to hold down two and three part-time, low-pay jobs to make ends meet.

Gavin Barwell: Is the hon. Gentleman seriously saying that, in his opinion, between 1997 and 2010, many hard-working people did not have to hold down multiple jobs to make ends meet?

Mr Brown: Yes, that was beginning to happen again, but not at the rate we have experienced from 2010 onwards.

Ian Mearns (Gateshead) (Lab): I had the great privilege of visiting my hon. Friend’s constituency during the summer break. It must be difficult for people on part-time work to put together the combinations of part-time jobs in areas where the economic community is so disparate. I visited Stranraer, Wigtown and Withorn. They are relatively small places, and putting together the combination of part-time jobs to make a living wage must be very difficult in such a community.

Mr Brown: I thank my hon. Friend for visiting—I appreciate that he did not tell me that he was coming, but it was on unofficial business. He is right that, in that remote rural locality, jobs are few and far between.

My area lost 1,300 local authority jobs over nine quarters. In those same nine quarters—between June 2010 and September 2012—we lost 2,000 private sector jobs, including quality jobs. The figures are staggering. The average wage in Dumfries and Galloway is some 24% less than the national average. In May 2010,

4 Sep 2013 : Column 356

460 people were long-term unemployed; there are now 970. Jobseeker’s allowance claimant numbers are above the UK average.

Worst of all—the House needs to take this to heart—is youth unemployment. Under the previous Conservative Government, we almost ended up with a complete lost generation. In my area, we have 8.9% youth unemployment. That is not acceptable when the Scottish average is 7.4% and the UK average is 6.2%. I will not stand by and allow the youth—those aged 18 to 25—to sit wasting. That is why, two weeks ago, I held a cross-party summit in my area to discuss the difficulties that we face.

I do not have the answers, but welfare reform has played a big part in what is happening on our high streets. We have seen the Government freeze benefits at 1% because they thought that it was the right thing to do, but all that has done is take money out of the local economy.

Kwasi Kwarteng: Will the hon. Gentleman give way?

Mr Brown: No, because the hon. Gentleman would eat up my time, and I am not prepared to allow that to happen. I need all the time I have got.

Taking money away from the poorest, who would have spent it on the high street, is bound to have an impact on what is going on. It takes even more jobs out of the economy.

Let me put the record straight on energy and fuel costs. The hon. Gentleman made a point about fuel costs—[Interruption.] Never mind the hand signals. On 11 occasions over nine years, the Labour Government froze the planned fuel duty increase. When Labour came to government in 1997, duty and tax on fuel was 78%: when it left government, duty and tax was 66%. Let us not forget that the price of fuel sometimes increases because the price of oil increases.

I regret to say that in Dumfries and Galloway 41% of all households are in fuel poverty, with the average in Scotland being 28%. I am not boasting about those figures: I am frankly ashamed of them. We are a low-wage economy, after decades of low pay in agriculture and tourism.

I pay tribute to the hon. Member for Suffolk Coastal (Dr Coffey), who chairs the all-party group on off-gas grid. She has made a valiant effort, with support from the all-party group, to get the Minister with responsibility to make early payments of the winter heating allowance to those people who want to use it in time to buy cheaper fuel. Regrettably, her effort has failed, as the Minister has declined to make early payments.

Things may be going well in some Conservative Members’ constituencies, but the picture across the country is patchwork, and that should not be forgotten.

2.42 pm

Harriett Baldwin (West Worcestershire) (Con): When I saw the wording of the Opposition’s motion today, I simply could not believe its sheer gall, or the absolute nerve they had in making the points they made. In fact, in honour of Jewish new year tomorrow, I will say that they have incredible chutzpah in putting this motion on the Order Paper today. If there is one sure way in which

4 Sep 2013 : Column 357

the Government can reduce the living standards of their citizens, it is by living way beyond their means. A deficit is the spending reductions or tax rises that the Government are not prepared to impose today but willing to pass on to future generations.

I do not ask the House to believe me on that point, but to believe the recently retired Lord King, who has made it very clear that today’s living standard squeeze is a consequence of the Labour party’s policies. In 2011, he said:

“The real consequence of this crisis is only now beginning to be felt. They weren’t felt in 2008, they are only now being felt.”

What we have seen was the consequence of the previous Government, who left this Government with a note saying, “I’m sorry, Chief Secretary, there is no money left.”

Ian Mearns: It is a little rich for the hon. Lady to suggest chutzpah on our behalf. I live in the midst of an Orthodox Jewish community in my constituency of Gateshead. It is a learning community, given the local colleges, and contains considerable poverty. The people there would probably disagree with her.

Harriett Baldwin: What would that community feel about a Government who left a deficit of 11.8% of GDP? This Government have reduced it by a third, to 7.4%, although there is still a long way to go. More than any community, that community would understand the importance of living within one’s means. We need to judge the Government by their track record, compared with the previous Government.

Charlie Elphicke (Dover) (Con): The issue is not just the deficit. Real earnings did not rise from 2004 onwards under the previous Government’s mismanagement. We still see the scars of the terrible recession of 2008 in the earnings lag, which continues to this day and which we are battling to turn around.

Harriett Baldwin: I agree, so let us turn to the track record of what we have tried to do in government to tackle the very issues raised in today’s debate. We all want to see our constituents prosper and have more money each month to pay their bills. The most important bill that they have to pay each month—on pain of imprisonment if they do not pay it—is their income tax bill. In 2007, people had to start paying income tax once their income rose to just over £5,000. By the end of the next tax year, people will be able to take home £10,000 before they have to pay income tax. That is a halving of the income tax bill for the hard-working person who works full time on the minimum wage. It is also a 20% real-terms reduction in the tax bill of someone on median income. That is the action that a responsible Government can take.

Fiona O’Donnell: Will the hon. Lady give way?

Harriett Baldwin: I am sorry, but I have now taken my fair share of interventions.

One of the other large bills that people pay is the council tax. Under the previous Government—let us judge them by their deeds—council tax went up by

4 Sep 2013 : Column 358

100%. This Government have managed to hold it broadly steady, which has meant a 9.5% real-terms reduction. Under the previous Government, fuel taxes were increased on 12 separate occasions for my constituents. Indeed, the previous Chancellor legislated for a further 13p in tax increases on fuel, which happily we have been broadly able to avert—an 11% real-terms reduction in that important bill, or a saving of £7 every time people fill up their tanks.

Mortgage rates are also at a record low. That important monthly bill would be £1,000 a year more if interest rates were to increase by 1%. That is a modest estimate of the increase if the Opposition were to borrow the additional £200 billion estimated by the Institute for Fiscal Studies. The cost of child care is extortionate, and I can speak from personal experience on that, but it went up 77% from 2004 under Labour. The Government have taken many steps to try to increase the availability of free child care for our constituents. For those on median incomes who find that it is not economic to return to work, we will make the cost deductible against tax from 2015.

We have tried to take steps on the unmanageable expected costs of social care expenses, and we have also made sure that pensioners will benefit each year from an increase in their pensions that at least matches inflation—something that will reassure them over time, compared with the 75p increase that they once received under the previous Government.

Those are the steps that we have taken to address the cost of living for our constituents. We also want to invest in skills, apprenticeships and the measures that will help people to move up the ladder of responsibility at work and take on higher-paid jobs over time. Our welfare reforms have made the incentive to work much stronger, so that the number of households with no one in work has dropped to a record low.

Growing private sector employment and record growth in the manufacturing index, which came out yesterday, are what will allow businesses to grow, to grow in confidence and to pay their employees more over time. That is how to tackle the cost of living for our constituents—not by taxing more and borrowing more as the Opposition propose. We must have a credible and responsible Government who keep their own costs down. We must never give the power to tax and spend back to the Labour party, with its damaging track record.


2.50 pm

Lisa Nandy (Wigan) (Lab): I do not need to tell most Opposition Members about the crisis unfolding for individuals, families and whole communities, including in my constituency of Wigan. It is not just that unemployment has hit communities like mine hard and had an impact on people’s living standards, it is that the unemployment figures mask the reality facing many families of cuts to pay and hours, which have had a devastating impact on their daily lives. Many Opposition Members are also familiar with the picture we are seeing in Wigan, where payday lenders have sprung up to fill empty shops on the high street and are charging extortionate rates of interest, and where the queues at food banks, such as the Brick in the centre of my constituency, are lengthening by the day. In the past eight weeks, the Brick has given out more than 1,000 food parcels—it is running out of food.

4 Sep 2013 : Column 359

We are now in a situation where one in five children in Wigan arrive at school too hungry to learn. Across Greater Manchester and Greater London, that figure rises to nearly 50%, leaving teachers having to feed children out of their own fridges and their own pockets.

Kwasi Kwarteng rose

Lisa Nandy: I will give way to the hon. Gentleman. I would be grateful if he told me what he thinks his Government should do about it.

Kwasi Kwarteng: I am grateful to the hon. Lady for giving way. Does she not recognise that if over 10 years a Government consistently spend a lot more than they get in and leave a huge deficit, any attempt to deal with that deficit will be difficult? Does she not accept that basic point?

Lisa Nandy: I find the hon. Gentleman’s comment alarming. Perhaps it is time for Government Members to attend an economics course or, more pertinently, a history lesson. If we fail to learn what happens when considerable deregulation causes a global financial crisis—supported and egged on by Conservative Members—we will be condemned to repeat it.

I was telling the House about the indignity, anguish and anxiety that afflict many of my constituents, and that daily grind people down. There are a number of things the Government could do, and I want to address them in the short time that I have. First, the Government should and could take immediate action to create jobs by investing in infrastructure. We badly need new schools, we badly need new homes and, in some areas, we badly need new hospitals. Constituencies like Wigan, where the construction industry has always been important to the local economy, need that investment, not just because we will get the buildings we need but because it will provide jobs and apprenticeships for young people.

Construction used to be one of the key routes for young people leaving school to get into the labour market and learn skills that could take them beyond the sort of low-paid work that hon. Members have described. If the Government were to take action immediately, it would be a huge relief not just to me but to the 1 million young people who are out of work and who ought to be a national priority. We know that this should be a national priority, because we know what happens when young people are left out of work: they suffer prolonged periods of unemployment, insecure employment and wage-scarring effects well into their 40s. What we are seeing at the moment is limited action to create apprenticeships. I am seeing young people in a revolving door of apprenticeships, taking on work experience, internships and apprenticeships over and over again. These do not lead to a real, paid, lasting job. Government Members heavily criticised the future jobs fund for being expensive, but I say to Ministers: please recognise that investing money in young people up front is repaid in droves. It is the right thing to do morally; it is the right thing to do economically.

Many young people are on zero-hours contracts and I want to say something about the increasing casualisation of the work force, something that the workers in the Hovis factory in my constituency are rightly standing up against at the moment. People on zero-hours contracts

4 Sep 2013 : Column 360

tend to earn lower wages as a whole, and we have seen compelling evidence of widespread exploitation. I would be grateful if the Minister paid some attention to what I am saying, because this is something that affects people across the country, including, perhaps, in his constituency.

Andrew Bridgen: The hon. Lady speaks passionately about youth unemployment. If the Opposition have all the answers on youth unemployment, why did it rise by 40% under the previous Labour Government?

Lisa Nandy: Again, I would really like to send the hon. Gentleman on a history course. If he looks more closely at what happened under the previous Government, he will see not only that youth unemployment fell, but that at the one point in the mid-2000s when it rose it was because there were more young people compared with the number of jobs. It was due to an increase in the number of young people, not a shortage of jobs. The previous Government immediately took action to reduce youth unemployment, something I hope Ministers revisit and learn from in view of the problems we have now.

I was talking about the widespread exploitation of people on zero-hours contracts. Whole sectors are now dominated by this. I represent women in my constituency who work in the home care sector, and I have heard appalling stories about the way they are treated. One woman was forced to take eight hours of shifts on no notice whatever. She has two young children and had to take them with her and lock them in her car while she tended to older people. I would be really grateful if the Minister stopped laughing for a moment, because this is very serious. When the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson), responded recently to a debate in Westminster Hall packed with Labour MPs raising similar concerns, she did not say very much. However, it cannot be beyond our wit to bring in some kind of statutory code or regulation and ensure that it is enforced. I take the Minister’s point that some people like zero-hours contracts, but, given the widespread exploitation of people in that situation, surely it is time to take action.

Lilian Greenwood (Nottingham South) (Lab): Will my hon. Friend give way?

Lisa Nandy: I am sorry but I will not, because I have only a short time left.

Women, in particular, are affected by zero-hours contracts. We should take this seriously, because women are increasingly important to low-income households. In 1968, men in low-income households contributed 71% of the household income. By 2008, that was just 40%. The contribution made by women had doubled, yet female unemployment remained stubbornly high. We lag eight percentage points behind OECD leaders such as Iceland, Norway and Sweden in the re-employment of women with children. We should celebrate a fall in unemployment whenever it occurs, but we need to look seriously at what is happening to women; otherwise we will fail to solve the problems for families.

We should also take seriously the fact that for many women part-time work is not a choice. One third of women with children were found recently to be in part-time work through lack of choice. We should first

4 Sep 2013 : Column 361

address the high cost of child care, which is rising by 5% a year. As my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) pointed out, that far outstrips affordability, especially for those on the minimum wage.

Finally, we should take immediate action to tackle low pay. We have seen a long-term trend of falling pay and rising profits. There is no pressure from the Government to take action against multinationals such as Tesco, which made huge profits last year. It employs many women in my constituency on below the living wage. I say to Ministers that low pay is not a ladder for most people. They are trapped in low pay, which is why we need action on the living wage. It is not just important for individuals and their families; it is important for the local economy. If people are not spending, small and medium-sized enterprises fold and the cycle continues. I ask Ministers this: where is the pressure? Condemn those multinationals, implement a living wage and refuse to do business with companies that will not take action. It is time for us to take concrete action. Our families and our young people simply cannot afford for us not to do so.

2.59 pm

Gavin Barwell (Croydon Central) (Con): Beneath the narrow partisanship and complete lack of penitence over Labour’s record in government lies a profound point in this motion about the challenge for public policy in our time: how do we improve the standard of living for people in low-paid work? This Government have done an awful lot to end the obscenity of people out of work being better off than people in work, but there is much more to do to ensure that being in a low-paid job actually pays for people. Government Members should not allow our anger at the hypocrisy of those on the Opposition Benches to cloud the fact that there is a real problem.

Ian Mearns: Will the hon. Gentleman give way?

Gavin Barwell: I would like to make a bit of progress first.

I want to talk about two things: how the problem arose, and what we can do to solve it. I would argue that there are four causes of the problem. The first was the deficit built up under the last Government, which was partly the fault of the collapse in the banking system, but partly the fault of Labour for having a deficit before the recession started. Let me quote from something written by the Institute for Fiscal Studies before the last election:

“With government borrowing at its highest level since the Second World War…the key domestic policy issue for the next parliament will be how best to implement a combination of spending cuts and tax raising measures to return it, over the medium-term, to appropriate levels.

This will be painful…families”

will be made

“directly worse off”.

That was the view of the IFS, no matter who was going to win the last election. That is the logical consequence of having the deficit, and voters understand that. I

4 Sep 2013 : Column 362

spent the summer knocking on more than 5,000 doors in Woodside and South Norwood in my constituency. The electorate understand that tough decisions have to be made.

The second cause is the international economic climate, which has led to lower than expected growth across the developed world. The third and fourth causes have nothing to do with Government: they are rising commodity prices and long-term changes in the labour market, which have led to a lower value being placed on low-skilled work. My hon. Friend the Member for West Worcestershire (Harriett Baldwin) referred to a quotation from the shadow Secretary of State for Work and Pensions identifying the problem back in 2004.

Ben Gummer (Ipswich) (Con): My hon. Friend said that the third reason, rising commodity prices, had nothing to do with Government. I would respectfully demur. One of the biggest pressures on families is energy prices, and the reason we have high energy prices in this country is because no one built anything in this country in the 13 years that Labour was in power.

Gavin Barwell: There are certainly some commodity prices that Government can influence—my hon. Friend is quite right to pick me up on that—but there are others, such as the prices of basic foodstuffs, that are beyond national domestic control.

How do we solve the problem? I would like to suggest five possible solutions. The first is economic growth. It is not a solution on its own, because part of the deficit is structural.

Geraint Davies: Will the hon. Gentleman give way?

Gavin Barwell: I will give way once more, to the hon. Member for Gateshead (Ian Mearns), because I promised I would.

The OECD forecast shows that our economy is projected to grow in quarter 3 by 0.9%, which is more than any other country in the G7 other than Canada, and in quarter 4 by 0.8%, which is the best projected rate in the G7. Unemployment in my constituency of Croydon Central is 6% lower today than it was when Labour left office, while youth unemployment—which the hon. Member for Wigan (Lisa Nandy), who spoke before me, rightly spoke so passionately about—is nearly a quarter lower today than when Labour was in office.

Ian Mearns: Does the hon. Gentleman accept that there are significant variations around the country? I am afraid to say that youth unemployment in the north-east of England is now 25%. We have been accused of being hypocritical a number of times this afternoon, but although he spoke eloquently about the scourge of low pay in his opening remarks, he forgets entirely that his party opposed the implementation of the minimum wage when it was introduced by the last Labour Government.

Gavin Barwell: The hon. Gentleman makes two excellent points. The regional variations in economic performance are a profound issue for public policy, and the Conservative party was wrong to oppose the national minimum wage, which is one of the things that the last Labour Government deserve credit for.

4 Sep 2013 : Column 363

The second solution I would suggest involves interest rates. At the moment we have record low interest rates. If we followed the economic policies of the shadow Chancellor, the cost of borrowing would go up, which would make an already difficult problem far worse and hit anyone with a mortgage extremely hard. The third thing we can do is look at public policy changes that Government can make to try to help people in low-paid work. One of the things about this Government that I am proudest of is the increase in the personal allowance. That sounds rather technical, but what it means is how much you can earn—not you, Madam Deputy Speaker, but how much anybody can earn—before the Government start taking money away in tax. When we came to power, the figure was £6,475; from next April, it will be £10,000.

Gemma Doyle (West Dunbartonshire) (Lab/Co-op) rose

Gavin Barwell: I am afraid I cannot give way again.

That change has taken 2.7 million low-paid people out of income tax altogether and cut the income tax bill for someone on the minimum wage by a half. The shadow Chief Secretary talked about priorities. It is true that this Government have made a change to the tax rates for some of the wealthiest in our country, but if we want to talk about priorities, we have to say that the Treasury has spent 50 times more cutting tax rates for people in ordinary low-paid work than it has paid in reducing the top rate. That shows this Government’s priorities.

As other hon. Members have said, we have ensured that petrol duty is 13p a litre cheaper today than it would have been if we had followed Labour’s policies. We have cancelled the beer duty escalator. We have helped local councils across the country to keep council tax bills down. We have a scheme that we will introduce for tax-free child care, which will help with the cost of child care for people with children under the age of 12. We are ensuring that energy customers are placed on the lowest tariff. We have introduced the triple lock for the state pension, to ensure that we never again have the national scandal of our pensioners being given a derisory pension increase each year. We are also introducing the Help to Buy scheme, to try to help my constituents who want to own a home of their own and take that vital first step to get on the housing ladder, so there is much that this Government are doing.

Geraint Davies rose

Gavin Barwell: I cannot give way again.

There is also the crucial issue of wages. I have talked about the national minimum wage already, and there were some interesting reports in the media recently about the Government perhaps looking at what they can do on the minimum wage. As a Conservative, I would worry very much about a uniform increase, which might price some people out of the labour market. However, there is a case for asking whether larger companies or those that are making healthy profits should not be paying their staff more, because at the moment we are subsidising some employers to pay low wages, through the tax credit system that the previous Government introduced. I very much hope that the

4 Sep 2013 : Column 364

Government will look at how we tackle the issue of quality of life for people on low pay from both ends, by raising the personal allowance, so that we do not tax them so much, but also seeing whether we can ensure that they are paid a fair wage for the hard work they do.

One Opposition Member who talked about this issue implied that it was just Labour councils that are passionate about a living wage. My local authority, Conservative-controlled Croydon council, pays all its staff the London living wage, while the Mayor of London has guaranteed that that will apply to all staff working for the Greater London authority as well.

Chris Leslie (Nottingham East) (Lab/Co-op): Will the hon. Gentleman give way?

Gavin Barwell: I am afraid I cannot give way again.

That is a big issue, particularly in London and the south-east, where pay costs are highest.

I also want to raise with my right hon. Friend the Financial Secretary to the Treasury, who gave an incredibly thoughtful speech, the issue of public sector pay. We have been quite right to restrict increases in public sector pay, because high increases would simply have meant more joblessness, but there is a limit to how long that policy can be continued. I hope that as wages increase in the wider economy, those who work in the public sector are not left out of that process.

Finally, if we want a high-wage economy, the long-term solution is to ensure that we have people with high skills who can command high wages in our globalised labour market. That is why I am so proud to work as the Parliamentary Private Secretary to the Secretary of State for Education, whose work, building on what the former Prime Minister and Lord Adonis achieved, is transforming standards of education in our country. Ultimately, if young people in Croydon Central want to command high wages in our economy, they need the qualifications and skills that will enable them to secure those jobs. We should not pretend that there is not a problem, but the Government are doing much to deal with it, and I hope they will do more still.


3.8 pm

Alison McGovern (Wirral South) (Lab): I respect the hon. Member for Croydon Central (Gavin Barwell), but with respect, I understand that Croydon put its council tax up because of a lack of Government funds. Although we would all like to see living-wage councils, we need to recognise the extreme pressure that local authorities are under because of this Government’s ferocious cuts to them.

On skills and education, which I shall come to later, I agree with my hon. Friend the Member for Wigan (Lisa Nandy) on the need for a history lesson. It is absolutely right that we focus on the needs of young people. However, Government Members in this debate somehow seem to have forgotten that a previous Labour Chancellor of the Exchequer had to rescue modern apprenticeships from the history books in order to give this country a proper industrial skills policy again. I am glad that Government Members support that and that it has been kept going, such that young people will still have the chance to get an apprenticeship in this country, but let

4 Sep 2013 : Column 365

us not pretend that we did not suffer all those years until 2003, when that proper industrial skills policy was put back.

On the broader question of living standards, if the Government think that they are out of the woods with this recovery or that all our problems are solved, then good luck to them. I ask the Minister just to speak to a few people on low and middle incomes in Merseyside, as he has already kindly agreed to do the next time he is there. I really do not think that those people are feeling better off at all. They do not feel better off, and they are not better off. In fact, I think that the Chancellor might quietly agree with me on that. Before the summer, I asked him at Treasury questions:

“Does the Chancellor believe that since he came to office the average British family is better off after inflation, yes or no?”

I was hoping for a straightforward answer from him. Instead, I got this:

“I think that they have better economic prospects than they did under the previous Government.”—[Official Report, 26 June 2013; Vol. 565, c. 333.]

Emily Thornberry: Jam tomorrow.

Alison McGovern: Quite right! Jam tomorrow, but never jam today. People in the Wirral will certainly not put up with that, and I doubt that anyone in the rest of the country will either.

I have spent much of the summer talking to people about zero-hours contracts. They are a growing issue for my constituents and others. My hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth) and I have conducted a survey in order to listen to people with experience of such contracts. Given the stories that we heard from people who simply did not know what their wage packet was going to contain at the end of each week or month, I simply cannot accept the argument that any job is better than no job. That is like saying that it is better to work for £1 an hour than to have no job at all. I cannot accept that argument. I cannot accept an economy that is devoid of standards.

This is not a proper recovery. Unless it reaches those on low and middle incomes, we shall not see the kind of economic recovery that we need. Instead, we shall see the kind of hysteresis and waste of talent that my hon. Friend the Member for Wigan has described. Zero-hours contracts affect young people; they are a blight on their prospects. Those people need a chance to build their skills so that they have the potential to have a good career. Will the Minister answer these questions? What will he do if the number of hours worked per person in the economy does not increase? What will he do if people are still underemployed in a year’s time? How will he address their need to increase their pay packet so that they can afford the prices in the shops?

On inflation, I repeat that I still cannot quite believe the Prime Minister’s response at Prime Minister’s questions today to the question about school uniforms. I remember only too well the situation in my own family. There were three of us, and September was an expensive time. My mum used to worry that we had grown. If the Prime Minister has not experienced that, or heard about it from families in his own constituency, let me tell him

4 Sep 2013 : Column 366

that it was extremely stressful. Unfortunately, the previous Governor of the Bank of England was forced to write to the Chancellor of the Exchequer citing the VAT increase as part of the cause of the inflation that we have experienced. So, although I accept the points that have been made about the global situation, the Government’s policy has not exactly helped to bring down prices.

Barbara Keeley: I thank my hon. Friend for re-raising the point about school uniforms. The point that seemed to escape the Prime Minister, and possibly also the Secretary of State for Education, who was sitting next to him at Prime Minister’s questions, is that the problem is due entirely to the Government’s policy of creating new free schools and academies that insist on a branded uniform. That has raised the cost of the uniforms to £300. It is not possible to buy those uniforms from a supermarket. The increased cost is directly due to the policy of creating lots of new free schools and academies. The Government have to take responsibility for that.

Alison McGovern: My hon. Friend is quite right.

Gavin Barwell rose

Ben Gummer rose

Alison McGovern: As I am following the speech of the hon. Member for Croydon Central, I will give way to him.

Gavin Barwell: The hon. Lady is typically gracious. May I just remind her—and, through her, the hon. Member for Worsley and Eccles South (Barbara Keeley)—that the policy of establishing academies was introduced by the last Labour Government?

Alison McGovern: My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) mentioned free schools and the proliferation of such new schools opening. I believe that we should all, on a cross-party basis, call on schools to do everything they can to keep the cost of uniforms as low as possible. That message must be sent out loud and clear.

Gavin Barwell indicated assent.

Alison McGovern: If the hon. Gentleman will support that suggestion, his support will be welcome.

The issue of living standards is not going to go away. It will affect us for many years to come. If we simply say that increasing GDP figures and nominal growth in the economy are all that matter, regardless of the distribution or sustainability of that growth, we shall be storing up problems for the future. We know this from the history of our country, and we should not be oblivious to the needs of those on low and middle incomes. Let us not forget that those people are not some small special-interest group; they are the vast majority of people. So when Labour Members talk about the importance of living standards for them, we are not engaging in some strange obsession with a small number of people. This is about the needs of everyone in the country, and about making sure that they are well served by the Government’s economic policy.

4 Sep 2013 : Column 367

3.16 pm

Emily Thornberry (Islington South and Finsbury) (Lab): It is a great pleasure to follow my hon. Friend the Member for Wirral South (Alison McGovern) and the hon. Member for Croydon Central (Gavin Barwell), who have both made thoughtful contributions to the debate. It is a great shame that more Members are not present on the Government Benches. We seem to be running out of speakers rather early, which speaks volumes.

The Conservative Government seem quite happy to crow at great length about how well the economy is doing, but they seem to take very little interest in the question of living standards. They crow about how well the economy is doing, we hear a great deal of briefing on the subject and we endure a great deal at Prime Minister’s questions, but the truth is that no one believes them. That is because people’s lives do not reflect a growth in the economy. For ordinary people, life is getting harder, not better. People do not believe that next year is going to be better than this year; they believe that it is going to be harder. And I am afraid that, at the moment, it looks as though they are right.

That is partly because services are being cut. It is partly because people are having to queue to see their GP. It is also harder for older people to get social care or to see a consultant. After-school clubs are being cut, youth groups are being closed and there are restricted hours for day centres. Life is also more difficult for people because they no longer have access to the kinds of services that they have been taking for granted, which are being cut by the Government. Primarily, however, life is harder because people feel that their wages and benefits are not keeping up with inflation. The reason for that is that they are not: they are not keeping up by a long chalk.

Those people who are lucky enough to be in work are often not working sufficient hours. They might be working for their poverty, but they are not earning enough to be able to rely on their own wages. They also have to rely on benefits and tax credits. Many of those on low wages who work full time also have to rely on benefits and tax credits, especially in areas such as the one I represent. In central London, it is simply not possible to live on the average wage without relying on benefits to help to pay the rent and to help with child care costs.

Much has been said about what a great idea universal credit is, and about how we should have one level of benefits for everyone across the country, including those in central London. No allowance is made for the fact that rents and child care costs are so much higher in areas such as this. People on average wages in central London rely on benefits too. That is the truth, and if universal credit is introduced in the way the Government propose, I do not know what is going to happen to those people.

Charlie Elphicke: I appreciate that the hon. Lady is making a sincere and heartfelt speech, but the difficulty is that every prescription from Labour involves more spending and more welfare. The effect of that would be to drive up interest rates, which would harm the recovery and harm the job creation that could lead to increased wages and a strengthened recovery. The polls show that that is not a prescription that this country finds credible.

4 Sep 2013 : Column 368

Emily Thornberry: The hon. Gentleman raises a point that divides us completely. Those of us on the Labour Benches believe in investing money in housing, for example. I have just mentioned the huge rents that people have to pay, and how difficult it is for people on average wages to live in London without relying on housing benefit. If we could build more houses in central London and the south-east, house prices would not be as high as they are now and people would not need to rely on benefits in the way that they do. That makes sense. If we build homes, we also provide jobs and infrastructure, lower our dependence on housing benefit and lower housing prices generally. We will offer hope and opportunity for the next generation. I have no idea why the Government will not do this, but they are refusing to invest properly. We will need a new Government before that happens.

Ben Gummer: There is absolutely no difference between us on whether there is pressure on living standards, as it is completely obvious to all Members that there is. Where there is a difference relates to prescriptions. The hon. Lady rightly talks about housing demand in the south-east, but she knows perfectly well that, even if we start building tens of thousands of houses in the south-east this year, it will take many years before it feeds into reductions in rent. What prescriptions—costed prescriptions —could the hon. Lady and her Front-Bench team bring forward now to ease living standards?

Emily Thornberry: I am sure that the hon. Gentleman, who I know takes this issue very seriously, will have seen the policy development happening in the Labour party and the seriousness with which we are putting this issue as a front-and- centre policy for us as a future Government. We know the difference that that will make to the economy. When it comes to investing money, this is what we should invest it in. I fully support our Front-Bench team on this and I believe it is the right thing for this Government to do. In the end it would save us a great deal.

I do not believe that we can just build tens of thousands of homes. We need to get out there and start building seriously. We need to start building now and, frankly, I think it is disgraceful that, given the recession that we are having to endure, this Government have, I believe, the worst house building record of any Government since the 1920s. That is outrageous. This was not the original purpose of my speech but since the hon. Member for Ipswich (Ben Gummer) has touched this particular nerve—I apologise for giving it to him with both barrels—I simply cannot see the sense in the Government’s current policy of putting their fingers in their ears and saying “La, la, la, la, la, la, la.” and thinking that this problem will somehow go away. It will not go away. The only way to solve our housing crisis is to build more housing.

Returning to my original brief, those in part-time work do not earn enough money to be able to afford a good standard of living and that applies even to some of those in full-time work, so some have to rely on benefits. We have seen that 60% of new jobs since the last election are in the low-paid sectors of our economy—retail and residential. Between 1997 and 2010, 25% of the new jobs established were in those sectors. Why is this difference occurring? A Resolution Foundation study has shown that 4.8 million Britons—20% of all

4 Sep 2013 : Column 369

employees—earn below the living wage, which is a leap from 3.4 million, or 14%, at the height of the recession. Why is that happening? Why have those on average wages lost an average of £1,500 a year?

It is happening because our economy is unfair and unbalanced. What are the Government going to do about it? How are they going to address the problem? They cannot simply keep sailing on and hope that things are going to be all right. Things are not going to be all right. The evidence shows that there will continue to be people who just manage to grab on to work by their fingertips, but not by enough for them to be able to sustain themselves and their families. Even those in full-time work, particularly in areas such as London and the south-east, cannot afford to live without being supported by benefits. In the end, this is unsustainable; we must raise wages in real terms.

I hold a women’s listening panel every year. This year, it is on 13 September at St Mary’s hall in Upper street, and all my female constituents are welcome. I carried out a survey last year and 89% of the constituents who replied said that their income had gone down in the previous year; 32% said their rent had gone up and 70% said it was difficult for them to make ends meet because of their food and fuel bills. They particularly mentioned the expense of child care in Islington. The problem is not just the obvious and manifest cost of rent. The cost of child care—£164 a week—is so expensive as to make it impossible for someone on the minimum wage of £212 a week to put a child into full-time child care. These things do not make sense.

There are many single parents in my constituency who want to get into work, but who simply cannot make ends meet when it comes to getting to work, placing their children in child care, being able to pay the rent and being able to pay their way. This is the trap that so many people find themselves in, and there has to be an answer to it. Even getting someone to pick the children up after school and look after them for a few hours until the person finishes work can cost £92. How can that be all right for someone on the minimum wage of £212 a week? It does not make sense; it does not add up.

Those who live on benefits and do not work at all—those on jobseeker’s allowance—have, of course, seen a rise in their income of 70p a week. I do not know whether the Exchequer Secretary has ever spoken to anyone who lives on jobseeker’s allowance and gone through with them how they spend their £70.70 a week? If so, he would know how difficult it is for them to make ends meet at the moment. It seems to me that we have heard a great deal of political knockabout today when what we should be doing is listening to real people out there and how they live their real lives. I invite the Minister and his boss to come to my women’s listening panel. I will not tell the women that they are Tories, so they will be safe, and we will finesse the fact that they are the only men in the room. They should listen to what is said, listen to these women’s stories of how they are trying to make ends meet in these difficult times. Year in, year out, it gets worse and more difficult for them. The Minister may talk about the economy getting better, but he should listen to what is going on in real life.

4 Sep 2013 : Column 370

3.25 pm

Lilian Greenwood (Nottingham South) (Lab): Twelve months ago, I spoke at the launch of the Clifton food bank in my constituency. I was proud to support Wendy White and everyone else in her team of volunteers who had given their time and energy to help support others in the local community. Led by the Clifton churches in partnership with the Trussell Trust, the Clifton food bank is providing vital help to people who simply cannot make ends meet. Many of those referred to the food bank have sought help from the Clifton advice group. Claire Ashton, who has been involved in the group for 13 years and who chairs the management committee, recently said that it had seen a marked increase in the number of people struggling to put food on the table, and that this was a direct impact of Government policies, particularly benefit cuts.

When I spoke at the launch, I was proud of the response from a community that is not wealthy, but where people look out for each other. My view then and now is that it is a disgrace that even though we are the seventh richest country in the world, we face an epidemic of hidden hunger, particularly among children. But as families struggle to make ends meet while the Government stand by, the work of food banks is vital. It is the Government’s failure to act, their standing by in the face of a cost-of-living crisis, that prompts me to speak in today’s debate.

Today, the Prime Minister demonstrated how out of touch he is, completely refusing to recognise his failure to turn things around for hard-working families in cities such as Nottingham. Contrary to what he says, life is getting harder, not easier, for ordinary families. Prices are rising faster in the UK than in any other major economy; average wages are down almost £1,500 a year since this Prime Minister came to office; and we have the slowest recovery for nearly 100 years and almost 1 million young people are out of work—with devastating consequences, as a number of my hon. Friend have already described.

The Prime Minister claimed that people were getting back into work but in my constituency—I recognise that it is not the case everywhere in the UK—unemployment is higher now than it was in May 2010. The unemployment rate in Nottingham South is now 6.5%, compared with a national average of 4.5%. Those forced to rely on out-of-work benefits are condemned to falling living standards because of this Government’s 1% cap on benefit rises, which falls so far behind the current rate of inflation.

Life is hard not just for those who are unable to find a job; it is hard for those in work, too. In Nottingham, the average wage for a full-time worker is about £22,000, but that compares with a national average of £26,500. Of course, many part-time workers, especially women, earn far less than that.

Employees face increased uncertainty about their incomes. Many are under-employed, trapped on zero-hours contracts or reliant on a multiplicity of mini-jobs, and they are at far greater risk of losing their jobs following the Government’s decision to reduce employment protection and workplace rights. I ask Members to compare that decision to reduce job security and make work more uncertain with the decision of our local Labour councils, such as Nottingham city council and Nottinghamshire

4 Sep 2013 : Column 371

county council, to provide a living wage. I pay tribute to Nottingham Citizens for its campaign to secure that decision, and its practical action to support ordinary working people and our local economy.

It is no surprise that when people in Nottingham South have had the opportunity to choose who they want to represent them over the last couple of years, they have chosen Labour. They recognise that the present Government are out of touch and make the wrong choices. This Government have chosen to raise VAT while cutting taxes for millionaires; they have allowed energy companies to make huge profits while failing to help people with energy bills that have risen by £300 a year, condemning many thousands to fuel poverty; they have failed to take action to curb bank bonuses while allowing payday lenders to charge exorbitant rates of interest; and they have done nothing to tackle rogue landlords and rip-off letting agents, although many more households are being forced into the private rented sector because they cannot get on to the housing ladder. When we compare average house prices in Nottingham with average salaries, it is easy to see why that is happening.

Any recovery in the United Kingdom’s economic performance is to be welcomed, but ordinary people know that recent improvements are not benefiting low and middle-income families. The 16 food banks in my city are a shocking reminder of how out of touch the Government are, and show clearly why Nottingham needs a Labour Government with a programme that will boost living standards.

3.31 pm

Geraint Davies (Swansea West) (Lab/Co-op): Again, we heard a ragbag of rubbish from the Financial Secretary, who gave us the Laurel and Hardy story about another fine mess from Labour. In fact, between 1997 and 2008 the economy grew by some 40%. It was only when the financial tsunami came that we saw difficulties, but with the fiscal stimulus from Obama and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), bang, we were back to shallow growth, albeit with a deficit two thirds of which was caused by the bankers and a third of which was caused by spending beyond earnings to pump-prime the economy. That was the right thing to do at the time.

Ben Gummer: Let us try to get the facts right. First, the Government were running a structural deficit between 2002 and 2010. Secondly, the private sector in Britain did not grow after 2003. All growth was down to credit and public sector increases. The hon. Gentleman’s contention that somehow the economy grew by 40% is therefore incorrect.

Geraint Davies: That is certainly not the case. GDP was up by 40%, and the history of the last three years is one of zero GDP growth. I admit that we have seen growth of 0.6% in the last quarter. However, according to the TUC, 80% of the new jobs that have been created—it has been claimed that there are 1.3 million, but that figure is contested by the director of the Office for National Statistics—are low-wage jobs. What we actually have is a low-wage, low-investment, falling-productivity economy, with living standards falling through the floor and prices rising at the same time. It is a complete disaster.

4 Sep 2013 : Column 372

Government Members such as the hon. Members for Dover (Charlie Elphicke) and for Croydon Central (Gavin Barwell) and other economic illiterates have said that interest rates might rise under Labour, but anyone who reads the financial press will know that the new Governor of the Bank of England, Mark Carney, has given undertakings that they will not rise until unemployment has fallen by 750,000, from 7.8% to 7%. So that argument too is a complete load of rubbish.

Ben Gummer: If the hon. Gentleman does not mind my saying so, he is confusing market rates with bank rates. Market rates will rise, because the cost of borrowing for the British Government on the international markets will rise under a Labour Government. That was shown at the time of the general election. The hon. Gentleman is right in saying that bank rates will be fixed, but the two are not connected to the extent that he claims.

Geraint Davies: I am grateful to the hon. Gentleman for making that point. The point that I was making was that the Bank of England rate would be secure in the way that I described. The other rates depend on confidence. Whatever happened to the triple-A rating? Government Members said “Oh dear, it will be all over. We will lose the triple-A rating if Labour gets in.” Well, we have lost it, and why has that happened? It has happened because objective observers have seen that productivity is falling, not rising, that the jobs that are being created are low-grade jobs, and that the distribution of investment is skewed towards the next general election, with 80% of all infrastructure investment being made in London and the south-east—which needs the least investment—and most of the cuts being made in the north and in Wales: in places such as my constituency in Swansea, where 40% of people work in the public sector. Yes, we want investment in the private sector, but the way to boost local economies is not to cut people’s wages, jobs and services, which is the current prescription.

What is happening is not sustainable, and given the current economic capacity—the manufacturing and construction sectors are 10% smaller than they were in 2008—there is clearly some way to go before unemployment reaches the level at which interest rates will fall, so that point was a complete red herring.

In fact, mortgage rates are low now—as low as 1.5% for safe bets. The Government, alongside the Bank of England, should be thinking about providing more funding for firms so they have more cash flow and can invest in higher-value jobs and products. Household lending from the banks is about the same as it was—it is 0.3% less than in 2008—but lending to business is 32% down. It is massively down in all the major sectors. In January lending to business was 3% lower than a year ago. By June that figure had doubled; it was down 7%. So the Chancellor is a man looking to the future who is walking backwards. The reality is that Britain is 159th in terms of the ratio of investment to GDP, and is lagging around the bottom in terms of research and development.

One might ask why the banks are lending all this money for houses. Part of the reason is because we have a bubble, artificially generated by the Chancellor to get his votes in the south, through what The Economist calls the “daft policy” of subsidising new deposits on mortgages, which will inflate house prices and lead to sub-prime debt downstream.

4 Sep 2013 : Column 373

The banks also now require four times more capital cover to lend to a business than to provide a mortgage. Turning to the question of the complexity of all this, I have run my own businesses and been involved in others, and have therefore looked at business plans. The banks need to look at the business plans too, as opposed to just having somebody in a call centre saying, “All right, fill in the box. You’re all right mate, you can have a mortgage.” The Government should be telling the banks that the funding for lending scheme should be specifically directed at firms to cover new and existing loans. In other words, they should be doing something positive to get the level of business investment up and create real jobs and get wages moving in the right direction. That is what is needed.

The current situation is that house prices are rising and household debt is growing, partly because the cost of housing is going up both in terms of rents and house prices. That is only sustainable if we have real wage growth. [Interruption.] The Exchequer Secretary is mumbling to his mates, but what are the policies for sustainable wage growth? How are we going to move away from this low-investment, low-wages, low-productivity trajectory that we have got? There is no point in blustering and denying it all; we have got this problem across Britain. We have also got inequality between north and south, and obviously between Wales and the south.

I am talking about SME support, but in contrast we have the corporate world, where Vodafone has just done the biggest share transaction of this century. It has taken £54 billion in cash, and it is not paying a penny in tax. What is the Exchequer Secretary doing about that? Nothing. Why does he not do something about procurement, too? We could use our muscle to buy from SMEs locally—companies that pay tax rather than avoid tax—so they can provide jobs locally. This is a complete disgrace. We should be doing something positive with the powers at our disposal, to create higher wages, higher business investment, more security and more focus on emerging markets.

That is not happening, however. This is a complete farce. It is a mess and I hope the hon. Member for Croydon Central (Gavin Barwell) will join the Labour party like his predecessor, Andrew Pelling, did, and stand up for what is right and what makes sense.

3.38 pm

Fiona ODonnell (East Lothian) (Lab): It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies), and I will try to irritate Government Members less. Given his track record, it will, I think, be impossible to irritate them any more.

I am particularly pleased today to welcome back my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chief Secretary. It is great to see her back. Only the hon. Member for Spelthorne (Kwasi Kwarteng) could describe maternity leave as a long enjoyable break. That takes being out of touch to a new level.

I am pleased that so many Opposition colleagues have focused on the impact of falling living standards and access to employment on women in particular. I am sure that all Members will have received from Asda today the Asda Mumdex, and I am sure that my hon.

4 Sep 2013 : Column 374

Friend, as a first-time mum herself, will be very disappointed to see that first-time mums reported to that survey that they are twice as worried about financial pressures than about their own health.

Such stories do not talk in statistics, percentages and GDP, but they show the real impact of the economic crisis on people’s lives and on what that is doing to families. People often say that a happy mother is a happy family. A happy father is pretty important in that picture, as is a same-sex partner or, as will soon be the case, a same-sex wife or same-sex husband. We need to examine the human cost of this crisis and what it is doing to a generation of children growing up.

I am sorry that we have not heard much today from Government Members about investing to reduce child poverty. What are they going to do about that? They are happy defending their own record and attacking ours, but I suspect that our constituents want to hear, in the 37th month in which their income has dropped in real terms, what the Government are going to do about it. All sorts of barriers are involved here. We all know that employment is a means to improve the well-being—the income—of a household, but that will not always be so.

The other figure in today’s Asda Mumdex that stands out is that 74% of mothers say that they do not think that it would be financially worth their while going back to work because of the cost of child care. The Government really need to address that if they are serious about helping mothers back to work. I am looking forward to going to my local Asda store in Dunbar on Friday to sit down with a panel of mothers and listen. My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also recommended to the Minister that he does the same. The Government need to sit down with mothers, as do we all, to hear the stories of how this economic situation is having an impact on their lives.

I was pleased that at today’s Prime Minister’s questions my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) raised the issue of school uniforms, which has arisen again. It resonates with many of us because of our memories of knowing that pressure. Last year, I was horrified to hear the story of people from the high-street payday lender, The Cash Store, standing outside a primary school in my constituency giving balloons to children. Fliers had been put up around the area beside the school saying, “Need a school uniform. Come to us.” That is shocking. This week, we have heard about Wonga’s profits for the quarter. We talk about “legal loan sharks”, and that is the right term for them, because they are predators. They sniff poverty in the way that a shark sniffs out blood, and then they home in and profit from that poverty.

I am not saying that I want to make this debate completely about payday lending and regulation—of course there is a need for people who have no assets to have access to credit—but the Government must try to get a grip on this area. The debt charity StepChange has seen a dramatic increase in the number of my constituents seeking help with debt because of problems with payday lenders—the figure went up from 10% to 28%. So I appeal to the Government to do more; they are so concerned about debt—rightly—but why are they not more concerned about unsustainable debts that so many

4 Sep 2013 : Column 375

of our constituents are taking on?

[Interruption.]

I thought someone wanted to intervene, but it was just another Government Member leaving the Chamber.

Emily Thornberry: Would my hon. Friend like to join me in noting that only four Government Members are in the Chamber—a Whip, a Front Bencher and two on the second row—whereas a large number of Opposition Members wish to speak?

Fiona ODonnell: I am grateful to my hon. Friend for that remark. I am afraid that I have just been very unkind and tweeted that not only were there only three Government Members—I think it was—in the Chamber, but the Opposition Whip had fallen asleep. [Interruption.] I should have said that the person sitting in the place usually occupied by the Government Whip has fallen asleep—I say that for the benefit of Hansard.

Fuel bills are a huge problem for families, having risen by £300. The Prime Minister promised this country that he would do something about excessive rises in energy prices, and he has not made good on that promise. The Government parties ask what we did about the energy companies, and I am proud to share the fact that in my sock drawer at home I have a pledge card from the 1997 general election. One thing that Labour did was to use its windfall tax on the privatised utilities to invest in creating jobs. That is the difference between Government Members and Labour Members.

Ben Gummer: I am very happy to intervene on the hon. Lady, and I hope that she will have another minute in which to continue her thoughtful speech. On energy prices—I know the next debate will address this—the previous Government may have come to office in 1997 wishing to control energy prices, but in the end by building so few power stations, they have left us having to invest more than any other western European nation—£200 million—to renew our infrastructure. In the end, that money will have to come from somewhere. Part of it will come from those who pay for fuel. The hon. Lady, or at least the Labour Government, must bear some of the responsibility for that situation.

Fiona ODonnell: I am willing to take responsibility when that is due, but it seems as though for this Government the past three years have not happened. In my constituency, a coal-fired power station has closed down. That is good for the environment, but Scottish Power and the Spanish firm, Iberdrola, cannot invest the necessary money to convert that into a gas cylinder plant because the Government are not giving clarity on the charges for connecting to the grid. We should all share the responsibility. Unfortunately, in opposition, there is less that we can do about it, whereas the hon. Gentleman has the privilege of being in government. I wish the Government would use the little time that they have left in office to get on and make a difference to the lives of my constituents.

Yesterday’s debate makes me worry about who will stand up for those people in my constituency who are falling foul of payday lenders and who cannot afford to put food on the table. The whole debate about food banks is thoroughly depressing, and although I welcome the fact that they are there in so many communities, including my own—I am a trustee of my local food

4 Sep 2013 : Column 376

bank—I worry that we are propping up a system that is dismantling the welfare state in this country. We need to pause and think about that further. I am grateful to have had the opportunity to contribute to the debate and look forward to hearing the Minister’s response.

3.47 pm

Mr Steve Reed (Croydon North) (Lab): I want to take part in this debate because the Government are clobbering people in Croydon North and everywhere else by squeezing their standards of living. The Prime Minister likes to say that he has helped with the cost of living where he can, but the truth is that he has not. I want to demonstrate that by showing just how much Labour councils, including those that are part of the Co-operative Councils Network, are doing compared with the Government’s relative inaction.

Wages have fallen in real terms in London, including in Croydon North, by 7.5% since the Government were elected. The average employee in my constituency therefore takes home £2,200 less a year since 2010. That is a catastrophic fall in income for many households at a time when the cost of living is going up, not down, thanks to the Government’s actions. One of the Government’s very first actions was to hike up VAT to 20%, despite repeated criticisms of that policy by one of the coalition partners when they were trying to persuade people to vote for them. It is notable and disappointing that no member of that party has chosen to participate in this afternoon’s debate.

One of the heaviest costs for families or households with young children is the cost of child care. Child care costs have risen by 19% since the Government were first elected, and 25 hours of child care in Croydon can cost up to £175—nearly £800 a month. How many families can afford that, especially given the downward pressure on wages? In part, that is a result of the Government’s decision to cut the early intervention grant by 40% in real terms, so limiting the capacity of councils to contribute towards child care provision. The cost of child care in Britain is the highest in Europe, and instead of demonising parents who cannot work as skivers, how about the Government considering the costs that they have allowed to pile up to such an extent that parents cannot afford the child care that would allow them to go back to work?

More locally, I regret that Croydon’s Conservative-led council has closed six designated child care centres since 2010—a reduction of almost a quarter in what used to be provided. That sudden loss of provision has forced up costs elsewhere, once again costing families dear and pricing parents out.

Although the Tories in national and local government have made the problem worse, Labour in local government is acting to solve it. I commend Edinburgh city council, ably led by its Labour leader Councillor Andrew Burns, for using co-operative values to explore setting up a city-wide child care co-operative, aiming to reduce costs and increase accessibility for parents with young children. The council is working with parent-led, out-of-school care providers to set up after-school clubs and mutual child care services, helping them to achieve co-operative status and setting up a service level agreement to bring stability and sustainability to the sector. That is Labour offering real help to hard-pressed families, based on parent power, while the Tories continue to do very little.