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David Wright (Telford) (Lab)
It is a great pleasure to see you in the Chair, Mr Robertson, on a fine morning in Westminster. Having said that it is a fine morning in Westminster, it is a difficult time for families in Telford, who are struggling with higher food prices and energy bills, and who are worried about their jobs and their children’s futures. People in Telford are experiencing a significant squeeze on their living standards as a result of the global economic crisis and the deficit reduction strategy being pursued by the coalition Government. The global financial crisis has hit every country. The downturn was not created in Britain; it was caused by the irresponsible actions of the banks, which pushed up deficits in every major country. Every country, therefore, faces the challenge of getting its deficit down. The question is how quickly that should be done, and how to ensure that economic recovery is not choked off, which would make things worse.
I will return to that theme later, but I want to focus specifically on Telford and the situation that my constituents find themselves in. There is a very worrying trend in the number of people out of work and claiming jobseeker’s allowance in Telford. As of September this year, 2,929 are in that position. That is an 85.1% increase on the same period in 2006, with a 6% rise since last year. Some 345 people have been claiming for 12 months or more; that is 5% of 16 to 64-year-olds, and 6.6% of the economically active population. More than 1,000 people aged 24 and under claimed jobseeker’s allowance in September. A third of the total number of people unemployed are young people. More than three people— 3.4 people, in fact—are chasing every vacancy that is notified to Jobcentre Plus. The actual figure is probably higher than that, as companies tell me that they get hundreds of applications for every job that they advertise. I visit companies in my constituency, and they always get a flood of applications when they advertise a post.
Telford has a large number of public sector jobs, and some of the biggest private sector employers are reliant on public sector contracts. Uncertainty over job cuts and low growth in the economy generally—in fact, a virtual flatlining of growth—has left people worried about their future. In turn, that has a number of consequences, such as a sapping of confidence in the local housing market. A report published yesterday by the Home Builders Federation shows that in 2000, house prices in Telford and Wrekin stood at 3.41 times average earnings. In 2010, that had risen to 6.1 times average earnings. Lower-quartile house prices—the properties most likely to be bought by first-time buyers—have risen from £42,750 in 2000 to £107,500 in 2010. People are struggling to secure mortgages, and entry into the market is very difficult for first-time buyers. There is a burgeoning private rental market in Telford. Every week, when I pick up the Telford Journal, there are significant numbers of properties up for private rent—a clear sign that the sales sector of the local housing market is struggling, and that there is a lack of confidence.
That is the backdrop to an intense squeeze on living standards for those who are in work. We all know that inflation is high, with the retail prices index at 5.6%—the highest annual rate since 1991. The Government seem to be largely ignoring that fact. They are keen to downplay the importance of inflation in the economic landscape, like someone who thinks that if they cover their eyes the problem will just go away. For those on low and fixed incomes, including pensioners, inflation is a hammer blow, particularly when interest rates on savings are not keeping pace with inflation. Meanwhile, wages are being squeezed. Indeed, the Governor of the Bank of England has said that real wages this year are likely to be no higher than they were in 2005. This is the first time since the 1920s that wages have fallen over a six-year period.
Food prices are on the rise, and the big six energy companies have announced sharp rises in prices. Families now face average bills of more than £1,200 a year for gas and electricity. Across the west midlands, approximately one household in four lives in fuel poverty, spending more than 10% of its income on fuel costs. I regularly see constituents in Telford who complain bitterly about fuel prices. Households in poor-quality housing face even higher energy costs. We need a major review of how the energy market operates, and we need to bring greater competition into the market. Privatisation effectively created a six-company cartel for energy, with the big providers dominating the scene. We need to diversify that market if we can, or at least do what the Prime Minister suggested—I support him on this—and ensure better information on bills, so that people can compare prices against those of other providers. That is crucial. We need energy companies to invest more, and to try to bring down prices.
I mentioned the number of young people claiming JSA in Telford. The next generation has seen the future jobs fund and the education maintenance allowance scrapped. Alongside that, two thirds of universities plan to charge the new £9,000 tuition fee, and average fees will be more than £8,000. Clearly, the situation is very difficult for young people who are looking to get into employment, training or education. We need a massive drive to get young people into education, training or work. Our activity needs to be focused on the needs of young people in towns such as Telford.
Mark Pritchard (The Wrekin) (Con)
Does the hon. Gentleman accept that one of the ways that standards of living can be improved for the constituents of Telford and The Wrekin is by ensuring that public finances are managed well, both nationally and locally? Given that Telford and Wrekin borough council has a new Labour administration, does he support my call for a council tax freeze in the coming years to help those who are struggling to make ends meet?
David Wright
Clearly, the council will have to look at its budget very carefully. It will have a number of pressures in the next year or so. We will have to consider the Government’s funding proposals for the local authority. Clearly, the council will look at its budget-setting. Its difficulty is that massive cuts are in place, and they are affecting the poorest people in our community. The answer to the hon. Gentleman is that we will have to wait and see. At the moment, I do not know what the council’s position will be on council tax.
On household incomes, the Government’s decisions on VAT rub salt in the wounds of every family in Telford. The latest report from the Office for National Statistics states:
“The poorest fifth of households in the UK spent a higher proportion of their expenditure on goods and services that attracted Value Added Tax (VAT) in 2009/10 than in 1986…Poorer households in 1986 spent a smaller proportion of their expenditure, than poorer households in 2009/10, on discretionary items which attracted VAT…the data shows the poorest fifth of households in the UK pay more in VAT as a percentage of their disposable income than the richest fifth.”
VAT is hitting the poorest people in our community the most. We need a quick rethink on our VAT strategy. We need to ensure that we support households that find it very difficult to make ends meet.
I mentioned pensioners earlier, and I wanted to say that many of them in Telford tell me how important the winter fuel allowance and free local bus travel are. The yearly tax-free payment to help people pay for their heating in winter was worth £250 for over-60s and £400 for over-80s. I was extremely disappointed that the coalition decided that the payment will revert to £200 and £300 for the two age groups in the winter of 2011-12. I urge the Government to think again in their pre-Budget report.
I do not claim that Telford has problems that have emerged only in the past 18 months—frankly, that would be ridiculous. Telford and Wrekin has higher than average levels of multiple deprivation, especially in wards in the south of the town, and we have a significant number of children living in poverty. The End Child Poverty campaign group, which fights to give poor families a voice, estimates that 30% of children in the Telford constituency were living in poverty in mid-2010, compared with 23.1% in England as a whole; in some wards, the figure was approaching more than double that. Children are classified as being in poverty if they live in families in receipt of out-of-work benefits, or in receipt of in-work tax credits, and with a reported income of less than 60% of median income. Telford and Wrekin’s NHS trust states that 9,305 children are living in poverty in the borough.
Those problems have no quick fix. I am proud of the work of the previous Government, who introduced tax credits and a range of benefits to support children. Sure Start children’s centres have been a major success in the town, and the Building Schools for the Future programme promised the opportunity for every child to enjoy state-of-the-art learning facilities. Locally, that policy was supported on both sides of the council chamber, I am pleased to say, but we must still do more to support families.
People in Telford regularly raise the issue of the cost of child care and the continuing inflexibility of the labour market, and we need to do much more work on those policy areas, but the key to improving living standards in the town is to secure growth in the economy and attract more high-paid work. That approach helps people who are struggling and who are having their living standards squeezed, and supports business.
Immediate action should include the following five points—they will not come as too much of a surprise to you, Mr Robertson. First, a £2 billion tax on bank bonuses could fund 100,000 jobs for young people and build 25,000 affordable homes. Secondly, long-term investment projects, such as new school buildings, should be brought forward—we have done well in Telford with that kind of approach. Thirdly, the VAT rise should be temporarily reversed, which would give a £450 boost for families with children. Fourthly, there ought to be a one-year cut in VAT to 5% on home improvements and repairs, to help small businesses. Fifthly, there ought to be a tax break for every small firm that takes on extra workers. In short, in Telford we need Labour’s five-point plan for growth.
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
I commend the hon. Member for Telford (David Wright) on securing this debate, which I am sure is important for his constituents. He covered a wide range of issues, and I hope that I can set out some of the action that the Government are taking. I absolutely understand his concern about the challenges that families face. I am sure that he welcomes the swift action that the Government have taken to address many of those underlying concerns. As my hon. Friend the Member for The Wrekin (Mark Pritchard) said, if we are to provide the long-term stability that families need, the first thing that we must do is secure the public finances. The truth is that the Government inherited from Labour—the party that the hon. Member for Telford represents—the largest public budget deficit in peacetime history: it was some £156 billion, which is more than the deficit in many other developed countries, and it accounts for around 11% of our country’s annual income.
Mark Pritchard
The hon. Member for Telford (David Wright) set out five points for growth, but he could have had a sixth point: stop taxpayers’ money being used to fund unions in local authorities. Most people in Telford and Wrekin would rather see their taxpayers’ money spent on a weekly bin collection than on full-time union officials who will possibly campaign in local elections.
Maria Miller
My hon. Friend makes an important point. Councils have a real challenge in ensuring that they are using their money most efficiently. An important recent report by Scope showed a huge divergence in how councils are approaching their budget challenges. By making decisions on what is most important for our constituents and local residents, we can ensure that the money goes where it is needed most. I have great sympathy for his point about weekly bin collections. Ensuring that public finances are secure is at the heart of what our Government are all about.
Let me set out for the constituents of the hon. Member for Telford some practical ways in which the Government are taking account of the pressure on families’ finances. The cut in fuel duty made by the coalition counters some of the measures of the previous Administration. Rather than recognising the problems faced by families, the previous Government put this country on an ever-increasing fuel duty escalator, creating some of the problems that we are dealing with. Rather than continuing on that escalator, the Government decided not to implement Labour’s planned increase of 5p per litre in April this year and, in the Budget, announced a further 1p cut as well, recognising the real challenges faced by families.
The other important issue that the Government have taken into account is the real financial problem that council tax causes families. A council tax freeze recognises the financial challenges that the hon. Gentleman rightly outlined. Our measures recognise those challenges and try to help families to make ends meet in these difficult times.
As a Minister in the Department for Work and Pensions, I very much feel that employment is the way out for many of the hon. Gentleman’s constituents, and would enable them to achieve the standard of living that I know he wants them to enjoy.
Gavin Williamson (South Staffordshire) (Con)
Does the Minister agree that the fantastic recent news that Jaguar Land Rover has decided to invest in my constituency will create an awful lot of employment, and not only in South Staffordshire? It will benefit many people working in the supply chain industry in Telford and across the region.
Maria Miller
I thank my hon. Friend for mentioning that very real example of how British industry—indeed, the manufacturing sector—is benefiting from the stability that the Government have achieved by getting our public finances in order and ensuring that people feel that it is right to continue to invest in our country. It is not only large employers, such as the one that he cited, but smaller employers who look to the Government to ensure that Britain is a great place to do business. The work undertaken by our colleagues in the Department for Business, Innovation and Skills shows the Government’s commitment to the issue.
We are improving support for new businesses with a 40,000-strong network of experienced business mentors. We are working to strip away regulations, and we are cutting corporate taxes. We will bring the headline rate down to 23% by 2014, making this country one of the most attractive places to set up a new business. We are giving micro-businesses a three-year exemption from all new domestic regulations from April 2011, and we are helping small and medium-sized enterprises to create new jobs by investing £180 million in 250,000 new apprentices. Those are the sorts of practical ways in which the Government are supporting the constituents of the hon. Member for Telford, so that they are not, as perhaps happened under the previous Government, consigned to unemployment, but given the opportunity to get into work.
If we look at the unemployment figures for Telford from 2008 to 2010, the sad truth is that the rate nearly doubled. Even more tragically, under the previous Administration, the number of young people who sought jobseeker’s allowance increased from a little more than 500 to more than 900. At a time when the economy was growing, the previous Administration did not do enough to help individuals get into work, and the recession has made a difficult situation worse for the hon. Gentleman’s constituents. That is why my Department has been looking at a wide-ranging set of reforms. The universal credit will ensure that work will pay, and the Work programme will ensure bespoke and individual support to get people into work in long-term, sustainable jobs. That practical support will give his constituents the sort of job that will secure them the standard of living that he is fighting for them to enjoy. I hope that he will support the introduction of the universal credit and the Work programme, which will benefit his constituents in the way that I outlined.
As the Minister with responsibility for disabled people, I note the challenges that many of the hon. Gentleman’s disabled constituents will face, so the Department has been looking very carefully at how we can support and help disabled people into not just short-term but long-term employment, and help them to retain jobs that they may already have. I was pleased to note that Remploy Employment Services has supported almost 200 individuals in the past year in the hon. Gentleman’s area. It has helped individuals with disabilities or in challenging circumstances to get into work, and throughout the Shropshire area it has helped more than 500 people to get into employment. That practical help will really make a difference to the residents of Telford. That success story applies to the broader employment market as well.
Telford jobcentre has around 1,000 new vacancies every month. I hope that the individuals whom the hon. Gentleman represents will be able to get skills under their belt through the Work programme and take advantage of that job market. No one is saying that it is easy or straightforward. It is a challenge, particularly in an area that has had a great history of industry that has evolved and changed. I speak with a little knowledge, having been born and brought up not far away. The communities face real challenges. However, through the Work programme and the support that we can give people to get the right sort of apprenticeship training, we can help many of the hon. Gentleman’s constituents. Perhaps they have felt that they did not have the relevant support to get into employment before, but we will provide support to help them get the sort of jobs that will give them the standard of living that I know the hon. Gentleman wants them to be able to enjoy.
I share the hon. Gentleman’s concern about fuel prices and the challenges that families face, but I hope that he is reassured by my earlier comments on the actions that the Government have taken, particularly around fuel duty, to ease the burden on motorists. We know that the challenge goes further than that, and that the problem falls particularly on our older constituents. We have therefore prioritised the importance of the winter fuel payment, which will be £200 for those born before 5 January 1951, and £300 for those aged 80 and over. Indeed, we have gone further than the previous Government by permanently increasing the cold weather payment, which is a very targeted way of getting support to vulnerable constituents, about whom I know he will be concerned when he is talking about fuel duty. We are increasing that payment from £8.50 to £25. Again, in a practical way, we are recognising the challenges facing families, and particularly the most vulnerable in our communities. I hope that I have been able to draw together the issues that we are putting in place to help the hon. Gentleman’s constituents.
It is interesting that the hon. Gentleman brought up the issue of VAT. There is nothing fair about the deficit that the Government and the people of Britain inherited from the Labour Administration. It is not fair that so many families were trapped in a cycle of dependency. Our decisive dealing with the deficit has ensured that those with the broadest shoulders bear the greatest burdens and support the most vulnerable and those facing the biggest challenges in society. We have made sure that those on the highest incomes contribute more towards the entire fiscal consolidation, not only in cash terms but as a proportion of their income and consumption of public services combined. That is why we introduced the new fairness premium.
On the hon. Gentleman’s analysis of the role that VAT could play in trying to redress what he called an imbalance in fairness, I draw his attention to the fact that fairness is very much at the heart of the Government’s approach to addressing the fiscal deficit, and across the whole piece we are making sure that those who can pay bear the biggest burden.
Child poverty is an area for which I have direct responsibility. I hope that the hon. Gentleman welcomes the child poverty strategy that the Government introduced in April. I also hope that he welcomes our evolving idea for a commission to look not only at child poverty but social mobility. I am sure that he wants to ensure that his constituents have social mobility, so that they can enjoy a better quality of life and standard of living. By drawing those two important issues into one commission, the Government can be held to account, and there can be the right level of scrutiny of our policies. The child poverty strategy underpins the Government’s ambition for children to be able to realise their potential throughout the country, whether they live in the north, south, east, west or, indeed, the midlands—the area that the hon. Gentleman represents.
The universal credit is one of the most potent tools for addressing child poverty. I am sure that the hon. Gentleman will have followed very closely the debate in this place and the other place. The introduction of universal credit, which tries to simplify our overly complex benefits system, will help around 900,000 individuals, including more than 350,000 children, out of poverty by making sure that work pays. People will understand that our very complex benefits system can be simplified and made to work for them, rather than there being a jungle of different benefits, as is the case at the moment.
The hon. Gentleman mentioned the importance of child care in making sure that work pays. I agree that that is important. I know from my constituents—I am sure that this is true of his as well—that the costs of child care can make all the difference to being able to get into work. The Government have recognised the difficulties that families face. We have reaffirmed our commitment to helping parents with the costs of child care by investing an extra £300 million in child care support under the universal credit system. Individuals who perhaps found it difficult to stay close to the labour market when they had children, because they were not able to do a full-time job, will for the first time have access to child care cost support. Individuals working fewer than 16 hours a week will be able to get the support that will enable them to do a few hours’ work a week. That will keep them close to the labour market, and perhaps when their children are older, they will be able to take on more work. The Government are trying to help families through difficult times in practical ways, so that they can build better lives.
I have covered many of the issues that the hon. Gentleman raised. If I have left any out, I am sure that he will raise them with me separately. I hope that I have reassured him and his constituents that the Government absolutely understand the pressures that families are under at the moment. We are taking very practical steps to alleviate some of the financial pressures that families face. We are looking to the long term and putting in place the sorts of building blocks that will help families, individuals, and parents, and will help children to get the right start in life. We will help people to get the support that they need to get good jobs and keep them in the long term. We are trying to give them the standard of living that the hon. Gentleman and I want them to enjoy.