Autumn Statement
Yvonne Fovargue Excerpts(12 years, 2 months ago)
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Mr Osborne
One of today’s most significant announcements, which will not necessarily be on the front pages tomorrow, was the increase in student numbers and the lifting of the cap on aspiration. That is a major structural improvement in the British economy. Britain has fewer graduates as a proportion of population than many other comparable countries, and it is a basic tenet of economic success that we should do more in this area. We are providing additional money for STEM subjects so that they are taught properly as well.
Yvonne Fovargue (Makerfield) (Lab)
Last year, The Brick, a Wigan borough charity, gave out 920 food parcels. This year to date, it has already given out 3,750, many of them to working families. Does the Chancellor agree with Citizens Advice that for many low-income families in work, the gain from the change in the personal allowance is swamped by the Government’s other changes to tax and benefits, causing them to turn to food banks for everyday necessities?
Mr Osborne
I praise the work that citizens advice bureaux do across the country, and I know that the hon. Lady was previously connected with them, but cutting income tax for the low-paid and taking them out of income tax is a real help, as is the freeze in fuel duty, rail fares and the like. As I say, in the end, the biggest thing we can do for this country is deal with our debts and get people into work. In her constituency, unemployment is down 26% and youth unemployment is down 40%. [Interruption.] Labour MPs shake their heads. I thought it used to be the party of full employment, but now it cannot welcome falls in unemployment.
Cost of Living
Yvonne Fovargue Excerpts(12 years, 2 months ago)
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Yvonne Fovargue (Makerfield) (Lab)
No subject impacts more on my constituents than the cost of living. Wages are dropping—in the north-west by 7.8%, a loss in spending power of nearly £1,700 a year—while more people are being given part-time hours or zero-hours contracts. That is not their choice, yet food and fuel prices continue to rise.
People in my Makerfield constituency are “doing the right thing”: they are working or looking for work. For those looking for work, a quick glance at the universal jobmatch site will superficially show that many jobs are available after searching for retail jobs in Wigan. Let us look a bit deeper at these “jobs”, however. In the three pages I checked at random, 67 of the 75 jobs available were for self-employed catalogue distributors—jobs that the site stated it had been assured “may” enable people to earn a wage equivalent to the national minimum wage. Really? How many people have tried these jobs, paid up front for their catalogues—about £150—and found that they consistently earned the national minimum wage after paying all their contributions? It certainly does not include the people who have been to my surgeries after trying these non-jobs and finding that they could make very little—not even enough to heat and eat.
Domestic energy bills have risen by an eye-watering average of 37% over the last three years. In 2012-13, citizens advice bureaux received 92,000 inquiries about fuel debt alone, while Which? estimates that flaws in the market have left consumers paying £3.9 billion over the odds since 2010. We intend to stand up for consumers in this failing market and break the stranglehold of the big six. What have this Government proposed? Nothing. It is no wonder that citizens advice bureaux saw a 78% increase in the number of people having to use food banks last year. Many of those people were in work, yet were unable to pay their bills and could not afford to eat.
Mr Newmark
As the hon. Lady has mentioned jobs, I thought that it would be useful to give her a little information and a few facts. Is she aware that unemployment in her constituency has fallen by 26% in the past year, and that youth unemployment has fallen by 40%?
Yvonne Fovargue
I am grateful to the hon. Gentleman for mentioning the unemployment figures in my constituency. I recently received an e-mail from the Audit Office telling me that the figures were not reliable because the constituency was a pilot area and people were coming off the register.
Admitting that you cannot feed your family is not easy or comfortable. For many people, going to a food bank is a last resort and a source of shame, although it is not their fault but is due to an accumulation of Tory-led policies that are punishing, not rewarding, hard-working people.
I would not be doing justice to my constituency postbag, or to the people who attend my surgeries, if I did not mention the economically unsound bedroom tax. As I have often said before, in Wigan we have a shortage of one and two-bedroom properties and a surplus of three-bedroom properties. People are being forced either to move to the more expensive private rented sector, uprooting their families and incurring further expense, or to pay the difference. Given that 4,200 people in my constituency are affected by reductions in housing benefit ranging from £517 to £1,273, it is no surprise that in October, 2,500 people contacted Wigan and Leigh Housing about rent arrears and debt. That represents an increase of 50% in the last three months.
The bedroom tax means yet another cut in the available income of many of my constituents, forcing them to make stark choices about how they spend their money. Far from being a case of what luxury item they must do without, it is a case of “Can we afford to have the heating on, or should we shiver and buy food—and what about that new pair of school shoes? Heaven forbid that the washing machine or the fridge should break down!” There is certainly no money to save for a rainy day. In fact, many of my constituents are already swamped and drowning in debt.
No wonder the payday lenders, the home credit providers, the log book loan companies and the rest are proliferating. According to a recent report, 48% of people who go to payday lenders are female, and the majority of females have borrowed for everyday necessities. They have borrowed to buy food for the family, or to pay the heating bills. Capping the cost of credit constitutes a welcome recognition that these companies are making profit from despair, but there is much more to be done. The root cause of rising prices and low incomes needs to be addressed if people are to be saved from being dragged into a spiral of debt.
The people I represent are hard-working people who want the best for their families and who are doing the right thing, but they are being let down by this Tory-led Government in so many ways. Every time they go to the supermarket, every time they receive a fuel bill, and every time they turn on the television or walk down the high street and see more advertisements for payday lenders, they are reminded of the Government’s failure to address the issue that is most important to them: the cost of living.
Oral Answers to Questions
Yvonne Fovargue Excerpts(12 years, 5 months ago)
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Sajid Javid
As always, my hon. Friend speaks the truth very eloquently. The economy is growing. Of course there is a lot more work to do, but there is plenty of evidence that we have turned a corner.
Yvonne Fovargue (Makerfield) (Lab)
3. What recent estimate he has made of the effect of fiscal policy on the level of child poverty.
Gavin Shuker (Luton South) (Lab/Co-op)
9. What recent estimate he has made of the effect of fiscal policy on the level of child poverty.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have protected vulnerable groups as far as possible while urgently taking action to tackle the record deficit we inherited. Work remains the best and the most immediate way out of poverty, and the Budget took action to support families and make the tax and welfare system simpler, including further increases in the income tax allowance to take 2.7 million people on low incomes out of tax altogether.
Yvonne Fovargue
The chief executive of Citizens Advice, commenting on the huge rise in inquiries about food banks, said:
“The combined impact of welfare upheaval, cuts to public spending, low wages and the high cost of living are putting unbearable pressure on many households, forcing them to seek emergency help putting food on the table.”
Is the Minister concerned by this evidence, which is backed up by the recent statistic showing that 300,000 children have been pushed into absolute poverty since this Government took office?
Sajid Javid
The hon. Lady did a lot of good work with Citizens Advice before she came to this House, so I think she shares with me a genuine interest in child poverty. If that is the case, she will recognise that the existing measure for child poverty is flawed. It is based on relative incomes and it produces perverse results. For example, according to that measure, during the previous recession—Labour’s recession, the deepest in our post-war history—child poverty fell by 300,000. The hon. Lady knows that that cannot be right, so if she wants to work with me to help develop a measure that actually works, I would welcome that.
Economic Growth
Yvonne Fovargue Excerpts(12 years, 9 months ago)
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Yvonne Fovargue (Makerfield) (Lab)
There may have been concentration today on a certain topic in the Queen’s Speech, but in Makerfield it is the economy, the cost of living and jobs that concern my constituents the most. Without confidence in the economy and job security, they will not spend, and without spending the economy will not thrive. I stress that there need to be real jobs with real opportunities. When I last checked the universal jobmatch site, 45 of the 67 sales jobs that were advertised within 10 miles of Wigan were self-employed catalogue distribution jobs, many of which demand an up-front fee.
I welcome the consumer Bill of Rights, which has been proposed to simplify and consolidate consumer law. If people are to spend, it is important that they are free from misleading and aggressive practices and have access to proper redress if they have been ripped off. They should not have to go through tortuous legal processes because of grey areas. Last year, Citizens Advice found that three quarters of consumers had had a problem that was covered by existing consumer rights, and 94% of them had complained but only 10% were successful. Improvements are needed, and I hope that the consumer rights Bill will be amended so that consumers understand their rights, are clear about what to expect and are given a time scale within which they can expect redress.
One notable omission from the consumer rights Bill, and from the Financial Services (Banking Reform) Bill, is action on lead generators and the marketing texts that people receive. Some companies, particularly in the high-cost credit sector, for example Cash Lady, do not provide the service themselves but simply gather details and pass them on to lenders. The consumer is often not aware who their lender is until they get the paperwork. They do not know whether the company from which they are buying is in a trade association or has a code of practice that they can use if there is a problem. They think they are taking out a loan with one company when they are actually taking it out with another.
The consumer Bill of Rights aims to provide transparency, which I would like to see extended to all products and services. Particularly in the high-cost credit sector, consumers do not always know the full implications of their agreement. How many, for example, would agree to a continuous payment authority if they knew that it gave the lender unlimited powers to dip into their bank account at any time and for any amount? Such a power also militates against the rigorous affordability checks required.
Another area contributes hugely to the strength of our economy but is often overlooked: the humble bus. A excellent report was launched this week by Pteg entitled “The case for the urban bus”, and it describes the contribution that buses make to the economy. Bus networks generate more than £2.5 billion in economic benefits, about £1.3 billion of which reflects user benefits from access to jobs, training, shopping and leisure opportunities. The remaining £1.2 billion of benefits accrues to other transport users and society at large through decongestion, reduced pollution, lower accident rates and productivity. The overall economic benefits are around five times higher than the amount of public funding going to the bus networks, and the bus industry has a turnover in excess of £5 billion, much of which is ploughed back into regional economies through the supply chain and consumption expenditure by staff.
Public expenditure on bus networks is therefore likely to have a large and direct impact on regional economic growth. It helps the economy by contributing to flexible labour markets and by increasing the number and range of jobs accessible to workers, in particular less-skilled workers who are likely to have less access to a car. However, the bus service operators grant has been cut, and there are fears that it might be under threat in the next spending review. Instead of salami slicing the BSOG—an easy target—I urge Treasury Ministers to read the report and recognise the contribution that the bus makes to the economy. It might be the Cinderella of the transport service, but it is used by the highest numbers of our constituents—more than any other mode of transport—and we must look at the benefits that the service accrues, instead of cutting it willy-nilly.
Oral Answers to Questions
Yvonne Fovargue Excerpts(13 years, 2 months ago)
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Mr Osborne
My hon. Friend makes a good point. Obviously, everyone is frustrated when they see multinational companies breaking the tax laws or interpreting them in such a way that they basically avoid paying corporation tax. That situation is not acceptable. We are putting more money into the enforcement of the rules and working with countries such as France and Germany to change the international rules so that we can have a better situation in the future. It would not work if we just acted unilaterally, because these are by definition multinationals. That is why we have to work with other countries.
Yvonne Fovargue (Makerfield) (Lab)
4. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of child poverty.
Mr David Hanson (Delyn) (Lab)
13. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of child poverty.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have protected vulnerable groups as far as possible while undertaking the urgent task of tackling the record fiscal deficit that we inherited. Work remains the best and most immediate way out of poverty, and we have continued to prioritise work incentives through welfare reform and increasing the personal allowance.
Yvonne Fovargue
The total cost to a two-child family on the minimum wage of the freeze in child benefit, the 1% increase in working tax credit and the VAT increase over four years will be £5,033. The extra tax allowances and the child tax credit will save them only £1,770, leaving them with a net loss of £3,263. How many more children do the Government expect to be in poverty as a result of those cuts?
Sajid Javid
I know that the hon. Lady cares deeply about the issue and she has done a lot of good work with vulnerable families in the past. She will be concerned, as I am, that under the last term of the previous Government child poverty, as defined by the Department for Work and Pensions, increased by 200,000 to 3.9 million. This Government believe that there should be a relentless focus on the causes of poverty, such as worklessness, so I hope that she will join me in welcoming the fact that the number of people employed today in Britain is at a record high.
Financial Services Bill
Yvonne Fovargue Excerpts(13 years, 2 months ago)
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Greg Clark
I am grateful to the hon. Lady for her point, which makes the point I was making to the hon. Member for Harrow West (Mr Thomas). To use the term “payday lenders” exclusively is to miss a broader range of potential practices that may cause detriment to consumers, and that is why this approach is about the powers vested in the regulator.
Yvonne Fovargue (Makerfield) (Lab)
Will the FCA be able to look at other concerns such as the misuse of continuous payment authority by both high-cost lenders and fee-charging debt management companies? The unrestrained use of continuous payment authority causes one of the biggest detriments to consumers that I have seen.
Greg Clark
The short answer to that is yes. The FCA’s powers will be broad, and defined by practice rather than activity. We have been clear that it might not be just the level of interest charged, but other practices associated with the lenders that come within the ambit of the regulator. It is clear that it will use those powers vigorously to promote the interests of all our constituents.
I will leave my introductory remarks on that point. I am sure that Members wish to contribute and I will seek to respond to any points raised when I make my winding-up speech.
Stella Creasy
I pay tribute to the work that the hon. Gentleman has done in raising issues about debt and credit, and about the way in which companies such as this operate. We know that many of them use a get-out clause, arguing that they could not possibly have known that someone had eight or nine loans at the same time. That is partly because there is no register specifying rates of interest and the number of loans that people are taking out. The OFT should make it clear that that constitutes irresponsible lending, and that loans should be made on a real-time basis. It is no good for supposedly short-term credit to be provided on a monthly basis. I also agree with all those who have expressed concern about continuous payment authorities. I hope that, in the new year, the OFT will make it clear that we must end both the fraud and the debt that they cause.
Yvonne Fovargue
Continuous payment authorities also militate against affordability checks. As was established by the OFT’s last review, once companies know that they can dip into someone’s bank ad infinitum, they simply do not bother to carry out the checks .
Stella Creasy
My hon. Friend is right. I pay tribute to the work that she has done in this regard, and also in regard to debt management plans.
Bad practice is widespread in this industry. The Financial Conduct Authority will have an opportunity to set the tone when it comes to the sort of consumer credit industry that we want in the future, but let us use the opportunity presented by the OFT to do something about the problems now, and to prevent 2013 from being boom time for the legal loan sharks.
The Minister must be aware that three quarters of consumers are looking towards Christmas with severe financial concerns, and that 10 million of us in Britain feel financially squeezed. Will he state explicitly whether he will support my proposals and take them to the OFT, so that we can be certain that 2013 will be a time for legal loan sharks rather than consumers to be worried? I urge him to read the Bristol research findings—which are already in the pocket of the Department for Business, Innovation and Skills—in order to understand how measures such as this, and total cost-capping, can work, so that we can finally say that Britain is a legal loan shark-free zone.
Autumn Statement
Yvonne Fovargue Excerpts(13 years, 2 months ago)
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Mr Osborne
I will certainly work with my hon. Friend and publications such as City A. M. to make sure that happens. The deficit is how much is added to the debt each year, and we are getting the deficit down. We inherited the highest budget deficit in the world, and we have been able to reduce it by 25%.
Yvonne Fovargue (Makerfield) (Lab)
The Treasury will benefit by £1.1 billion per annum from the high earners’ pension pot cut and by £3.7 billion per annum from benefit claimants. Is this not just an inconvenience for the rich but a catastrophe for the poor?
Mr Osborne
As I say, we have had to make difficult decisions. Are Labour Members against the uprating of welfare benefits by 1%? We will find out when the Bill is before Parliament—at the moment, they are not telling us how they would vote on that measure. We have had to make difficult decisions, but let me repeat what I have said at this Dispatch Box: the rich are paying more as a share of our income tax in every single year of this Government than they did in any one year of the 13 years of the Labour Government. The pensions tax measure is a difficult measure, but we felt it was necessary to take it. We have also increased the amount of money we are getting from dealing with tax avoidance and we have taken decisions such as putting stamp duty up to 7%. We have done all those things, not one of which was done by the Labour party.
Financial Services Bill
Yvonne Fovargue Excerpts(13 years, 9 months ago)
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Lorely Burt
Of course I would encourage such organisations, and as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, we need to give people financial education. There is an image of companies profiting from others’ misery, but there are companies that act responsibly and ethically, so I do not support new clause 9. It is a shame that all companies have to be tarred with the same brush, and the new clause would remove an element of choice from the consumer. Of course, many consumers would not choose a debt management company over a free service given the choice.
Yvonne Fovargue (Makerfield) (Lab)
Does the hon. Lady agree that one problem is that consumers making a distress purchase do not know which companies are reputable? Unfortunately, the ones at the top of the Google list tend to be the least reputable.
Lorely Burt
I agree that the companies that spend money on unsolicited calls to people who may have a financial problem are the ones that need to make the most profit, to cover the cost of doing so. However, responsibility for debt management is moving to the new FCA, and new guidelines are being issued. As long as those guidelines are strong and properly enforced, part of the market may still be able to benefit from providing debt management advice.
Yvonne Fovargue
I rise to support several of the amendments. I will speak first to new clause 9 on the phasing out of debt management companies. I accept that some of them might act ethically, but a great number do not, and the voluntary code of practice has simply not worked. We are talking about a distress purchase. People who buy a debt management plan will often have been worrying about it for months and months. They are looking on the internet at 3 o’clock in the morning and going to the first name they see. They do not know whether it is a member of a reputable trade body. They simply see, with relief, that someone can help them with their debts. It is no wonder that the number of complaints to the Financial Ombudsman Service about these companies’ practices has rocketed in recent years. The cost of policing and dealing with these organisations is disproportionate. It would be much easier to phase them out and put that money into the free sector so that it can ensure that creditors, via the fair share scheme or the financial inclusion fund, pay for such advice.
I would also like to speak to new clause 12 and the prepayment issue, which was so eloquently outlined by my hon. Friend the Member for Walthamstow (Stella Creasy). The people who invested in Farepak honestly thought that it was a savings scheme, which should be regulated. My experience of working for a citizens advice bureau is that one of the most difficult things to explain to people is the difference between a deposit and a prepayment. People do not understand the difference; they believe that they are equally protected whether a payment to a scheme is classed as a deposit or a prepayment. Indeed, I have seen people in my constituency surgery who have had problems with funeral prepayment schemes, most of which are covered, but some of which are not. I have had grieving relatives come to me and even people who have paid for their funeral, thinking that their family were covered and would not have to worry anymore, who have lost their money.
The voluntary Christmas prepayment scheme is simply not sufficient. As my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) said, the big supermarkets are not taking part. I wrote to every supermarket, and they said, “There’s no need for us to take part.” However, if they will not take a lead, how can we expect the smaller companies to follow? The scheme needs to be expanded. We need to ensure that people do not fall through the gaps, such as when the Government say, “It’s not this regulation; it’s that regulation,” or, “It’s not in this area; it’s a consumer matter.” The people who suffered because of Farepak do not care where it is regulated; what they need is some regulation.
Amendment 55, which deals with the money for specialist debt advice, is extremely important. We have heard on a number of occasions that the Money Advice Service does not provide debt advice, and nor should it. It should not be providing people with advice on debt, but putting the matter to the agencies that specialise in it. It is quite understandable, with face-to-face money advice and the financial inclusion fund, that the Money Advice Service should want more cases dealt with. However, there is a perverse incentive, because in being able to deal with one-off cases, the agencies are seeing more people, but giving less advice. The intractable cases, where people really need advice—those involving people who cannot deal with their debts, but need to keep coming back because their creditors keep asking them to—are not being seen. One-off advice is fine for those who can help themselves; indeed, there are a number of people who can be directed to the internet or telephone. My concern is that the removal of legal aid for debt and the Money Advice Service’s inclusion of one-off cases in the financial inclusion fund mean that the people who need ongoing support for long, complex cases are not being seen by the agencies. If amendment 55 is not accepted, therefore, I would urge that those people be considered when debt advice is reviewed.
Let me turn to amendment 40, which was so eloquently spoken to by my hon. Friend the Member for Walthamstow. I agree that capping the total cost of credit is simply one measure. However, we face an urgent situation. There are many other measures to consider, and I agree with the hon. Member for North Swindon (Justin Tomlinson): roll-overs indeed cause detriment. I have one constituent who has taken out 17 payday loans in one day alone—that is the highest so far; I am still waiting for an improvement on that. As companies have no way of checking in real time whether somebody has taken out any more payday loans, we need a database, run by the regulator so whether somebody has taken out any further loans can be checked, and a limit, whether monetary or numerical. We need to consider that, so I welcome the fact that the Office of Fair Trading is conducting a review. I hope that it will widen that review to include doorstep lenders, such as Provident, which have for so long caused detriment to consumers.
I would like to mention a case that would be solved by capping the total cost of credit. I had a constituent come to me because she had borrowed £300 from Toothfairy. She was a hairdresser. Unfortunately her washer had broken down and she had borrowed that £300 so as not to have to go to BrightHouse and pay its extortionate costs. Unfortunately, however, the hairdressers closed before her next payday—no notice; she lost her job. Over 12 months she had offered instalments to Toothfairy, but the company would not listen to her or accept any instalments. Twelve months on, she went to the citizens advice bureau. She owed £2,570 at that stage, from a debt of £300. She had also received threats from the debt collection agency, which purported to be a bailiff. The company refused to negotiate with the citizens advice bureau, and although the OFT is investigating, there is no action yet. The OFT does not have the power to suspend the company. It is investigating the case, but if it finds that there was consumer detriment, it cannot suspend the company’s licence, and it knows very well that the company will appeal. I cannot believe that there is no consumer detriment in that case, or in the number of similar cases. The OFT or the new regulator must look at the power to suspend. However, capping the total cost of credit would also be a way of doing something urgently to prevent people such as my constituent from getting into such situations.
Lorely Burt
The hon. Lady talks about the OFT not having the power to suspend, but does she agree that the new powers, which the FCA will have, will make it possible to address that?
Yvonne Fovargue
I do not believe that it has yet been confirmed that they will include the power to suspend a company. I would like the Minister to address that. If the FCA has that power and has the resources to act, that would help in cases where the company is breaking all the voluntary codes—it has been proved again that a voluntary code is not working. Again, however, consumers do not look to see whether such companies are regulated; they just need the money. They simply go to the nearest company—possibly the one at the top of the internet or possibly the person or company that sends them an unsolicited text. Consumers do not shop around for such loans.
Consumers need a robust regulator, and although I welcome the move from the OFT to the FCA in new clause 4, the Government need to clarify what that means for consumer protection. There needs to be a robust deterrent for firms entering the market. The bar needs to be set much higher. There also needs to be a real deterrent. I was therefore pleased to hear the Minister say that the £50,000 limit did not apply and that there could be an unlimited fine, because I believe that £50,000 will quite often be written into the business plan as a write-off. There needs to be the power and, as importantly, the resources to supervise and to stop bad practice at an early stage. Two years down the line is too late for the innocent people who have walked into the trap. We need a real consumer champion. As Which? has often said, what we want is a watchdog, not a lapdog.
Neil Parish (Tiverton and Honiton) (Con)
I apologise to the House for not being here at the start of the debate.
I congratulate the hon. Member for Walthamstow (Stella Creasy) on her amendment 40, because payday loans and doorstep lending are a huge problem. There are many loan sharks out there and they need to be put back in their boxes. We need serious financial health warnings about their conduct, so that our constituents have some idea of how much they are borrowing and how much they will have to repay. For instance, anyone borrowing £100 at 2000% will have to pay back up to £2,000. That needs to be clearly laid out when people are taking out such loans. As has been pointed out, APRs—annual percentage rates—are not always understood by our constituents. Therefore, if they could see exactly what they had to repay, they would be much less likely to take out such loans.
Amendment of the Law
Yvonne Fovargue Excerpts(13 years, 10 months ago)
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Yvonne Fovargue (Makerfield) (Lab)
I would like to address an area that has been eagerly awaited since it was heralded by the Chief Secretary to the Treasury—the advice fund. What we actually got was two lines in the Budget, with £20 million for the next two years to help the sector to adapt to the change in the funding environment. Given that a loss of £100 million is anticipated over the next two years, that £20 million does not even cover the 77% reduction in legal aid funding. As the Law Society said, it is a sticking plaster that will not heal the savage wounds caused by these cuts. What the sector needed was sustainable strategic specialist funding. It would have been good if it had been linked to the long-awaited advice review and if real needs had been taken into account; it would have been good if there had been acceptance that early advice saves money—but, no. What we got was a token amount with no strategy and I predict that the number of advice deserts will increase.
The increase in the personal allowance does little for the poorest, who rely on benefits to supplement low-paid work. Council tax benefit and housing benefit claimants will get just £33 a year, for as their income goes up, their benefits go down. Their weekly gain is less than the price of a loaf of bread—63p a week. That is coupled with changes to the working tax credits, whereby some of my constituents will lose £3,870 year. Truly to benefit the poorest and to make work pay, the Government should increase the disregards for council tax benefit and housing benefit and scrap the changes to the working tax credit that will affect thousands of hard-working families.
Moving on to the granny grab and the effect on pensioners, I have to declare an interest: my mum is 83. Every year she calculates her tax, and most years she gets it right and HMRC gets it wrong. I do not know what she felt most insulted by: the freezing of her personal allowance, for which she had saved over a long period of her life, or the excuse that it was a simplification. She asked me to put a comment to the Chancellor that although she may be anniversarily challenged, she is not numerically challenged. As the Chancellor likes simplification, I will tell him what she said. She said, “I might be old, but I’m not stupid.” To do what he did while at the same time reducing the 50p tax rate is the wrong measure at the wrong time.
So much more could have been done in the Budget. The Government could have looked at VAT levels, they could have cut fuel duty—a measure that would have helped motorists and the hard-pressed hauliers in my constituency—or they could have looked at jobs for young people. Instead, taxes have been cut for the richest 1% of earners. This Budget has the wrong priorities at the wrong time. It is a Budget of failure, not of success. The biggest failure of all is this out-of-touch Government’s failure to understand the priorities and the struggles of the millions of ordinary people who live in areas such as my Wigan constituency, and instead to prioritise giving rewards to the rich.
Oral Answers to Questions
Yvonne Fovargue Excerpts(14 years ago)
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Mr Gauke
Absolutely. It is important to point out that it is not just those who are taken out of income tax altogether who benefit, but the approximately 25 million people overall who receive an increase in personal allowance. That should be supported by hon. Members of all parties.
Yvonne Fovargue (Makerfield) (Lab)
The Treasury has admitted that cutting tax credits will lead to an increase in child poverty. Rather than trying to change the definition of child poverty, was not the Prime Minister right in 2006 when he said:
“We need to think of poverty in relative terms”?
Mr Gauke
It is also important not just to think of poverty in terms of moving someone from one side of an arbitrary line based on a percentage of median income to another, but to look more widely. That includes improving poor children’s opportunities. The Government, through the pupil premium and other measures, are concentrating on opening up those opportunities.