David Lammy
Main Page: David Lammy (Labour - Tottenham)Department Debates - View all David Lammy's debates with the HM Treasury
(13 years, 10 months ago)
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Mr David Lammy (Tottenham) (Lab)
Let me begin by congratulating the new hon. Member for Weaver Vale (Graham Evans) and expressing some solidarity with him, given what he said about his background and experience of growing up on a council estate. I am sure that his constituents will be very well served by the effective way in which he makes his remarks.
In a few days it will be my birthday, and as I inch towards the fourth decade of my life, it occurs to me that the economic downturn that we are experiencing now is also my fourth. The truth is that I do not remember the first recessionary period in the early 1970s, but I have strong memories of the recessions of the early 1980s and early 1990s. I think back to what it was like growing up poor and black in my present constituency in Tottenham, and the hardship experienced by my family and many others at the time. I remember my father losing his business in the early 1980s, and the depression and the booze that followed.
Children do not always quite understand these things as they are growing up, but I remember, in about 1982 or 1983, coming to understand that there was far less money in the home. The fridge seemed much less full, and—although I do not want to suggest that my parents were not generous—the presents at Christmas were not what we might have seen in the commercials on television, and not what we might have liked. I think that the VAT rise had something to do with it. Although Margaret Thatcher had said that she would not change the rate before the election, she raised it from 8% to 15%. I also vividly recall the freezing of child benefit for successive years, and how hard that was for my mother. More than anything, however, I remember the restlessness, the fecklessness and the worklessness of the broader community and the explosion of violence that we experienced in my community as a direct result of that, leading to some of the worst images that this country has ever seen or experienced.
Richard Graham
Does the right hon. Gentleman agree that, in that context, it is particularly regrettable that the Government of the last 13 years left us with more than 1 million unemployed young people—an absolute record?
Mr Lammy
Unemployment at that time in my constituency was running at 20%, and in some communities, particularly the black community, the rate was double that. It is because of the situation then that young people like me, growing up in constituencies like Tottenham, forged such a huge solidarity with colleagues and friends in different parts of the country. Although those areas seemed very different from Tottenham, the assault on manufacturing industry and the attitude to former mining and steelworking towns led us to forge a solidarity that remains on these Benches today.
In the 1990s I qualified as a young lawyer, but I did not go straight into employment because, yet again, the country was in recession and the employment was not there. I went to the local unemployment benefit office hoping that I might become a barrister, but not sure whether that would actually happen. My mother was now struggling on her own with a 15% interest rate, and the shops up and down Tottenham high road were boarded up because of bankruptcy. That was the backdrop in the 1990s. We experienced two recessions that had huge social consequences—social consequences that I deeply fear could be repeated as a result of this Finance Bill.
Richard Graham
The right hon. Gentleman is very generous in giving way. Given his experience in the early 1990s, is it not an absolute tragedy that he was part of a Government who, having promised to abolish boom and bust, landed us with the largest recession not just in his lifetime, but in the lifetimes of three generations?
Phil Wilson
I agree with 100% of what my right hon. Friend is saying. Back in the 1990s, 11% of young people were out of work; in the 1980s, the figure was 12%. As a proportion of the work force, the unemployment rate was much higher than it is now, and 40% of those people had been out of work for 12 months or more. That figure too is much higher than the figure today. In my own constituency the unemployment is just over 1,000, but at the height of the recessions in the 1980s it was 5,500. The main reason for the difference between what we have experienced over the last year and what we experienced then is what the Labour Government did to ensure that ordinary people up and down the country did not suffer.
Mr Lammy
My hon. Friend is absolutely right. That is why Members on the Government Benches should be reminded that employment in my constituency was running at 20% in the recession of the 1980s and at 28% shortly before we cane to power in 1997, and that although my constituency now has the highest unemployment rate in London, it is currently running at 9%. I say “currently” because it will surely rise as a result of this Finance Bill. The consequences—the social consequences —of what we are debating today, and what we will vote on in a few hours’ time, will be so significant that it is hard to put words to them, but they will be real and stark.
Andrew Bridgen
The right hon. Gentleman is speaking passionately about his opposition to unemployment. Surely he must be ashamed to be a member of a party that has formed Governments many times over the past 70 years and that, every time it has left office, has left unemployment higher than when it came to office.
Mr Lammy
That is patent nonsense, which is why so many hon. Members are shouting from a sedentary position.
What we see in the Bill is absolutely ideological. It is not the first time that the House has debated such ideological decisions, which have huge social consequences for people a long way from Westminster. On one side, we have an orthodoxy, a Conservative position, that says that we must reduce deficits at all costs, despite the social consequences. Behind that there is a desire to reduce the state and welfare at the same time. On the other side, consistently, over generations, we have progressive parties, and at the centre of those is the Labour party, which understands that the private and public sectors are co-dependent. They rely on each other.
There are times during difficult recessionary periods when the public sector must borrow to ensure growth. That is why I am hugely proud of the future jobs fund. That was a classic example of our Government borrowing £1 billion to create jobs and to ensure that the social plight that constituencies such as mine have seen in the past did not come to pass again. What an outrage. What a shame. How can hon. Members look at the young people of Tottenham, who now do not have that scheme and who will join the unemployment queues as a result of yet another catastrophic decision? We on the Labour Benches remember the failed youth training scheme, a joke scheme that was not really about jobs; it was about gerrymandering the figures, which started to look so bleak in the depths of unemployment in the 1980s and 1990s.
Mr Kevan Jones
Does my right hon. Friend agree that the VAT increases that are in the Budget will make it worse for the poorest in his constituency—not only the unemployed but those on low pay and on limited incomes?
Mr Lammy
My hon. Friend is absolutely right. In the midst of a growth in unemployment, which has been predicted by the OBR, there is a VAT rise that will affect the poorest families.
In debating the Budget, we have to defend the hope and prospect that there is a different economic way. That is articulated not just by the usual suspects—economists such as David Blanchflower have been mentioned in the debate—but Martin Wolf in the Financial Times, Samuel Brittan and George Joseph Stigler. A number of economists are saying that this is the time for fiscal stimulus, for an FDR-type new deal, for an LBJ-type offer. This is the time for that big society that they dreamed about.
When this country lay in rubble after the second world war, we did not shrink back. The Attlee Government invested. We built the NHS, we built housing, we built schools. That is the example that we should be following. Instead we get this false smoke-and-mirrors game.
Mr Lammy
I will not give way at this moment.
Politically one has to applaud, in some senses, the Government for the way in which they have changed the debate that was about fiscal stimulus, support, opportunity and hope, despite these difficult times. The country had a focus on the banking sector in this country, in particular, but that has been turned into solely a debate about deficits; that is the only discussion taking place. I say, as a Labour Member who is proud of my party’s tradition, that the discussion had not solely been about the recovery; it had also been about what had led us to this position. That was a discussion about materialism, consumerism and excess, but all we hear now is this emphasis on cuts, cuts, cuts and deficits. The Government are wrong, as was made clear in the G20 meeting and the letter that President Obama wrote shortly before it. They have taken the wrong position for ideological reasons, which will have grave social consequences.
The Government have said that this Budget is unavoidable, but of course it is not, for the reasons that I have set out. It is not unavoidable, because the previous Budget, in March, made it clear that we intended to cut the deficit over the next Parliament in a measured way. This Budget is not progressive. How can one describe a Budget that means that unemployment will rise and growth will shrink as “progressive”? This is a total twisting of the word “progressive”. We have a dictionary on the table in front of the Economic Secretary, so I invite her to pick it up and look at what “progressive” means. It certainly does not mean what is in this Budget. This Budget is not fair to many people beyond this place.
Martin Horwood
Does the right hon. Gentleman think that taking nearly 1 million people out of income tax altogether, a measure of which the Liberal Democrats are immensely proud, is progressive or not?
Mr Lammy
The hon. Gentleman knows that this is robbing Peter to pay Paul—I am sure that his mother said that to him. One cannot give to people on the one hand and take a damn sight more in VAT on the other, and he knows it. I am talking about people such as the Uddin family, who live on the Broadwater Farm estate in my constituency. I am grateful to the TreeHouse charity for asking me to spend a Friday afternoon with a family in my constituency, dealing with the issue of autism. Because of the context of this Budget and the Finance Bill that flows from it, I was, of course, examining the wider issues that surround this family.
It was privilege to go to the Broadwater Farm estate, which I have known all my life, as I grew up and spent many years there. It was a privilege to go up the stairwell to the 15th floor to spend time with the Uddin family. In that two-bedroom flat was Mr Uddin and his wife, a family of five children and a niece. There were eight of them in this flat surviving on income support of £322 a week and struggling with a five-year-old autistic child. I was the bearer of bad news, because I had to explain to them that Mr Uddin, who cannot work as a result of an injury at work—he was a chef in an Indian restaurant and he had a serious back injury—would face a new medical test in order to get the disability living allowance that made up that £322. I had to explain to them that once again—I recalled this from my own background—their child benefit would be frozen. I had to explain to them that the price of living would go up because extra VAT would be whacked on their household goods and items such as school uniforms. I had to explain to them that the toddler element of the child tax credit and the element for their new five-week-old baby had been taken away. That was worth £1,000 to many families across the country. The Uddin family would be experiencing huge hardship as a consequence of this Budget.
It gets worse. What the Uddin family would dearly love of course is better housing. The prospect of better housing in London as a consequence of this Budget is dark indeed. That brings me on to the real test of what is progressive and what is fair. The cap on housing benefit will have the most pernicious effect in this city. Rents in London boroughs such as Islington, Camden and Westminster can run into the many hundreds of pounds, so there will inevitably be an exodus from zones 1 and 2 to zone 3. My constituency already has 20,000 on the housing list, more than 3,000 in temporary accommodation and, as I speak, more than 800 in emergency accommodation. It will become even more crowded. There will be no prospect of the Uddins moving anywhere, particularly when, as we would expect, Conservative local authorities in London continue to refuse to build. Guess what? Westminster council built just 200 affordable homes in the last year for which there are records. The Royal Borough of Kensington and Chelsea built just 100; Richmond built 127; Wandsworth just over 300. That is the record on affordable housing. It is very bleak indeed. The Mayor has made not one representation on the housing consequences of this Budget.
Gavin Shuker (Luton South) (Lab/Co-op)
Does my right hon. Friend agree that beyond metropolitan areas such as London the Government’s decision to take away the regional spatial strategies that allowed councils to work together to deliver affordable housing will have a profound effect on the way in which we manage the problem of affordable housing?
Mr Deputy Speaker
Order. That was wide of the mark. May I ask hon. Members from time to time at least to mention things contained in the Finance Bill.
Mr Lammy
My hon. Friend makes a good point, which I hope he will have an opportunity to develop later. I want to make it clear that, as a result of the housing benefit cap, there will be an exodus from zone 1 to zones 3 and 4 and areas such as mine. I predict as a consequence something similar to what we see in Paris—suburbs that are most often brown, black and other ethnic minority in complexion and are crowded, cramped and dangerous. The decisions made in the Finance Bill will lead to social unrest.
Liberal Democrat colleagues in London, especially the hon. Members for Hornsey and Wood Green (Lynne Featherstone), for Brent Central (Sarah Teather) and for Bermondsey and Old Southwark (Simon Hughes) should hang their heads in shame if they vote for the Bill tonight. Working people voted for them on the basis of the platform on which they stood. They know that people will suffer as a consequence because benefits will be cut and housing benefit will be capped. People who voted for them in good conscience will suffer.
Martin Horwood
I am sure that if my hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone), who is being attacked in her absence, were here to defend herself, she would do a very good job of it. Does the hon. Gentleman accept that one of the consequences of very high housing benefit payments in central London has been, in effect, to line the pockets of private landlords with public money? Even if he does not accept the solution presented in this Budget and Finance Bill, does he not think that something needs to be done to address the problem?
Mr Lammy
I commend the hon. Gentleman for his defence of his hon. Friend, who, let us face it, is having a bad few days. This is not the moment to say that the private sector should step in. What are the chances of one of my constituents wanting to go into the private sector, as many of us have encouraged our constituents to do, given the uncertainty about what will happen to their housing benefit? None. The people who are in social housing will stay there, despite conditions such as those that I have described.
This is the time to walk the walk, I say to the Liberal Democrats. This is the time to demonstrate compassion, care and empathy—to walk alongside those who are poorest in our community. That is test of whether this is an effective Finance Bill, and it does not meet that standard.
Mr Kevan Jones
It will not only be private sector tenants who are affected. If a cap is introduced either in London or in my North Durham constituency and that cap is less than the current social market rent, the gap will have to be filled by the tenant. Some will be unable to afford it, and they will either be evicted or have to move out.
Mr Lammy
My hon. Friend is absolutely right. There will be a significant increase in evictions as a result of the housing benefit measures. Many Members will remember London in the 1980s and the early ‘90s. We remember what it was like walking under Waterloo bridge—sometimes it seemed as though whole families were living there, homeless. We remember the stories of “cardboard city”. That is what we remember, and that is what we will see again as a result of this Bill.
To say it is fair if a Bill places a £2 billion levy on the banks but imposes on hard-working people cuts and VAT rises that combined in total come to £24 billion is to treat people like fools. Of course it is not fair. How could it possibly be fair? That is why I repeat that Members who know a lot better and who have relied on the votes of those hard-working people should be ashamed of voting for this Finance Bill. I urge them, in the time left as we continue to debate the Bill, to hear those voices in this place and beyond that say that this moment, as tough as it is for our economy, can be a moment of hope, can be a moment of growth and can be a moment of fiscal stimulus. I urge those Members not to line up alongside the ideological orthodoxy that always sees the opportunity not just to cut a deficit but to cut the state and to cut welfare, but to say once again, as we have in progressive moments in the past: no, we can act differently. I am proud and very lucky to stand here having grown up in a constituency such as mine was in the past, but there are many young men and women who faced years of unemployment and many who, sadly, spent too many years serving at Her Majesty’s pleasure, as a direct consequence of decisions that were made about our economy at that time.
Andrew George
May I make this point about the ideologically driven element of the debate? I strongly endorse an element of it. There is a welcome on the Government Benches, and even on the Opposition Benches, for elements of the Finance Bill and the Budget that preceded it. I am thinking of the rise and ultimately the further ratcheting up of the personal tax allowance, of the triple lock that will ensure that pensioners get a decent annual pension increase and of the closing of the tax loophole that has existed for many years.
The loophole was created by Labour’s reduction of capital gains tax to 18%. That has now been increased to just 28%, and we will certainly have an opportunity to debate that issue in the coming weeks. It was an important contribution. Furthermore, a banking levy has been introduced. It is important that the sector that dropped us into the mess should make a significant contribution towards helping us get out of it; I would argue that at this moment its contribution is still not sufficiently significant.
The hon. Member for North Durham’s last comments were about public sector pay. In the Budget, we have been seeking to protect the lowest-paid in the public sector.
Andrew George
Just let me finish my sentence. When I have made this point, I will give way to the hon. Member for Stretford and Urmston (Kate Green).
I welcome annex A of the Red Book and congratulate those on the Treasury Benches on introducing it. For the first time, it provides an impact assessment and evidence of the kind that Labour Members must accept that they did not provide in the past. However, I still do not think that it is enough—it is too superficial. I have asked a large number of questions of the Chancellor of the Exchequer, as hon. Members will know, because I believe that it is important that we understand a great deal more about the impact of the VAT rise on low-income households, charities, businesses and others.