Sheila Gilmore
Main Page: Sheila Gilmore (Labour - Edinburgh East)Department Debates - View all Sheila Gilmore's debates with the HM Treasury
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Leslie
The trouble for the hon. Gentleman is that an awful lot of Conservative councils have metaphorically stuck two fingers up to the Secretary of State for Communities and Local Government and, indeed, the Chancellor by deciding to increase council tax because the Government’s approach to local government finance has squeezed services. Even Conservative councils and authorities are finding themselves in a position where they are raising council tax.
Sheila Gilmore (Edinburgh East) (Lab)
The Social Mobility and Child Poverty Commission has stated that the fiscal consolidation has been regressive. Does my hon. Friend think that that should be taken into account?
Mr Newmark
The Government have already reduced energy bills by £193 by removing the green levies imposed by the Leader of the Opposition and are ensuring that energy companies offer the lowest tariffs to customers, thereby reducing the cost of living.
The Government have frozen fuel duty for the longest period in more than 20 years, with pump prices 13p per litre lower than when Labour was in power. Indeed, the average motorist will save at least £170, the average van driver will save £340 and the average haulier will save £5,200 each year as a result, thereby reducing the cost of living.
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman and his party must be greatly relieved to be able to report an increase in GDP, given that in June 2010 the Office for Budget Responsibility was predicting that it would be 2.5%, 2.5% and 2.6% in the three years coming. So it must be a big relief to have at last turned the corner.
Mr Newmark
Yes, it is a big relief, but as anyone in business knows—I had been in business for 20 years before I came to this place—turning around a business, particularly in an economy that was as messed up as that created by the Labour Government, takes a while. Progress is not necessarily linear. What we do have is growth returning. That is recognised by the Governor of the Bank of England, the OECD and the International Monetary Fund.
Ian Swales
The hon. Gentleman has an excellent memory. I think that people will judge the council on how it is spending the money that it raises.
This Government have also scrapped Labour’s national insurance hike and, above all, implemented the Lib Dem policy of raising the tax threshold to £10,000.
Ian Swales
I am sorry; I have taken two interventions already.
We hear a lot from Labour about wages, but it is what ends up in people’s pay packets that really counts. When Labour left office, people on the minimum wage were paying a massive £35 a week in tax and national insurance. Since then, the minimum wage has gone up by £20 a week, but the national insurance bill for those people has gone down by £9 a week, with a further cut to come in April.
Ian Swales
I certainly agree with that. I wish that my area was as fortunate with employment, but my hon. Friend makes an excellent point. That is the direction we should be taking.
I helped to launch an event for the Living Wage Foundation two weeks ago. It has stated that it
“supports moves to increase the personal allowance for the low-paid”—
because they—
“could make the Living Wage easier to attain.”
The living wage is about net pay, not gross pay.
I have talked about tax and spend measures. I also mentioned interfering in industry. I welcome today’s announcement on payday lending, following an amendment tabled by a Lib Dem peer the other day. The Government have stepped in quickly to do something about the problem. We interfere in industry at our peril, however. The Opposition motion mentions an “energy price freeze”. I worked at a senior level in business, finance and industry for more than 25 years, five of which were spent working as an accountant in the electricity industry. I could scarcely believe Labour’s proposal for a price freeze. In three and a half years in this place, I have never heard a policy announcement so guaranteed to achieve the opposite effect to the one intended.
It has been obvious from the start that any business faced with having its prices fixed but its costs varying dramatically, as they do in the electricity industry, would have real problems. Prices would increase before the freeze and after it. Prices that had been frozen could not decrease if the costs reduced. Above all, less investment will take place, especially from new players. So what has happened since Labour’s announcement? We have seen huge price hikes, which I am sure include hedging just in case the public are stupid enough to elect a Labour Government.
Ian Swales
I have already given way and I am in my own time now. Two weeks ago, National Grid said that half of proposed investment in energy was now on hold because of political uncertainty. This week, RWE abandoned the Atlantic array. This is what is happening in the real world of business as a result of the irresponsible announcement from Labour. At Dod’s energy lunch a Cross-Bench peer described how this policy was disastrous for commercial confidence, and he is absolutely right.
As the hon. Member for Tamworth (Christopher Pincher) said, the irony is that the policy protects the big six. When I mentioned that before, the shadow Energy Secretary, the right hon. Member for Don Valley (Caroline Flint), said from a sedentary position that we were protecting the big six by challenging the policy, but that is not true. In my constituency, three new energy investors want to invest—two in fossil fuels and one in renewables. There are US, Japanese and Korean investors behind these projects, but the projects are now in danger because their bankers are wondering what on earth is going to happen to this country’s electricity industry. So this irresponsible announcement by Labour threatens investment and security of supply, and, above all, it will raise prices, both in the short term and the long term. So I urge the Opposition to withdraw the policy as soon as possible to avoid more damage to consumers and to the electricity industry.
We do need to do things about our energy future. One key thing that must happen is that we must have genuine competition, based on more players. The fact that pay levels are too high in many industries, including the electricity industry, is clear. However, at least this Government are taxing capital gains at a higher rate, taxing pension contributions at a much higher rate and taxing income at a rate 5% higher than under the previous Government.
A few weeks ago, the shadow Health Secretary made a point about Front Benchers of all parties—I think he was thinking partly of his own. He said that we now see policies developed by people who have been trained—this is about career politicians—to write press releases rubbishing the opposition. We can tell the lack of strategic thinking behind that announcement. The Opposition have shown that they know how to write headlines, but they do not understand business and finance. As always is the case, we cannot trust Labour with the economy.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I am grateful for the opportunity to speak in this important debate. Over the past few months, we have seen the spectre of the Chancellor and the Prime Minister on repeated occasions suggesting that everything is rosy and that hundreds of thousands of jobs are sloshing around. It is the old attitude of, “Crisis, what crisis?” Unfortunately, such a view is completely out of touch with the daily, lived experience of many of my constituents and thousands of others across Wales, who have seen one of the greatest falls in real average earnings—a staggering drop of £1,669, or 8%, since the general election, when this Government came to power. They see this Government as out of touch, patronising and complacent; they see a Government on the side of the rich, of millionaires and of banking and energy bosses, as we heard aptly demonstrated by the hon. Member for Redcar (Ian Swales). It is Labour Members who are on the side of the British people, with solutions such as capping the cost of credit and payday loans, and freezing energy prices. These real measures would help the real lives that many on the Treasury Bench seem to have little understanding of.
Sheila Gilmore
Does my hon. Friend share my incredulity that the price rises that the energy companies started to announce are being blamed on us because we announced our policy on an energy freeze?
Stephen Doughty
My hon. Friend is right to point out that the energy price scandal has been going on for some time, and that the Government have done nothing to deal with it.
I welcome any growth and any new jobs in the economy, and I hope that any positive movement in the economy will help people in my area address the massive drop in earnings since this Government came to power. However, I caution that illusions are simply not good enough. The Government repeatedly fail to answer questions about how many new jobs are part-time and, of those, how many are on zero-hours contracts. They also do not say in what sectors those jobs are being created. The truth is that half the new jobs are in low-paid sectors, and that the minimum wage is not always being enforced.
When I hear the Chancellor crowing about recovery, I am always tempted to ask, whose recovery and what sort of recovery. Is it a recovery benefiting my constituents who are struggling to find well-paid jobs, to pay those soaring energy bills and to put food on the table for their children? Is it helping those who are struggling to cope with the bedroom tax? One well-known local Liberal Democrat member in Cardiff recently said in a tweet that she knew that it was difficult for some people, yet many Liberal Democrats proudly voted for the bedroom tax in this House the other night. It is not just difficult but increasingly impossible for many families across my constituency.
Let me share with the House three stories that I have come across recently. First—I hope that the hon. Member for Redcar is listening—one of my constituents came to me saying that his monthly direct debit to npower had been increased from £197 to £254 just after he had been reimbursed an overpayment. I contacted npower and found that that was on top of the price rise of 10.4%. For him, the rise is 28.9%, which is extraordinary. That is the sort of issue that is affecting people in the country. How will that man make ends meet over the next few months? [Interruption.] The hon. Member for Redcar is chuntering from a sedentary position. As he does not seem to be interested, perhaps he would like to intervene and respond to that sort of example.
Alec Shelbrooke (Elmet and Rothwell) (Con)
This is indeed a very important debate. We can hear stories from any part of the House about the struggles that our constituents are going through. Indeed, constituents who one might deem to be on very good salaries are struggling, too. Whether someone is on a good salary or unemployed, if they are on a fixed income—including even those on good salaries who have had them frozen—a rise in the cost of living has a direct impact on their lives.
We must recognise the things we have to try to do to change the situation for the long term. Unemployment in my constituency has reduced by 32% since the Government came to power. We should welcome not only that reduction but the transfer of jobs from the public to the private sector, as quite a few small industrial bases in my constituency are supplying those jobs. As the economy is now turning a corner, growth in the economy and in the productivity of companies will allow wages to go up in line. What I do not support is a false rise in wages.
The minimum wage is very important; it ensures that people are not exploited, and as the Prime Minister outlined earlier today, if companies are found to have broken the minimum wage legislation, they will be fined a huge amount of money. We hope that will crack down on some of the more ruthless employers. We talk about a living wage—we would all hope to achieve a living wage—but it should not be specified in statute. By increasing wages falsely—in London, by 40%—we ensure that a living wage is always just out of reach.
Sheila Gilmore
I wonder whether the hon. Gentleman remembers that exactly the same arguments were advanced, mainly by members of his party, before the minimum wage was introduced. We were told that jobs would be lost—that it would be a terrible thing—but those predictions did not come true, so perhaps the hon. Gentleman is exaggerating his case.
Alec Shelbrooke
I am most grateful for the hon. Lady’s intervention because she makes the point that I wanted to make. I did not say that the living wage would cost jobs; I said that it would inflate wages. Many would argue that a lot of people already earn the living wage, and that a statutory living wage would benefit all those underneath. But we are all well aware how many people, especially our friends in the unions, would demand a 40% pay rise if it was to go through.
Ultimately, there is nothing to be gained by inflating wages artificially, as we did in the 1970s. I remember my parents telling me that when they were teachers in the 1970s, they got a 25% pay rise when Harold Wilson came to power in 1975 but it was worthless the following year. The goal is always slightly out of reach. We must tackle the cost of living, and ensure that people’s real wages and real net income can advance to meet it.
Sheila Gilmore (Edinburgh East) (Lab)
I am not at all surprised that the Government Members who have spoken in this debate on the cost of living—all of whom, interestingly, are men, with the exception of the Minister who will respond—seem so delighted and thrilled that they can come here and talk about a recovery, because something very strange has happened over the past three and a half years.
In June 2010, the Office for Budget Responsibility made its first pre-Budget forecast before the emergency Budget that we were rushed into because we had to do something about the economy. It predicted that GDP growth would be 2.1% in 2010-11, 2.6% in 2011-12, 2.9% in 2012-13 and 2.7% in 2013-14. It was assumed that inflation would be at its highest at 4.1%. I seem to remember that it hit 5.2% or thereabouts. Of course, the higher-than-predicted inflation was the only reason why the Government were able to boast about record increases in pensions.
Something happened between June 2010 and now. The thing that happened was the Government’s economic policy. Instead of improving the economy over the past two and a half years—
Sheila Gilmore
Time is very limited, so I will not take any interventions. During that period, economic growth has gone backwards and we have found ourselves in a position of stagnation—[Interruption.]
Mr Speaker
Order. The hon. Member for Braintree (Mr Newmark) should calm down, relax, and lower the temperature. He should not get too excited; there is no need.
Sheila Gilmore
That stagnation is why so many of our constituents are suffering so much. I was astonished by some of the comments made this afternoon. The hon. Member for Harlow (Robert Halfon) managed to suggest that unemployment was not down to the recession but down to the entire period of the Labour Government. In fact, when the global financial crisis hit in 2008, unemployment was a little over 5% at 1.6 million, but by the end of 2009 it had risen by 1 million to 2.5 million. The cause of that rising unemployment, so suddenly and over such a short period, was the economic recession, not the Labour Government. Such rewriting of history is constantly going on. Recently, however, that rewriting seems not just to be about what caused the recession, but tries to read back to the Labour Government and put things into that period that were not the case.
The stock answer from the Government on what they have done to help people in the cost of living crisis is to talk about the increase in the tax threshold. The problem with that policy is that it unduly helps those who are already better off, and does not help those with the lowest income levels in our communities. Two thirds of the billions of pounds that have been spent on raising the tax threshold has gone to people in the top half of the income scale, because the policy benefits people on higher incomes as much—if not more—as those on lower incomes.
What has been the quid pro quo? There have been cuts to benefit payments and tax credits, which has cancelled out the rise in the tax threshold for those at the lower end of the income scale. Not only have those paying no tax not benefited, but those at the bottom end who have apparently benefited a little have had that cancelled out. That is what we must all remember. Those with the lowest earnings have not benefited from the policy. Both Government parties constantly say that the tax threshold is being raised because they want to help the lowest earners. In fact, that policy has not benefited the lowest earners, because in order to pay for it—it is very expensive—there have been constant cuts to people’s benefits.
At the extreme end, those who say there has been no change should look around their towns and cities. I have never seen so many quick lenders, payday lenders, and companies such as BrightHouse spring up in such a short period. It was not happening before. Food banks are new in my lifetime—they were something I read about in the history books of the 1930s. One of the Prime Minister’s favourite statements about food banks is, “But usage of food banks went up tenfold under a Labour Government.” The problem with that arithmetic is that 10 times a very small number is still a very small number—from 4,000 in 2005 when the Trussell Trust started up, to 40,000 in 2010. Last year, that figure rose to 347,000, and in the first six months of this year, it has risen to 350,000. That very big number is down to the policies of this Government.
Nicky Morgan
I am not going to give way to the hon. Lady, because she did not give way to anyone during her speech.
My hon. Friends the Members for Elmet and Rothwell (Alec Shelbrooke) and for Bedford (Richard Fuller) talked about work being the key to recovery, the need to create more jobs and making work pay, which is a critical part of our welfare reforms.
We heard from the hon. Member for Makerfield (Yvonne Fovargue), who talked about breaking the stranglehold of the big six. It was the last Labour Government who left us with the big six; we started with more and ended up with six.
I listened carefully to the speeches of the hon. Members for Dundee East (Stewart Hosie) and for Swansea West (Geraint Davies), of the right hon. Member for Oldham West and Royton (Mr Meacher), and of the hon. Members for Edinburgh East (Sheila Gilmore), for West Ham (Lyn Brown) and for South Shields (Mrs Lewell-Buck). What struck me most—I have referred to it before in this place—was the collective amnesia and total lack of understanding among Labour Members of how we ended up with the largest deficit since the second world war, which this Government have tackled by taking tough and difficult decisions.