Jobs and Growth

Steve Rotheram Excerpts

Thursday 17th May 2012 Commons Chamber

[Steve Rotheram (Liverpool, Walton) (Lab)]

I was supposed to attend an event hosted by Her Majesty this afternoon on her visit to Liverpool to celebrate her diamond jubilee, but I thought this debate was too important to miss—even for the Queen. I suspect that she was as unimpressed as were Labour Members on having to deliver a speech last week that was more to do with renewing coalition vows than it was about restoring the economic future of her country, which she serves so dutifully.

Liverpool Walton has seen a 165% rise in youth unemployment in the last 12 months, while total unemployment in the constituency has risen to more than 5,000, making the unemployment count the fifth highest in the country. I know that thousands of people in Walton, and millions around the country, are having conversations about their own lives. What are they thinking? They are thinking: “Do we have enough money for the weekly shop?”; “Do we have enough money to put petrol in the tank?”; “Who is going to tell the kids that they can’t do extra-curricular activities any more becausewe can’t afford the weekly subs?”. Some are even having to explain why their gas and electricity have been cut off.

The Government are simply wrong when what they do results in tearing families apart, providing tax breaks for the very rich and hitting the poorest families hardest. That is the human cost of Tory-Lib Dem policies. In Parliament, however, the Lib Dems still blindly walk through the voting Lobby with their Tory masters.

In the short time available, I would like to challenge a particular Tory-Lib Dem myth—the one suggesting that the only economic factor that relates to improvement in the living standards of lower-paid workers is raising the income tax threshold. Let me make it absolutely clear that that is not a bad ideal in itself, but here are the facts. I will paint an upbeat picture based on average earnings of £30,000, to which many of my constituents could only ever aspire. For the current financial year, 2012-13, the personal allowance is £8,105. That means that that anyone earning up to £30,000 will be £186 better off this year, making people better off by the grand total of an extra £15.50 in their pockets each month. In the next financial year, the personal allowance will rise to £9,205. That means people will be £346 a year better off, working out at a whopping £28.83 a month in people’s pockets.

That sounds great, and nobody is arguing that putting more money in pockets of the lower-paid is not a good thing. But—and there is a big “but”—there is a snag. The Liberal Democrats allowed the Tories to raise VAT to 20%, despite their manifesto pledge and the “VAT bombshell” posters that all Opposition Members probably remember. That 2.5% rise is estimated to cost each household with children an average of £450 a year.

The Institute for Fiscal Studies has estimated that by 2015—even if the tax income threshold has been lifted to £10,000—the Government’s tax and benefit reforms, as a package, will result in an average 4.2% reduction in the incomes of families with children during the current Parliament, which means that a couple with children will be £1,250 a year worse off by 2015. That is simply not acceptable, and it is not the full story. An extra £28 a month is clearly no recompense for such a disproportionate hit on families and their living standards.

The sober eye of history will view this Queen’s Speech more for what was not in it than for what was in it. There was nothing for the young unemployed, nothing for families struggling to get by, and nothing for the record number of women who are waiting and wanting to work. There was not even a single mention of the word “jobs”.