Catherine’s article, published on the New Statesman website, ahead of the Opposition Day debate on the cost of living in the Commons (27th November). You can also read it here: http://www.newstatesman.com/politics/2013/11/tories-remain-denial-about-living-standards-crisis
The Tories remain in denial about the living standards crisis
Next week’s Autumn Statement provides Cameron and Osborne with the perfect opportunity to act – but will it be more of the same for the privileged few?
Last month, I visited a primary care centre in my constituency to hear more about the challenges facing those working in general practice. In the face of ever increasing demands for their services, stretched budgets and the ongoing upheaval within the NHS, these challenges are many and growing. But while well aware that food banks across the north east are giving out seven times more in emergency food parcels than this time last year, I was still disturbed to learn on my visit that, on an almost daily basis, the GPs and their support staff are giving patients the bus fare to get to the nearest food bank, from their own pockets.
No doubt the Prime Minister would welcome this as the perfect example of the ‘Big Society’ in action. He would possibly go so far to suggest that it’s saving the taxpayer money in the long-term as patients able to obtain a decent square meal are less likely to need to see their doctor so often. But I believe this appalling state of affairs is a sad reflection of the cost of living crisis facing millions of hard-pressed families and individuals up and down the country under David Cameron.
While out-of-touch Tory ministers might like to kid themselves that the threefold national increase in food bank usage in the last 12 months is a result of posters in local job centres – or because “they are not best able to manage their finances” – those of us in the real world know that increasing numbers of people now turning to food banks for help are in work but still unable to meet the basic cost of living.
And is it any wonder, when for 40 out of the 41 months that David Cameron has been in Downing Street, the cost of living has risen faster than wages? The stark reality is that average earnings have fallen in real terms in every region and nation of the country on this government’s watch, while the cost of family essentials continues to go up and up. Gas and electricity bills have risen by an average of £300 a year, and the cost of nursery places by 30% under David Cameron. Households are spending 12% more on food bills than in 2007, despite actually purchasing 4.2% less food.
The economic recovery which finally appears to be underway after three years of damaging flatlining is clearly yet to touch the lives of millions of households across Britain. That’s why Labour has called an Opposition Day debate in the Commons this afternoon, focusing on the cost of living crisis and the government’s economic failure. We believe that any economic recovery should deliver rising living standards for all, and not just for the Prime Minister and Chancellor’s friends at the top. We need a recovery that is balanced, that is built to last and – absolutely critically – benefits every corner and community of this country.
Yet what we have is a government with ministers who continue to bury their heads in the sand and remain totally oblivious to the cost of living crisis that millions are experiencing. Or worse, deny what they hear, and see, with their own eyes and ears.
It’s time that our complacent Prime Minister and Chancellor got a grip of this issue, by finally taking action to tackle the cost of living crisis now facing too many – for a start by implementing our proposed energy price freeze that would benefit 27 million households and 2.4 million businesses, and by extending the previous Labour government’s 15 hours of free childcare for three and four-year-olds to 25 hours per week for working households to help make work pay.
Next week’s Autumn Statement provides Cameron and Osborne with the perfect opportunity to take heed and do something – but will they stand up for the many struggling to make ends meet, or will it be more of the same for the privileged few?
And this is the full transcript of Catherine’s response to the debate in the Commons, in her role as Shadow Economic Secretary to the Treasury:
Catherine McKinnell (Newcastle upon Tyne North) (Lab): The most recent GDP figures suggest that our economy might finally have started to turn a corner, which everybody, especially the Opposition, welcomes. We have had three years of flatlining growth under this Government. How much damage has that economic stagnation done? How long will it take the country, families and businesses to recover from a starting point that is so much lower than was promised back in 2010?
The Opposition motion states that
“growth of 1.5% is needed in every quarter between now and May 2015”
just to catch up on the ground that has been lost. Stagnation and no-to-low growth means that the Chancellor’s much hailed deficit reduction plan has been a failure, with borrowing rising—the coalition is set to borrow £200 billion more than it planned in autumn 2010. Will we get an explanation for that? That failure—the slowest recovery in 100 years—means that the Prime Minister and the Chancellor do not have a chance of meeting their promises to balance the books by 2015.
Mr Stewart Jackson rose—
Catherine McKinnell: I would be interested if the hon. Gentleman answered a question. Does erasing those promises from the Conservative party website mean that people will forget they were made?
Mr Jackson: The hon. Lady was doing so well. She is airbrushing the previous Labour Government’s record. If Labour is elected in 2015 and the economy is growing, does she recommend running a structural deficit, as the previous Labour Government did?
Catherine McKinnell: It is time for Government Members to take responsibility for the economy: three wasted years, lost opportunities and the loss of jobs and growth as a result of this Government’s failing economic policies.
Mr Newmark: It is an inconvenient truth for the hon. Lady that in the previous Parliament unemployment in her constituency went up by a whopping 88%. Under this Government, it has gone down 12%.
Catherine McKinnell: There are some inconvenient truths for Government Members. Personal debt has increased on their watch by 33% in my constituency and by a significant number in the hon. Gentleman’s constituency.
Hon. Members are keen to refer to the previous Government’s borrowing figures. As of last week, the coalition Government have borrowed more in three years than the Labour Government did in 13 years of government—that is the reality. On every economic test, and on the test the Prime Minister and the Chancellor set for themselves, they have failed palpably. It is clear from the many contributions to the debate that the recovery, which appears to be taking place, has yet to touch the lives of millions of people, contrary to the impression given by Government Members. My concern is that things will get a whole lot worse before people see any signs of them getting better.
Any economic recovery needs to deliver rising standards for all, not just for the Prime Minister, the Chancellor and their friends at the top. We need a recovery that is balanced and built to last. Critically, it needs to benefit every corner and community in the country. Instead, the Government, and the Government Members who support them, continue to bury their heads in the sand. They remain oblivious to the living crisis experienced by millions of families, or, worse, they deny what they hear and see with their own eyes. It is the same old Tory party, aided and abetted by the Liberal Democrats. They are totally out of touch with the reality of life for so many in Britain today who find themselves increasingly out of pocket and increasingly in debt.
Kwasi Kwarteng: I will ask the hon. Lady the same question I asked her colleague, the hon. Member for Nottingham East (Chris Leslie). What was the absolute level of the deficit in 2010 when this Government took over?
Catherine McKinnell: The hon. Gentleman is obsessed with statistics and keen to detract from the truth, which is that it is this Government who are borrowing £200 billion more than they planned. They have failed to reduce the deficit in the past three years to even a fraction of what they promised back in 2010. It is his Government’s plans that have failed. He should wake up to that fact.
I go back to the people who are paying the price. There is the single dad in my constituency who, to pay for the bedroom tax for the room he keeps for his children to stay in, eats barely anything all week and saves the money to buy food for his children at the weekend. The Chancellor would probably call that thrift. There is the GP and his staff who hand out, from their own pockets, the money for patients to get the bus to the local food bank. The Prime Minister would probably call that the big society in action. There is the branch of a well known bank on the outskirts of Newcastle, where 80% of customers have only the most basic bank account. It has young mums coming in on a daily basis in tears because they cannot manage to feed their children and heat their homes. Citizens advice bureaux across the country saw a 78% increase in the number of people inquiring about food banks between February and June this year alone—little wonder, when gas and electricity bills have risen by an average of £300 a year on the Prime Minister’s watch. Households are spending 12% more on food bills than they were in 2007, despite purchasing 4.2% less food, as my hon. Friend the Member for Inverclyde (Mr McKenzie) pointed out.
Let us cast our minds back briefly to 2010 and the Conservatives’ general election manifesto. They have attempted to wipe many previous pledges from their website and from the public’s memory, but I am afraid they cannot hide the blatant pledges printed in their manifesto. On page 8 it stated:
“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”
What about the Liberal Democrats? We know that their manifesto needs to be taken with a very large handful of salt. They stated:
“Liberal Democrats want to make the tax and benefits system fair, so that everyone, be they young or old, can afford to get by.”
They said that Britain was
“one of the most unequal societies in the developed world, where ordinary people struggle to make ends meet while the richest benefit from tax breaks.”
Well, we know who voted through the biggest tax break for top earners as soon as they got into power.
On the back of those election promises, what is the coalition’s record on living standards three and a half years into government? Under this Government, this Prime Minister, this Chancellor, this Deputy Prime Minister and this Chief Secretary, who is not here today, prices have risen faster than wages for 40 of the last 41 months. According to a report published by the TUC over the summer, of all the jobs created since June 2010, four out of five—80%—have been in low-paid industries. The stark reality is that average earnings have fallen in every region and nation of the UK on this Government’s watch. Indeed, the Prime Minister already has the worst record on living standards—none of his predecessors comes close to matching his singular failure on the issue. He is a record-breaking Prime Minister with a record-breaking Chancellor, as my hon. Friend the Member for Nottingham East (Chris Leslie) put it so eloquently.
Let us just remind ourselves, particularly the Liberal Democrat Members previously so concerned about ordinary people struggling
“to make ends meet while the richest benefit from tax breaks”,
when the one blip in the Prime Minister’s dismal 40-month record was. In which one month of the last 41 did we see average wages rise faster than prices? Yes, it was April this year, when financial services firms deferred paying up to £1.7 billion in bonuses so that their staff could benefit from the 50p tax cut. At a time when average earnings for working people have fallen by £1,600 in real terms since May 2010, we have a Government who believed that it was right to prioritise giving a whopping tax cut to the highest earners in the country. At a time when almost 1 million young people are out of work, when long-term unemployment remains dangerously high and when the number of part-time workers wanting full-time hours stands at a record 1.5 million—another record for this Government—we have a Chancellor devoting his time and attention to taking legal action against the EU’s attempts to limit bankers’ bonuses to just one year’s salary. At a time when people are facing a genuine cost of living crisis, in the face of ever-increasing household bills and diminishing earnings, we have a Prime Minister who seems happy to sit on his hands and do nothing.
Only today, figures released by the Money Advice Service show that nearly 9 million people across the UK are living with serious debt problems. Staggeringly, 18% of Britons—8.8 million people—consider themselves to have “serious” financial issues. Many hon. Friends raised those issues on behalf of their constituents, including my hon. Friends the Members for Makerfield (Yvonne Fovargue), for City of Durham (Roberta Blackman-Woods) and for Inverclyde, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) and my hon. Friends the Members for Cardiff South and Penarth (Stephen Doughty), for South Shields (Mrs Lewell-Buck), for West Ham (Lyn Brown) and for Edinburgh East (Sheila Gilmore). We heard none of that concern from the Government Benches. We have a Prime Minister who is clearly happy to let ordinary people pay the price for his economic failure and that of his Chancellor. They are the people who, in the words of my right hon. Friend the Leader of the Opposition, the Prime Minister will never meet and whose lives he will never understand.
What could the Government be doing about this crisis? It is all about priorities. With the cold winter months now upon us, it is time to stand up for hard-pressed families by supporting our energy prize freeze. It is time to do something about the staggering rise in the cost of child care—up 30% under this Government—which is preventing people from getting to work. It is time to do something about housing and to ensure that as well as helping people to buy we help people to build. We also need to do something about unemployment and bring forward the compulsory jobs guarantee.
It is clear that the Government’s policies have failed on their own terms. On living standards, economic growth and the deficit, the Government have completely failed to meet the goals they set themselves in 2010. The Opposition believe that there are specific, urgent and costed measures that the Chancellor could take in the autumn statement next week to help hard-pressed families and small businesses. The Opposition call on the Government and the Chancellor to wake up to reality and do just that. I recommend our motion to the House.