Mr Redwood’s interventions during the Opposition Day debate on Living Standards, 30 Nov 2011

Mr John Redwood (Wokingham) (Con) rose —

Mr Byrne (Birmingham Hodge Hill) (Lab): I shall give way in a moment.

The weakness in the jobs market is not abstract; it shows up in people’s pay packets. That is exactly what the Office for Budget Responsibility confirmed yesterday. Earnings, it says, are now set to fall throughout the rest of this Parliament. By 2016 wages will be no higher than they were in 2001—£1,400 below their pre-crash peak—yet prices are not falling; they are rising. Prices are going up over the course of this Parliament. Wages are falling and prices are rising. That double whammy is now hurting families all over this country.

Not long ago, the Governor of the Bank of England said that we in this country now confront the worst squeeze on living standards since the 1920s. Yesterday, the Institute for Fiscal Studies said that the squeeze was “unprecedented”. This is the biggest fall in household income since records began. With our nation’s family budgets under such pressure, we would have thought that the Government would step in to help. Not a bit of it. Instead, working families are being asked to pick up the pieces.

Mr Redwood: The right hon. Gentleman is making a very important point—that a big squeeze on living standards started under his party’s Government. It is continuing under the coalition. As the forecasts make clear, a big element in that is energy and fuel prices. Does he have any proposals that the Government could adopt to tackle that problem?

Mr Byrne: We do think that Government should be doing more in the energy market to help to bring down prices. The right hon. Gentleman will, I know, feel strongly about that, because of the 6,500 families in his constituency who are now seeing cuts in tax credits.

When wages are falling and prices are rising, people would expect the Government to do more to help—but what we now have is a budget set out yesterday that tightens the squeeze on working families. Last Friday the Deputy Prime Minister blustered his way through an interview on the radio and said, once again:
“We will not balance the books…on the backs of the poorest”.

That is an old line, and today it rings pretty hollow, because that is exactly what the Government are doing.

Yesterday, the Government rejected any new tax on bankers’ bonuses. Instead, it is children, women and working parents who are picking up the tab for the Government’s failure to get people back to work.

3.19 pm

Mr Redwood: Will my right hon. Friend confirm that it is his strong intention always to make sure that it is worth while working, and will he bring us up to date on the progress and timetable on that?

The Secretary of State for Work and Pensions (Mr Duncan Smith): I will indeed. The point I was making was that, as the universal credit comes forward in the next two years, it will do huge amounts to ensure that the incentives to return to work are improved. Secondly—and this relates to complaints from Opposition Members about the tax credit—it will reset the baseline so that those incentives will be increased and improved. Had we remained in the same position as the previous Government with their tax credits, there would be no way back for us now.


  1. Quietzaple
    December 5, 2011

    Wow! You mean there was a world wide recession from 2008?

    Who’d have thunk it?

    And our economy was growing when you Tories took over, but looks like that will falter? Nothing to do with your VAT rise then …

    And the inflation is all imported commodity inflation, the 2.5% VAT rise didn’t put prices up by 1.6% or so …?

  2. scottspeig
    December 6, 2011

    I would have thought that the prices rising has a direct relation to inflation/low interest rates.

    Surely tackling this would have a good outcome? Yet Osbourne has left the same people in charge that have failed a high percentage of the time in doing exactly what they are paid to do. Can I have their job? I don’t know what I’m talking about but even I understand the concept that low interest rates + printing money = inflation. Seems that the clowns at the MPC don’t even know that!

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