The Cost of Living

Mr. Mark Field (Cities of London and Westminster) (Con): Having so recently heard the sermon from the heart of Devon, I almost feel a little guilty, as an urban Member, for saying a few words. I appreciate that the Minister’s constituency contains both rural and urban areas, and I hope that she has taken on board the strength of feeling about fuel duty and the cost of living for many rural constituents.

The issue of the cost of living has not just come to the fore in the past few months. It has made the front pages of newspapers and been the lead headline in many news bulletins in only the past six to nine months, but the increasing cost of living has been a fact of life in London for some time. It was one of the main reasons why we had the largest swing in the country at the last general election.

I share the alarm of many of my hon. Friends at the complacency of the Government, as shown in the speeches by the Minister and by the hon. Member for Edinburgh, South (Nigel Griffiths). This Government were happy to take undue credit when things were going well for the economy, but over the past 12 months they have argued that the problems are due to global causes. There are some global issues, and it would be wrong to deny that entirely, but the public have been so hostile because the Government sought to claim that the days of boom and bust were gone and to take credit for the economy being in such an apparently strong position.

I confess that I used to sigh with depression whenever the then Chancellor of the Exchequer—now Prime Minister—and other members of the Treasury team would compare our economic performance with that of France, Germany or other G7 countries. The reality of the global world is that the competition we face is from India and China, those two economic superpowers of the 21st century. With 2.5 billion people, they will make far more important competitors than many European countries, and if we do not learn how to adapt our economy—as we evidently have not learned over the past decade—we will all suffer.

One of the biggest issues connected with the cost of living is the high levels of income tax paid by the poorest in our communities. The very fact that people start paying income tax when they earn barely £105 a week is a nightmare. It is an especial problem in London and the south-east, where even people doing the worst-paid, part-time jobs pay income tax. The Government will no doubt point out that tax credits make a difference, but the hon. Member for Northampton, North (Ms Keeble) was very complacent. She gave undue credit to the implementation of the minimum wage. It has made a difference to many of the less well-off in our society, but there is a price to pay for that, and we are beginning to pay for it as the economy slows down.

In London, there is a thriving—indeed, an over-thriving—black economy. We rely on many thousands of immigrants being willing to earn relatively small amounts of money, often paid in cash. One of the biggest indictments of some of the broader aspects of this Government’s policy is that London now has the highest level of unemployment—a total inversion of the position in decades gone by. That is in part because too many Londoners lack the aptitude or the skills to hold down even the most basic jobs. They often live in social housing, which is very scarce, and that has the makings of some serious social unrest in the years ahead.

It is very rare in any bar or restaurant in my constituency—or, I suspect, any of the other 73 London constituencies—to be served by a British national. The servers will be Lithuanians or Poles, or from some other far-flung country, doing some of the relatively unskilled but important jobs in the hospitality sector. That has the makings of a disaster in the future, as unemployment rises. It will not be those who come here short term, to earn some money and learn the language, but our indigenous British who end up unemployed without the skills or aptitude to hold down a job.

Only last year, the Government made it clear that they reckon that this year we will be in hock to the tune of £43 billion. Add to that the £2.7 billion for the Prime Minister’s get-out-of-jail-free card for the 10p tax band, and the other £1 billion or so that will be paid for Manchester’s Metrolink, and I suspect that the outturn will be significantly worse, not least because the figure of £43 billion was put forward at a time when the economic clouds had not darkened in the way that they have over the past few months. There are some problematic times ahead.

Above all, I have had the opportunity to speak in this House on many occasions about the long-term problems, as I see them, in relation to private finance initiatives, public-private partnerships and all the off-balance sheet financing. They are a disaster in the making and the complacency of the hon. Member for Edinburgh, South was breathtaking. He can talk about the new hospitals and schools, but where is the money coming from? It has not been paid by this generation. It is effectively jam today to be paid for by generations to come. Our children and our grandchildren will foot the bill.

I would not tend to use the word “socialist”, as my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) does, but in many ways the genius of the idea from the Prime Minister’s point of view is that the room for manoeuvre will be limited for any future Conservative Government, just as, in many ways, the success of privatisation was irreversible once the Labour Government came in to play. Even railway privatisation, which happened in 1996, was not reversed in 12 months when the Labour Government came in to play. The same will happen, I fear, but in reverse, with the increase in public expenditure that is a requisite part of the PFI burden. That tax will have to be paid during the course of the next two decades and that will make the room for manoeuvre more limited.

I fear, in a way, that we might have an election in the next 18 to 24 months, because we will have to take on an economic inheritance that will lead to an appalling state of affairs.

Nigel Griffiths: Will the hon. Gentleman give way?

Mr. Field: No. The state of affairs will be far worse than it was in 1979—at least at that point we had had two and a half years of monetarism courtesy of the International Monetary Fund, after the Labour Government had to go cap in hand to the IMF. As we have already seen, there is little doubt that the Government seem set on effectively borrowing against the bank and they keep on borrowing and spending. There are only two ways in which they can possibly get out of the political hole in which they find themselves. One is to make borrowing grind to a halt and the other is to keep on spending to ensure that the cost of living problems to which we have referred will seem to be better for the purposes of an electorate who, they hope, will be grateful come election time.

This country has some severe problems ahead, I fear. The cost of living is an issue that the Government, in their arrogance and complacency, might have thought that they had put on the back burner over much of the past decade, but it will be the leading issue in relation to not only off-balance sheet financing but day-to-day costs. The real worry, which I hear when I speak to constituents who are perhaps slightly older than I am—in their late 40s and early 50s—is that they worry that the situation for their children will be a lot worse than it has been for them. They worry that they cannot pass the standard of living that they have come to take for granted for themselves on to a future generation. Outside wartime, I think that that is roughly the first time in history that that has happened. That would be the worst indictment of the Government’s complacency. The past decade was the best of times. So much should have been invested rather than frittered away. We will see, I fear, the disasters of those years in the decade or so to come.

I thank you, Mr. Deputy Speaker, for allowing me to make a brief contribution to the debate. It has been an important debate and I am sure that we will return to many of the themes, as we rightly should, in the months and years ahead.