I absolutely agree that separating the investment arm from the high street banking arm was one of the answers to the cause of the financial crash, but we have not had an update recently, and as I understand it, the banks are not co-operating on this issue—either with each other or with the regulators. It would therefore be very helpful to have on update on that from the Minister.
The financial sector heaped masses of debts on to ordinary people—our constituents. We do not want it to pay; we are not vengeful sorts in this House—we want it to reform so that what happened can never happen again. However, instead of learning from the mistakes that I accept the last Labour Government made—mistakes that would have enabled the Government to build a sustainable economy in which everyone can share—the Conservatives have imposed their ideological agenda on a terrible crisis in order to shrink the state and entrench inequality. That is why the UK’s recovery was delayed by three years after America’s and Germany’s, squandering billions of pounds in lost output. However, what matters now is what the Government will do about that. The problem is that the Government are not merely acting with intransigence; they are exacerbating the problems.
The measures in today’s Budget on tax credits may take debt off the Government books, but they heap it directly on to some of the most low-paid and the most vulnerable and those who can just about afford their mortgage, if they have one at all. Fourteen-hundred pounds for a working parent who lives on their own—that is what the Government have saved, but do they think that a lone parent can afford to lose £1,400 a year? He or she will take out credit cards to pay for their children’s school trip, clothes, the rent or the mortgage, and household debt will rise and rise. Turning maintenance grants into student loans, passing debt straight off the Government’s books on to those who can least afford it and who are the most adverse to debt—a generation of young people is being created that is not just accustomed to personal debt but reliant on it.
The Chancellor said today that he wanted to move away from an economy based on debt, but he made no mention of records of household debt. Indeed, some of the OBR’s forecasts were not mentioned by the Chancellor today—for example, the forecast that the ratio of total household debt to income will rise by 26% by 2020, most of it unsecured debt, an additional £48 billion of which the OBR expects to be added by 2020, compared with the March outlook. Overall household debt is now expected to reach 167% of household income by 2020, while household disposal income will be down by 1.5% in 2020, compared with the estimate at the previous Budget.
Private debt turned into public debt and put on to the backs of individuals, and the same mistakes being repeated: if this were a Budget genuinely designed to help working people, we would have seen measures to tackle the inherent issues in our economy. We would have seen genuine ambition on lifting wages, not mere rhetoric. We would have seen action to lower housing costs, commitments to increase social housing, and measures to militate against spiralling household debt. Instead, we have seen yet more tinkering around the edges, just like in every Budget in the last five years. Not only does this Budget hurt working people; it stores up yet more problems for the future that it will take at least a generation to fix.
6.43 pm