I welcome the opportunity to open the third day’s debate on the Budget on behalf of the official Opposition. I will focus my remarks on two of the most important long-term challenges that we face as a country: devolution and housing. First, however, I want to make a number of points about the Budget as a whole.
Last week, the Chancellor presented his Budget as a Budget for working people. Regrettably, the grim reality is that millions of hard-working families will be worse off as a result of this Budget. The Chancellor gave with one hand, but took away so much more with the other. Of course, we welcome action to tackle low pay. The minimum wage was, after all, a Labour policy and one
of the proudest achievements of the previous Labour Government. We first introduced it in the face of fierce Tory opposition. More recently, we campaigned to increase it. Let us be clear about what the Chancellor has actually done. He has not introduced a national living wage; he has attempted to rebrand the national minimum wage. Admittedly he has increased it, but at the same time he has decimated tax credits, leaving 3.3 million families worse off and 500,000 families without any tax credits at all.
The independent Institute for Fiscal Studies says that the Chancellor’s claim that the increase in the minimum wage will compensate working people for the changes to tax credits is “arithmetically impossible”. For example, a working couple in full-time employment earning the minimum wage who have two children will earn £1,500 more, but will lose £2,200 as a result of the cuts to tax credits. Far from making work pay, the IFS says that the Government’s changes would
“reduce the incentive for the first earner in a family to enter work”.
In effect, what the Chancellor has done is introduce a work penalty.
As my hon. Friend the shadow Chancellor said last week, the Government are “pulling the rug from beneath people’s feet while higher wages are not yet available.”—[Official Report, 9 July 2015; Vol. 598, c. 473.]
Young children in the families affected are likely to grow up to become poor adults, which is not only wrong and unfair, but will cost society more in the longer term. Yet again, this Government are hitting women the hardest, with women losing twice as much as men. Yet again, too, this Government are putting more of the burden of clearing the deficit on to the shoulders of young people. The Government seem absolutely determined to deepen and entrench the inequality in our country and the inequality between generations.