Budget Resolutions and Economic Situation — House of Commons, 2016-03-22
Topic: Macroeconomics
Stella Judith Creasy (Labour, Centre-left): Let me begin by associating myself with the comments made by the hon. Member for South Dorset (Richard Drax) about the dreadful situation in Brussels. This debate has seemed to be more about astronomy than about the Budget, because we have all been talking about black holes. However, there is a clear analogy to be drawn. It will be remembered that Stephen Hawking famously described what he called the "black hole paradox": the idea that information could simply disappear into a black hole, never to be restored, although all matter contained information that was to be held in perpetuity. What a perfect analogy that is, given that, at this point, we simply have no information about how the Budget will stack up. Our colleagues in local government would rightly be horrified Where can we find information about the impact of the Budget? We can find it in our constituencies, and obtain it from the people whom we represent. In the time that I have been granted, I shall offer three areas of information on which we can judge the Chancellor’s work. The first is personal debt; the second is savings; and the third is productivity. Those are three areas in which this Budget signally fails the British people It is no accident that personal household debt in this country is going up and up. "Unprecedented" is the term that the Office for Budget Responsibility has used to describe the impact of the Chancellor’s plans on our constituents. Unsecured personal debt is set to reach 3% of GDP and to stay at that level. This is a black hole into which the Chancellor is asking the public to pour their own money to pay for his mistakes. Just how bad is the situation? The Bank of England tells us that people are now borrowing £1 billion a month in this country. In January alone, people put £500 million on their credit cards, and Aviva tells us that the average family debt is now £13,000, up £4,000 from last summer’s level Those on the Conservative Benches who are casual about credit miss the point. Not everyone is paying the same level of interest. Some are being charged excessive amounts for the debts that they are getting into to pay for the Chancellor’s mistakes. The hon. Member for South Dorset talked about people putting their houses up to fund their businesses, but many in our communities have long given up on the dream of home ownership as a result of the debt that they are now in. Wages have risen by just 4% in the last few years, but house prices have gone up by 76%. We know that every single penny matters. That is why it is such a problem that people face these levels of debt. This Chancellor is banking on the British habit of borrowing, but that is like putting Wayne Rooney in charge of a stock-take in a Nike shop This is not just about people’s borrowing habits. The fact is that we are now a nation that cannot save either. We are saving just 4% of our disposable income, which is half as much as we were saving four years ago. That is the lowest level of personal saving since 1963. Help to Save will do little for the 26 million people in our country who do not even have access to £1,000 for an emergency. On this Government’s watch, they have no rainy day money. Lifetime ISAs are out of reach for those people who have too much month at the end of their money We are seeing a situation of rising personal debt, and low or no savings, in which wages are now stalling. This has an impact on our public finances, because it leads to lower tax receipts. They are down £44 billion on the projections made in 2011. That is why we on this side of the House are angry when we see that those who will do well out of the Budget are those who can well afford to pay. We know that 80% of the gains from the Budget will go to those in the top half of the income distribution, and that half of that amount will go to the top 20%. Meanwhile, debt is locking our people out of opportunities.