Families: Cost of Living

Baroness Pitkeathley Excerpts

Thursday 31st October 2013 Lords Chamber

[Baroness Pitkeathley (Lab)]

My Lords, I congratulate my noble friend on securing this debate and on her excellent speech setting out the problems relating to the rising cost of living. There is very little to add at this stage, and my two main points are the same ones that many noble Lords have put forward.

First, it is not so much cost of living that is the problem, but the level of income. When we go to Scandinavia, we find the cost of living there tremendously high, but it is not a major problem for them, because their incomes are adequate and sufficient. For most people, incomes in this country are both inadequate and static.

The other major issue which has been referred to several times today is that this is not a problem for everybody; we are definitely not all in this together. The disparity between those who are barely coping and those who seem to be more prosperous than ever is what rankles. This was encapsulated by what was overheard in a north London supermarket: “Darling, do we need parmesan for both houses?”. This is not the big society about which we were promised so much; this is not even a halfway decent society.

The Joseph Rowntree Foundation study, which has updated the minimum income standards first published in 2008 to this year, shows that the continuation of several trends has made it harder for households to make ends meet. Increasing prices, especially in childcare, social rents and public transport, as well as in food and energy, have pushed the minimum cost of living up faster than the average cost of living. These increases show no sign of abating, while cuts in benefit entitlements both to those in and out of work are going to continue. We must remember that so many benefit recipients—some surveys say the majority—are actually in work. These discrepancies will continue; the report concludes that the minimum amount that households without children need to earn rose about in line with inflation, but for families with children this amount continued to rise more steeply. The people for whom rising prices for food and fuel are the problem are those whose wages are static or whose benefits have been cut. These people literally have to make that decision which I never thought I would see again in our supposedly decent society: whether to have food or the means of keeping warm.

Nowhere is this more acute than with those who are disabled and living—through no fault of their own—on benefits. Let me give a specific example. Beverley Smith is 47 and severely disabled.

“She’s tetraplegic and largely bed-bound. Most of her £174-a-week benefits income goes straight into her social care costs, leaving her with £71 a week for food, bills and any other expenses. In April this dropped to £55 when she had to make up a £16.55-a-week housing benefit shortfall as a result of the bedroom tax … Because of her condition she needs the heating on constantly, all year round, at a cost of around £108 a month. Two years ago it was around £80 a month. Her basic income has barely gone up since then, but now, she says, her gas supplier thinks she should pay £120 a month. ‘I can’t afford it now. How am I going to pay that?’”.

She has had to ask for help from a charity and gets food parcels from a local food bank. I join with others in condemning the Minister’s contention that people go to food banks because they are there. Beverley’s friends help out occasionally but she says,

“I miss out meals. Some days I might have some … toast, and some porridge, and that’s it”.

Beverley is one of hundreds of thousands of vulnerable people—particularly older people, people with a disability or families of low income—who face that heat or eat dilemma. Imminent energy price rises, soaring food bills and shrinking or static incomes have played havoc with budgets that were already tight. Many people are really in fear of what the winter will bring.

When we consider the difficulties such individuals and families now face, we must not forget that they are not only strapped for cash at present but also building up poverty for the future since they can make no possible provision for pensions from their current budgets. As our population ages, this will become more of a problem. I sincerely hope that the Government’s consultation on the deferred costs for care will clarify the position about how much in the way of resources you can have and still be eligible for the scheme. If the cap stays at its current level, the coalition’s much trumpeted reforms of care will mean very little to those in need of it.

One more issue, mentioned by the right reverend Prelate, is the effect of rising prices, especially of fuel, on community groups. Our local village hall in Herefordshire, a community hub if ever there was one, is a centre of not just leisure activities but vital links and social contacts, especially for the older people in the village who without it would be socially isolated. It is struggling to pay its heating bills, maintain the building and keep the rates for the breakfasts and lunches it provides at an affordable level for those who need it so much. This story will be repeated throughout our country, in towns and cities as well as villages. We often do not value such community hubs until they disappear but we should try to remember how vital they are in maintaining links and contacts. Such organisations and charities always work as hard as they can to ensure their services continue, often via the personal sacrifice of the volunteers in charge. Helping them invest in fuel-efficient heating, insulation, solar panels and so on can be useful not only now but as insurance for the future. We simply cannot afford to let such services close. We should remember that although volunteers are very good value, they are not cost-free.

So what must we do about it? First, as we have heard, we must enable people to maximise their incomes. Better access to benefits and no bedroom tax would be a good start. We forget, in the stigmatising of benefit claimants which seems to be de rigueur now, that huge amounts of benefits actually go unclaimed. We must also strengthen the powers of the Low Pay Commission, and I endorse what others said about the living wage. Better childcare and support for carers would also enable many who wish to undertake paid work but are currently prevented from doing so.

Secondly, we must ensure that instead of focusing on fraud in the benefit system—which is a tiny amount of the whole budget—we focus on fraud of all kinds in the tax system to target the rich as well as the poor. We must also do better with controlling prices of food and fuel. I hope that the Minister will not just say that the Government take those issues seriously but indicate what action they are committed to in order to address those most pressing problems.