In-work Poverty

Alison McGovern Excerpts

Wednesday 16th March 2022 Westminster Hall

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure, as ever, to serve under your chairship, Ms Rees.

I thank my hon. Friend the Member for Easington (Grahame Morris) for, and congratulate him on, securing this debate in Westminster Hall. The passionate contributions from all, particularly Opposition Members, have made it clear that this is a crucial discussion. At the heart of the debate is a simple truth: we all want to get on in life. Many of us know the feeling of receiving our first pay packet—that sense of finally releasing our parents from the stress of having to afford us and from that worry about money. There is a feeling of ease—not of great wealth, but of having enough—and that is what we want every person in our country to feel. With hard work, that should be available to all. The truth, however, as we heard in so many countless examples, is that that feeling is not available to everyone.

The hon. Member for Darlington (Peter Gibson) described the simple law of economics that a high number of vacancies increases wages. If that were the case, real wages ought to be shooting up, but they are not. The fact is that economics does not have simple laws—if it did, a lot of economists would be out of work.

Things do not work like that; they are much more problematic. This is the challenge: there is a rocketing number of vacancies, but people are not able to get on in life. That is the problem. The Government themselves know that that is the case. They know we have a problem. They commissioned the in-work progression review by Ruby McGregor-Smith.

[Peter Gibson]

Will the hon. Member give way?

[Alison McGovern]

As I mentioned the hon. Gentleman, I will give way to him.

[Peter Gibson]

As a former employer of a substantial number of people in a very competitive industry, I frequently had to recruit people when demand was greater than the supply available. It was often the case that employers such as myself had to increase wages to make those jobs attractive and to bring people in from other employers. I was speaking from my own experience. Having spoken to employers in my own constituency who have vacancies, I know that they too are increasing their wages to attract people.

[Alison McGovern]

Perhaps the hon. Member could ask those other employers why real wages are not increasing, because that is what the data tells us is happening. Unfortunately, it turns out that the rules of supply and demand are not so simple when an economy has as many problems as those experienced in Britain.

The Government themselves—the hon. Member’s own Government—know that this is a problem. They know that people are stuck in low pay, because they got Ruby McGregor-Smith to investigate and ask why people are simply not able to get on in life, earn a better pay packet and look after their family. She found that there were myriad issues with the cost of childcare and transport, and that people are unable to get the right skills to move on and move up. In certain professions, including care, a culture of low pay means that people are not able to move on and get a well-paid job to look after themselves and their family.

Last February, the Secretary of State told me that she was the reason that the response to Ruby McGregor-Smith’s report was being held up. My first question for the Minister is: when will the Government respond to that report? When will practical steps be taken to help working people get better pay? As the review found, there are myriad reasons why it is not a simple matter of supply and demand. It also showed that single parents have only so many hours in a day, and that if someone lives in a town whose bus service is so chronically bad that it limits their job choices, it is not their fault that they cannot get a better paid job. We need the Government to reply to that report.

My second question to the Minister is time-sensitive. Working people are facing a national insurance rise. If ever there were a time for such a tax rise, it is not now. People are dealing with truly horrific increases in energy bills and other costs. The Government really must rethink this. I want to quote an organisation that has spoken on this issue and on the underlying reason why this tax increase on workers is being brough about. It said:

“There is a large, unjustified and problematic bias against employment and labour incomes”.

That quote comes not from Marxism Today, but from the Institute for Fiscal Studies. The Government must rethink their whole approach to working people and how we make sure that people have decent pay.

To conclude, I want to come back to the point made by the hon. Member for Darlington about the iron law. As I have said to him on several occasions, it is not a matter of simple supply and demand. We only need to look around the economy today in Britain to realise that we can have rocketing vacancies while real pay does not go up. That is what is happening now. I ask myself what could possibly have gone wrong. The economics textbooks say it should work. What could have possibly gotten in the way of working people and a decent income?

Since 2010, the Tories have done the following: presided over a massive increase in zero and short-hours contracts; overseen a pandemic of low pay in key professions such as social care, which has driven chronic staff shortages; put charges on employment tribunals, so that working people find it much harder to get their rights confirmed; put roadblocks and bans in the way of trade unions, so that organising is harder; got rid of Unionlearn, which helped many working people get on; and overseen a labour market with a skills crisis and in which 20% of people have to work below their skill level, making it impossible for them to get on.

Rishi Sunak has put taxes up more times in two years than Gordon Brown did in 10 years, and he is landing working people with a devastating tax rise at the worst possible time. We have seen child poverty rise and food bank use explode, and 1 million experienced destitution in 2019. That is the problem. It has been a decade of doom for people trying to get on in life—a Labour Government is required.

--- Later in debate ---

[David Rutley]

I understand the hon. Gentleman’s point, but as a member of the Work and Pensions Committee he will also realise that we are experiencing record levels of fraud, and we are absolutely determined to bear down on that. We need to get the balance right, because it is taxpayers’ money that we are talking about.

[Alison McGovern]

Just to remind the Minister, when will the Government respond to the in-work progression report?

[David Rutley]

Of course, we recognise that we need to do more on in-work progression. The hon. Member is right to highlight that and we will respond shortly, and the response will be important. We are already taking action in this area, and I did not focus on that today because it was focused on in a previous debate. The hon. Member for North Ayrshire and Arran (Patricia Gibson) wanted to know what we were doing differently on progression, and I confirmed then and confirm now that we are working to put in place progression champions across the country who will make connections between employers, local authorities and skills providers and help more people to progress in work, which all of us across this Chamber want to achieve.

I believe passionately that we need to help people to see the opportunities before them and realise their potential. The plan for jobs helps people into work and also provides lots of mechanisms to enable people to progress in work. The progression work coaches will be a vital tool to help with that agenda. We know there is more to be done, and we are working hard to deliver on it.