Wales: Cost of Living

Baroness Morgan of Ely Excerpts

Monday 2nd December 2013 Lords Chamber

Asked by

[Baroness Morgan of Ely]

To ask Her Majesty’s Government what assessment they have made of the impact of the current cost of living and changes to the welfare system on the people and economy of Wales.

[Baroness Morgan of Ely]

My Lords, when the banking crisis hit in 2008, we knew that someone, somewhere would pay a price, but even the most callous cynic would never have predicted that the people to be hardest hit would be the poorest people in Wales, while the richest people in Britain would be given a tax break and the bankers—the people who caused the crisis—would be receiving massive bonuses.

The cuts to the support mechanisms for the most vulnerable in our society and a compounding of the problem through the increases in the cost of living mean that there are, according to the Joseph Rowntree Foundation, almost 700,000 people living in poverty in Wales today. Let us just imagine what that looks like. Picture the Millennium Stadium full. Now picture it again and again and again. The number of people living in poverty in Wales today would be enough to fill the Millennium Stadium 10 times over. These are people living on a hand-to-mouth existence and in perpetual fear of how they will make the money last until the end of the week.

Research by Sheffield Hallam University found that Wales will lose more than £1 billion a year when all the benefit cuts are taken into account. That represents an average cut of £550 per year to every working age adult. That is 20% higher than the estimated average loss for Great Britain. Under benefit cuts, Wales is the hardest hit.

Of course, the point is that those cuts will not be equally distributed; they will be focused on those least able to cope with them. Merthyr Tydfil will be one of the areas hardest hit in the whole of Britain, where adults will lose an average of £722 per year. The biggest single loss of income will be felt by around 350,000 working-age benefit claimants and 330,000 families in receipt of tax credits as a result of increasing benefits in line with inflation by the consumer prices index rather than the retail prices index in future. This matters because the CPI inflation rate does not take into account rises in mortgages, rents and council tax. Guess what? These are going up, fairly significantly.

Just when you think it cannot get any worse you hear that the Government plan to reduce the income of 42,000 disabled people in Wales by removing their disability living allowance, costing them around £55 to £83 a week. This also means that their carers lose carer’s allowance. This will not mean that they cut down on little luxuries. There was never a latte in the local coffee shop for these people. They will have to decide between putting the heating on and feeding their children. Approximately 600,000 children live in Wales and of these around 200,000 are living in poverty—one in three of the total—according to a new report from Save the Children. Wales has the highest rate of child poverty of any nation in the UK. What does this mean in reality? It means that parents are skipping meals and are dreading Christmas as they know they cannot give the little treats that most of us can take for granted. Wales is hardest hit by child poverty.

Of course, times are tough and the deficit needs to be reduced but it is galling to hear these statistics while those who caused the crisis are earning more than ever. The European Banking Authority last week claimed that the total number of UK bankers earning more than £800,000 last year increased by 11% to more than 2,700 and their average pay rose by 43% to £1.67 million. The freezing of child benefit for three years will affect 370,000 families in Wales, each losing an average of £2.50 a week, with a total loss to Wales of £47 million in 2014. The cost of food, school buses and school uniforms has gone up, not down. Of course, we expect a Cabinet full of millionaires whose children attend private schools to be out of touch, but do they need to inflict further pain on those least able to bear it?

I want to touch briefly on the bedroom tax. This policy is ripping people away from their communities or forcing them into the hands of loan sharks. Again, Wales is hardest hit, with 46% of housing benefit recipients who live in social housing affected—40,000 households. Let me give a picture of what this policy means for Emma. Emma is 57 and lives alone in a three-bedroomed social housing property. She took tenancy of the property with her husband, who died two years ago. She has lived in the property for 25 years and brought her children up there. She looks after her grandchildren and is in receipt of jobseeker’s allowance of £71 a week. Once she has paid the bedroom tax of £18.50 a week, TV licence at £2.75, travel at £5, electricity at £10, telephone at £5, water at £8.50 and gas at £10 she is left with £11.25 a week for everything else. Emma is still making a valuable contribution to society but can anyone pay for all their food, clothes and other basic requirements for a civilised life from £11.25 a week? Wales is hardest hit by the bedroom tax.

Will the Minister give an assurance that if there are no smaller houses for people to move into in their area they will not be forced to pay the pernicious spare bedroom tax? Thank goodness that the Welsh Government are sensitive to the pressures of costs today. The cut in council tax benefit that the UK coalition has imposed—a new poll tax no less—has led the Welsh Government to put protection measures in place worth £22 million. It means that a quarter of a million poor families in Wales will at least not be hit by this coalition cut.

The people receiving welfare support want to work and do not recognise the miracle uplift in the economy that is supposedly occurring. Most couples with children are now required to work at least 24 hours a week, up from 16 hours, to qualify for working tax credits. These people have demonstrated that they are able and willing to work but they will lose up to £3,800 a year if they are unable to find additional hours. Wales has seen the largest increase in the UK of people who want to work more hours but cannot find them due to the coalition’s failed economic policies. Some 65,000 people in Wales are under-employed. Wales is hardest hit by under-employment.

The Pope was right and I am not a Catholic so I do not have to believe that he is always right. He claims that the trickle-down economic theory does not work. It does not work from the richest to the poorest and it does not work from the centre, London, to the periphery, Wales. However, it is not just the people living on welfare who are suffering. Wales has the highest proportion of workers of anywhere in the UK, around 300,000 people—the same as the population of Cardiff—earning less than the living wage. Minimum wage jobs account for close to 7% of jobs in Wales compared with the average of 5% across the UK. Labour local authorities are leading the way in paying all workers a living wage, with Cardiff one of the first to sign up. Wales is hardest hit by low pay.

Women are suffering disproportionately from the cuts and are more likely to be on low pay than men, with 28% on less than the living wage compared with 16% of men. What is being done to make sure that than women’s voices are heard? It is not just the poor who are suffering; the middle classes are as well. Real wages have fallen in 41 out of 42 weeks and Welsh workers are now £1,600 worse off, with an 8% fall in annual pay since the coalition came to power. Energy bills in Wales have risen by almost £300 since 2010. South Wales has the highest combined gas and electricity bills in Britain and north Wales the third highest. Wales is the hardest hit by energy bills.

Where are the answers from the Government? The coalition boasts of more than £2 billion of new infrastructure that will benefit Wales. However, virtually none of this will be evident in this Parliament. Electrification of the Great Western main line to Swansea will not start until 2015. The north Wales prison will not be completed until 2017 and major onsite work at Wylfa Newydd will not start until 2018. The poor of Wales need answers now, not in 2015. Can the Minister give some examples of what is being put in place now by the UK Government to give some kind of hope that jobs will be available for those desperate to come off welfare support?