Taxation: Families

Baroness Prosser Excerpts

Thursday 17th January 2013 Lords Chamber

[Baroness Prosser]

My Lords, I join others in thanking the noble Baroness, Lady Hollis, for tabling this debate. I particularly thank her for her excellent opening speech.

I will direct my remarks towards the situation of the working poor. Back in the 1980s, at the height of Margaret Thatcher’s Government’s attack on the funding of public services, a journalist whose name I have forgotten coined the phrase, “private wealth and public squalor”. Fast-forward 30 years, and we are facing the same situation, although somehow worse. It is worse because over that period the gap between rich and poor has grown exponentially, so that we now have private wealth, public squalor, and private poverty.

Downward pressure on wages has come about for a variety of reasons. First, there is the reduced ability of trade unions to maintain, on behalf of their members, wage levels which give workers a fair share of the financial cake, which in turn in the past has provided pressure on the labour market as a whole, lifting up the pay of those at the bottom end of the scale. Organised labour reduces and low-paid, unrepresented work opportunities increase: the balance shifts towards an inexorable decline overall. The continuing use of technological solutions, and the consequent reduction in workforce numbers, within certain sectors of the economy—together with the globalisation of huge swathes of manufacturing—have also played a major part in keeping down the costs of labour.

To add insult to injury, along come the Government with the bright idea that reducing people’s incomes even further will, first, somehow help to solve the debt crisis—I am not sure how taking away the ability of large swathes of the population to have enough money to spend, even on essentials, will put money in the Government’s coffers, but that may be another story—and, secondly, will encourage lazy scroungers to get out of bed in the morning, when in fact two-thirds of the people affected by these cuts are already in work.

Those affected most by the very wide-ranging changes and reductions to benefits are working parents with dependent children. What kind of Government decide to target the poorest in society—people struggling to keep their heads above water, balancing the payment of the electricity bill against the cost of the supermarket shop? Parents are having constantly to tell their children, “No, we can’t go to the football match” or, “No, we can’t go on holiday like your friends do”. Do Ministers have any idea how soul-destroying it is never to be away from the fear of not having a penny piece, and always having to make do and mend, although you are going out to work and trying your hardest? Do the Government seriously think that the children of those families, starved as they are of the opportunity to flourish and grow, are being given the start in life that will enable them to become tomorrow’s committed and fully rounded citizens?

Noble Lords should look at the array of changes taking place. Working families are being bombarded with requirements to reduce their expenditure and/or to increase the number of hours worked each week. How easy is it for a mother, for example, to find an extra eight hours’ work each week and what does that mean for childcare arrangements and costs? These households, which are at the bottom end of the income scale, lose out particularly badly by the use of the CPI for uprating purposes, from cash freezes to child benefit and working tax credit. When replying, can the Minister please not say that it is all right because of the changes to the tax system for lower earners? Many of these families will have had an income below the personal allowance anyway.

The demonisation of the recipients of welfare has been particularly upsetting. I firmly believe that the vast majority of individuals would much prefer to be able to earn sufficient so that they do not have to get involved with “the social”, as it is known. Most folk want financial independence and want their children to have a better life than they have had. There will of course always be a small minority—the workshy and the idle. That has always been an issue, but it must be kept in perspective. They are a tiny minority. We cannot have a low-wage economy and a social system which then blames the low-paid for their own misfortune.

Finally, I think that I am probably the only Member of this House who has spent a long time reliant on welfare benefits. My husband became paralysed at the age of 28, and I spent eight and a half years looking after him and my three young children. I can tell the House that relying on welfare is not a lifestyle choice. We were what is known as “the deserving poor” and were therefore treated with a measure of respect, and probably sympathy. I also had a supportive, although far from well-off, family. However, it should be borne in mind that welfare payments are calculated to leave no space in the personal budget, so that the smallest incident becomes a crisis: the lost school coat, the broken kettle or the worn-out bed linen. How are these things dealt with when there has been no opportunity to set money aside?

The reductions in value now being proposed to the weekly incomes of both the working poor and those who have fallen on hard times through ill health, et cetera, will indeed cause a crisis—and all the rhetoric will be that it is their own fault. We need a strategy for growth, with a well educated and trained workforce and high-quality employment opportunities. That is what will deal with the country’s debt and the deficit.