Wales: Cost of Living

Baroness Randerson Excerpts

Monday 2nd December 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, I thank the noble Baroness, Lady Morgan of Ely, for securing today’s debate on what I believe noble Lords all agree are important issues in Wales. I have listened carefully to noble Lords this evening and I recognise their concerns. As a Government, we understand that it is and remains a difficult time for low earners in particular, and for those on benefits.

The UK economy is recovering from the most damaging economic and financial crisis in generations. The Government appreciate that times are tough for families, so we have continued to take action to help with living standards. Last year, real household disposable income grew by 1.4%, which is the fastest growth for three years.

One of the key actions that we have taken to help hard-working people is to reduce the income tax burden by raising the threshold to £10,000. Many noble Lords have referred to low pay. This Government’s policies will take the 130,000 lowest-paid workers in Wales out of income tax altogether and will benefit 1.1 million taxpayers in Wales. That will make a real difference to low-income households. That increase in the personal allowance will be worth £705 per year for the typical taxpayer.

Noble Lords, including the noble Lord, Lord Wigley, have referred to energy prices and highlighted the importance of energy costs. We are in the process of restoring the neglected infrastructure that the coalition Government inherited from their Labour predecessor. Between 1997 and 2010, the average domestic gas bill doubled and the price of liquid fuels, on which many rural households in Wales rely, increased by more than 300%.

I must remind noble Lords that in 2000, there were 14 major energy suppliers. By 2010 there were just six. That took the bottom out of the market in terms of competition and its impact. However, we are reforming the energy market and encouraging investment in our energy infrastructure, which will help to stabilise consumer prices and reduce our exposure to fossil fuel price hikes in the longer term. We are committed to ensuring that all customers are on the lowest available tariff and we are making it easier to switch suppliers.

Many noble Lords referred to welfare reform. The picture of poverty that the noble Baroness, Lady Morgan, painted is one that has existed for far too long and has got steadily worse since the turn of the century. The picture of child poverty is one that is only too familiar to me. The situation has got steadily worse. The picture on GVA, which several noble Lords referred to, is also one where Wales, versus the rest of the UK, has steadily declined since the turn of the century. These are not issues that started with the coalition Government. I am grateful to those noble Lords who pointed out that the history of poverty in Wales did not start in May 2010.

I have also listened to concerns from noble Lords about government policy to reform the dependency on welfare in the UK. I must say I am greatly concerned that there are, for example, 200,000 people in Wales who could work but who have never worked. I am grateful to the noble Baroness, Lady Andrews, for pointing out that this is a third-generation problem in Wales, not something that started recently. Worklessness is a persistent problem in Wales and successive Governments have failed to reform the system. However, this Government are working tirelessly to improve the incentive to work, as work remains the best route out of poverty.

Already we are seeing people moving into work in order to accommodate the changes to their benefits. This is a positive step for Wales, its communities and the individuals who were previously locked into the benefit system. There is no fairness in retaining a welfare system that traps people in a life on benefits; it is not good for them, or their families, and it is certainly not good for Wales.

The noble Baroness, Lady Morgan of Drefelin, referred to the Shelter report. I point out that it is the responsibility of local authorities to ensure that all those people who are eligible, get discretionary housing payments. It is important that local authorities in Wales are pursuing that in the way that they should. I was concerned, however, to hear the noble Baroness say that social landlords—discretionary housing payments relate to social landlords—are not letting tenants know about discretionary housing payments in some cases. I will take that issue up with the Minister in the Welsh Government to ensure that that is undertaken. I will also write to the relevant body, Community Housing Cymru, about the issue.

In relation to comments of the noble Baroness, Lady Andrews, I am very happy to visit RCT Homes. The noble Baroness also asked me about libraries and local government. Those are entirely a devolved issue. Those issues are entirely the result of decisions by the Welsh Government, and it would be improper of me to make detailed comments on their policy and their decision.

I turn now to the spare room subsidy. We accept that some people will need extra help and the Government are continuing to support local authorities in Wales, in particular with the housing benefit reforms via discretionary housing payments. In Wales we have trebled the funding available and are now providing more than £7 million, with extra money for some rural communities. The noble Lord, Lord Bourne, made reference to council tax increases. Once again, those are, as he pointed out, the decision of the Labour Government in Wales. As a responsible Government, the coalition Government feel that we must be serious about welfare reform. We inherited a welfare system built to deal with a 1940s society and no longer able to deliver the support that people need in a modern, flexible labour market.

The noble Baroness, Lady Morgan of Ely, made the point that Wales has been hit hard by welfare reform. Of course it has; it is one of the areas of Britain most heavily dependent on welfare. I point out to the noble Baroness that two-thirds of the additional jobs created in the past year in Wales have been full-time, and that 80% of those working part-time have said that they do not want a full-time job.

The noble Baroness asked me to make a comment about women. There are 20,000 more women in work now in Wales than there were in May 2010.

The noble Lord, Lord Thomas, referred to the Chief Medical Officer’s report and to the importance of good public services, and our dependence on them. That is something that the Joseph Rowntree Foundation highlighted as one of the main actions to alleviate poverty in Wales. It said that there was a dependence on, and a need for, good public services. Too often, unfortunately, in Wales, those services lag behind the rest of the UK. The Joseph Rowntree Foundation also pointed out the importance of job creation. I am proud to say that that is what the coalition Government are doing in Wales, more than ever before. Overall, 71,000 more people are in employment in Wales since May 2010, economic inactivity has fallen by 49,000, and the number of unemployed people has fallen by 15,000.

The noble Lord, Lord Anderson, pointed out how few people in Wales pay the higher rate of income tax. That is a problem, and it is one that we can overcome only by a very determined effort, with the formation of new businesses. The noble Lord, Lord Howarth, asked what we were doing in a time of rapid change to accommodate that change. Our response, as a Government, is a massive investment in infrastructure. I say to the noble Baroness, Lady Morgan of Ely, that it is a great pity that the previous Labour Government did not undertake that investment in infrastructure in the 13 years for which they were in power, because it takes a very long time to build infrastructure. Therefore, it is very difficult for us to make up for that lost time.

I do not share the politics of envy that was expressed here on one or two occasions. Wales must aspire to have wealthier people and successful businesses. I am proud of Wales and I want to talk Wales up. I am sad that over so many generations Wales has suffered from poverty and has gradually fallen back in respect of the rest of the UK. I am confident that Wales can deliver, that Wales can prosper and that Wales will continue to cultivate an economy that sustains good jobs, develops infrastructure and improves standards of living for everyone.