Welfare Reforms and Poverty

Chris Williamson Excerpts

Monday 13th January 2014 Commons Chamber

[Chris Williamson (Derby North) (Lab)]

I congratulate my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on securing this incredibly important debate on the need for a commission of inquiry into the impact of this cruel, callous coalition’s policies on poverty in the United Kingdom. I wish to focus in large measure on the impact of housing and the welfare reforms that have been put in place, but I wish to start by addressing the intervention made by my hon. Friend the Member for Corby (Andy Sawford), who referred to the pernicious reforms that have been made to the council tax benefit system. We hear a lot from the Government about freezing council tax. That is fine and dandy for the people who have the resources not to need council tax benefit, but the very poorest people, even in those local authority areas that had a freeze on their council tax, are seeing an increase in the amount of council tax they are expected to pay. That is absolutely disgraceful, and I do not know how Ministers can sleep in their beds at night when they are inflicting such penalties on the poorest people in our country.

As I have said, housing is a key area in addressing poverty in our country. The hon. Member for Stafford (Jeremy Lefroy) said that the commission we are talking about should have a slightly wider remit, and that is important, as it should incorporate housing, too. What we saw when this Government came to power was a massive reduction in investment in affordable housing in our country. One of the first things they did was to cut it by 60%—that is what they did when they first came to power. Their housing policy is shambolic. They are not building anywhere near enough houses for the people in our country, and the houses they are building are too expensive—to buy or to rent. People are caught in a Catch-22 situation. Youth unemployment is growing, with about 1 million young people on the dole, and low pay is endemic. As my right hon. Friend the Member for Oldham West and Royton pointed out, some 6.7 million people living in poverty in our country are in employment —that is disgraceful.

Let me briefly touch on my personal story, and how things have changed from the 1970s in terms of what ordinary working-class people were able to do and the sorts of lifestyles they were able to afford, particularly the housing. I was a 19-year-old apprentice bricklayer when I was able to buy my first house, with the benefit of the option mortgage scheme brought in by the 1974 to 1979 Labour Government. I was earning £60 a week and I was able to buy a brand new three-bedroom house that backed on to a canal for £10,000. That was three times my salary then, but it would be impossible to do the same today because the average price paid by a first-time buyer is £185,000. I have checked on the internet what a bricklayer can earn these days. On average, they earn £10.28 an hour, or £21,382 a year, so the average price for a first-time buyer would be a multiple of 8.6 times their salary. In this day and age, an apprentice bricklayer earns around £170 a week, or £8,840 a year, so a multiple of 21 times their salary would be required. People can no longer put down roots in the way that they did, because they have been priced out of the market. I am talking not just about buying but renting as well.

It is vital that we build the houses that people need. Labour is committed to building 200,000 homes per annum, which is vital in not just delivering a social need but putting thousands and thousands of people back into work. We need a renaissance in council housing, because the private rented sector is ill-suited to social housing, which has led to the obscene housing benefit subsidy system that was set up by the right hon. Member for North West Hampshire (Sir George Young) when he was the Housing Minister. On 30 January 1991 he said:

“If people cannot afford to pay that market rent, housing benefit will take the strain.”—[Official Report, 30 January 1991; Vol.184, c. 940.]

Well, take the strain it most certainly has. Some £24 billion a year is being paid out in housing benefit. According to the House of Commons Library, £9.3 billion is going into the back pockets of private landlords. Compare that with the £1.1 billion this Government are putting into building affordable homes for people. The affordable homes programme summary said that will result in just over 67,000 homes per annum. Imagine if we put all that money into building homes for people. Think of all the jobs that could be created. If we just used the amount that is going to private landlords, we would be able to build 600,000 homes a year. We are building nowhere near that. We have a massive housing crisis in our country. There is a crazy housing subsidy system, which needs to be reformed. There are 1.7 million households on the housing waiting list across our country, 4,000 of which are in Derby. More and more people are reliant on the vagaries of the private rented sector. That cannot go on. What we need is a change in emphasis. We need a bricks and mortar subsidy to build the homes that people need. We need a council house, renaissance, to regulate the private rented sector and to ensure that land is released to build homes that people can afford.

[Steve Rotheram]

Does my hon. Friend also agree that Labour’s pledge, if we were to be the next Government, would mean an additional apprentice for every £1 million of public sector contracts?

[Chris Williamson]

That is a really important commitment. Let me refer if I may to some other statistics. I have talked about a massive investment in council housing. It is important to recognise that for every £1 of public sector investment in infrastructure, the Exchequer gets back 56p. As the net expenditure is somewhat less, it is well worth making that investment to generate the apprenticeships to which my hon. Friend referred and the jobs across the piece that are required, and to build the homes that people need. We need this commission. Its terms of reference should be somewhat wider than has been set out in the motion. If we can invest in the housing that we need, it will help to create stable communities, generate jobs and promote economic growth. Yes, we need a commission, but we also need a Labour Government in 2015 with the radical commitment that we saw in 1945 to deliver what Beveridge achieved. We need to deliver on the recommendations of the commission, which has been called for by my right hon. Friend the Member for Oldham West and Royton.

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[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to follow the hon. Member for Worthing West (Sir Peter Bottomley). I congratulate all those who signed the motion and did the work to secure this debate, because I think that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty. I say that because of my experience as a constituency MP, and my knowledge, from this place and other places, of what is happening nationally.

The reality is that all of us are inundated in our constituency surgery by constituents who are experiencing the impact of the Government’s welfare reforms. Mr Scott, a constituent, came to see me last week; he was diagnosed with bowel cancer last summer, and had applied for the personal independence payment. He has worked all his life; it was the first time that he had had contact with the welfare benefit system. He is still awaiting receipt of any money. Many other constituents who come to see me, including carers and those who are disabled, are suffering as a result of the bedroom tax.

There has been a massive increase in poverty in this country since 2010. Some of that is associated with welfare reforms; some is related to other aspects of Government policy, and what is going on in the country with low pay, wage freezes, wage cuts, and less secure forms of employment, and all the other issues that we spend time talking about in this place.

We particularly need to focus clearly on welfare reforms, both for those in work and those who are not working. Since 1997-98, there has been a decrease in poverty for most of the time. Some 28% of the population lived in absolute poverty in 1997, but by 2010, that had dropped to 15%—still a scandalously high figure that is unacceptable in any civilised country, but the reality was that 2.3 million children and 2 million pensioners were lifted out of poverty in that time. The country can be proud of that, even though, as I say, a huge amount more needed to be done. Since 2010, absolute poverty has increased by 1.4 million people, including 300,000 children and 200,000 pensioners. There can be absolutely no doubt that much of that increase in poverty has been a direct result of the coalition Government’s policies.

I will talk about some of those policies. We have had these debates already in this place, and we have divided on many of these issues. One of the impacts that will have the biggest cumulative effect over time is the uprating of benefits in line with the consumer prices index instead of the retail prices index. Of course, we already see the impact of that change. In 2010, when the Government changed the indexation, the difference between RPI and CPI was the difference between 4.6% and 3.1%. In every year since, RPI has been higher than CPI. Of course, the impact on our pensions and benefits affects disproportionately those on the lowest incomes.

Let us look at those in receipt of carer’s allowance. In April 2010 they received £53.90 a week. If that had increased under the old system, using RPI, they would now be receiving £61.08 a week, rather than £59.75. They are therefore £167.96 worse off each year as a result of the switch from RPI to CPI.

We see a similar situation with disability living allowance. Someone in receipt of the higher care component is now £221 worse off as a result of the switch. People with more serious disabilities who are on the higher rate mobility component are now £155.48 worse off a year. Those who receive both the higher rate mobility component and the higher care component are now £376.48 worse off a year. Those might sound like relatively small amounts to some people, but the reality is that those benefits are received by some of the poorest and most vulnerable people in the country, who were already struggling and finding it difficult to cope.

People in receipt of employment and support allowance—another form of benefit that many constituents come to see us about—are now £342.68 worse off a year as a result of the shift from RPI to CPI. It is not just that shift, but the impact of other policies, such as the 1% cap on benefits, that is having an effect. Ministers have claimed that those in the ESA support groups are exempt from that, but of course that benefit is both a basic payment and an additional payment. Although one is exempt from the 1% cap, the other is not. The reality is that for almost every benefit we look at, we are seeing our constituents receive less money every week, every month and every year.

[Chris Williamson]

Does my hon. Friend agree that cutting benefits for the poorest people in our communities has a knock-on impact on economic growth, because they inevitably spend the money in their pockets in the communities in which they live?

[Katy Clark]

I agree with my hon. Friend. I am sure that that is the case in his constituency, as it is in mine. In areas that are disproportionately reliant on the public sector and the welfare state, cutting benefits is taking millions of pounds out of the economy every year, which is simply putting us in a worse situation.

We have also seen a massive increase in the impact of benefit sanctions, as I am sure many Members are only too aware from their constituencies. It is often the same people receiving those benefit sanctions again and again, and each time it is for a longer period. Many of those people have nowhere to go, because they can go to a food bank only three times.

The other major concern is the bedroom tax, which constituents come to see me about all the time. In North Ayrshire we have seen a 756% increase in discretionary housing payment applications. Only 66% are accepted, which means that a third of those people do not get the payment. Indeed, when people go back to apply the next time, because it is a time-limited payment, they are often refused. That is having an impact on council rent arrears. Rent arrears in North Ayrshire, for example, have increased from 3.6% of annual rent to 5.5%.

Those are just a few examples from my constituency, but we all have many others. This is having a massive impact on our country. We are seeing a massive shift in wealth. We need someone to look at that seriously, which is why I think that the motion before us—

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[Simon Danczuk (Rochdale) (Lab)]

Let me start by thanking those Members who pressed for this important debate, particularly my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) and the hon. Member for Worthing West (Sir Peter Bottomley). I believe that we should be proud of our welfare system in this country. It provides a vital safety net, and not just for people who have fallen into poverty, but for the disabled, older people and those who need to get back into employment.

However, we should not fall into supporting an argument that suggests that the system is perfect. Too many people take the view that the welfare system is a sacred cow that should be left alone. I do not share that view; on the contrary, I believe that self-reliance and making the welfare state much more accountable and appropriate to people are extremely important. I certainly believe that reforms can be made, especially to the way in which the system supports and challenges people—and, yes, pushes them back into employment. However, when reform of the welfare system is undertaken we must be certain that we do not abandon the most vulnerable people and push them into poverty.

I will give two examples of the Government’s welfare reforms having left vulnerable people without the safety net they need. First, I want to talk about one of my constituents, Sheila Holt. On Friday I met her father, Mr Kenneth Holt, and other members of her family. Sheila is 47 years old. She had an exceptionally traumatic childhood that I will not detail here, but needless to say it was a period of her life that scarred her mentally. She has not worked for 27 years because she has a severe psychiatric condition; she is unable to work. Because of cuts, I suspect, Sheila was relatively recently persuaded to sign off her psychiatric treatment. Soon after that, she was being pushed by the DWP towards the back-to-work scheme. Her family advocated for her, explaining that she had had trauma in early life and had a psychiatric condition. They made those points strongly, but to no avail. Sheila had to start attending back-to-work classes in another town. She struggled with meeting other people. Most importantly, no mental health support or service was offered to her. The safety net was not there for her. She also had to start paying the bedroom tax. Needless to say, she was falling into poverty and beginning to worry about becoming increasingly poor. She started to become agitated and her medication could not keep up with her condition. On 6 December she was admitted to Birch Hill hospital under section 3 of the Mental Health Act 1983. A few days later, she suffered a heart attack—at the age of 47, which is my age—and she is now in a coma.

The reason I tell this story is that Sheila’s family want people to be aware that she was pushed into this situation. Soon after Sheila started her life, she experienced terrible trauma that mentally crippled her. The truth is that she is trying to live through the welfare system as best she can, but the unsophisticated and haphazard way in which it has been changed has forced a very vulnerable woman into a terrible predicament. She had a very difficult early upbringing and now finds herself in the situation she is in today.

My second point is about the discretionary social fund, which has provided crisis loans to people in need. Hon. Members will be aware that in April this year the DWP passed that responsibility on to local authorities. They will also be aware that the fund is not ring-fenced, and it has been open to local authorities to spend it however they wish. For me, this came to light because a number of constituents were presenting to me with difficulty in being able to claim any sort of crisis loan from any sort of crisis fund. One woman who came to see me was heavily pregnant and was being told by Rochdale council’s social services that unless she provided a carpet in her property she would lose the child, who would be taken into care. Ironically, the local authority was not administering the local discretionary social fund in a way that would enable her to claim money to be able to get the carpet.

Rochdale is not an exception to the rule. I carried out some research looking at local authorities right across the country, and it shows that the passing down to them of this responsibility has meant that they have set criteria far too strongly, to the point where one local authority has spent only 1% of its budget for helping people through crisis loans or grants. The irony is that, when the fund was administered nationally, it encouraged self-reliance because it was a loan that the recipient could pass back, but since responsibility was given to local authorities it has not done so because it is now a grant that cannot be passed back.

The best bit came just before last Christmas, when the Government announced that the fund will be scrapped completely from 2015. It will not exist at all and there will be no safety net for those people who really need it. They will be pushed towards loan sharks and money lenders. That will certainly happen in Rochdale and, I have no doubt, in other places as well.

[Chris Williamson]

Does my hon. Friend agree that this is tantamount to the reintroduction of the Poor Law, which was abolished by the 1945 Labour Government?

[Simon Danczuk]

I certainly take on board the point that we are moving that way in some respects. I am wholly in favour of reform of the welfare state, as I pointed out at the beginning of my speech, but it has to be done compassionately and it has to retain the safety net. If we do not do that, we will see, as my hon. Friend suggests, a return to Victorian values in the way that we administer our welfare state.

I call on the Government to reverse their decision on the discretionary crisis fund. I believe that the purpose of the welfare system is to provide a safety net for the vulnerable, but it is clear that some of the Government’s reforms are destroying parts of that safety net and leaving people much more vulnerable to poverty. As my hon. Friends have said, we need an inquiry into how the reforms are impacting on people so that they are not abandoned and left to poverty.

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[Mike Penning]

I thank the hon. Lady for her intervention and for her comments about my time as a Minister in Northern Ireland. That means an awful lot to me. Most of the welfare reforms have not been implemented in Northern Ireland yet because they are being blocked by one particular party, so it is difficult to see how we could appraise what was going to happen in Northern Ireland compared with the rest of the United Kingdom because the welfare reforms have not been introduced there in the way that they have in the rest of the country. I do not think that the answer at this stage is to have an independent review. The Government issue huge amounts of research—very expensive research—and we need to look carefully at what is going on.

We have of course brought in the benefit cap and reformed housing benefit. My constituency has one of the largest council-run social housing stocks in the country—nearly 16,000 council properties—as well as quite a large housing association stock. I get family after family saying to me, “Why do my children have to do their homework in the corridor? Why can’t we move into a larger property.”

[Chris Williamson]

Build more houses.

[Mike Penning]

Absolutely. The hon. Gentleman’s party had 13 years to do so. The housing situation has not suddenly occurred in the last five minutes. Labour did not do it when it was in government, and yet it wants to rewrite history this evening. That is not possible and it will not happen. We need to ensure that we have fairness in the system. I have listened carefully to Members throughout the debate. The system has to be fair for both sides. It has to be fair to the people who are working and to those who are on benefit.

Earlier in the debate someone mentioned the Channel 4 programme. The idea of Channel 4 being supportive of this Government would be a shock to the system and to Channel 4. I was brought up in a working class area in north London, and, as I have said, I have two estates in the top 10% of the most socially deprived areas, but I was shocked by what I saw.

[Chris Williamson]

It was not a fair representation.

[Mike Penning]

Whether or not it is a fair representation is a matter for Channel 4. Like the rest of the country, I sat and watched the programme. I have not said anything about it, because I do not know the facts. I will go and see what is happening on the ground rather than speaking in generalisations. Channel 4 is not in any way a mouthpiece for this Government. It has been hugely critical of what we have been doing.