In-work Poverty

Christina Rees Excerpts

Thursday 28th January 2016 Westminster Hall

[Carolyn Harris (Swansea East) (Lab)]

I beg to move,

That this House has considered in-work poverty.

It is a pleasure to serve under your excellent chairmanship, Mr Turner. This Government are failing to make work pay, and their cuts to in-work support risk increasing the number of working families in poverty even further. Over the previous Parliament, average real wages fell by more than £1,000 a year. Furthermore, 2010 to 2020 will be the worst decade for pay growth in almost a century and the third worst since 1860.

Cuts to universal credit that begin in April will make 2.6 million working families £1,600 a year worse off by 2020, making it almost impossible for families to work their way out of poverty. The Government’s advice to working families set to be hit by those cuts is to work an additional 200 hours a year to recoup the losses. That is neither fair nor practical for millions of low-paid families who are already working full time. I am delighted to have secured this debate, so that we in the Opposition can bring forward the reality of those in our constituencies who are experiencing high levels of in-work poverty and to call on the Government to scrap their cuts to universal credit before the cuts take hold in April.

We know from the Social Mobility and Child Poverty Commission that 1.5 million children are in poverty because their working parents do not earn enough to secure a basic standard of living. Four out of 10 children in working poor households live in families where parents might be expected to enter work or work more hours. Owing to high levels of in-work poverty, the commission has warned that the cuts to universal credit will—in its words, not mine—

“make many working families significantly worse off.”

The commission has recommended that the Government reverse their cuts to universal credit, saying:

“These changes would have resulted in millions of families in low-paid work who are ‘doing the right thing’ and working as much as society expects them to, seeing their annual income fall by thousands of pounds on 1 April 2016.”

Despite the fears, the cuts to universal credit are still going ahead. It will be very difficult for many affected families to increase their hours of work and hourly pay to avoid big cuts to their incomes.

[Christina Rees (Neath) (Lab)]

Does my hon. Friend know that 167,400 working families in Wales will be impacted by these cuts and that 134,600 of them are families with children?

[Carolyn Harris]

I do, and not only Wales is affected; this affects every constituency in the country.

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[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Turner, and I congratulate my hon. Friend the Member for Swansea East (Carolyn Harris) on securing this important debate.

It is hard to justify why so many people live in poverty in a country as wealthy as the UK. I believe that one of the key explanations is that the welfare state, designed to protect us all against risks such as unemployment, illness and old age, simply fails to provide an adequate income for families and others when they are unable to support themselves fully.

It is truly shocking that in 2016, in-work poverty is growing. In some areas, the number of working households in poverty is greater than the number of non-working households. Major factors appear to be low pay and part-time work, and zero-hours contracts are also a major contributory factor.

[Christina Rees]

It was remiss of me not to say in my earlier intervention what a pleasure it is to serve under your chairmanship, Mr Turner.

Does my hon. Friend agree that although responsibility for tackling in-work poverty in Wales is a devolved issue, the levers for tackling it lie mainly with the UK Government? He mentioned zero-hours contracts, but I add to that the minimum wage, welfare benefits and, of course, the tax system.

[Gerald Jones]

I could not agree more. Both the Welsh Government and local government have tried to mitigate those circumstances, but the major levers lie here at Westminster.

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[Mark Durkan (Foyle) (SDLP)]

It is a pleasure to serve under your chairmanship, Mr Turner, and I congratulate my hon. Friend the Member for Swansea East (Carolyn Harris) on securing this important debate.

Like my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), I want to address these issues, first of all, based on the experience of people in my constituency. I represent the city of Derry—or Londonderry—which has very high unemployment. The constituency of Foyle ranks No. 1 for unemployment of all the constituencies in the House of Commons. As well as having very high long-term unemployment and very high youth unemployment, it also has a lot of underpaid employment. It is a border city, with all the challenges that that brings for our regional economy, and obviously it has suffered the impact of conflict. Every day, families and working people there contend with the same economic challenges that hon. Members throughout the House have mentioned, in an economy that has structural weaknesses. It is clear that for people in my constituency, the problem is not lack of work ethic but a lack of work. Much of the Government’s agenda and purpose, in the welfare reforms and other measures they have introduced in the last Parliament and this one, seems to be fixated on work ethic rather than availability of work.

That is why I have found myself in opposition to so many of the Government’s reforms and why, along with so many others—I was glad to see that they included Conservatives MPs—I challenged the Government’s proposals on tax credits. They would have hurt people who are in work but coping with marginal incomes given their family, work-related and other living costs. Those changes have been parked, but there has not been a complete U-turn. There has been merely a J-turn, which has gone part of the way. The Government intend to apply the same logic to universal credit, we are just not getting the early implementation of the plan for those still on tax credits. That plan will clearly increase working poverty. We have seen in the various figures that have been quoted—I will not rehearse all the figures from the Institute for Fiscal Studies and others—that there will be a real impact on the family income of people in work.

[Christina Rees]

As the hon. Gentleman knows, new claims for legacy benefits will cease by June 2018 and migration to universal credit will be completed by 2021. As the Department for Work and Pensions says it cannot estimate the number of people who will be on universal credit by the time the roll-out is complete, does he agree that it is difficult for us to deal with the problem in our constituencies?

[Mark Durkan]

I thank my hon. Friend for making that point. That is part of the conundrum that we have. On one hand, DWP tried to offer all sorts of assurances that the change had been platformed and well modelled and would be sound. On the other hand, we know that, to date, many of its assurances and plans have come to little. On other things, it says it does not have a basis for some of its contentions. We get into a circular argument, so we cannot accept its assurances or try to persuade others about them.

Let us be clear. The changes being made are not just those to work allowances, which are part of the Welfare Reform and Work Bill. The hon. Member for Neath referred to when DWP plans to roll the changes out. I will not go into all the administrative and political differences in welfare reform in Northern Ireland, but implementation there has been different so far. The decision has effectively been made to give Westminster direct rule powers on welfare reform, including on the provisions in the Bill. That will obviously have a long-term effect. Although the direct rule powers applying to Westminster include a sunset clause for the end of this year, the legislation passed under those powers will have an impact on my constituents for many long years.

On the impact of working poverty, we need to consider not just the changes to universal credit and how they will affect people who have made the transition to work and meet all the Government’s oft-quoted tests—being hard-working families, not being workshy and so on—but the fact that people will be subjected to invidious treatment in the levels of support they are allowed.

Let us consider the Government’s plans for universal credit and, in the longer term, tax credits—for example, how the two-child rule will affect working families. Let us compare that rule with what was passed in the last Parliament in a blaze of glory. The Minister was one of those who took the Childcare Payments Act 2014 through the last Parliament. The Government boasted that under Bill, parents would be able to claim up to £2,000 a child in childcare support, on the basis that it would be up to 20% of costs of up to £10,000. Let us think about what income bracket parents would need to be in if they were spending £10,000 a child on childcare and claiming up to 20% of that as childcare allowance.

That allowance was going to be bankable. People were going to have discretion to do what they wanted with it, but under universal credit they must claim the childcare element after the event and show the actual cost. They must spend the money before they get it back. That is not so for those who are better off and claiming childcare allowances, and of course they are not subject to a two-child rule. The plan is for one law for the working rich and one law for the working poor. That is why we must speak up about working poverty.

Those policy contradictions are not the only ones we need to raise with the Government. We all have a responsibility to think through the other implications for people working in our constituencies. There will be future liabilities from pension contribution changes, and student loan payments will have to be made through people’s income. The changes in the Housing and Planning Bill will have an impact on who is eligible to remain in social housing. There will be a cliff edge for families, who will face additional housing costs if they remain in employment with a certain income. All those issues will bite on family budgets and make a material difference to the worth of people’s earnings. We should address working poverty much more holistically and not on the basis of some of the more pretentious and specious claims that the Government make.

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[Nick Thomas-Symonds]

Indeed, he would have been better off saying it quietly, because in November 2015, the actual figure was 155,568. He should be sanctioning himself, on the basis of such a performance. It shows an absolutely dreadful level of incompetence.

I congratulate my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), who drew on his experience as a county borough councillor, and set out well the measures that Labour councils in Wales are implementing to try to deal with wage levels. My hon. Friend the Member for Foyle (Mark Durkan) spoke, as he always does, with great authority on the matter. His point about the availability of work, and his quote about there being one rule for the working rich and one for the working poor, really resonated in the context of the debate. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on her speech, which was delivered with great passion.

Let us remind ourselves of what the Chancellor—his must be the longest leadership bid in recorded history—said on the “Today” programme on 8 October 2012:

“It is unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits.”

I fundamentally disagree with that statement. The person behind the blinds could be disabled or vulnerable. Dare I say it, they might even have just worked a night shift, although that is something that seems to be lost on the Chancellor of the Exchequer. The Chancellor has been trying to draw a division between those who work and those who do not. He is not the only one who has a problem with the language that has been used in the debate. In September, the Secretary of State said, in answer to the hon. Member for Gloucester (Richard Graham), that

“the most important point is that we are looking to get that up to the level of normal, non-disabled people who are back in work.”—[Official Report, 7 September 2015; Vol. 599, c. 6.]

Normal, non-disabled people—what kind of language is that? What does that say to somebody who is disabled? I hope that the Minister will take the opportunity this afternoon to distance herself from such shocking remarks.

Even if we accepted that distinction between those who work and those who do not, the Secretary of State is now in such a mess that he is on the wrong side of his own dividing line. It is all very well to say that work is the route out of poverty, and of course we want to see more people in work, but the kind of poverty that we are talking about affects people who have jobs, and who go out to work. As the smoke lifts from the Chancellor’s U-turn on tax credit cuts, it has become clear that he is simply going to make the same £12 billion of cuts to universal credit. No one can tell me that when the Tories were going around during the election campaign and talking about their £12 billion of welfare cuts, people such as cleaners seriously thought that they would be affected.

Let me give another couple of examples. I gave the statistics for single parents to my hon. Friend the Member for Swansea East.

[Christina Rees]

Does my hon. Friend recognise that lone parents are already twice as likely as two-parent families to be in poverty? Single parents are worse hit in the combined reforms; as a share of income, they lose seven times more than two-parent families. By 2021, single parents will lose £1,300 a year, on average, even after taking into account wage increases and tax concessions.

[Nick Thomas-Symonds]

Single parents could be forgiven for thinking that the Government have a tin ear, as far as their needs are concerned. Let me give the example of a couple who live and work together, one or both of whom have limited capacity to work, because they are disabled. Work allowance will be cut from £7,700 to £4,700 this April, which will mean a loss of income of £3,000 a year. Single individuals will essentially lose everything, with a reduction of £1,332 and a net loss to income of £865. My hon. Friend the Member for Swansea East has mentioned the Social Mobility and Child Poverty Commission; its latest report was published as part of the glut of data that the Government put out just before Christmas, on 17 December. I quote from the commission:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations 2015 before they are implemented in April 2016.”

The commission is asking the Government to do that, and it is precisely what they should do.

What is the Government’s answer to the claim that they are attacking working people? At least the Ministers in the team are not shy about coming forward with the odd suggestion of what people should do to help themselves. We have heard the one about working more hours. I am not entirely sure how single parents are meant to do that, but perhaps the Government will explain that to us in due course. My particular favourite was the suggestion made by the Under-Secretary of State for Work and Pensions, the hon. Member for North West Cambridgeshire (Mr Vara), in the House on 6 January 2016. When he was asked about mitigating the effects of the social security changes, he said that we should not forget

“the fact that every time we fill up our tank with petrol there is a saving of £10 because of the freezing of the fuel duty.”—[Official Report, 6 January 2016; Vol. 604, c. 342.]

In the 1980s, the unemployed were told to get on their bikes, but in 2016 the advice is to fill your car. If that is the best that the Government can offer the working people of this country, it shows the position they have reached.

The Government are in the worst of all worlds. Universal credit is the Secretary of State’s passion. The policy is his baby. He allegedly fights the Chancellor around the Cabinet table so that he can keep it going, although we might draw the conclusion that he is not doing so very effectively. We will have to wait until, I think, 2021 to see the full effects. The Secretary of State seems to be going for some kind of record for how long it takes to implement change at the DWP. The Government are in the worst of all worlds, because they lack both compassion and confidence.

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[Priti Patel]

Tata is not a particular case study for Wales or the United Kingdom. I hope that the hon. Lady recognises that the steel industry faces huge challenges around the world. In China, people are also losing their jobs because of what has happened in the steel industry. Jobcentre Plus and the Department for Work and Pensions have been there from the outset to support people who have lost their jobs in the steel industry by helping their families at this very difficult time and supporting them to find work. The marketplace is challenging, but the hon. Lady is the Member of Parliament for a Welsh constituency and she has a duty to acknowledge the support that is being given—the work that Jobcentre Plus staff in her constituency are providing—to individuals and families who have lost their jobs.

[Christina Rees]

Surely the increase in jobs in Wales is down to the excellent policies of the Welsh Labour Government and schemes such as Jobs Growth Wales with EU investment.

[Priti Patel]

If it were not for the fact that this Government picked up the shambolic legacy of the Labour Government in 2010, rebalanced the economy and, importantly, created the right environment for the creation of new jobs, those new jobs in Wales would not exist today. We have supported lower corporation taxes and lower taxes for businesses to come to the UK to make the UK a much more competitive place.

We have heard voices from around the UK in the debate, including the hon. Members for Foyle (Mark Durkan) and for Motherwell and Wishaw (Marion Fellows). A record number of jobs have been created in Scotland and wages in Scotland are going up as a result.