Autumn Statement Distributional Analysis, Universal Credit and ESA

Debbie Abrahams Excerpts

Wednesday 16th November 2016 Commons Chamber

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

This has been a detailed and thorough debate, in which we have heard from 10 speakers. I will begin by responding to the Minister’s comments. I should state for clarity that this Government are borrowing more now than any previous Labour Government have borrowed in the past. We certainly welcome the reduction in the disability employment gap, but unfortunately it shows that the Government have simply stood still, because the situation got worse over the past year. The Minister did not answer the question that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) asked about the commitment to halve the disability employment gap by 2020.

I am glad that the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) has suddenly seen the light, but why did he not do something about the issues faced by the social security system when he was Secretary of State?

My hon. Friend the Member for Darlington (Jenny Chapman) made important points about the distribution analysis and the impact on child poverty. The hon. Member for Enfield, Southgate (Mr Burrowes) made an interesting speech, but I refer him to the IFS data that show that cuts to universal credit work allowances mean that the incentives for single parents to enter into work have been significantly weakened. Similarly, the Child Poverty Action Group has described the cuts as being in direct contradiction to the policy’s stated agenda of making work pay.

I am grateful to my hon. Friend the Member for Bishop Auckland (Helen Goodman) for highlighting her constituents’ issues, particularly with the distribution analysis and the impact on the poorest, as opposed to the richest. The former Minister with responsibility for disabled people, the hon. Member for North Swindon (Justin Tomlinson), said that nobody has explained how our proposal would be funded. As my right hon. Friend the Member for Hayes and Harlington said at the beginning, the Resolution Foundation has shown that reversing the cuts to capital gains tax, corporation tax and inheritance tax would be more than sufficient.

My hon. Friend the Member for Wirral South (Alison McGovern) made a characteristically comprehensive speech. Her passionate and regular campaigning on child poverty does her and our party credit. The same is true of the hon. Member for South Cambridgeshire (Heidi Allen), who is brave to speak out on the issues so eloquently and so often.

There are 6.8 million adults in this country who are in working households but who live in poverty. Two out of three of the nearly 4 million children living in poverty are from working households. All the evidence points to the simple truth that, under this Government, work is not a route out of poverty. I contrast that with the achievements of the previous Labour Government, who reduced poverty across the board.

Our disabled people have been battered by this Government, too. Some 5 million disabled people currently live in poverty in the UK—nearly one in three—and the gains made by Labour are now in reverse. Although disabled people are twice as likely as non-disabled people to live in poverty, specifically as a result of their disability or condition, the Government cut £28 billion from 3.7 million disabled people as part of the Welfare Reform Act 2012, thereby increasing the likelihood of poverty.

As we have heard, the IFS has shown that people on low incomes have been most adversely affected by the Government’s changes to tax and social security support since 2010, and that that will continue. In other words, the rich get richer and the poor get poorer.

Landman Economics and the National Institute of Economic and Social Research estimate that poor families with a disabled adult or child have been made five times worse off than non-disabled families, through tax and social security changes. Of course that does not even factor in other spending cuts. There is ample evidence.

Several measures in the Welfare Reform Act 2016 further punish the sick and disabled, but the cuts to employment and support allowance and the related cuts to the limited capability for work element of universal credit are among the most troubling. Nearly half a million people will be affected when the measure comes in next April, losing around £30 a week or £1,500 a year—a third of their weekly income from ESA. Those are people who have been found by the Government’s flawed work capability assessment process to be not fit for work, but who might be in the future. The Minister’s argument that these cuts will incentivise sick and disabled people into work is baseless and deeply offensive. In fact, the Government published this summer their own research showing absolutely the opposite. The policy does not incentivise people; it makes the situation worse. We must stop using this “shirker” and “scrounger” rhetoric, which is harmful and wrong.

I remind Ministers that the Government’s data show that the death rate for people on incapacity benefit and ESA in 2013 was 4.3 times that of the general population; that figure increased from 3.6 in 2003. People in the support group are 6.3 times more likely to die than the general population, and people in the WRAG—the people from whom the Government will be cutting more money—are more than twice as likely to die as the general population. IB and ESA are recognised as good population health indicators, and the Government’s data prove that point.

Consultation on the Government’s work, health and disability Green Paper will barely have finished before the cuts are imposed. I am sceptical that the measure will address the issues that sick and disabled people face, and I fear that it will be just another means to get people off flow. Last year, the Government failed to produce evidence of the cumulative effect of their further cuts on disabled people living in poverty, saying that it was too difficult. Labour disagreed, as did the Equality and Human Rights Commission, disability charities and disabled people’s organisations. Reporting last week, the UN committee that investigated breaches by this Government of the UN convention on the rights of persons with disabilities also disagreed. The UN’s report concluded that “grave and systematic violations” of disabled people’s rights had been perpetrated by this Government.

In the same week as the UN published its damning report, the Trussell Trust released data on the increase in food bank use because of social security issues, and the Supreme Court ruled against the Government on the discriminatory bedroom tax as it related to disabled people and their carers. The film “I, Daniel Blake” epitomises what is wrong with the social security system, in an accurate and moving representation of what is happening in this country. Surely the Government must see red. They must do the right thing and reverse the cuts to ESA WRAG.

On universal credit, we supported the principles of the Government’s flagship programme when it was first introduced: to unify a complex system into a single payment and to ensure that work pays. However, since its inception, universal credit has gone from damage limitation to outright disaster. In particular—apart from the Government’s gross incompetence in its costly implementation—the £3.8 billion of cuts to work allowances significantly undermine the principle that work will always pay under the scheme.

Research by the Resolution Foundation showed that the cuts will leave 2.5 million working families on average £2,100 a year worse off. The Resolution Foundation estimated that the poorest 50% of households will be £375 worse off on average by 2021, while the other half will be £235 better off. Those already on UC will be hit first. House of Commons Library analysis shows that the cuts will mean that a single mother of two who works full time on the minimum wage will lose £2,400 a year. Further analysis by Liverpool Economics has shown that disabled people in work will lose £2,000 a year. The north—particularly the north-west, where UC started—has been hit first: from powerhouse to workhouse. Once again, the Government have failed to publish an impact assessment on the effects of the cuts. The Government’s cuts to UC work allowances, replacing tax credits and topping up income for people in work on low pay, are undermining the principle of making work pay. I repeat the call to reverse these cuts.

In conclusion, the Government’s arguments to justify the cuts to UC work allowances are without any evidence. In contrast, there is a clear and growing evidence base on the effects that these cuts are having on the working poor and on sick and disabled people. At the same time, there is increasing evidence that as a nation we are becoming more and more unequal. After six years, the Government have done next to nothing to curb boardroom pay, giving tax breaks to the highest earners. Last year, the average worker’s pay of £27,645 increased by less than 2%; by comparison, the average top executive pay of £5 million increased by nearly 50%. The impacts of those inequalities are already being felt. The very fabric of our society—who we are and what we stand for as a tolerant and just society—is under attack as a result of these inequalities. The Prime Minister’s warm words about tackling injustice are not enough. We need action, not just words.