In-work Poverty

Gerald Jones Excerpts

Thursday 28th January 2016 Westminster Hall

[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.

[Neil Coyle]

May I add a London voice? Specific costs include much higher accommodation costs for many in London, which contribute to in-work poverty. However, the last Government hit something like 30,000 working people in Southwark with reductions in support and left 700 people in work using the local food bank, according to figures from Pecan, which is part of the Trussell Trust network.

[Gerald Jones]

I could not agree more with my hon. Friend, and the situation he describes is replicated in many areas across the UK.

Can it be right in 21st-century Britain that many people are working hard and cannot afford to live above the poverty line? As my hon. Friend the Member for Swansea East outlined, 85% of people receiving support from the food bank in her constituency are working people. In my constituency, many working families rely on food banks to be able to put food on the table. That is clearly not acceptable.

Years of below-inflation wage increases, particularly in the public sector, have taken their toll on people’s incomes. In-work benefits such as tax credits are meant to support families against the worst effects of in-work poverty. The current proposals to change universal credit will clearly make matters worse for millions of working families. In Merthyr Tydfil and Rhymney alone, about 10,000 working families are likely to be adversely affected by the Government’s universal credit proposals by 2020.

Jobs must be a clear and critical part of any programme to end poverty. Access to jobs, and the quality of those jobs, must be addressed if families are to be able to work their way out of poverty. Low pay is a major factor in in-work poverty and is unfortunately a routine feature of much of the work available to poorer families. The national minimum wage sets a floor for pay levels, but one report shows that a couple with two children would need to work 58 hours a week at the minimum wage to lift themselves out of poverty.

As a county councillor prior to being elected to this place last May, I was proud to be associated with the introduction of the living wage at Caerphilly county borough council, one of a growing number of Labour councils in Wales that pay the living wage. I am proud of the many former colleagues in local government across the UK who are championing the true living wage, as promoted by the Living Wage Foundation, not the gimmick national living wage that the Chancellor has announced.

The low-paid sector is characterised by jobs that often do not provide steady employment. Moving in and out of work on a regular basis is common for lone parents and generates grave financial uncertainty for many families. Limits on the number of hours worked and zero-hours contracts mean that many people might work full-time one week, part-time the next and have no work the following week. Even if they have reliable employment, many find it hard to work enough hours, given their caring commitments and other barriers to employment.

Such situations can also compound problems with in-work benefit entitlements, such as housing benefit. The process for benefit assessment cannot be done efficiently, leaving households falling into rent arrears while things are readjusted and threatening the security of their tenure. Often, due to barriers to employment, people do not have the opportunity to increase their hours and therefore their income. As a result, many low-paid jobs are nothing more than poverty traps.

It is not just a lack of income that causes hardship in poorer families. Evidence shows that they also pay higher prices than others for many essential goods and services. Low-income families are often unable to take advantage of the cheaper prices that are routinely offered to customers paying by methods such as direct debit. The situation has been exacerbated by rising utility bills. With fuel prices coming down, the Government should bring more pressure to bear on utility firms to ensure that they do more to pass savings on to customers.

Finally, many people who are in work discover that their jobs are so low paid or insecure that they are unable to provide an income sufficient to lift themselves and their families out of poverty. The Government appear reluctant to reconfigure the tax system so that the richest households pay more of the burden. Policy changes such as the changes to inheritance tax, the reduction in the 50p income tax rate to 45p, the retention of the bedroom tax and the changes to universal credit mean that poorer families will continue to pay more than their fair share of tax.

To make a positive impact on tackling in-work poverty, the Government have to take action on the issues raised during this afternoon’s debate. Unfortunately, we are seeing very little evidence that they are serious about tackling in-work poverty. In fact, some of the Government’s proposals risk making matters worse. Will the Minister outline what the Government are doing to tackle urgently the unacceptable scale of in-work poverty facing people across our country?

--- Later in debate ---

[Carolyn Harris]

Will the Minister give way?

[Gerald Jones]

It is a long sentence.

[Priti Patel]

I will give way in a moment. I have been very respectful by listening to and not intervening in the contributions of Opposition Members. More people will benefit when the national living wage is introduced in April.