In-work Poverty

Grahame Morris Excerpts

Wednesday 16th March 2022 Westminster Hall

[Grahame Morris (Easington) (Lab)]

I beg to move,

That this House has considered in-work poverty.

It is an honour to serve under your chairmanship, Ms Rees. Before I start, I want to pass on our best wishes, from all sides of the House, to the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies), who I am sorry to hear has covid. I am sure that her colleague, the Under-Secretary of State for Work and Pensions, the hon. Member for Macclesfield (David Rutley), will do an admirable job in her place.

Work should always be a pathway and route out of poverty. The fact that the phrase “in-work poverty” even exists is a damning indictment of successive Conservative Government policies over the past 12 years. The Government are clearly making life harder for working people, as I will illustrate with a number of examples. I am conscious that a large number of Members want to participate in this important debate, so I will truncate my remarks, but I want to illustrate my argument with some examples from a number of sectors.

Clearly, one of the issues is the increase in taxes and national insurance, which is in direct contravention of a commitment that the Conservatives made in their last general election manifesto. We are also having to deal with the problem of the huge increases in energy prices that the Government, via Ofgem, have allowed to take place. Members may recall that I had a question for the Prime Minister last Wednesday in order to contrast the position of the French Government, who have capped energy price rises at 4%, with that of our Government, who have capped energy price rises at an incredible 54%. That has had a huge impact on people who are in work.

Fuel poverty, food poverty, energy poverty, housing poverty and child poverty are all measures of economic failure, and they are all on the increase. According to the Joseph Rowntree Foundation, one in eight workers are struggling to make ends meet. If work guaranteed a decent standard of living, the UK would be going through a golden age of prosperity. Instead, the Conservative party has delivered successive year-on-year policies of austerity over a decade. The social security safety net has given way, after a decade of wear and tear.

Without the most basic protection, a decade of pay cuts and wage stagnation has left working families ill prepared. Many have no savings at all, and people certainly have far less resilience to cope with the current cost of living crisis. In the workplace, we have seen employment rights deliberately weakened, a dramatic increase in the number of zero-hours contracts, and an expansion of the gig economy, with a growing proportion of working people in insecure employment.

I also want to mention the appalling employment practices. Poor employment practices, such as fire and rehire, are rife, even with very profitable and long-established companies, some of which are household names. Despite recent and repeated assurances from Ministers at the Dispatch Box—often condemning the practice—they have done nothing to outlaw the practice of fire and rehire by rogue employers. The Government have disregarded the interests of working people and dismissed the private Member’s Bill brought forward by my hon. Friend the Member for Brent North (Barry Gardiner).

The key workers we all clapped for and honoured during lockdown are bearing the brunt of our low-wage, poverty-pay economy. Figures produced by the TUC reveal that 43% of north-east key workers—over 173,000 people —earn below £10 an hour. Personally, I do not think that £15 an hour is an unreasonable ask in this day and age.

[Chris Stephens (Glasgow South West) (SNP)]

I thank my honourable comrade for giving way. Is he as surprised as I am at a recent article, published by The Herald newspaper and The Ferret website, showing that 20% of jobs advertised on the Department for Work and Pensions website paid under the national minimum wage rate of £9.50? The Department really needs to launch an inquiry into why that is the case.

[Grahame Morris]

Absolutely. It should concern us all when the DWP is advertising jobs that fall below the minimum standard and even the limited protections afforded to working people.

We know that even a modest increase in the minimum wage to £10 an hour would transform the lives of key workers, including one in three care workers—so many of us applaud care workers for their contribution, particularly during the pandemic—and 173,000 childcare workers. It would raise the incomes of over half a million people.

Workers across the country are struggling to feed their families and heat their homes. I will give some examples, including one I received from the National Union of Rail, Maritime and Transport Workers. Like many of us, I have met the cleaners employed by the Churchill Group who are fighting for a real living wage of £15 an hour. I will also highlight the fact that the GMB trade union is campaigning against real-terms pay cuts for nearly 150,000 ASDA staff, and the ongoing University and College Union strike in the university sector. The pattern is the same: terms, conditions, wages and pension rights are being eroded; workers who try to negotiate are blocked, ignored and blamed; while well-paid directors shrug their shoulders with uninterest, often while picking up huge bonuses.

The workers who kept our supermarket shelves stacked during the pandemic are now struggling to feed their own families. I was shown a survey by the Bakers, Food and Allied Workers’ Union, which was very illuminating; it was conducted by the union of its members, who are in the food sector. It found that between February and March 2021, 40% of those surveyed had eaten less than they should have eaten because they did not have sufficient cash; 35% had eaten less than they should have to ensure that other members of their household got a meal; and 21% relied on goods and contributions from family and friends to make ends meet. These are people who are in work—shift workers who supplied the country with bread during the pandemic.

I will also highlight the excellent Right to Food Campaign, which was mentioned in this very Chamber yesterday. The campaign was set up and promoted by my hon. Friend the Member for Liverpool, West Derby (Ian Byrne), and it has been endorsed by my own union, Unite. It seeks to make the Government responsible for addressing the raging income inequalities and the broken benefit system that have pushed so many people into a spiral of poverty.

I saw a quote on social media just before this debate and thought how relevant it is to what we are discussing, because we are talking about the cost of living crisis. The country has more than enough resources and more than enough money to keep everyone warm, housed, free from hunger and properly clothed; in fact, the country has enough wealth to do that a hundred times over. So it is not really a cost of living crisis; what we have is an inequality crisis.

I think the Government should scrap some of the provisions that currently apply to those in receipt of universal credit. Let us not forget that a substantial number of those in receipt of universal credit are in work—they are the working poor. The five-week wait before they can receive a penny is a major contributing factor to the huge increase in the number of people having to turn to food banks.

We need to start putting people before profits. Sadly—it is lamentable, really—poverty has become the norm in Britain; it has become normalised. Yards away from where we are having this debate, homeless people are freezing on the streets and sleeping rough for want of a home. Children go hungry. We see Members of Parliament, particularly Members of the Conservative party, posing for photographs at food banks, and I think the irony must be lost on them that those food banks exist only because of the policies that this Government have promoted.

To return to energy prices, the French Government have capped cost rises at 4%, Germany has cut tariffs and Spain has introduced a windfall tax on the energy companies. But here in Britain, standing charges are doubling and the energy price cap will see energy bills rise by 54%—that is £700 more on average—for our families. Peterlee is the biggest town in my constituency, and EDF, one of the big six energy companies, has many customers there. It is interesting to contrast what is happening in Peterlee with what is happening in Paris. Will the Minister explain why French state-owned EDF can cap cost increases at 4% in Paris while my constituents in Peterlee face a 54% increase in their bills?

Tax rises are exacerbating the cost of living crisis as many in our nation struggle with rising prices. I happened to meet a farmer last weekend, and we chatted about a number of issues. He grows oilseed rape and wheat, and he said that the price of wheat is doubling, and that the price of fertiliser is doubling as well, which will cost him an extra £10,000 a year. He reliably informed me that the cost of wheat, which was £150 a tonne, is now £300 a tonne. That will filter through into dramatic increases in food costs for staples such as bread. The prices of many basic staples, including margarine, tomatoes and apples have increased by as much as 45% in the past year.

Figures from the Trussell Trust and the Independent Food Aid Network show that more than 3 million food bank parcels were distributed in 2020-21. I tried to get the figures for the food banks operating in my constituency —at the community centre in Dawdon and at the East Durham Trust in Peterlee—but they are not part of the Trussell Trust, so the excellent work that they do is not included in those statistics, meaning that the figure is even bigger.

Average petrol and diesel prices are £1.61 and £1.73 per litre respectively, but regional public transport is expensive and unreliable after a decade of neglect, meaning that families have no alternative to protect against increasing fuel costs. The energy cap is up at 54%, and further increases are in the pipeline. The Conservative party once promised to be the “greenest government ever”, but the Public Accounts Committee recently described the green homes grant as a “slam dunk fail”.

House prices are rising beyond the reach of first-time buyers; sky-high rental costs leave little at the end of the month for deposits and savings; and we as a country have abandoned council housing, which is quite disgraceful—that social housing delivered low-cost homes for the post-war generation.

Nelson Mandela said:

“poverty…is man-made and can be overcome and eradicated by the actions of human beings… Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life… While poverty persists, there is no true freedom.”

Once again, we see that poverty is a political choice. It is a Conservative political choice, and one that this Government should be ashamed of.

[Several hon. Members rose—]

--- Later in debate ---

[Andy McDonald (Middlesbrough) (Lab)]

It is a delight to see you in the Chair, Ms Rees. I thank my hon. Friend the Member for Easington (Grahame Morris) for securing the debate.

If anything proves how broken the current economic model is, it is the extent of in-work poverty—it does just that. I have listened carefully to the remarks from Government Members. You would not think, Ms Rees, that they have been in power for 12 years. The hon. Member for Darlington (Peter Gibson) talks about work being the best route out of poverty. Are cleaners not entitled to a decent wage? Are security staff who keep our hospital staff and patients safe not entitled to a dignified life? Are care workers not entitled to the decency of a wage that they can live on? Are the shopworkers who we applauded not entitled to be able to make ends meet? Or have people got to leave those jobs and get “better” ones? What an indictment it is on this Government that they say such a thing.

It is a fact that one in six working families is now in poverty—a record high. It puts paid to all the Tories’ boasts of job creation when the jobs that they are creating still confine people to destitution. The latest employment figures, published by the ONS yesterday, show that real wages dropped by 1.5% over the past year. That is the worst fall in real pay for eight years.

This is clearly a situation that the Government are actively pursuing. The motion they passed last month—effectively cutting pensions and social security payments by 3% to 4% in real terms—along with their slashing of the universal credit uplift, the rise of the energy price cap and the increase in national insurance contributions all point to the simple conclusion that this Government are knowingly pushing more and more families into circumstances where they have to choose between staying warm and putting food on the table.

Just as with the coalition Government’s austerity programme after the financial crash, we hear from this Tory Government that it is those in most need who will have to bear the biggest brunt of the fallout of the covid crisis, and now the illegal and atrocious Russian invasion of Ukraine. The Government’s argument is that the cost of living crisis is a sacrifice that must be made to oppose Putin’s actions—it is nonsense and must be called out. Poverty is a political choice, and the Government are choosing for that sacrifice to be made by working people instead of the wealthy. In fact, despite the ongoing crises, billionaires have never had it so good.

[Grahame Morris]

Would my hon. Friend comment on the level of profits being generated by the energy distribution companies for gas and electricity, and what alternatives there are in windfall taxes on those companies?

[Andy McDonald]

My hon. Friend makes a pertinent point. Those transmission companies are enjoying a scandalous rise in profits; if ever a case was made for public ownership of the transmission of energy, that is it. The time is absolutely now.

There are also a number of longstanding factors that have caused the spiralling levels of in-work poverty. Above all is the fact that the so-called national living wage of £8.91 an hour is significantly below a wage that people can actually survive on. I have said it time and again: we need to raise the minimum wage to a level that allows people to live fully flourishing lives, not just get by. The planned rise to £9.50 an hour next month simply will not cut it. In the midst of a cost of living crisis, with inflation soaring, the national minimum wage is nothing but a poverty wage. The time is right for a £15 an hour minimum wage—in fact, it is way overdue.

Different categories of workers are going to work with different types of employment rights. We need to consolidate those categories into a single status of worker so that people have the same full employment rights from day one. I am pleased to have introduced to this House the Status of Workers Bill, which was guided through the other place by my noble Friend Lord Hendy. I implore the Minister to allow the Bill the necessary time to pass through this House, so that it can make the fundamental change to workers’ rights that could do so much to turn the tide of in-work poverty.

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see a friend of the worker in the Chair, Ms Rees. I thank my good friend and comrade the hon. Member for Easington (Grahame Morris) for making an excellent speech to kick off the debate. The contributions—with the possible exception of one—have been very impressive indeed.

I want to make a number of points. First, in-work poverty and inadequate living standards remain the norm for far too many people on these islands. We urge the UK Government to look at the minimum wage rates in the country. They need to not only amend the definition of a worker, but go further by strengthening protection for workers.

The UK is experiencing the highest levels of in-work poverty this century, which disproportionately impacts groups facing high living costs, such as lone parents—the majority of whom are women—disabled people and people with caring responsibilities. The Joseph Rowntree Foundation report that was mentioned earlier shows that around two thirds—the actual figure is 68%—of working-age adults in poverty in the UK live in a household where at least one adult is in work. The figure has never been higher since records began in 1996, so we now have the highest ever levels of in-work poverty. For too many people, low-paid jobs offer no opportunities to progress to better work and better wages, and far too many people are in insecure work with unpredictable hours and incomes, which is something that I want to touch on. That is, of course, in stark contrast to the situation in Scotland.

[Grahame Morris]

The hon. Member is making some excellent points, but I wonder what impact the Government’s decision to close jobcentres will have on constituencies such as mine and perhaps 60 others. What impact will that have on alleviating in-work poverty and on encouraging people who are out of work into paid employment?

[Chris Stephens]

It will increase in-work poverty. As the hon. Gentleman will know, the Government tried to close half the jobcentres in the city of Glasgow. People there are having to spend more money and go further in order to get to a jobcentre to see whether they can get better work.

As we have a Minister from the Department for Work and Pensions in front of us, I want to point out that a number of people claiming universal credit are in work. We have a situation—the Minister responded to a written question on this issue—whereby half of DWP claimants have their universal credit claims deducted. I would argue that that is a poverty tax. In some cases, £60 a month is taken away from someone’s universal credit claim. Universal credit is supposed to be a subsistence benefit that is paid at a rate that people can live on. If we take £60 a month away from them, people have to choose whether to heat or eat. That really needs to end. Advances need to be replaced by an up-front grant or a starter payment, as we argued on the Work and Pensions Committee. The recovery of tax credits needs to be at a lower level, and I would say that debts of more than six years should be written off entirely. There are a number of lawyers in the Chamber and they know that if I try to sue them for a debt that is over six years old, a sheriff in a Scottish court would write that off and absolve the debt.

I also want the Minister to respond to a point that I made earlier during my intervention on the hon. Member for Easington. In the jobs advertisements on the DWP website, 31% of full-time jobs and 50% of parti-time jobs pay less than the real living wage of £9.90 an hour. Some 20% are advertised as paying less than the national living wage of £9.50. I will give three examples: Burger King pays £6 an hour, Pizza Express £6.56 an hour, and Farmfoods £6.66 an hour. None of the adverts clarifies wage rates for different ages, and all the companies have made substantial profits in the last year or two, so increasing the wage rates and asking them to pay more certainly would not harm those businesses all that much. I am talking about multinational companies, and I would like to know what the DWP is going to do about the adverts. Will it refer itself to the national minimum wage compliance unit, which has a number of vacancies? Perhaps we can advertise those jobs on the DWP website.

I want to touch on what my hon. Friend the Member for Glasgow East (David Linden) said about discrimination in the national minimum wage rates, because he is absolutely right. There is a nonsensical argument that somehow young people are not active participants in the labour market. If Burger King has a 17-year-old next to a 37-year-old and they are both flipping hamburgers, they are equal participants in the labour market and should be paid the same rate for doing the same work. That is what I call equal pay. The equal pay legislation always encourages people to get the same rate for the same job, the same work.

What would happen if we increased wages? People would spend money. A false argument is also made about public sector pay—that somehow it takes money out of the economy. But that is not how it works. When people get a wage increase, they do not put it in a shoebox and hide it under bed; they go out and spend it in the economy. It means that they can afford things that they could not afford before, so they spend more on food and other items.

To touch on the contribution of the hon. Member for Middlesbrough (Andy McDonald)—I support his Bill and I know that he supports my Workers (Definition and Rights) Bill—there needs to be a definition of “worker”, so that we can strengthen workers’ rights. For four years the Government have been sitting on the Taylor report, which sought to address the issues, but at the last Queen’s Speech we were told that it was no longer a priority for them. That is scandalous. We need to take a real look at protection for workers and at eliminating zero-hours and other unfair contracts.

Employers are currently able to text four people to say, “The first one here gets the shift.” That has to end. People phone taxis and run out of the house to get there first, spending money as they do so, only to end up as the runner-up and get nothing. That is completely and utterly scandalous. I have included that in my Bill, because we need to address it. We also need to look at flexible working and at strengthening parental, neonatal and miscarriage leave for workers.

SNP MPs have consistently sought to strengthen workers’ rights and have promoted Bills to do so. I commend the Bakers, Food and Allied Workers Union for its Right to Food campaign. I will welcome that in Glasgow, because it has identified Glasgow South West as one of the constituencies in which it wants to do work. There is much that the Government need to do to address in-work poverty, before it gets even worse.

--- Later in debate ---

[Grahame Morris]

I thank everyone who has participated in the debate. I particularly thank the Minister for his courteous responses to the points put by Labour Members, and I thank the hon. Members for Darlington (Peter Gibson) and for Runnymede and Weybridge (Dr Spencer), who made some excellent points. I thank my hon. Friends the Members for Leeds East (Richard Burgon), for Wirral West (Margaret Greenwood), for Salford and Eccles (Rebecca Long Bailey), for Bolton South East (Yasmin Qureshi), for Middlesbrough (Andy McDonald) and for Wirral South (Alison McGovern). I also thank the hon. Members for North Ayrshire and Arran (Patricia Gibson), for East Lothian (Kenny MacAskill), for Glasgow East (David Linden), for Strangford (Jim Shannon) and for Glasgow South West (Chris Stephens).

Some really good points have been put forward as a critique of existing policies in relation to a raft of things that I hope the Minister has taken note of. We look forward to such issues being addressed in the spring statement.

I conclude by saying that there are young people across this country subsisting on poverty pay with little hope or prospect of home ownership or a decent pension. They are crippled by student debt and long for a standard of living above the breadline. We look to the Government to come up with policies to address that. If the Minister and his colleagues cannot, there are people willing and waiting to take up that challenge.

Question put and agreed to.

Resolved,

That this House has considered in-work poverty.