Welfare Benefits Up-rating Bill

Ian Mearns Excerpts

Tuesday 8th January 2013 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

As someone who has been in this House for two and a half years and who in the past has been unemployed and has held low-paid jobs, I think that the mirth with which parts of this debate are being greeted will be seen with dismay by many people outside this Chamber.

The Bill is yet another example of the Government demonising and punishing the most vulnerable in our society and making the poorest live in greater poverty. The most important fact to take into account is that the Bill does not target only those who are out of work, whom I refuse to refer to as skivers, but those who are in work on low wages. It does not affect just those in part-time work, but people who are in more than full-time employment—people who regularly work long hours or complicated combinations of part-time jobs just to make ends meet.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend agree that the problem is not just with the 1% cap? A constituent came to see me before Christmas who had been made redundant last year by a local factory. His wife is a cleaner and he has now taken employment in a local garage serving petrol at night. He will lose about £20 a week when the bedroom tax comes in because the family home of 30 years is now deemed to be under-occupied.

[Ian Mearns]

I could not agree more. My surgery in Gateshead is regularly populated by people with similar problems. This is a society that Government Members do not understand. In the whole town, the average income of a household is not much more than £20,000 a year. That is the income for the whole household, not for an individual.

[Stephen Mosley (City of Chester) (Con)]

Surely the way to help people on incomes of just above £20,000 is to reduce the amount of tax that they have to pay. What the hon. Gentleman is proposing is to tax them with one hand and give part of it back with the other. The way to solve the problem is to do what the coalition Government are doing and remove them from tax altogether.

[Ian Mearns]

What is shocking for low-income families is the impact of VAT on their real income. Rises in VAT and other taxes of that nature have a disproportionate impact on people on lower incomes.

[Mrs Moon]

Will my hon. Friend give way?

[Ian Mearns]

I am afraid that I will not, because I need to make progress.

The shocking statistic is that the number of people experiencing in-work poverty has risen to 1.6 million. Sadly, workers are increasingly reliant on welfare to top up their low wages. The number of families receiving tax credits has risen by 50% since 2003 and 4.4 million jobs pay less than £7 an hour. We have to ask ourselves whether we want to continue to support a situation in which private employers in particular do not want to pay a living wage to the staff that they employ in order to make profits.

As the Secretary of State knows all too well, a real-terms cut will have a much greater impact on low-income households than on higher-income households because basic living costs make up a greater proportion of their income. Even when a cut is proportional to income, it is often felt more acutely by a household on a lower income, as a greater proportion of its income is spent on essentials such as food, fuel and clothing.

On Friday, The Daily Telegraph reported the managing director of Waitrose as predicting that the prices of basic food such as bread and vegetables could rise by up to 5% this year, and in the past few months utility companies have hiked up their prices—the biggest change that I have seen so far is 10.8%. How on earth are the low paid and those out of work supposed to heat their homes and feed their families if their benefits are not increased in line with inflation? Families are already having to make difficult choices between heating and eating.

Make no mistake about it, the Bill is intended to squeeze further the already squeezed. Analysis by Unison shows that in-work poverty is becoming the modern face of UK hardship. It is estimated that the freeze suggested in the Bill will cost an average family with two children more than £1,000 by 2015-16. The Chancellor may point to changes in personal tax allowances as the reasoning behind the Bill, but that will do little to offset the shortfall in the income of working families. The Child Poverty Action Group argues that a working family eligible for both housing and council tax benefit will gain only 13p a week extra—13p!—as a result of the extended personal allowances. We should remember the furore that the 20p upgrade in old-age pensions caused under the last Government, and in this case we are talking about 13p. It is a slap in the face for the working poor and their children.

The CPAG has also spoken of its grave concern about the Bill, arguing that failure to

“uprate in line with inflation will increase absolute child poverty, relative child poverty and the material deprivation”

of many children. The Bill fails any fairness test with regard to income distribution, and it fails the working poor, the job seeking, the caring and the disabled poor. It will push those at the bottom further down the ladder.

The Bill is shrouded in smoke and mirrors. The Chancellor’s choice of start date to illustrate the rise of out-of-work benefits is 2007, but if we take a longer period, for instance beginning in 1979, we can see that benefits have risen significantly less than wages. He talks about strivers and skivers, but I see something different on the ground—families scraping by in low-paid work or jumping from insecure jobs to benefits and back again. The truth, unlike what the Government keep spouting, is that the vast majority of those who rely on benefits and tax credits are either in work, have worked or will desperately be trying to get into work in the near future. They have made a contribution to society, but their families are really struggling.

Welfare to work is a two-part equation: welfare and work. Where there is no work—in many parts of the north-east there is not a great abundance of work—there must be welfare that is enough to sustain families fairly. I know that in difficult times we all have to think about ways of reducing the bills that face the Government, but let us do that in a way that is proper, productive and economically and socially beneficial. Let us do it by stimulating, not stagnating, our economy; by unlocking the huge investment potential of UK business; and by creating hundreds of thousands of real jobs, building houses and reinvigorating our infrastructure, not by punitively poisoning the minds of ordinary people and punishing the poor.

--- Later in debate ---

[Lisa Nandy (Wigan) (Lab)]

I do not have time to do justice to the appalling, grinding impact of this miserable piece of legislation on the 3,500 people I represent who are seeking work, including a number of people who until last year used to work for Remploy, when they were casually forced out of work by Ministers. I do not have enough time to do justice either to its impact on the 8,500 working families who will lose out as a result of the Bill, or the 40% of children across Greater Manchester who already go to school hungry. There was not one single reference to them in the autumn statement, and we have heard very little about them from Government Members today.

It is bad enough that, as food banks spring up across the country, the impact of the Bill will be felt by the children I represent. It is worse that the Government believe it is appropriate to label them and their families as shirkers and scroungers—to play the politics of division while at the same time failing to explain how jobseeker’s allowance claimants gaining 72p per week and millionaires gaining more than £2,000 per week could possibly be fair in anyone’s book.

In the past few days, it has become absolutely clear that the case for the Bill is based on a series of what I can only politely describe as false premises: that it is on the side of people in work, when, as the Resolution Foundation pointed out, two-thirds of the people who will be hit are in work; and that there is a culture of worklessness, which the Joseph Rowntree Foundation roundly disproved in its recent research.

[Ian Mearns]

One of the things that stuns me about the debate is the fact that 57% of children living in poverty actually have one parent who is in work. It is dreadful that Government Members discount that fact.

[Lisa Nandy]

I could not agree more with my hon. Friend. That brings me on to the third false premise that the Bill is based on: that there are two distinct groups, the working poor and the non-working poor, who can somehow be separated out and divided when, as we know and as the research proves, most of the people we are talking about are moving in and out of work at an alarming rate. Many of the people I represent work part-time on zero-hours contracts. They are agency workers and they are in insecure employment.