DWP Policies and Low-income Households

James Berry Excerpts

Tuesday 17th January 2017 Commons Chamber

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

The Minister paints such a rosy picture, yet the SNP spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), gave examples of cases that he has experienced. I could also give examples, and I am sure that Government Members have examples of cases they have dealt with regarding the work capability assessment or other cuts. It is absolutely right that we debate this very important matter.

The Minister started by expressing the Prime Minister’s commitment about having

“a country that works for everyone.”

We need to scrutinise those words and, more to the point, work out whether they are actually true, particularly in relation to social security policies and their impact on low-income households.

To understand why the Government’s attacks on the poor are so damaging not just to the people who experience those attacks, but to the whole country, we need to understand the situation in the context of inequalities. I worked on this for more than 20 years before I entered this House six years ago, and I focused on the effects of inequalities in income and wealth on our health. Overwhelming evidence over the past 30 years shows that the risk of poorer health and lower life expectancy increases from high-income to low-income groups. My dear friend, the former Health Secretary, Frank Dobson, said:

“There is no more serious inequality than knowing that you’ll die sooner because you’re badly off.”

This pattern of illness and disease is systemic, socially produced and universal. It is not about the individual or biological factors. It is about inherent, systemic, socially reproduced inequalities. They are not inevitable. They can be changed, so we should all have hope.

The pioneering work of Professors Richard Wilkinson and Kate Pickett published in “The Spirit Level” a few years ago showed that socioeconomic inequalities do not affect just life expectancy, but educational attainment, social mobility, crime levels, mental health, happiness, and even trust within and between communities. The simple truth is that the smaller the gap between rich and poor, the better we all do.

When the Prime Minister claims she wants to tackle these burning injustices, I have to ask her where she has been. These injustices were burning while she was a senior member of the Government. Now that she is Prime Minister, what is she doing to address them? Again, I am going to go on to show that it is not a lot.

This week, as the World Economic Forum gets under way in Davos, we hear the same warning we heard from the IMF in 2015—that widening inequality is the most defining challenge of our time. Last week, we heard yet again about obscene pay ratios, with top executives now earning 130 times more than the average employee. Yesterday, Oxfam published the breathtaking figure that eight individuals have the same combined wealth as half the world’s population—just eight people.

Last Friday, the Institute for Fiscal Studies published its analysis of inequality in the UK, which showed that the inequality in pre-tax pay between high and low earners has risen. Since 2010, working people on low incomes—particularly families with children—have lost proportionately more of their income than any other group, as the net result of tax and social security changes.

The Government have glossed over this problem with divisive rhetoric. Repeatedly, they have said that poverty and inequality are a pathology of the individual rather than the result of the structural flaws of their economic and public policies—particularly their social security policies.

We have just heard from the Minister that work is the route out of poverty, but why is it that, contrary to the Government’s divisive narrative, more people in work— 7.4 million people—are in poverty than ever before? Three million children of the 4 million living in poverty are living in families where someone is working. How can that be a success story of the Government? When will they start to look at the structural issues in the labour market and at the productivity crisis rather than victimising the poorest? Four out of five people on low incomes now will still be on low incomes in 10 years. What have the Government done about that?

The motion raises some of the important questions hanging over the Government’s flagship programme, universal credit. We supported the original principles of universal credit—to make sure that work always pays, by allowing people to work more hours without the fear of being made worse off. Universal credit had the potential to address inequality, by targeting employment support to those on low pay, reducing the cliff edge associated with other support, such as tax credits, as the Minister said.

However, we are a world away from the project initially lauded by the Government. We have been through seven delays in implementation, a reset by the Major Projects Authority, criticism from the National Audit Office and costs spiralling out of control. The many practical issues with the programme have yet to be sorted out, and a full working delivery is still a distant prospect. Fundamentally, there are key flaws in the design of UC.

Take, for example, the issue of four-weekly payments, with people being paid twice during one universal credit assessment period and expected to re-apply for support the following month. As hon. Members can imagine, many people do not know they have to reapply, so it comes as a rather unpleasant surprise when the Department refuses them support. Will the Minister please update us on progress in dealing with four-weekly payments?

Or perhaps we should look at the impact of universal credit’s so-called long hello. Last year, a report by The Guardian showed that the shocking 42-day wait to receive the first payment had sent claimants’ food bank use and rent arrears spiralling. One survey of landlords responsible for 3,000 households on universal credit found that eight out of 10 tenants were in arrears. Will the Minister commit to immediately reducing that waiting time and to providing immediate access to hardship funds so that people do not have the current two-week delay?

On sanctions, I am pleased that the Government are finally seeing the evidence of how damaging the system is and its impact on getting people off flow. We cannot underestimate the impact of sanctions when it comes to the rosy picture of falling claimant counts. Under the UC regulations of 2014, the Government are able to sanction people who are in work on low pay. We are now starting to see more people who are already working—doing the right thing—being sanctioned because they are not working hard enough. One million people on zero-hours contracts are potentially under threat from this Government.

[James Berry (Kingston and Surbiton) (Con)]

Will the hon. Lady give way?

[Debbie Abrahams]

I am sorry but I will not; otherwise, people are going to miss out. [Interruption.] I am happy to take it outside, gentlemen.

Most important for low-income families has been this Government’s slashing of the programme’s budgets, significantly undermining the principle that work will always pay under the scheme. Cuts to the work allowances of universal credit will mean that, on average, claimants receive £2,100 a year less than if they were on UC. The autumn statement had no impact on this.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned the impact of this Government’s horrendous cuts on disabled people. With nearly £30 billion of cuts to 3.7 million people, we are definitely going to see more than 5 million disabled people pushed into poverty. We also heard about the jobcentre closures. It seems that the universal credit programme will no longer make work pay. It was built by a Government who believe that the best way to help people into work is by shutting jobcentres. We believe that, like our NHS, the social security system should be based on principles of dignity, inclusion and support, and Labour will do this.