Working People’s Finances: Government Policy

Jessica Morden Excerpts

Tuesday 21st September 2021 Commons Chamber

[Liz Twist]

I thank the hon. Member for his intervention; of course, I absolutely agree with the important point he makes.

Some 7,320 households in my constituency of Blaydon, or 21%, will be affected by this cut, which represents a combined loss for low-income households in Blaydon of £146,400 a week. That is £146,400 being sucked out of the local economy each week, virtually overnight. Is that levelling up for my community? I thank the North East Child Poverty Commission for the important work it does to produce such figures, which graphically illustrate the problems we are facing.

We have talked a lot about jobs as well, because universal credit is as much an in-work benefit as it is an out-of-work benefit. Some 40% of those on universal credit are in work, many doing really important key worker jobs that did so much for our society during the last 18 months of the pandemic. This is not about people being lazy and wanting handouts. Low wages, poor-quality jobs, zero-hours contracts—they all mean that being in work is no longer enough to be out of poverty in this country.

[Jessica Morden (Newport East) (Lab)]

My hon. Friend is making an excellent point. She refers to the fact that 40% of universal credit claimants are in work. Does she agree that that means that one in 14 British workers might be affected by this cut?

[Liz Twist]

I thank my hon. Friend for her intervention and share her concern about the number of people who will be affected by this cut. Being in work is not enough; we need better quality jobs, with proper conditions and adequate pay.

I want to mention the energy price cap rise and the inevitable cost rises that will follow. Many of these families will feel the impact of that. Many may be living in poorly insulated homes and may feel the need to increase the heating in their properties. We know that there are links between poor quality housing and poverty and, indeed, poor health, so the energy price cap rise will have a significant impact on those families—probably more significant than for some of us. Labour wants to keep the uplift until we can replace universal credit with a better, more compassionate social security system that properly supports those who need it.

I want to refer also to the increase in universal credit claims as a result of the pandemic. I have managed to get information from Gateshead Council showing a significant increase in council tenants across Gateshead claiming universal credit. Indeed, from April 2020 to the end of March 2021—almost exactly that whole year of the pandemic—there were 1,758 new universal credit claims. Some of those dropped off during the year—perhaps they were not eligible, or whatever—but there was still an increase of nearly 1,100 tenants claiming universal credit.

One other issue, which we have talked about often and must not forget, is the five-week wait, which leads to incredible arrears, certainly in Gateshead. By 31 March, 69% of Gateshead tenants were in arrears by an average of £666. Clearly, those arrears need to be resolved at some stage. They are a debt around the neck of those people.

I want to talk about the national insurance rise. Research from the New Statesman and the Resolution Foundation shows that people in the north-east will lose a higher proportion of their disposable income than those in the south of England due to incomes on average being lower in the north-east: people in the north-east will lose up to 25% more income than those in the south-west. When it comes to social care, people will still need to sell their home to fund their care, especially people with lower value homes. They will still face a substantial cost before the cap kicks in. Homeowners in the north-east could face care costs of up to three fifths of their assets, including the value of their home, while homeowners in London face costs of just 17% of their assets due to the difference in the value of housing. That is deeply unfair, on top of the additional contribution for many workers who, as I said, are in relatively low-paid jobs.

--- Later in debate ---

[Jessica Morden (Newport East) (Lab)]

I congratulate the hon. Member for Hartlepool (Jill Mortimer) on her maiden speech. She is not in her place, but it was a very good maiden speech and I look forward to joining her in many more debates in this place. Having spent a little time at by-elections, I have never quite been sure that Peter Mandelson would confuse mushy peas with guacamole, but there we go.

Thank you very much indeed for calling me today, Mr Deputy Speaker, to support Labour’s motion on behalf of all the families in Newport East who have been hit really hard over the past 20 months and who now face the perfect storm of rising costs and cuts to Government support, with their incomes down and prices rising. Instead of making positive plans to tackle the problem and to help people, Conservative Members are making it worse, as we saw last week from their manifesto-busting vote to increase national insurance contributions—we saw their actions then.

The burden of lower incomes and rising prices is falling yet again on working people who can least afford it. As my hon. Friend the Member for Blaydon (Liz Twist) said, many of the working people who are being hit yet again were the key workers we so relied on in the pandemic. As my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) said, this is very much about political choices. That is a point that we repeatedly have to ask the Government to address—this is about political choices that they are making.

Last month, I met my local citizens advice bureau in Monmouthshire. I also thank Newport CAB, which is doing an excellent job in difficult times with funding cuts—my thanks go to all those out there offering advice services, because we will really need them in the months to come. In my meeting with Monmouthshire CAB, we discussed the looming autumn crisis, the end of furlough on 30 September and the cut to universal credit, which so many hon. Members have mentioned and the impact of which we could see coming down the tracks.

The uncertainty of the pandemic has already led to a series of income shocks for many constituents who are struggling just to meet everyday bills. Whether those bills are for heating, food, transport, childcare, back-to-school costs or rent, they are pushing people into debt. The Money Advice Trust’s report “The cost of Covid” makes shocking reading: it found that 5.5 million adults are behind on their basic bills and credit payments, 12% of adults have used credit and 37% are using high-cost credit just to cover essential outgoings such as groceries and energy bills.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

My hon. Friend is making an excellent speech. Payday lenders —loan sharks, really—are charging exorbitant interest. The Government changed the regulations in 2017, but that has not helped at all. In the credit union market, which we particularly support, credit unions are absolutely at their limit because of covid, but the Government have not stepped in to support those low-cost lenders at all. It has been a boon to payday lenders, but for low-cost lenders such as credit unions, which are membership organisations, the Government have done absolutely nothing.

[Jessica Morden]

My hon. Friend has made an extremely valid point. I see that at first hand in my constituency, and I hope that Ministers will note what he said, take it away and actually do something about it.

People are using credit, including high-cost credit, to cover essential outgoings—spending on groceries, energy bills, and school books and stationery for children. Those on the lowest incomes are also bearing the brunt of the rising food prices that we have talked about today. I pay tribute to Raven House Trust food bank, Caldicot food bank, and all the other food banks that serve Newport East for the fantastic work that they do to support people. I also pay tribute to the community and the churches for supporting those food banks during what has been a very difficult time.

[Liz Twist]

During the pandemic, we have seen our community groups, our churches and others come to the forefront and help people. Without that help, would not many more people have been in real difficulties?

[Jessica Morden]

My hon. Friend is right. We owe a debt of gratitude to all those out there in the community—in churches and in other organisations—who have stepped up to help those who are suffering the most.

According to the BBC food price index, food prices have risen by 8.3% since January, with meat and fish up by 22% and fruit and vegetables by 14.7%. As has already been said today, the Government have done very little to address the supply chain issues which are leading to higher prices yet again. We are seeing HGV driver shortages and delays at borders and ports, and we need the Government to address those problems. As we have seen in many news reports, the costs of raw materials for many goods and services have risen as well, affecting the cost of furniture, women’s clothes, vets’ bills, second-hand cars and more. So much for the positive strategy from this Government for shaping our future post Brexit.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making some excellent points about the wide range of problems that families are facing—not only the deeply mistaken cut in universal credit and the end of the furlough scheme, but wide-ranging price rises linked to supply chain issues and the Government’s ineptitude in so many respects. All those problems are hitting ordinary people across the country very hard. Do we not face a perfect storm for many of our residents?

[Jessica Morden]

My hon. Friend is spot on. It is indeed a perfect storm, with all those factors coming together at the same time.

Petrol and diesel are also more expensive, costing more than they have since 2013, and the cost of buying a home has skyrocketed in Newport East. Home-Start Cymru has highlighted the huge rise in prices in Monmouthshire, and we have seen the same in Newport. That has put the opportunity to buy beyond many people, particularly our local young people trying to get on to the housing ladder. Housing insecurity has increased, with more mortgage arrears and more people pushed into renting. My hon. Friend the Member for Houghton and Sunderland South mentioned the research carried out by Zoopla, which has reported that rental prices have risen by 5% in the last 12 months, while wages have remained stagnant for many. Average rail fares are rising three times faster than wages, and are 50% higher than they were in 2010. Studies by the Office for National Statistics suggest that those who commute to work are set to experience the steepest increase in rail fares next January. As we heard from my hon. Friend the Member for Reading East (Matt Rodda), it is all coming together in a perfect storm.

There are further problems on the horizon. This week we have seen the crisis in energy costs and soaring prices. Fuel debt is already the third most common type of debt with which people seek help. The energy price cap for October—just as the cold weather sets in, furlough payments end and the universal credit uplift is scrapped—is set at £153, higher than the warm home discount payment, which has been set at the same rate since 2014. As Martin Lewis has said on his website, that payment should be increased in the Budget, and I hope that the Ministers are listening to that too.

The CAB estimates that 2 million households are already behind in paying their energy bills. As I have mentioned the CAB, it is important to note that while demand for debt advice has gone up and up, funding for debt advice services has decreased. If the Government do nothing else as we come into the autumn, they should at least look at properly funding our debt advice services.

The cutting of the universal credit uplift will be the biggest overnight cut to social security, with 8,630 households in Newport East alone seeing their money cut by £20 a week. I know at first hand from my constituents, as many hon. Members do, how the uplift has been a lifeline for those struggling to buy essentials.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I have heard from One Parent Families Scotland that single parents are often overlooked and stigmatised, and that an overwhelming number of one-parent families are headed by single mothers. On top of the day-to-day worries of increased energy and food costs, they also worry about providing a happy Christmas or a fun birthday for their children, and will push themselves into debt to do so. The £20 universal credit uplift is a lifeline for single parents. Does the Member agree that it is not enough to be barely getting by, and that it is also about quality of life?

[Jessica Morden]

The hon. Member makes a really valid point. Added to that is the fact that single parents who are under 25 get a lower rate of universal credit because they are perhaps deemed to be living at home, which is deeply unfair. They will also be deeply hit by these cuts and changes.

We know that 40% of those who will be hit by this cut are in work. That is an inconvenient truth for Ministers, who ignore the fact that universal credit is as much an in-work benefit as an out-of-work benefit. A cut of £1,040 a year alongside the increase in national insurance contributions says everything about where this Government’s priorities lie. Action for Children has said that

“you can’t level up the country by pushing down the living standards of some of the hardest working families in the country.”

The Joseph Rowntree Foundation estimates that 300,000 more children will be pushed into poverty. Families who are just about keeping their heads above water will be plunged into poverty.

In the face of this crisis, the Government choose not to help but to make things worse, wasting huge amounts of taxpayers’ money on outsourcing and crony contracts while hitting the same group of people over and over again. I hope that Conservative Members will do better tonight than they have in previous votes. I hope that they will stand up for constituents who need them, and show that they understand what life is like for many in this country.