Welfare Cap

Debate between John McDonnell and Alison McGovern

Wednesday 29th January 2025 Commons Chamber

[John McDonnell (Hayes and Harlington) (Ind)]

I hope that the Government will consider completely scrapping this debate in future years, because it has become farcical. The right hon. Member for Islington North (Jeremy Corbyn) will remember that the welfare cap was introduced because of the Dutch auction that was going on in this Chamber about who could be more brutal on the poor. The welfare cap was part of that period of debate, in which anyone claiming benefits was allegedly a welfare benefit scrounger who was not willing to work for a living. That was the atmosphere that was engendered in this Chamber. At that stage, to be frank, it was deeply worrying. In many ways, humanity almost left the Chamber.

The farcical nature of the debate is that, having introduced the cap, Minister after Minister would have to come back each year and report that the cap had been breached, because more expenditure had been forced on the Government as a result of the increasing levels of poverty. I suppose that it at least gives Members the opportunity to have some discretion over issues of poverty.

May I suggest to those on the Labour Front Bench that they should remove the cap, because it has become a farcical exercise? If we are to have a debate on poverty, there should be an annual report by the Labour Government on the poverty strategy that they are now developing. I believe that the commission established by the Labour party is now working, and it would be so much better if we had a report and did not have the farcical pantomime that we have today.

[Alison McGovern]

I thank the right hon. Gentleman for allowing me to intervene briefly to say that the child poverty taskforce’s work is ongoing, and that it regularly engages with parliamentarians and others to update them. I know that many parliamentarians have been pleased to involve themselves in that work, given the importance of tackling child poverty.

[John McDonnell]

That is a really helpful response, but it does not respond to the fact that if we are to have a focus on poverty, rather than a debate on the welfare cap, which is breached on virtually an annual basis, it might be better to have a debate on the Government’s strategy to tackle poverty overall. Then we could have a proper discussion, and even a debate with a motion that could be amended where we want to see improvements. That is what I want to get on to now.

I hope that people have seen today’s Joseph Rowntree Foundation report on overall poverty, which reflects what most of us know and experience in our constituencies. It is shatteringly depressing, to be frank, because it does not show any improvement over the last few decades. The hon. Member for Faversham and Mid Kent (Helen Whately) mentioned that the Tory Government introduced this measure when they came into power. It was during the period of austerity, and it is worth reflecting on what that meant.

The London School of Economics’ report and other independent reports say that 140,000 people lost their lives as a result of austerity; others have estimated that the figure could be up to 300,000. In part, that was because of the grinding poverty that was imposed on people, as reflected in all our constituencies—we saw it. I remember a time when there were no food banks in any of our constituencies, because they were not necessary, but now they are, as a result of 14 years of austerity.

If we are to have a proper debate on poverty, we need to highlight as individual constituency MPs where we think the Government should be going, so I will briefly do so on the basis of what we have seen in the Joseph Rowntree Foundation report. I always cite the overall figures: we have 15 million people living in poverty, including 5 million children. I think the Joseph Rowntree Foundation report says that there are 4 million people living in deep poverty, and nearly 4 million in destitution.

The statistic that always shocks me is that 1 million children are in destitution. I never thought we would use the word “destitution” again in our society; I always thought we would improve year by year and lift people out of poverty. I never thought that children would live in poverty in the way that some of my generation did.

There are groups that clearly need to be on the agenda, and my hon. Friend the Minister has mentioned some of them, thank goodness. I chair a group of unpaid carers, of whom there are 5 million in this country. If an unpaid carer is looking after a disabled member of their family, it is almost inevitable that they will be living in poverty, unless we face up to the central demand of unpaid carers, which is to address their income. It is not just about how much they can earn, which the Government have looked at recently; it is about the carer’s allowance being at such a level that people cannot survive on it.

Looking at the report with regard to families with children living in poverty, I cannot at the moment see a faster way of getting children out of poverty than scrapping the two-child limit. I am hoping that will be on the agenda as a priority when the Child Poverty Action Group reports to Parliament.

The Joseph Rowntree Foundation has identified that the poverty rate among disabled people is now 30%. The Government are about to consult again on the work capability assessment reforms because they lost in court to Ellen Clifford two weeks ago. I am pleased that the Government lost in court, to be frank. The basis of that decision was the lack of consultation on the previous Government’s reforms. I do not understand why our Government continued the appeal within the court, but they did. They have now lost and have been forced to bring forward their consultations on the reform of the work capability assessment.

I am hoping that those reforms will be done in co-production with disabled people—on the basis of the disability groups’ principle, “nothing about us without us”. My fear is that an overhanging £3 billion-worth of savings is required from the DWP on this issue. If that results in cuts to individual benefits, I think there will be uproar within our communities and across this House. What is also interesting in the Joseph Rowntree Foundation report is that the poverty rate among people who are suffering long-term health conditions is 50%. The work that the Department of Health will now do in walk-in advice surgeries, for example, and the focus on mental health, will be key.

The household benefit cap overall is iniquitous. It forces families into poverty, particularly in places such as London, because of the high rents that are hitting people. According to the Joseph Rowntree report, the poverty rate among renters in social housing is 44% and in the private rented sector it is 35%. The Government’s refusal to accept the amendment to introduce rent controls, which was tabled by a number of Labour Members, was extremely disappointing. The Government could at least devolve that power to the individual Mayors so that they can represent their communities and introduce rent controls where necessary. I believe that Sadiq Khan has expressed his support for that power to be devolved. With rent controls, we could tackle the housing crisis that we face within our constituencies.

When we talk about poverty, we need to come forward with an agenda that will tackle it at pace, and I do not think that, in our discussions in the future, a welfare benefits cap in any form will assist in bringing forward the reforms that our constituents so desperately need.

Economy and Jobs

Debate between John McDonnell and Alison McGovern

Thursday 29th June 2017 Commons Chamber

[John McDonnell]

I am not sure that that adds to the sum of human knowledge.

[Alison McGovern (Wirral South) (Lab)]

In response to the intervention from the hon. Member for Solihull (Julian Knight), does the shadow Chancellor think that the Tory Brexit mess has been good for confidence in the UK economy, or less good for confidence in the UK economy?

Zero-hours Contracts

Debate between John McDonnell and Alison McGovern

Wednesday 19th March 2014 Westminster Hall

[Alison McGovern]

I agree with my hon. Friend. Given the plethora of things that found attention in today’s Budget, it was a surprise that the Chancellor did not want to talk about zero-hours contracts, which seem to be at the heart of the Government’s approach to economic recovery.

I want to return briefly to the numbers. If the Minister has not yet clocked the problem, she ought to. The ONS has effectively said that previously it was undercounting due to the definitions in the labour force survey and/or a problem with people’s awareness that they are on zero-hours contracts. We now cannot tell what the trend is. The latest statistics may or may not represent a massive spike in the use of zero-hours contracts—I do not know. We cannot tell whether the statistics show a rise or a fall, because it is clear that the ONS has been undercounting previously. I would therefore like to know what further research DBIS has commissioned. As policy makers, we are in an awful situation—there is a phenomenon in the labour market, but we do not know what is happening. What further research has been or will be commissioned by DBIS, because unless we know whether the phenomenon is radically and exponentially increasing, how can we know what measures should be taken to tackle it?

Secondly, I would like to know what the Government are doing. The Minister will probably stand up and say that they have talked about preventing exclusivity clauses, which is okay and fine, but there is a raft of other ways in which the Government need to tackle the phenomenon, not least the one mentioned by one of my hon. Friends in relation to the Work programme and jobcentres. For example, are jobs on zero-hours contracts routinely being advertised through Jobcentre Plus and are claimants then sanctioned if they do not take them? I am afraid that it will not be enough for me to know whether a policy document exists. I would like to know whether the Minister believes that people are routinely being sanctioned for not taking jobs on zero-hours contracts, because it would be terribly serious if that were the case.

I have always said that if a small business offers opportunities on a zero-hours basis, as and when, and the person taking that job is in no way penalised if they turn down the hours—either they are a student or they just want to keep their hand in with a job but do not want lots of hours—that would be okay in my book. However, the problem is that we are in a world in which Jobcentre Plus is being directed to get the claimant count down, and we know that there are significant problems in the DWP and in that organisation. I am very worried about the idea that my constituents and others are being forced into employment on a basis that they do not really want or feel comfortable with because of current policy decisions.

I stand in this Westminster Hall debate today, proud of Wirral council, the local authority in which I am a Member of Parliament, because it has tried to adopt Unison’s ethical care charter. The council has said—to respond to the points made by my right hon. Friend the Member for Oxford East (Mr Smith)—that in its commissioning, it wants to adhere to standards to ensure that, in the very important work of looking after older people or those who are vulnerable and need a bit of help, it is not participating in a race to the bottom. That involves moving away from zero-hours contracts, paying properly for travel time, trying to get to the living wage and ending 15-minute appointments.

Without going deeply into the care sector, we need to look at the role of central and local Government in preventing zero-hours contracts, in both their commissioning and procuring roles. We can try to lead from the front. I would like to know what conversations the Minister has had across DBIS on procurement and commissioning, and across the Government on moving away from zero-hours contracts and saying, “In general terms in our economy, it is not a hugely helpful phenomenon to have people with unpredictable levels of income at the end of each month.” Will the Government lead the way in trying to set the standard in the labour market? What conversations has the Minister had about that?

This issue has been mentioned, but I would also like to know what the Government are doing to enforce the minimum wage properly. It seems to me that there is a group of—not universally, but broadly—women in society who are at risk of not being paid the minimum wage. They are in a workplace in which they are not necessarily powerful, and they often have child care or other caring responsibilities alongside their job, and cannot be expected to expend the time and effort to take their cases forward. It falls as a duty on us in this House and on the Government to ensure that we stand up for those people and ensure that they get the minimum wage.

Without focusing universally on the care sector, there was further new evidence this week that it is becoming more difficult to have a predictable or the same carer all the time. Part of that is about the use of zero-hours contracts and their unpredictability. I repeat my question to the Minister: what cross-Government conversations has she had to find out what actions DBIS needs to take to lead in response to the phenomenon?

I do not know whether the Minister is aware, but zero-hours contracts are not the only problem in this sphere. Often, they go alongside the use of agencies and other ways in which people find loopholes to get around their responsibilities. I would not want us to bear down on the use of zero-hours contracts only to see the problem pop up in another guise. The Minister should be aware of that problem as we move forward. It should not be about closing down one way of getting around employers’ responsibilities, only for the problem to raise its head under another definition. The Minister needs to think carefully about that.

[John McDonnell (Hayes and Harlington) (Lab)]

Before my hon. Friend concludes, I want to congratulate her not only on today’s debate, but on the significant work she has done over the past two years. She has concentrated to a certain extent on the care sector, but may I point her towards the fast food industry? With the bakers’ union, we have just launched a campaign in the fast food sector not only for the living wage, but to oppose the imposition of zero-hours contracts, because they are used by managers to intimidate workers. For example, if a worker seeks to join the union or seeks to exercise or make representations about their rights, they will be denied work under zero-hours contracts for the following week. We are seeing them being used as an intimidatory tool, as well as one of exploitation.

[Alison McGovern]

My hon. Friend is right. One of the worst things about zero-hours contracts is what I call “zero-hours contracts as a management tool”. People have brought cases to me where, for whatever reason, somebody’s face did not fit and they did not end up getting any hours. That is no replacement for the usual practices of good management and all the rest of it, so it is something that we absolutely need to be aware of.

Another thing that employers can practically do to help us to deal with the situation is encourage people to join a trade union—I would say that, being a Labour MP. People will not always have the capacity to raise such issues themselves, but with workplace representation, they can, and we can help on low-paid work issues, such as getting people skills and boosting their abilities. I am sorry to be so predictable—being a Labour MP and supporting people joining a trade union—but there is a reason for joining a union. A union is a practical bit of infrastructure that can help businesses to give their workers a sense of being involved in the leadership, and help to tackle some of these problems. I think good employers would agree with me on that.

I want to take the opportunity to thank parliamentary colleagues who have taken the time to come along to today’s debate. Most importantly, however, I thank every single person who has been in touch with me over the past week or so since I was awarded the debate. I also thank all the people who have been in touch with me over the past six months to share their experience. I felt the experiences of people working on that basis were totally hidden. They are not hidden now. The question is: what can we do about it?

Finance (No. 3) Bill

Debate between John McDonnell and Alison McGovern

Tuesday 5th July 2011 Commons Chamber

[John McDonnell]

No. If that was the case, we would not have introduced a stamp tax on transactions. It brings in £5 billion and has been an incredibly successful tax. The concern has been expressed that this country would be disadvantaged if it acted unilaterally, but the International Monetary Fund’s study does not say that. It cites the stamp duty as an example of a transaction tax that has not affected UK business and states that financial transaction taxes

“do not automatically drive out financial activity to an unacceptable extent”.

Banks do not leave, because they know that they are secure in this country—in fact, they know that if they get into trouble we bail them out.

The argument that London’s advantages would evaporate overnight as a result of this sort of tax are just not accurate. The reason this country has these advantages, apart from the experience in dealing with financial transactions that we have built up over generations and centuries, is that it is time zone-critical—it is located between the Asian and New York markets—so it is ideally placed to ensure that financial operations are carried out in London. If companies were to move elsewhere in Europe, where would they go? Germany, our main competitor in the European time zone, is already committed, under Chancellor Merkel, to implementing a financial transaction tax.

The argument that is made now about needing some form of global international agreement is exactly the same one that was used to say that we should not introduce any form of taxation on bank bonuses. When we introduced the one-off tax on bonuses in 2010 we were told of fears that there would be a mass exodus of bankers leaving the country. In fact, the recruitment of bankers has increased—perhaps that is a debate for another day.

[Alison McGovern]

On the argument that my hon. Friend has just made about whether or not people would leave as a result of such a tax, does he agree that we should support what J. K. Rowling said in 2010 about people who might leave this country because of taxation? She said:

“I cannot help feeling…that it would have been contemptible to scarper…at the first sniff of a seven-figure…cheque.”

Ought we not to support her on this?

[John McDonnell]

There is a spell, is there not—[Interruption.] The new sequel film is coming out soon, so we will see what spell there is to retain bankers in this country, if we need them.

I do not take this issue about international agreement lightly. That is why I am calling for a report, as any report would examine that issue. We are going back to the point that my hon. Friend the Member for Wirral South (Alison McGovern) made earlier, because this country is best placed to take the lead in trying to secure some of these agreements and such a report could address how we could do that. However, it certainly should not hold us back from taking unilateral action.

The other matter that has been raised in this debate previously is the concern about avoidance, but we can design out any avoidance measures. We can design this tax to make it difficult to avoid, just as we did with stamp duty.