Welfare Reform (Welsh Valleys)

Jonathan Edwards Excerpts

Tuesday 11th November 2014 Westminster Hall

[Wayne David]

Yes. My hon. Friend touches on the central point of my speech. The welfare changes are having a detrimental effect not simply on individuals, but on the community as a whole, in a variety of different ways.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

On that theme, Sheffield Hallam university has just produced an important report on the welfare changes of the previous Labour Government and the coalition Government, indicating that more than £1 billion has been taken out of the Welsh economy as a result. The biggest single hit was the changes to incapacity benefit, which was a reform of his previous Labour Government.

[Wayne David]

The hon. Gentleman has led me on neatly to my next point and the central part of my contribution this afternoon. That is to talk not about the work of the previous Labour Government—yes, we began the process of welfare change, but we did it fairly—but about what we have seen since: a completely unfair introduction of welfare reform, or so-called welfare reform, that, more accurately, has been a way of making crude cuts affecting some of the poorest and most vulnerable in society.

As the hon. Gentleman said, however, an excellent report was published by the Industrial Communities Alliance in Wales. It was written by Christina Beatty and Steve Fothergill of the Centre For Regional Economic and Social Research at Sheffield Hallam university. The report sets out in well researched detail the scale of the Government’s cuts on one of the most deprived areas of the United Kingdom and quantifies in great detail the impact that those cuts are having on the economy of the south Wales valleys.

It is important to remember that not all the cuts have yet been implemented but, when they are, the valleys will lose around £430 million a year. That is an average of £650 per adult of working age. Those are massive figures, especially when we realise that the impact on the valleys is far greater than it is on virtually any other part of the United Kingdom. Without taking into account the household benefit cap and the bedroom tax, the overall financial loss for the United Kingdom as a whole is £475 per working-age adult—for the south-east of England, £370.

The contrast with the valleys is sharpest in parts of southern England outside London. In parts of Surrey, Berkshire, Hampshire, Oxfordshire and Buckinghamshire, the financial loss per adult of working age is estimated to be little more than a third of the loss for the people living in the south Wales valleys. The Government’s welfare cuts are therefore accentuating the already huge differences between well off and poor areas, and are having a hugely negative impact on the local economy across the old south Wales coalfields from Torfaen to Ammanford.

If that were not bad enough, Beatty and Fothergill have dug down to ward level and shown that the financial loss per adult in the poorest parts of the valleys is truly horrific. By looking at official Government data, they have shown that in Maerdy in the Rhondda the overall financial loss per adult is £1,050 per year and in Pen-y-waun, near Aberdare, it is £1,040 per year. In my own constituency, the loss is £820 in Bargoed and £790 in St James. In St James, for example, which includes some relatively well off areas, the loss is greatest at sub-ward level, among some of the poorest people in Caerphilly. If that is true in my constituency, I am sure that it is also true elsewhere.

The huge loss of income has not only a hugely negative effect on the individuals and families concerned, but a massive effect on the local economy—a point made by my hon. Friend the Member for Llanelli (Nia Griffith). Over time, Beatty and Fothergill estimate that some 3,000 jobs in consumer services can be expected to be lost as a result of the Government’s welfare policies. The Government’s argument, of course, is that reforming welfare in such a way is increasing the incentive for people to take up employment—I am sure we will hear that from the Minister—but the trouble is that in many parts of the valleys the local economy is incredibly weak and there is little sign of significant growth in quality job opportunities. What growth we do see tends to be in jobs that are part time, have zero-hour contracts attached to them and are very low paid.

There is another factor. Beatty and Fothergill have pointed out that the valleys have an archetypal “weak local economy” with a large pool of people who are unemployed. The consequence is that bringing into the labour market more people who have been on long-term disablement benefits does not necessarily lead to those people getting jobs. Men and women with health problems or disabilities, with few formal qualifications and little if any skilled work experience, and often in the latter phase of their working lives, are rarely employers’ first choice.

[Wayne David]

Yes, indeed, that is absolutely correct. My right hon. Friend makes her point well. To begin with, we have a larger proportion of people who suffer from disabilities than many other parts of the United Kingdom, because of the industrial past of the south Wales valleys. Such people are being especially hard hit by the Government’s policies.

Many of the people who are losing benefits are not securing employment—certainly not of the reasonably well paid variety. They are suffering a huge cut in their income levels and their standard of living. The report by Beatty and Fothergill points to the resources coming to the valleys from the European Union and compares those to the financial loss from welfare reform. We all know that as west Wales and the valleys were originally designated an objective 1 area, and then a convergence area, they received significant European regional development fund and European social fund moneys. From 2014 to 2020, we will see additional EU aid amounting to £1.6 billion. That funding will be worth around £120 million per year to the valleys, but, as I said earlier, the valleys’ loss through welfare reform is estimated at £430 million a year. In other words, the welfare cuts will remove almost four times as much money as the valleys receive in EU regional aid.

Let us not forget that the ongoing welfare cuts will be running in parallel with the harshest cuts in local government services that we have ever seen. Having been shielded by the Welsh Government until now, local government in the valleys is being forced to introduce unprecedented cuts in expenditure, which will inevitably hit hard those who rely most on local authority services: the sick, the disabled, women, the old, the young and the disadvantaged. Not only will services be hit, but we are likely to see jobs being lost and local economies suffering through the knock-on effects of the contraction of local government. Although the Beatty-Fothergill report does not examine what those cuts will mean, there is absolutely no doubt that they can only make a bad situation very much worse.

The Beatty-Fothergill report demonstrates that Wales is being hit harder by welfare reform than almost any other part of the United Kingdom, and that the valleys are being hit “exceptionally hard”. It concludes:

“The South Wales Valleys, long afflicted by the loss of jobs in coal, steel and manufacturing, have been the target of many regeneration efforts, some more successful than others. Welfare reform unequivocally works in the opposite direction: the poor will become poorer, and the poorest areas will fall further behind.”

Nothing highlights more clearly the need for a Labour Government in Westminster after next year’s general election. That Government need to pursue—I believe they will—policies that have at their heart the need to regenerate the economy of the south Wales valleys. We need policies that will provide well paid jobs, build on the excellent work of the Welsh Government’s jobs growth fund and harness creativity and drive so that entrepreneurship becomes the hallmark of the valleys.

[Jonathan Edwards]

I voted against the Welfare Reform Bill on Second Reading, and was proud to do so—reading the report, I feel vindicated. Will the hon. Gentleman outline which measures introduced by the current Government will be repealed by the next Labour Government, if there is one?

[Wayne David]

I am happy to say that top of our list will be the bedroom tax. We have made an unequivocal commitment to getting rid of that. Of course there will be welfare reform, but it will be genuine reform. The system needs to be modernised, but we will not place an undue burden on the poor and those who are least able to suffer cuts. Frankly, we will turn on its head a Government policy that is designed to make the poor poorer and the rich richer. We will have a Labour Government who will stand four-square behind ordinary people. Such a Government, armed with the policies that I outlined, will work in genuine partnership with the Welsh Government. I am confident that will happen and that a new and positive chapter will begin for the south Wales valleys.

--- Later in debate ---

[Alun Cairns]

With credit to the right hon. Lady, who has been a strong champion of constituents with disabled rights for many years and has gained respect throughout the House, I underline the comments made at the time by Disability Wales that Remploy and the segregation of disabled employees was something for the last century rather than this century. It wants the mainstreaming of disabled people. Disability Wales clearly recognises and champions that.

[Jonathan Edwards]

On universal credit, is it not the case, as the “Dispatches” programme highlighted last month, that the roll-out is in complete chaos and is a shambles, and that Jobcentre Plus is unable to deal with the demands of the roll-out set by the Department?

[Alun Cairns]

The hon. Gentleman will know that, in Wales, Shotton in Flintshire is where universal credit has been rolled out. The response has been remarkable in incentivising people into work. Some 75% have responded positively and said that they are now in a better position to find work as a result of universal credit than they were under the previous system.

In the minute remaining, I ask Opposition Members for support, because there is a responsibility on all MPs. Reference was made to council cuts and I underline the fact that council taxes in Wales rose when there had broadly been a freeze in England. We need to draw attention to that. Local authorities must keep their bills as low as possible.

Housing benefit has been considered and discussed. Only three local authorities in Wales applied for additional discretionary housing payments. Caerphilly was one, so I give recognition and credit to Caerphilly. If housing benefit and the spare room subsidy are such an issue, why did the other 19 local authorities in Wales not make an application for the additional funding that was available? I hope that the hon. Member for Caerphilly would support that.