In-work Poverty

Karen Buck Excerpts

Wednesday 28th June 2023 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

It is a pleasure to be here under your chairmanship, Sir George. I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on introducing the debate, and on setting out a powerful and well-argued case for action on the scourge of in-work poverty. We also heard excellent contributions from my hon. Friends the Members for Wansbeck (Ian Lavery), for Newport West (Ruth Jones), for Luton South (Rachel Hopkins), and for Reading East (Matt Rodda).

A consistent theme of the debate has been the extent to which the problem of in-work poverty, which has increased over a number of years, has been exacerbated by the cost of living crisis that we have been grappling with over the past year. That is driven by such factors as core food inflation, which is worse in this country than in neighbouring countries; the housing cost crisis, which has been driven by rising mortgages and rents; and a decade of low wage growth.

The Trussell Trust’s figures today, which should shame the Government—should shame any Government—show that the scourge of food insecurity is affecting millions of people. As was said by many hon. Friends, it has been proven that work is not in itself a means of ensuring that people are not food insecure. My food bank, and food banks in the constituencies of my hon. Friends, are reporting unprecedented demand for assistance from people who are working.

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

Does my hon. Friend want to comment on the fact that work is now not the route out of poverty, as we have heard? Nothing in what the Government propose on in-work progression will make an impact on that.

[Ms Buck]

I will touch on that in a second. We all want to see people in good, well-paid work. The fact that work is not a route out of poverty has been proven amply in recent years, and more so than previously, but I would also say that work in itself is not necessarily a route out of poverty for people bringing up children. It has always been, and remains, the case that Government have a role to play in ensuring that working families, including those with children, receive support, and that that is not simply left to wages.

The story of in-work poverty over the last 13 years is one of wasted opportunity. One of the most underappreciated social changes of recent decades is the decline in family worklessness. When Labour came into government in 1997, one in five children were living in a workless household. On the most recent data, 9% of children are in workless households. The decline in family worklessness has been an almost continuous trend, outside of economic downturns, over the last two or more decades. There are not only far fewer children in workless families than there were a generation ago, but more couple families in which both adults are working, and fewer in which only one parent works. All those changes should be positive for poverty reduction.

“Work is the best route out of poverty” was always a glib soundbite that dismissed the challenges faced by people who cannot work, whether because of disability, health or caring responsibilities, but it is true that as a general rule parental employment greatly reduces the risk of poverty. On the face of it, then, the employment situation for families with children is incomparably better than it was a generation ago, yet despite continuing improvement in parental employment, child poverty was higher in 2021-22 than it was in 2010-11.

The link between increased employment and poverty reduction broke down somewhere around the middle of the last decade. Some 19% of children in families with someone in work were in poverty after housing costs. By 2019-20, that figure had risen to 26%. It fell back very slightly in the latest data, which are for 2021-22. I suspect that is to do with the boost provided to universal credit and other support during the pandemic.

Astonishingly, the poverty rate after housing costs for children in single-earner families with full-time work is now 44%. Given the changes to employment over this period, had the risk of poverty for working families remained where it was when Labour left office in 2010, we would now be looking at there being far fewer children in poverty. That is what I mean about a wasted opportunity. Just think: the historical record of Conservative-led Governments would be one of poverty reduction. Ministers would be able to proudly defend their record on child poverty. They would not need to switch poverty measures to confuse people. They would be quite happy to be judged on the headline relative poverty measure.

How did this all happen? Faced with employment trends that would have reduced poverty, we had policies that made working and out-of-work families poorer—specifically the benefit freeze, which permanently reduced the value of in-work and out-of-work support. Universal credit was designed around a single-earner household model, and it continues to provide poor rewards for second earners when they increase their hours and earnings. The Government’s response to the weak incentives in universal credit is the crude stick of in-work conditionality. It is virtually an admission that they do not expect second earners to be dramatically better off if they increase their earnings.

For too long, jobcentre policy has been concerned with getting people into any job without considering crucial aspects of job quality such as stability and predictability of earnings and progression. If we want work to be the main route to poverty reduction—and we do—for those who can work, it needs to be work where people can genuinely improve their incomes over time, rather than struggle with zero-hours contracts, unpredictable shift patterns and fluctuating earnings.

The lesson is that increasing parental employment is a necessary but not sufficient condition for reducing child poverty. If we want to reduce poverty, we need a genuinely supportive welfare state and a focus on job quality. These have been the missing ingredients in Government policy since 2010, leading to the squandering of opportunities for poverty reduction.