Pensions and Social Security

Karl McCartney Excerpts

Wednesday 13th February 2013 Commons Chamber

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a pleasure to follow the other Back-Bench contributions in this somewhat sparsely attended debate, particularly the hon. Member for Hayes and Harlington (John McDonnell), who always speaks with consistency and clarity on these issues. Like him, I very much regret that the motions have been grouped in such a way that voting against the egregious real-terms cut in working-age benefits would potentially jeopardise the essential support to some of the most disadvantaged people in our society. I regret that it is not possible to vote against part of the measures.

When we debated the issue a few weeks ago, I raised a number of concerns. What I have heard this evening has done nothing to assuage those concerns. A below-inflation rise and a real-terms cut over three years will do nothing except pile on the pain for low and middle-income households that are already paying the price of the recession. The cap of 1% on the uprating of working-age benefits will drive low-income families into real hardship, increase levels of deprivation, and accentuate the gross inequalities that plague our society. It will hit parents especially hard, particularly those in low-paid or part-time work. Given the extremely short time that we had to debate this a few weeks ago, with strict time limits, it would be utterly wrong to allow this debate to end without challenging those points and reiterating the key issues.

It is fair to say that low-paid workers have already borne the brunt of the economic downturn. Many people have seen their working hours cut. Increasingly, we find people, especially women, working part-time when they really want a full-time job. Those who have child care and caring responsibilities, as the hon. Member for Edinburgh East (Sheila Gilmore) mentioned a moment ago, often find themselves in seasonal, temporary, part-time, insecure and sometimes zero hour contract work. It is extremely difficult for them to juggle the competing demands on their time if they have caring responsibilities or children to look after.

We should not forget that unemployment is still unacceptably high and concentrated geographically in certain parts of the UK. It is neither fair nor accurate to lay responsibility for high unemployment solely on people who are unemployed. Although it may be easier for us to abdicate responsibility for economic policies and political decisions and blame unemployed people for their own plight, we should acknowledge the role of the wider economy, the climate we are living in, our political response to it and the inadequacies of that in creating the present high levels of unemployment.

The key point is that it is not just the unemployed who are hit by a freeze and a cut in working-age benefits—it is people in work who will pay the highest price. The Resolution Foundation has said that around 60% of the cuts will fall on people in work. It is important to see the impact of the autumn statement in the round, looking at the freeze on benefits alongside other measures. According to Citizens Advice, a family of two parents both working in full-time low-paid jobs, with two children, paying a modest rent of £130 a week, will be more than £12 a week worse off by 2015. A similar family with one full-time earner on minimum wage will be about £13 a week worse off by 2015.

A disabled lone parent of two children receiving the support component of employment and support allowance will see a comparable net loss of income in real terms. This does not take account of the cuts that such families have already experienced through last year’s changes to the tax credit system and child care support. The distributional analysis of the Government’s own impact assessment shows that the Government’s reforms will hit the lower half of the income spectrum hard. The analysis by the Institute for Fiscal Studies shows that the pain of the austerity measures is being felt in the lower five income deciles, with the biggest losses in the lowest deciles.

The point that I have made previously in debates on this subject is that although these distributional analyses can be helpful, they do not tell the human story. More than that, they do not show the disproportional impact that the rising cost of living has on low-income households. In the context of today’s inflation forecasts that show that high inflation is set to be with us for several years, this point becomes even more acute. Whether it is hikes in domestic fuel prices or rises in the price of staple foods, it is the things that lower income households most depend on that are going up in price most quickly. I have said before that I do not think the retail prices index or the consumer prices index is a particularly good measure for assessing the experience of inflation in lower-income households, but the CPI for sure underestimates the real impact of those real-term cuts in support.

This is not just abstract economic theory. We are talking today about the difference between a 1% rise of about 71p and an inflationary rise of a meagre £1.50 a week. It is important that we bear in mind what we are doing. Abandoning any link with earnings or prices sends a strong signal that the Government are abandoning any support for citizens going through tough times. It undermines the social contract that most of us thought we had.

The 4% cut in real terms to low and middle-income families will have material consequences for thousands of families right across the UK. These are deeply regressive measures. They are mean and miserable. They will affect 30% of all households in Scotland. They will affect the vast majority of families with children. Given the importance of the issue, the consequences that it will have for our constituents, and the lack of time that we have had to debate it, it is a scandal that the Government Benches are so empty this evening. No one has risen from the Back Benches to defend this egregious policy. I urge the Government to think again.

[Karl MᶜCartney (Lincoln) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

I am just concluding, and the hon. Gentleman was absent for most of the debate, so I do not think it is fitting that he should try to get in at the last gasp.