Working People’s Finances: Government Policy

Liz Twist Excerpts

Tuesday 21st September 2021 Commons Chamber

[Liz Twist (Blaydon) (Lab)]

Let me start by saying that I make no apology for referring to a subject that I have talked about very often in this House and in questions—universal credit and child poverty, which are inextricably linked. I want to talk again about the serious and really disproportionate effect that ending the universal credit uplift will have on people in my constituency of Blaydon and across the north-east.

Many constituents have written to me expressing their concern about the cut—the loss of the £20. I have heard both from people who receive universal credit themselves and know what a huge difference that has made to them, and from those who are concerned about other people in their community who will be affected by the cut. There is a real and genuine concern about how people will suffer as a result of the loss of that £20.

One of the many constituents who got in touch with me, Stacey, will, after the cut, no longer be able to afford to take her child to their hospital appointments as the travel fare is too expensive, leaving her, she says, to choose between buying food and accessing healthcare. Stacey’s story highlights perfectly what we know from the data and what we hear from charities across the region. Forty-six per cent. of families with children in the north-east will be affected by the universal credit cut, and that in a region that already had the second highest level of child poverty in the country before the pandemic. The cut will leave families worse off.

Of the 20 constituencies with the highest increases in child poverty between 2014 and 2019, 17 are in the north-east. In my constituency of Blaydon, 27% of children live in poverty. That is data from before the pandemic.

[Jim Shannon]

The hon. Lady is bringing forward the very important issue of child poverty. Charities have indicated to me that child benefit is a godsend, but they also say that the benefit cap has remained the same since 2013 and that, in the same period, inflation has been 17.56%. That means that people who have been on the same wage for eight years will find that if they go to their boss and ask for a wage increase, they will lose their child benefit. Does the hon. Lady agree that it is time to address that too?

[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.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making a compelling and powerful speech about a wide range of issues affecting her region, and I commend her speech to the whole House. I was particularly moved by the point about housing and the difficulty for many tenants. Does she agree that there is a huge need for more council houses in this country?

[Liz Twist]

I absolutely agree about the need for additional council housing.

The rise in national insurance will disproportionately affect younger people and those on low incomes. It is absolutely right that we need more money for the NHS and social care after years and years of cuts, but it cannot be right that it is the lowest-paid earners who pay for it. The Government’s plan will not end the crisis in social care or help to fix the backlog in the NHS.

[Alex Cunningham]

The hon. Member for Aberdeen North (Kirsty Blackman) talked about the Conservatives not really understanding the plight of people living on universal credit. Does my hon. Friend agree with me that it might be a good idea for some of them to spend a month living on the income of a person on universal credit? Not just that, however. Let us load them with a debt of £10,000 and say that they have to pay off some of that debt out of their income as well, and maybe they might understand a little bit more.

[Liz Twist]

I would not like to load anyone with debt, frankly, but I do wish that people would understand what it is like to live on universal credit, and not just for a week or a month, with no recourse to a cash pot in the bank on which they can draw if they run out of money. Many of us will not understand that, but it came home to me very clearly when I became a councillor and an MP just how much on the breadline some people are, with no access to credit cards or other finance. It is a really difficult life for people.

I was talking about social care. As I said, the Government’s plan will not end the crisis in social care or help to fix the backlog in the NHS. It will take money from those already struggling financially, without fixing the problems. What my constituents want to know, when we talk about social care, is what services they will be able to access. We have talked about money and the need to address that, and we have talked about caps. What we have not talked about is what the Government’s social care plan means for those of my constituents who actually receive social care, with people coming in to look after them. Will they receive a better service? Will the staff, many of whom will be caught by the universal credit cap, see decent pay and conditions, and recognition for the really important work they do? We are missing a huge piece of the jigsaw and the Government need to address that. Labour has said that there are many other ways to raise the money, including taxing the incomes of landlords, and of those who buy and sell large quantities of financial assets, stocks and shares. Labour has been clear that we want those with the broadest shoulders to carry the burden.

I want to talk a little bit about the excluded, because so many of my constituents during the pandemic, including the self-employed, have found themselves facing real problems. They were excluded from any schemes that the Government brought forward and in many cases they were excluded from universal credit because of money that they might have put away for tax, or small amounts of money. Lots of single people running dance schools or hairdressers or working from home have found it hard to get through. It is really important that we recognise the pandemic’s impact on them. I know from Zoom calls with my constituents—people who own beauty salons, people who were creative—how much they have been affected. They really have suffered.

Lastly, I pay tribute to Gateshead food bank, Gateshead Council and the many other local organisations that have picked up a lot of the slack. They are doing a great job, but for goodness’ sake, it should not be necessary in this day and age.

--- Later in debate ---

[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.