Working-age Benefits

Lord Beecham Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I congratulate the right reverend Prelate on securing this debate. I am sorry that the congregation—if I may put it that way—is not quite as large as it should be, but we have already had a very interesting debate partially touching on similar issues. But it is as well that the right reverend Prelate draws our attention to particular aspects of the situation facing far too many people in this country. I again refer to my interest as a Newcastle city councillor. As I was happily reselected for the forthcoming elections, I hope to be able to continue saying that after whatever date they are on next year.

As I think I have said previously, I live just 12 minutes’ drive from the ward I have represented for the past 50-plus years. For every minute of that drive, life expectancy falls for people in that ward by a year. In other words, life expectancy is 12 years less in the ward I represent than in the ward in which I live, which says something about the problems faced by far too many people—and not only in the city of Newcastle. That manifests itself in many ways. Fortunately we have a very strong voluntary sector and a very caring community. But it is sad that teachers at the local primary schools bring in food for breakfast clubs for children attending their school because they cannot be certain of having an adequate breakfast and start to their school day. It is a measure of the deprivation that is unfortunately too prevalent. In a way, a more dramatic example of that is the West End Foodbank in Newcastle, run by the Trussell Trust, which has done wonderful work all over the country. The food bank in my ward is the busiest in the entire country. Again, it gives a sense of the deprivation, which is not universal but is certainly far too widespread for us to feel at all comfortable about it.

In an area with these problems and people struggling with them, many issues are making matters worse, reflected in a range of government policies. One of those is the bedroom tax, which has not been mentioned much latterly but which inflicts an average annual loss in the ward I represent of £777 on 243 households, amounting to £189,000 in just this one ward in the city. Across the whole city, the figures are 3,950 households, and the loss of income—and loss to the local economy—is £3,263,000, a formidable amount. On a national basis, I have not done the arithmetic but your Lordships will not find it difficult to acknowledge that we are talking of billions of pounds lost nationally to the local economy by this measure. Those numbers, of course, are expected to rise over the next few years. In general, dependency is likely to rise over the next few years.

The Resolution Foundation projects a total saving, at the expense of the most vulnerable and impoverished, through two more years of the benefit freeze and less in-work support under universal credit—which we have debated at some length already—of £6.8 billion a year by 2021. Money is not going into households and into the local economy, particularly in areas that need it most. We need to recall—although one would not imagine that readers of the Daily Mail and Daily Express would ever get to know—that 60% of benefit payments go to working households. Poverty among those in work is greater than among those without work. That is not to say that we should not be encouraging and facilitating people getting into employment—well-paid employment, we hope—but part of the problem that we have faced over the past decade or so is that earnings have not risen proportionately to the cost of living. In that way, people’s standards have fallen substantially.

In addition, there are government policies that make matters worse. In particular there is the pernicious restriction of benefits to the first two children in a family, mentioned in an earlier debate with reference to the kinship situation—which, I confess, I have not been alerted to, although I should have been—which is uniquely barbarous. However, it is bad enough for those restrictions to be imposed on any family. Some 900,000 are affected by this measure. The Rowntree Foundation, which does enormously valuable work in reviewing the state of our society, predicts that 470,000 more people will experience poverty by 2021, and a two-child family will be £832 a year worse-off than if benefits had kept pace with prices, or £676 for a two-child family with a single parent. Either way, that is a lot of money to support children in a very low-income family.

What is the justification for freezing benefit levels, especially now that the cost of living is rising rapidly? The cost of food, particularly, is rising substantially. The cost of living looks as though it is rising by a smaller amount but, for the people we are talking about, it is the basics—food, fuel and accommodation—that are the most telling calls on their budget. With Brexit, one imagines that food prices will continue to rise, probably at an ever faster rate.

There are also serious implications for the housing sector—both for social housing and for privately rented homes. ALMOs, the arm’s-length management organisations that provide much local council housing and manage it nationally, reveal that 31% of their tenants are in arrears to the extent of £414 per household, which brings a figure of £68.5 million a year in arrears. Of those who are universal credit claimants, 73% are in arrears, more than half of whom—this is telling—were not in arrears before universal credit began to be applied. In the private sector, as we have heard from time to time in your Lordships’ House, a vast number of people—4.7 million—are now in poverty after paying rent, where they can afford to. Where they cannot afford to, all too often they are faced with eviction, and society has to pick up some of the consequences of that through alternative provision.

The benefit cap has mainly affected single parents with multiple children. Indeed, 63% of those with three children or more are more likely to find it difficult to get into work or to be able to make up the difference. Yet against this background, the Government can find money effectively to reduce inheritance tax by increasing the threshold on family homes by an additional £125,000 for each spouse or partner, while their vaunted increase in the level at which income tax becomes payable benefits the higher paid proportionately more than those with very low earnings. There is also the anomaly that national insurance kicks in well below the tax threshold. Is it not time to review the relationship between these two forms of taxation? One of these two aspects of taxation receives attention from time to time, while the other apparently does not.

While we are talking about taxation, what about council tax? With bands unchanged for 25 years, the difference between the lowest band and the highest remains only threefold. In a street near where I live, there is a house on the market in band H where the asking price is just under £4 million, and the council tax will be in the order of £3,000. The smallest, cheapest flat in the ward I represent will be in band A, and the council tax will be £1,000. That is a ludicrously narrow ratio. I should make clear that my own home is in band F, and I estimate that it is probably valued at six to seven times the price of new houses being built in my ward—but my council tax is only twice as much. It is no longer the case that the poorest are protected by what used to be called the rate rebate scheme.

These are issues that need to be addressed if we are to protect people from the hardship that the right reverend Prelate so rightly outlined.