Welfare Benefits Up-rating Bill

Lord Touhig Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Touhig]

My Lords, I am very pleased to follow the noble Lord, Lord Brooke of Sutton Mandeville. Some years ago he contested the parliamentary constituency of Bedwellty in the Conservative cause. It later became the constituency of Islwyn, which I had the privilege of representing for 15 years. I am sure that from his experiences in the Welsh valleys and the fact that his mother was Welsh, he will certainly know where I am coming from in this debate.

Although we all recognise the difficult economic climate in which decisions around benefits are being made, we must ensure that families are never left unable to afford the essential costs of daily living. Our priority must always be to ensure that those who face financial difficulty due to illness, disability, low pay or unemployment are still able to pay their rent, heat their homes, and feed their children; basic necessities which everyone in this Chamber takes for granted.

The Westminster Catholic Children's Society works with some of the poorest families in London. Its chief executive, Rosemary Keenan, recently said:

“It is hard for many of us to imagine what it is like for a mother to only have £1 left and know she still has to feed her children”.

Yet this is the case for an ever-growing number of parents. They are being forced to choose between turning on the heating or putting food on the table. Over the past year, we have witnessed a 44% rise in the number of families relying on emergency bed-and-breakfast accommodation after losing their homes, and a staggering 79% increase in the number of people visiting food banks.

By capping the up-rating of key benefits at less than half the rate of inflation, this mean-spirited Bill stands to further exacerbate the problems faced by some of the poorest people in our country. In short, it will widen the gap between family income and the price increases of basic commodities such food and fuel, further undermining people's ability to achieve decent living standards.

Kevin Flanagan, the director of St. Antony's Centre in Manchester, warns,

“We are already seeing increasing levels of family poverty and homelessness; any further real-term reduction of benefits will only worsen this situation”.

One particular concern widely held among the organisations working to support struggling families is the breakneck speed at which changes are being made. This Bill cannot and should not be considered in isolation; it comes as yet another blow to the poorest people, in a long line of already devastating cuts. Perhaps most worryingly, it comes at a stage when many key provisions of the Welfare Reform Act have yet to be implemented, including the capping of household benefits; cuts to council tax benefit; and new penalties for those deemed to be under-occupying social housing. The cumulative effect of these measures, which are being simultaneously thrust upon families this year, will create significant reductions to household incomes that are already under immense strain for many families. With such a widespread change under way, it is important that time is allowed for proper assessment and appropriate adjustments to be made.

However, the Government are already committed to further real-terms benefit cuts both for the immediate future and the next three years. It is irresponsible to legislate for a fixed annual increase of 1% when there can be no guarantee of how the rate of inflation will change between now and 2015. It is very possible that we will see families eventually facing an even bigger gap between incomes and prices in the years to come.

This rush to make short-term savings is not only unjust but economically unwise. It will inevitably increase homelessness, cause mental health problems for many and create higher personal debt. As a consequence, the cost of more family poverty will ultimately fall back on the taxpayer. This is not some Dickensian tale. In Britain in the 21st century, some 200,000 children will be pushed into poverty, growing up in unheated households or going to school hungry. They will face real risks to their education and health, which apart from the devastating human cost will almost certainly require expensive interventions by the state further down the line.

One particularly unpalatable aspect of the debate surrounding this legislation has been the rhetoric contributing to the isolation and stigmatisation of the vulnerable in our society. A number of noble Lords have spoken about this. Seeking to differentiate those in poverty as “deserving” or “undeserving” serves only to scapegoat those who are the victims of Britain’s stagnant economy. They are blamed. The implication is that if we did not have the people labelled “benefit scroungers”, everybody would be in work and the economy would be all right. This sort of rhetoric harms the vulnerable and clouds the fact that the majority of people who stand to be affected by the Bill are in fact hard-working men and women in low-paid jobs.

There are currently 6 million British workers in poverty. They rely on benefits to bridge the gap between a lower-than-living wage and rapidly rising living costs. These people will bear the brunt of the Bill when they are hit by real-terms cuts to their essential working tax credits and child tax credits. Furthermore, a below-inflation rise in benefits risks creating work disincentives, especially when working people face above-inflation rises in food and transport costs. For a worker receiving the minimum wage and facing a 4.2% rise in the cost of their commute, the Bill simply means that work will pay less than ever before. There are also more than 1 million disabled people who will be directly affected, adding to the pressures they already face from changes including the overhaul of the disability living allowance and the time-limiting of employment and support allowance.

The Government have consistently said that disability benefits are exempt from the 1% cap on benefit rises, yet the cap applies to employment and support allowance, which helps people who have barriers to work because of their disability. People with conditions like autism who are struggling to find work but who want to contribute will miss out under this legislation. Just 15% of adults with autism are in full-time work, yet research by the National Autistic Society shows that the vast majority want to work. Benefits for them are a necessity, not a luxury. The Government need to change their rhetoric to acknowledge the fundamental necessity of benefits to thousands of disabled people and their families up and down the country.

John Coleby, the director of St Joseph’s Pastoral Centre, which serves the Catholic Archdiocese of Westminster and provides specialist support to adults with learning difficulties, echoed the warning of many disability charities when he said that,

“the Bill should not be seen in isolation”,

from other cuts that were,

“creating a climate of uncertainty and fear”,

among disabled people for their future living standards and their independence, both of which are coming under increasing threat.

This debate has frequently and mistakenly been framed around the fairness of benefits rising faster than wages. It fails to acknowledge the fundamental issue at stake: namely, whether individuals and families are able to maintain their basic well-being. A comparison with wage increases is ultimately a false one to draw because in pounds and pence terms, families are struggling to make ends meet on a daily basis. The average weekly take-home pay in Britain is £395. That is five and a half times the jobseeker’s allowance of £71 and seven times the under-25s jobseeker’s allowance of £56.25. Faced with those differences, is anyone seriously suggesting that people labelled “benefit scroungers” would rather stay at home than be in work?

The average weekly shopping bill has risen by £5.66 in the past year alone, and is set to continue rising annually by at least 4%. Energy bills, too, have risen well above the rate of inflation, with the largest companies putting up prices by 7.6%. It is unthinkable that a mere 71 pence a week in jobseeker’s allowance, or a 99 pence a week rise in employment and support allowance, will come anywhere near bridging that gap. This is what a 1% rise means—71 pence and 99 pence—for people in these difficult circumstances.

Rather than focusing on misleading comparisons between benefits and wages, we should ensure that those who need support will still be able to afford the soaring costs of food, heating and accommodation. Overall, the impact of the Bill on vulnerable people and their families will be overwhelming. The decision to cap benefit increases so far below rising prices comes rapidly on the heels of a programme of widespread welfare cuts, the combined effect of which will further erode the ability of the lowest-income families to meet their daily living costs.

It is unjustifiable that parents and children will go hungry and that their homes will be put under threat through the misfortune of being ill, unemployed, disabled or simply working in low-paid jobs. The rush to make short-term savings will cause irreparable damage to those who are most in need of protection, and risks transforming our current economic challenges in this country into a very real poverty crisis.