Welfare Reforms and Poverty

Michael Meacher Excerpts

Monday 13th January 2014 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

I beg to move,

That this House believes that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty.

I am very grateful to the Backbench Business Committee for giving the House the opportunity to debate this issue, which has been seriously neglected over the past three years. I am pleased to move the motion, which appears in my name and the names of Members from other parties.

It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age, more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs. The evidence of that is all around us. There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year. The Red Cross is setting up centres to help the destitute, just as it does in developing countries. A study that was published two months ago shows that even in prosperous areas of the country, such as London, more than a quarter of the population is living in poverty. This point is really scary: according to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.

The Department for Work and Pensions published new data two months ago—it was pretty reluctant to do this, and one can see why—showing that the use of sanctions, which means depriving people of all their benefits for several weeks at a time, had increased by 126% since 2010 and, most strikingly of all, that 120 disabled people who had been receiving jobseeker’s allowance had been given a three-year fixed duration sanction in the previous year. Figures from the Department for Communities and Local Government—these are the last that I will quote, although there are many more that I could quote—show that there are now more than 2,000 families who have been placed in emergency bed-and-breakfast accommodation after losing their homes. The 5% rise in the overall homelessness figures last year included nearly 9,000 families with children, which is the equivalent of one family losing their home every 15 minutes.

What impact have the so-called welfare reforms, which would more accurately be described as social security knock-backs, had on the families who have been affected? The best evidence comes from the Northern Housing Consortium, which carried out a survey three months ago of a representative sample of people living in social housing. It found that a third of families spent less than £20 a week on food and that the average spend on food per person per day was precisely £2.10. That is a third less than those families were able to afford three months before that. The proportion of households that had to make debt repayments of more than £40 a week had doubled and the average level of debt was £2,250. That might not sound a lot to us, but to people with that standard of living it is an enormous and daunting sum. A third of families had council tax debt, and households were having to spend 16% more on gas and electricity. Those are deplorable figures of profound impoverishment in an economy that is still the sixth largest in the world.

[Andy Sawford (Corby) (Lab/Co-op)]

I congratulate my right hon. Friend on securing this incredibly important debate. Does he also recognise the impact of 2.7 million people losing out through the Government’s changes to council tax benefit, many of them disabled people, veterans and some of the most vulnerable in our communities?

[Mr Meacher]

I have already made slight reference to that, but my hon. Friend is entirely right. The change is quite small, but its impact can push very poor families into deep poverty.

What are the causes of the emergence of absolute poverty? The biggest cause is the huge rise in sanctioning: depriving someone of all their benefit entitlement for a month in the first instance, for three months in the second instance and, on a third infringement, for three years!

[David T. C. Davies (Monmouth) (Con)]

Will the right hon. Gentleman give way?

[Mr Meacher]

I will not give way to too many Members, for the simple reason that many want to speak, but I will give way to the hon. Gentleman.

[David T. C. Davies]

I am grateful to the right hon. Gentleman for giving way. Does he not agree that it is vital that those who are not looking for work are made to realise that there will be consequences to those actions, particularly at a time when 1 million people have been able to come into this country from eastern Europe and find work here?

[Mr Meacher]

Those who come to this country are more likely to be employed and take out less in benefits than many of the indigenous population. The real point is that these people want work. Of course the hon. Gentleman is right that people should get work if they can, but there are 2.5 million people who have been unemployed for the best part of two years, and there are 562,000 vacancies—I checked that figure today. So four out of five of those who are unemployed simply cannot get a job whatever they do.

[Hugh Bayley (York Central) (Lab)]

The hon. Member for Monmouth (David T. C. Davies) does not seem to realise that many of the people who claim benefits, including jobseeker’s allowance, are people who work. I have a constituent on a very low income. He delivers newspapers to my constituency office. He has dyslexia, but he works because he wants the pride of keeping himself. He still needs to claim JSA, but he lost his allowance because his dyslexia meant that in one fortnightly period he applied for nine jobs, not 10. Can that possibly be right, when this man is already working and trying to pay his way?

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[Mr Meacher]

My hon. Friend is entirely right. I have already made the point that the greatest number of people in poverty are actually in working families. That is a real indictment of economic and social policy.

The sanctions are very harsh. I accept that there must be some sanctions, but the scale is out of all proportion and remarkably harsh. They are often applied for trivial reasons, such as turning up five minutes late for a job interview or a Work programme. Of course, people should not turn up five minutes late, but to deny them benefits for a whole month for that reason is totally disproportionate. There are other examples from my own experience in my surgery or from Citizens Advice interviews. I will quote, very quickly, just a few of them:

“The jobcentre didn’t record that I had informed them that I was in hospital when I was due to attend an appointment and I was sanctioned.”

“I went to a job interview instead of signing on at the jobcentre because the appointments clashed.”

Presumably, that was the right thing to do, but he was still sanctioned.

“I had to look after my mum who was severely disabled and very ill, but I was still sanctioned.”

“I didn’t know about the interview because they sent the letter to my previous address. I’d told them my new address but I was still sanctioned.”

“I was refused a job because I was in a women’s refuge, fleeing domestic violence and in the process of relocating, but I was still sanctioned.”

This is a classic:

“I didn’t do enough to find work in between finding work and starting the job.”

The latest DWP figures are from two months ago—it would be handy if we had more up-to-date figures—and show no fewer than 580,000 persons sanctioned in the eight months to June last year. If the same rate has continued since then—it has probably increased—that means that more than 1 million have been sanctioned in the past 15 months and deprived of all benefit and all income. Given that the penalties are out of all proportion to the triviality of many of the infringements, and given that, as I have said, four out of five people cannot get a job whatever they do, the use of sanctioning on this scale, with the result of utter destitution, is—one struggles for words—brutalising and profoundly unjust.

There are other reasons for this deeply worrying rise in absolute poverty. One is the delays in benefit payments, which have increased substantially—the delays, not the benefit payments, unfortunately. Another reason is the impossibility for many poor and vulnerable people to comply with the new rules, even though they want to, that are being imposed. I will quote just one case from my surgery a few weeks ago. He is a disabled man who had his benefits reduced due to the one-year employment and support allowance rule, so his income is now £71 a week. He has been left in a three-bedroom house because his mother and other people looking after him have died and so has to pay £23 in bedroom tax, plus £6 a week—this is the point that my hon. Friend the Member for Corby (Andy Sawford) was making—in council tax due to the new council tax rules, leaving him with £42 a week. He asked to downsize to a smaller property, which is what the Government would expect him to do, but the local housing association, ironically called First Choice Homes, demanded that he pay two weeks’ full rent upfront, £197, before getting any housing benefit. He cannot do that, of course, and he is stuck in an impossible situation.

Another reason for the rise in absolute poverty is the impact of the bedroom tax, which applies to two thirds of a million households. I think everyone, probably even Government Members, will admit that it is Dickensian in its sheer social divisiveness. The housing benefit cap has now been imposed on a further 33,000 households. Both of those measures have forced tens of thousands of people out of their homes—we need to take into consideration what that means—even though two thirds of those affected by the bedroom tax are disabled. It is reckoned that more than 90% do not have smaller social housing to move into.

Another not insignificant cause of destitution—I will be very brief on this—is mistakes made by the authorities themselves. Last week, one of my constituents who had been sanctioned for a month was suddenly told that his sanction had been extended to a year. It was only intervention with the local DWP office that uncovered that it was actually its mistake. What happens for others who do not have the advantage of such an intervention? It now seems that up to 40,000 working-age tenants in social housing have been improperly subjected to the bedroom tax because of DWP error.

I will cite just one more reason for the unnecessary and cruel imposition of poverty, and I say that advisedly: the way in which tens of thousands of severely disabled persons have been judged by Atos, the French IT company, as fit for work—and therefore forced on to JSA at just £71 a week—when they are patently unfit for work. Very often, their GP has not been consulted to inquire whether there are other factors that need to be taken into account. The Chancellor’s policy of keeping 2.5 million people unemployed makes it impossible for them to find work, even if there were employers who would be willing to take them, and the 40% success rate of appeals shows how unfair the whole process is.

I conclude by asking just one simple question: is all this brutality towards the poor really necessary? Is there any justification in intensifying the misery, as the Chancellor clearly intends, by winding up the social fund and, particularly, by imposing another £25 billion of cuts in the next Parliament, half of that from working-age benefits? The whole objective of the massive cuts programme—to reduce the deficit—is one that I think we would all support. There is no disagreement about that across the House, yet after £80 billion of public spending cuts, with about £23 billion of cuts in this Parliament so far, the deficit has been reduced only at a glacial pace, from £118 billion in 2011 to £115 billion in 2012 and £111 billion in 2013. Frankly, the Chancellor is like one of those first world war generals who urged his men forward, over the top, in order to recover 300 yards of bombed-out ground, but lost 20,000 men in the process. How can it be justified to carry on imposing abject and unnecessary destitution on such a huge scale when the benefits in terms of deficit reduction are so small as to be almost derisory?

[Mr Ronnie Campbell (Blyth Valley) (Lab)]

Does my right hon. Friend agree that the Government might save a lot more if they showed the same energy and enthusiasm for getting those who evade their taxes and run to tax havens as they do for going after the poor, the sick and people on the dole?

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[Mr Meacher]

I will come to that in just a moment.

People say that to carry on doing the same thing over and over again, but expecting a different result, is the first sign of insanity. The Chancellor is not insane, of course, but he is deeply punitive and sectarian. Frankly, I want to help him. There is another way.

[Stephen Mosley (City of Chester) (Con)]

I have listened to the right hon. Gentleman with great interest. What does he think about the assertion by those on his own Front Bench that they would be tougher on welfare than the Tories?

[Mr Meacher]

The thrust of what those on our Front Bench have said, as the shadow Chancellor has made clear on many occasions, is that we need public investment. We need to get jobs and growth. That is the alternative way: public investment in jobs, industry, infrastructure and exports to grow the real economy, not the financial froth, because that would cut the deficit far faster—that is the key point—than the Chancellor’s beloved austerity.

If the Chancellor is obsessed with fiscal consolidation, as I think he is, how about the ultra-rich—Britain’s 1,000 richest citizens—contributing just a bit? Their current remuneration—I am talking about a fraction of the top 1%—is £86,000 a week, which is 185 times the average wage. They received a windfall of more than £2,000 a week from the 5% cut in the higher rate of income tax, and their wealth was recently estimated by The Sunday Times—not The Guardian, but The Sunday Times—at nearly half a trillion pounds. Let us remember that we are talking about 1,000 people. Their asset gains since the 2009 crash have been calculated by the same source at about £190 billion.

My question, therefore, is: does the Chancellor believe that these persons, loaded with the riches of Midas, might be prevailed upon to contribute a minute fraction of their wealth in an acute national emergency, when one sixth of the work force earns less than the living wage and when 1 million people who cannot get a job are being deprived of all income by sanctioning and thereby being left utterly destitute? This is just a thought: charging the ultra-rich’s asset gains since 2009 to capital gains tax would raise more than the £25 billion that the Chancellor purports to need. I submit that it would introduce some semblance of democracy and social justice in this country if the Chancellor paid attention to this debate and thought deeply about what he is doing to our country and its people.

[Several hon. Members]

rose—

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[Mr Meacher]

This has been an excellent debate, one of the best that I have attended. The evidence from all parts of the House about the impact of the Government’s welfare reforms on poverty was both compelling and systematic. With the exception of the Minister, at the end, it was relatively free of tribalism.

There was little disagreement about the need for a commission of inquiry, with an emphasis on the 4 million children growing up in poverty. The hon. Member for Stafford (Jeremy Lefroy), in a considered speech, said that the bedroom tax should be, if not abolished, at least conditional on enough social housing being built and that sanctions for technicalities are totally intolerable. I am grateful to him for saying that. We heard about the level of debt standing at 40% in Liverpool, and I am sure that the same applies in many other cities. We also heard evidence from the hon. Member for Birmingham, Yardley (John Hemming) about a range of issues that must be considered in detail, not just in terms of the framework of policy. I agree with that.

We heard a passionate speech about the housing crisis, the catastrophic drop in Government investment in housing and the price-to-income ratio that puts housing totally out of the reach of poorer people. We heard about the damaging effects of the Government’s switch—convenient to the Chancellor, of course—from RPI to CPI and that the loss of a discretionary social fund was forcing people back into the hands of loan sharks. We also heard about the DWP staff culture of looking for targets to achieve sanctions. Those are all important points.

There were significant disagreements. The hon. Member for Monmouth (David T. C. Davies) gave, I think, the traditional Conservative response, as one might expect, giving the Chancellor the overriding right to pursue an austerity policy irrespective of the impact on ordinary people. My hon. Friend the Member for Hayes and Harlington (John McDonnell) strongly opposed that because of the Government’s choice to put the burden on the poor.

I hope that all Members of the House will support the motion, because we need a commission of inquiry.

Question put.

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That this House believes that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty.

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

On a point of order, Mr Speaker. We have just had a very important debate and a very decisive result—the House has spoken strongly, by 125 to two. I do not think that anyone could deny that this is a critically important issue. Can we therefore be assured that the Minister will respond, either now or tomorrow, in order to answer the fact that Parliament has decided and the Government should take note?

[Mr Speaker]

I am grateful to the right hon. Gentleman for his point of order, but it is not a matter for the Chair. If the Minister of State wants to respond, he can, but he is under no obligation to do so. [Interruption.] No, the Minister does not wish to respond. The right hon. Gentleman’s point stands on the record.