Welfare Reform (Welsh Valleys)

Nia Griffith Excerpts

Tuesday 11th November 2014 Westminster Hall

[Wayne David]

My hon. Friend makes her point well. I am aware of an excellent paper prepared by Chwarae Teg that highlights how women are all too often at the sharp end of benefit changes in Wales and elsewhere.

I have been aware of all the changes on an individual basis, as they have affected my constituents, but until recently I was not fully aware of the impact that the reforms are having on the south Wales valleys as a whole.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that it is not simply the individuals who feel the effect, but the small businesses in the area and in our town centres, such as in Llanelli? More and more money is being sucked out of the community. It would be far better to tax the rich, rather than to penalise the poor, because the money of the poor goes straight back into the community.

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[Alun Cairns]

I find it strange that the hon. Gentleman has gone back to the 1980s. I was still in school—that is how long ago it was.

It is relevant that when this Government came to power in 2010, Wales was the poorest part, nationally or regionally, of the United Kingdom. In 1997, when the previous Labour Government came to power, it was not. There needs to be a recognition of the context in which the welfare changes are taking place. The data are quite stark. The hon. Member for Caerphilly mentioned support from European aid that has gone to west Wales and the valleys. I remember that that support was discussed as a one-off opportunity, but we have just come to the third prospective round of European aid. That demonstrates the legacy that the previous Administration left.

[Nia Griffith]

Will the Minister tell us what he is going to do to improve the record of his Government’s Work programme, which is failing the people in the valleys, and particularly those who are furthest from the workplace, such that Oxfam Cymru has said that some people are being “parked” and are not being given the opportunities they should have?

[Alun Cairns]

I am grateful to the hon. Lady for raising that point. I will cover that as I make some progress with my speech.

I want to underline the context in which the Government are responding, with Wales, sadly, the poorest part of the United Kingdom. We inherited a situation in which parts of Wales were also sadly blighted with worklessness. In some communities, a third of the working age population were claiming out-of-work benefits. The Government had to act. We have taken steps—

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[Alun Cairns]

I am grateful to the right hon. Gentleman for making that point, but that report does not take account of the incentives that are built into the welfare reforms, nor does it recognise the increased income that the poorest in the community will receive from the universal credit. I will come to that.

[Nia Griffith]

Will the Minister take up with the Secretary of State for Work and Pensions the serious issue of the taper on universal credit, which will mean that work will not pay? That is exactly the opposite of what he and we want to see.

[Alun Cairns]

I hope to come to universal credit if I make progress in my speech.

Welfare reform is part of the long-term economic plan to stabilise the nation’s economy, to deal with the years of financial mismanagement under the last Government, and to get the people of Britain, including Wales, back to work. The Government want to move people from dependence to independence. We must enable them to free themselves from a lifetime on benefits and enable them to achieve their ambitions.

The previous Government, to their credit, recognised the need for changes to the welfare system. Various Governments attempted to address the issues, but only tweaked an already failed system. Another tweak was not an option. An overhaul was required, so we are creating a new welfare system in Wales and throughout the UK based on flexibility, simplicity and fairness. We want a system that can respond to the modern and flexible labour market, while ensuring that no individual is worse off by accepting a job. We want a system that is easy for people to use.

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[Alun Cairns]

That is one thing that universal credit will put right because people will always be better off. I will come to that in a moment. Our reforms are already reaping benefits. People are moving from dependency on benefits and into work. That is a positive step for Wales, for communities and for the individuals who, for far too long, have been locked in the benefits system.

The welfare system we inherited was built for 1940s society and is no longer able to deliver the support that people need in a modern flexible labour market: the sort of market that communities are already adapting to. Our benefits system needs to reflect that and to support people who need it.

A flexible labour market will be supported by universal credit because households in Wales will be entitled to £163 more a month on average and 75% of those who will gain will be in the bottom 40% of the income distribution curve.

Nia Griffith: Will the Minister look again at research by the Joseph Rowntree Foundation that has shown that some families, by working more hours, will lose out? Will he ask the Secretary of State to look again at how the taper will work in universal credit?

[Alun Cairns]

I will happily look at the Joseph Rowntree Foundation’s report, but I again emphasise that universal credit will leave people with an average of £163 more a month and 75% of them will be in the bottom 40% of income distribution. My point is that the very poorest in society and the community will not only be incentivised by universal credit to get back into work, but receive an uplift in their monthly income as a result, as they stand. People will always be better off in work than in one example I have highlighted in which people were happy to work 16 hours a week because they retained their benefit, but working the 17th hour was simply not worth their while. That was not what they wanted, nor was it what employers wanted because of the inflexibility that that built into the labour market.