In-work Poverty

Nick Thomas-Symonds Excerpts

Thursday 28th January 2016 Westminster Hall

[Carolyn Harris]

That is a shocking indictment of the low consideration the Government have for people in need. For example, a lone parent working full time on the minimum wage who receives no support for their housing costs will experience a reduction of £2,600 a year—that is £50 a week. Nobody can afford to lose £50 a week.

The combined effect of income tax, national insurance and the universal credit taper will mean that universal credit claimants who pay income tax will keep only 24% of any increase in their earnings. They will have to increase their earnings by £210 a week—or, to put it in percentage terms, 72%—to make up the income loss they will face as a result of the reduction in support.

[Nick Thomas-Symonds (Torfaen) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner, and I congratulate my hon. Friend on securing the debate. She has given some figures about single parents, and this shows the full extent of the policy: for a single parent—say, a mother with one or more children—the work allowance of universal credit will be halved from this April, going from £8,808 to £4,764. In cash terms, that is a loss of £2,628 a year. Does that not show the stark reality of this policy?

[Carolyn Harris]

I thank my hon. Friend for his intervention, and I agree. That is a reality people face every day, and it can only get worse.

The short-term effect for current claimants of universal credit is that they face huge losses to income come April 2016. There are currently 155,000 recipients of universal credit, and the number is increasing every week, with an aim of there being 500,000 recipients by April this year.

During Work and Pensions questions recently, the Secretary of State claimed that the flexible support fund will act as transitional protection for current claimants and said that

“those who are on universal credit at present will be fully supported through the flexible support fund, which will provide all the resources necessary to ensure that their situation remains exactly the same as it is today.”—[Official Report, 7 December 2015; Vol. 603, c. 688.]

However, that existing fund is used for a different purpose. Its budget last year was £69 million, but the Office for Budget Responsibility estimates cuts to working families of £100 million next year, rising every year until they reach £3.2 billion in 2020.

--- Later in debate ---

[Nick Thomas-Symonds (Torfaen) (Lab)]

I again reiterate my pleasure at serving under your chairmanship, Mr Turner. I congratulate my hon. Friend the Member for Swansea East (Carolyn Harris) on securing the debate.

For the second time this week, I appear opposite this Minister in this Chamber. I am starting to get very worried about her and the hon. Member for Macclesfield (David Rutley), because they must be becoming extremely lonely. This is the second time this week that they have appeared in this Chamber without one Tory MP coming along to support them. Not one came for the child poverty debate on Tuesday or has come for this debate today. “Now why is that?”, I ask myself. I cannot believe for a moment that it is anything personal towards them. Nor can I believe that the Tory Whips Office has become so incompetent that it cannot even encourage hon. Members to attend a debate such as this. The Chancellor of the Exchequer’s leadership bid is already so long gone that I cannot believe that he has got them round to the Treasury to glad-hand them. It cannot be that, so why exactly is it?

I can only draw the conclusion that both child poverty and in-work poverty simply are not high enough on the Tory agenda for their MPs to come along here this week. That is the only explanation, and perhaps we should not be too surprised about it, given what the Secretary of State for Work and Pensions said—he does speak occasionally. Indeed, he was in the main Chamber this morning. He came to watch one of his Ministers, as he usually does. I think that he is trying to live up to the reputation of being the quiet man that he got when he was Tory party leader, because he does not say very much, although perhaps in some cases less is more. But he actually said, at the Tory party conference back on 6 October 2015, that he thought that tax credits were a “bribe”. That is how the Secretary of State sees support for people in work, so perhaps it should not surprise us that no Tory MPs are here to support the Minister and the hon. Gentleman.

[Neil Coyle]

Is my hon. Friend aware that in Bermondsey and Old Southwark 6,100 working families were claiming the tax credits that the Secretary of State apparently referred to as a “bribe”? I hope that the Minister will give some reassurance that those families will not be adversely affected by the introduction of universal credit.

[Nick Thomas-Symonds]

I, too, hope that that reassurance will be given this afternoon.

In contrast to the absence of any contribution from Conservative Members, we have heard passionate contributions from the Opposition. My hon. Friend the Member for Swansea East spoke with her usual verve and passion both on the issue and for her constituents. What a telling statistic it is that wage growth this decade is the third worst since 1860, when Palmerston was Prime Minister. That is an incredible and shocking statistic.

My hon. Friend the Member for Neath (Christina Rees) made several very good interventions, and her passion for Wales, in particular, shone through in what she said. Similarly, my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle) put his finger on several crucial points, including the delays to universal credit. To be clear about this, I will quote from a press release of 1 November 2011 from the Secretary of State. What did he say? He said:

“Over one million people will be claiming Universal Credit by April 2014”.

[Neil Coyle]

He said it very quietly.

[Nick Thomas-Symonds]

Indeed, he would have been better off saying it quietly, because in November 2015, the actual figure was 155,568. He should be sanctioning himself, on the basis of such a performance. It shows an absolutely dreadful level of incompetence.

I congratulate my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), who drew on his experience as a county borough councillor, and set out well the measures that Labour councils in Wales are implementing to try to deal with wage levels. My hon. Friend the Member for Foyle (Mark Durkan) spoke, as he always does, with great authority on the matter. His point about the availability of work, and his quote about there being one rule for the working rich and one for the working poor, really resonated in the context of the debate. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows) on her speech, which was delivered with great passion.

Let us remind ourselves of what the Chancellor—his must be the longest leadership bid in recorded history—said on the “Today” programme on 8 October 2012:

“It is unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits.”

I fundamentally disagree with that statement. The person behind the blinds could be disabled or vulnerable. Dare I say it, they might even have just worked a night shift, although that is something that seems to be lost on the Chancellor of the Exchequer. The Chancellor has been trying to draw a division between those who work and those who do not. He is not the only one who has a problem with the language that has been used in the debate. In September, the Secretary of State said, in answer to the hon. Member for Gloucester (Richard Graham), that

“the most important point is that we are looking to get that up to the level of normal, non-disabled people who are back in work.”—[Official Report, 7 September 2015; Vol. 599, c. 6.]

Normal, non-disabled people—what kind of language is that? What does that say to somebody who is disabled? I hope that the Minister will take the opportunity this afternoon to distance herself from such shocking remarks.

Even if we accepted that distinction between those who work and those who do not, the Secretary of State is now in such a mess that he is on the wrong side of his own dividing line. It is all very well to say that work is the route out of poverty, and of course we want to see more people in work, but the kind of poverty that we are talking about affects people who have jobs, and who go out to work. As the smoke lifts from the Chancellor’s U-turn on tax credit cuts, it has become clear that he is simply going to make the same £12 billion of cuts to universal credit. No one can tell me that when the Tories were going around during the election campaign and talking about their £12 billion of welfare cuts, people such as cleaners seriously thought that they would be affected.

Let me give another couple of examples. I gave the statistics for single parents to my hon. Friend the Member for Swansea East.

[Christina Rees]

Does my hon. Friend recognise that lone parents are already twice as likely as two-parent families to be in poverty? Single parents are worse hit in the combined reforms; as a share of income, they lose seven times more than two-parent families. By 2021, single parents will lose £1,300 a year, on average, even after taking into account wage increases and tax concessions.

[Nick Thomas-Symonds]

Single parents could be forgiven for thinking that the Government have a tin ear, as far as their needs are concerned. Let me give the example of a couple who live and work together, one or both of whom have limited capacity to work, because they are disabled. Work allowance will be cut from £7,700 to £4,700 this April, which will mean a loss of income of £3,000 a year. Single individuals will essentially lose everything, with a reduction of £1,332 and a net loss to income of £865. My hon. Friend the Member for Swansea East has mentioned the Social Mobility and Child Poverty Commission; its latest report was published as part of the glut of data that the Government put out just before Christmas, on 17 December. I quote from the commission:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations 2015 before they are implemented in April 2016.”

The commission is asking the Government to do that, and it is precisely what they should do.

What is the Government’s answer to the claim that they are attacking working people? At least the Ministers in the team are not shy about coming forward with the odd suggestion of what people should do to help themselves. We have heard the one about working more hours. I am not entirely sure how single parents are meant to do that, but perhaps the Government will explain that to us in due course. My particular favourite was the suggestion made by the Under-Secretary of State for Work and Pensions, the hon. Member for North West Cambridgeshire (Mr Vara), in the House on 6 January 2016. When he was asked about mitigating the effects of the social security changes, he said that we should not forget

“the fact that every time we fill up our tank with petrol there is a saving of £10 because of the freezing of the fuel duty.”—[Official Report, 6 January 2016; Vol. 604, c. 342.]

In the 1980s, the unemployed were told to get on their bikes, but in 2016 the advice is to fill your car. If that is the best that the Government can offer the working people of this country, it shows the position they have reached.

The Government are in the worst of all worlds. Universal credit is the Secretary of State’s passion. The policy is his baby. He allegedly fights the Chancellor around the Cabinet table so that he can keep it going, although we might draw the conclusion that he is not doing so very effectively. We will have to wait until, I think, 2021 to see the full effects. The Secretary of State seems to be going for some kind of record for how long it takes to implement change at the DWP. The Government are in the worst of all worlds, because they lack both compassion and confidence.

[The Minister for Employment (Priti Patel)]

May I say what a pleasure it is to serve under your chairmanship, Mr Turner? I thank all Members for their interesting and lively contributions. As the hon. Member for Torfaen (Nick Thomas-Symonds) has said, this is our second debate on the topic this week. I will not respond to all his comments, because I have heard him make some of them before, especially those about my right hon. Friends the Secretary of State and the Chancellor. I recall commenting—not in the debate two days ago, but possibly two weeks ago—on some of the language that has been used when it comes to supporting work, supporting those who are in work and reforming our welfare system so that it supports people into work.

I recognise that this debate is about in-work poverty, although it has been quite broad. In the last five years, we have seen the movement of more than 2 million people into work and an employment rate of 74%, which is the highest since records began. Many of the generalised assumptions that have been raised in the debate are simply wrong, particularly given what we inherited in 2010. That movement of people into work came after the previous Labour Government had presided over the longest and deepest post-war recession, which wiped out nearly 6% of our economy. That did much to hurt people, who were put into poverty and saw their earnings decline, and it had a devastating impact on the country’s economy and resulted in the loss of jobs.

Three hon. Members from Wales spoke in the debate. If I recall correctly, the Office for National Statistics on employment, which were published last week, show that over the last year the number of people in work in Wales rose by 48,000, bringing the employment level up to 1.4 million—close to its highest ever level—with a rapidly growing employment rate. We have also seen an increase in the number of jobs in Swansea, Cardiff and Newport, and across Wales. New jobs were announced last week in Wales by major employers including BT, Admiral and General Dynamics.

[Nick Thomas-Symonds]

Will the Minister simply confirm that wage growth this decade is predicted to be the lowest since the 1920s? Does that not say everything about the wasted Tory decade?

[Priti Patel]

On the contrary. Average weekly earnings have grown consistently in the past year—

--- Later in debate ---

[Priti Patel]

No—I have served with the hon. Gentleman on a Bill Committee in which he has made some valuable contributions. This is not about individuals. We live in a global world. Look at what is happening with the international economy right now. Stock markets around the world, including the UK, have faced a challenging start to the year. Business is right to be sensitive to global factors. I come back to the point that the UK has a highly competitive economy thanks to many difficult decisions undertaken by the Government in the previous Parliament, and we continue to make difficult decisions in this Parliament.

All the contributions this afternoon are valid. The hon. Member for Motherwell and Wishaw mentioned that individual constituents come to her on a weekly basis. If she would like to share with me her casework examples regarding universal credit, I would be happy to take them up. When it comes to stability, we have made choices. None of the opposition parties has presented solutions to the House this afternoon. Hon. Members said that universal credit should not exist and that they want to scrap it, but they have no alternatives for welfare reform or changes to the welfare system. As we heard in earlier debates today, to govern is to choose. Our choice is to reform welfare and to ensure that we support people into work.

[Nick Thomas-Symonds]

The Minister is generous in giving way. Will she clarify something on the Government’s welfare reform? Lord Freud said that the move from tax credits to universal credit will happen in the event that someone re-partners and in the event that there is a new member in the household. Is the modern-day Tory party really providing disincentives to marriage and having children?

[Priti Patel]

The hon. Gentleman is taking the noble Lord’s suggestion out of context. There was quite a substantial discussion about universal credit including a gross representation of the roll-out—the hon. Member for Bermondsey and Old Southwark (Neil Coyle) said, in jest, that it would be “a thousand years”. All hon. Members know, because they have heard it from me previously, that universal credit is now in three quarters of all jobcentres and will be in all jobcentres by April 2016, so the roll-out will take a few more months and certainly not a thousand years as the hon. Gentleman suggested.

I come back to the principle of the reforms. Universal credit transforms the welfare system and has been designed to ensure that people are supported in work. It is a subject of many discussions I have had with the hon. Member for Bermondsey and Old Southwark in previous debates. Yes, there is a financial safety net and support through universal credit but, importantly, the universal credit system is designed to support people to progress in work. Jobcentres deliver support, providing a single point of contact with much more personalised support, advice and guidance from a dedicated work coach.

The concept of the work coach is working. I have sat in on many interviews when I go to see our colleagues—particularly work coaches—working in jobcentres and helping people to develop in their roles, especially people who are moving from part-time to full-time work or who are seeking to work more hours depending on personal circumstances. Work coaches help them to develop the right kind of skills and confidence to secure employment. Surely hon. Members cannot disagree with the fundamentals of supporting people into work, giving them confidence, and helping them to develop new skills, should that be the appropriate route for them.

I am proud of way in which we work with other aspects of the state when we look into co-locating our services with housing associations, further education colleges and local authorities. We have 30 fully co-located sites, where we can join up and bring public services together to ensure that we have the right kind of service delivery for individuals.

I am conscious of time as I can see the clock ticking, but I want to emphasise that the Government are fundamentally focused on providing in-work support through stronger local partnerships in constituencies to ensure that we support individuals on universal credit or benefits, help them to get back into work, and secure better employment outcomes and better futures for them in the long run.