Bedroom Tax (Scotland)

Debate between Pamela Nash and Eilidh Whiteford

Thursday 8th May 2014 Westminster Hall

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Bone. When discussing the report today, the key issue that we should not lose sight of is that the bedroom tax should never have happened in Scotland. There has been a broad cross-party consensus that it is a regressive measure and it should be abolished. However, the truth is that it should never have been introduced in the first place. It was brought to us by a Tory Government—propped up by their Liberal Democrat allies—for whom people in Scotland did not vote, and it reflects the same Tory values that brought us the poll tax 25 years ago, and which have been rejected time and again at the ballot box.

The bedroom tax has caused enormous hardship for some of the most disadvantaged tenants in Scotland, the vast majority of them disabled. It has created problems for social landlords and it has cost more than it has saved. The problems created by the bedroom tax were entirely predictable, and were in fact predicted by local authorities, housing associations and organisations representing tenants, as well as by Members of Parliament here and in Edinburgh.

To a large extent, the report we are debating today has been overtaken by events, given that a few days ago the Under-Secretary of State for Scotland said that the UK Government would provide Scottish Ministers with a power to set the statutory cap on discretionary housing payments in Scotland, using section 63 of the Scotland Act 1998. The Deputy First Minister made a statement in the Scottish Parliament yesterday and, I believe, met the Under-Secretary earlier today to discuss the process from here. That is a very welcome, if belated development, and follows several months of silence from the UK Government on the issue.

Yesterday’s announcement paves the way for discretionary housing payment to be made to everyone affected by the bedroom tax in Scotland. As the law stands, the only legal way to make regular and ongoing payments directly to tenants to make up for their loss of housing benefit is through discretionary housing payments. The UK Government has allocated Scottish local authorities £15 million for discretionary housing payments, but that is less than a third of the £50 million needed to mitigate the penalty for everyone affected.

[Pamela Nash (Airdrie and Shotts) (Lab)]

Does the hon. Lady accept that local authorities in Scotland have found other ways to give money to their tenants and residents to mitigate the impact of the bedroom tax, without using DHP? Can the Scottish Government not also use that, as the UK Government have confirmed?

[Dr Whiteford]

I am grateful to the hon. Lady for raising that point. It is something that parties in Scotland have looked at very closely, and I know that senior Labour MSPs such as Jackie Baillie and Iain Gray have very much been part of discussions with the Scottish Government about those issues. Even they have agreed with the Scottish Government about the way to distribute the extra money, in compliance with the law as it stands. They agree that DHPs are the only clear legal route to provide funding for bedroom tax arrears directly to the people affected on a regular and ongoing basis. We are having to jump through a lot of legal loopholes. It is clear there are some solutions—the Scottish Government, certainly, were looking at them very carefully—but it seems that the clearest way forward is through discretionary housing payments and the challenge for all of us is to make sure that they are made.

--- Later in debate ---

[Dr Whiteford]

I am very much looking forward to the referendum in September, when people in Scotland will have a say on whether they want control of their own affairs and responsibility for setting income tax levels. I led an Opposition day debate on this issue back in February last year, when I called on the Government to end the policy, but we have had a number of opportunities in the House since then to voice our opposition, which includes opposition on the Government’s own Back Benches. The best chance we had to get rid of the bedroom tax was in November last year, when the Government came tantalisingly close to being defeated in the Commons in a vote following a Labour Opposition day debate. A defeat in the Commons would have forced the Government to rethink their approach, because it would have shown that even their own Back Benchers in the coalition—

[Pamela Nash]

Will the hon. Lady give way?

[Dr Whiteford]

I said that I would not take any more interventions, so I will not. [Interruption.] Well, I did say that earlier.

A defeat in the Commons would have forced the Government to rethink their approach, because it would have shown that even their own Back Benchers in the coalition recognised the manifest injustice of the bedroom tax, but that vote was lost by a margin of 26 votes, and 47 Labour MPs did not vote for their own motion. They included 10 Scottish Labour MPs, who apparently were in cosy pairing arrangements with their Tory counterparts. That was the best real chance we had at Westminster to sink the bedroom tax, and it was wasted.

I am well aware that there are often very legitimate reasons why Members of the House of Commons cannot attend votes. At times, all of us will have to deal with illness, bereavement, caring responsibilities or competing demands from our constituencies, but for matters of importance, most of us will move heaven and earth to be in the Lobby when we need to be. Those who missed that vote need to ask themselves whether what they were doing was really more important than voting down the bedroom tax.

Fairness and Inequality

Debate between Pamela Nash and Eilidh Whiteford

Tuesday 11th February 2014 Commons Chamber

[Dr Whiteford]

I will not give way. I want to make some progress; I have a lot to get through in a limited amount of time.

The extremes of income inequality that we see today had their genesis in the late 1970s. The hon. Member for Dumfries and Galloway (Mr Brown) challenged the motion’s wording about the upward trend of inequality in the UK. I am prepared to grant him that, in the early years of the Labour Government after 1997, there was a stem in the rising tide of inequality, but if we look at the long-term historical perspective we find that it is clear that from 2003 onwards inequality started to rise again. We can argue the piece about that, and I would not take away from the Labour party things it managed to achieve in government that were beneficial to people, but I question the lack of responsibility we have seen from Members on both sides of the House. They have tried to blame each other for not only the financial collapse, but how we have been dealing with the aftermath. It is incumbent on us all to take responsibility for the situation in which we find ourselves and work out how we can build a more prosperous future for everyone, in which the rewards of our prosperity are shared more evenly.

Today, the richest 10% of the population across the developed world have incomes nine times greater than those of the poorest 10%, but in the UK the margins are even more stark, with the richest 10% having incomes 12 times greater than the incomes of the poorest 10%. Can we really say that a person’s contribution is worth 12 times that of another person? I find that a difficult piece of maths to do; I certainly do not think I work 12 times harder than people who are earning a lot less than me in my constituency, as I know they work very hard in difficult and often demanding jobs.

According to the OECD, the UK is now placed 28th out of 34 in its inequality league, as measured by the Gini coefficient. Of course that is not the only way in which to measure inequality, and some commentators who use a wider range of measures consider the UK’s inequalities to be even more stark. For example, Professor Dorling of Oxford university considers the UK to be the fourth most unequal country in the developed world, despite being one of the wealthiest. Those of us who aspire to live in a fairer, more equitable society will have been shocked by the research published by the Joseph Rowntree Foundation in December, to which reference has been made. It showed not just that 13 million people in the UK are living in poverty, but, for the first time, that more than half of those people live in working families.

We used to hear the mantra that work is the route out of poverty. For people who are able to secure better-paid, full-time jobs that is undoubtedly true, but the reality of modern Britain is that now most poor people are working, but that work no longer guarantees a life above the breadline. About 5 million people in the UK are paid below what would be considered a living wage, and millions of working people find they have to depend on the benefits system to top up their income to adequate levels. My hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) made the point that the report published yesterday by the Living Wage Commission showed that 21% of the work force are being paid below a living wage, which is a 9% increase in the past 12 months. People cannot get out of low-paid work. One of the most important points in the report, which echoes comments made by the hon. Members for North East Somerset (Jacob Rees-Mogg) and for Strangford (Jim Shannon), and my hon. Friend the Member for Moray (Angus Robertson), was that once people are in a low-paid job, it is extremely difficult for them to get out of it. Only 18% of those people manage to get out of minimum wage work in the course of their working lives; a decade later those people are still stuck in those jobs. So work is a route out of poverty only for those people who have well-paid jobs.

A number of hon. Members, the first being the Minister, mentioned food banks. We have seen a huge increase in their use over the past two years, which is a shocking development in a wealthy country. We know that that increase has been driven by changes to the benefits system, particularly by delays in benefits payments and the increased use of sanctions. It has also been driven by the rising cost of living. One thing that has shocked me most in my constituency is the number of working people who are now dependent on food aid parcels. Half a million people in the UK now depend on food aid, and instead of squabbling about whose fault it is and whose Government the levels rose most under, we should be trying to tackle the problem and ensure that people have enough to eat.

Ours is a mature democracy with a well-developed welfare state, but the tax and benefits system remains the main lever through which Governments mitigate poverty and inequality. The recent reforms of the past couple of years have been overwhelmingly regressive and have exacerbated hardship. The promise from the Chancellor in recent weeks that £60 billion of further cuts are on the way shows that there will be no respite for disadvantaged people in modern Britain. Of all the regressive measures we have seen in the past few years, perhaps the changes to housing benefit best illustrate both the willingness of the Government to squeeze the incomes of the poorest households and the London-centric drivers of policy making. The under-occupancy penalty, or the bedroom tax as it is better known, is punishing disadvantaged people in our society who live in social housing and need help with their rent. It is squeezing the incomes of those who are already most hard pressed financially and driving the most extreme forms of inequality. In Scotland, around 80% of those affected by the bedroom tax are also affected by disability, which highlights that link between poverty and disability. Disabled people are still disadvantaged in the workplace and often find it hard to make ends meet. The proportion of disabled people in the UK as a whole is slightly smaller than it is in Scotland, but it still represents two-thirds of the households affected by the bedroom tax.

We also have a structural mismatch between the available housing stock and the needs of tenants. Some 23% of the housing stock is one-bedroom accommodation, yet 60% of tenants need a one-bedroom house. Even if it was in anyone’s interest to play musical chairs with housing allocations, there are simply not enough one-bedroom homes to go round. Provision of one-bedroom lets in the private sector also falls well short of demand and, in any case, costs the public purse considerably more than renting from social landlords. As well as pushing low-income households into debt, the policy is costing more than it saves, and the Government’s persistence in pursuing the policy is foolhardy in the extreme.

I know that the Scottish Government have already made extensive efforts to mitigate the impact of the bedroom tax by increasing the budget for discretionary housing payments to the legal limit. In answer to the strange and bizarre interventions by the hon. Member for Airdrie and Shotts (Pamela Nash), there are legal constraints on how much the Scottish Government can top up those payments.

[Pamela Nash]

rose—

[Dr Whiteford]

No, I will not waste time taking an intervention from the hon. Lady. Her earlier intervention was really quite unbecoming. There has been cross-party support in the Scottish Parliament—not just from the Labour party and the SNP but from the Liberal Democrats who are represented on the Government Benches—to increase the discretionary housing payments budget to mitigate the effects of the bedroom tax. I therefore ask the Secretary of State, who is in his place, to talk to his colleagues in the Department for Work and Pensions about the matter so that when the Deputy First Minister, Nicola Sturgeon, is in London on Thursday, she can meet the Secretary of State for Work and Pensions to progress the issue further.

Transfers made to low-income households are the major tool through which our tax and benefits system compensates for the low-wage culture and, in a small way, mitigate the inequalities created by the structure of our labour market. Over the past two years, as the hon. Member for Llanelli (Nia Griffith) highlighted, changes to tax credits have created significant reductions in the incomes of families in low-paid work. Although some very low earners have been lifted out of tax, the gains have been more than cancelled out by cuts to tax credits and the freeze in the uprating of other benefits, which have fallen in real-terms value. That point was also made at length by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams).

The Government’s own distributional analysis of their tax and benefit changes shows that the lower half of the income spectrum has paid the greatest price of austerity, while tax cuts at the very top end have allowed the gap to grow between the haves and the have-nots.

A number of Members have drawn our attention to the fact that women make up a disproportionate share of the low-paid work force. In an early intervention, the hon. Member for Coventry South (Mr Cunningham) made the point that the Government have made tax adjustments of £14 billion, £11 billion of which have fallen on women. It is unfortunate that he was not able to stay to make a longer contribution, as I am sure that it would have been worth while.

Women are more likely to be in low-paid, part-time work. They are more likely to be working in insecure, temporary jobs, or on zero-hours contracts, and more likely to be working in jobs for which they are overqualified. More than 40 years after the Equal Pay Act 1970, women are still paid 12% less than men. When we look at who is poor in the UK, we find that women, especially women with children, are over-represented. When we look at who has been impacted most by the UK’s benefit reforms, we see women once again in the front line. That is largely because women take on the greater share of responsibility for child care and for looking after elderly relatives. Child benefit, child tax credit and working tax credit are all paid to the main carer of children, and when the changes were introduced, 83% of in-work families receiving those benefits had a woman payee.

The second half of the 20th century saw women enter the labour market in ever-greater numbers, to some extent masking the ever-widening gulf in wages by increasing overall household incomes. None the less, women are losing out heavily and as a society we lose out because women are not reaching their full potential. According to a recent report by the Resolution Foundation, two thirds of mothers find the cost of child care a barrier to working more. The UK labour market has some of the lowest participation rates by mothers of any OECD country. Some women make a choice not to work when their children are small and choose to take a break in their working life. Many, particularly those with more than one child, want to work part time, but most women find that their choices are financially constrained. There is clear evidence that many women who want to work full time or work more hours face barriers because they cannot afford child care. They cannot get work in the hours for which they are available, or they cannot get the kind of work for which they are qualified. We all know families in which a second earner has given up work because they cannot afford the cost of child care for pre-school children. That is particularly the case for people on low and average earnings, but I know men and women on graduate-level salaries who have given up work because child care for more than one child, plus commuting costs, adds up to working for free. That is bad for families in the longer term, but it also extremely bad for our economy.

Child care has been mentioned by a number of speakers, and in my view, a step change in child care would be the single most transformative policy that the UK Government could make in tackling inequality, because it would boost prosperity, improve work incentives for parents, empower women in the workplace, and would help to tackle child poverty. The hon. Member for Foyle (Mark Durkan), in an important intervention, discussed the Child Poverty Act 2010, and the important gains that were won with cross-party support in the House in the previous Parliament. This week, the Joseph Rowntree Foundation published a report on child poverty in Scotland that showed that, although gains have been made, progress is under real threat because of the austerity measures introduced by the Government.

Child poverty in Scotland has fallen by twice as much as in England. Most reductions in poverty are attributable to improvements in employment rates, but it has been argued that the additional fall in child poverty in Scotland, where it is now 40% lower, is due to a shift to full working—both parents in the family are working, and at least one of them is full time. That has not been replicated across the UK. I have no doubt that that is partly due to the fact that in Scotland we have the best child-care package anywhere in these islands. We have to go significantly further if we are to compete with the best in Europe and have ambitions for the next generation. Otherwise, we face the threat of more and more children falling into child poverty.

The Scottish Government have made huge efforts to try to ensure that all our young people have opportunities. A point made early in the debate by the hon. Member for South West Bedfordshire (Andrew Selous), which was not picked up very much, concerned the issue of skills, which are at the heart of how we increase prosperity and close the wage gap between high earners and lower earners. The Scottish Government have introduced the “Opportunities for All” programme, which means that every single school leaver has the offer of a positive destination to take up when they leave. We have record numbers of young people in apprenticeships. We also have record numbers of people completing apprenticeships. Some 92% of young people who complete an apprenticeship are in work six months later, with 79% of them in full-time work. Over 90% of our school leavers are now in positive destinations, and 89.5% of them are in work nine months later, or in education or training. That is the highest it has ever been, and it shows what can be done when we put our mind to it.

Today’s debate shows exactly why Scotland needs the full fiscal levers of a normal country to tackle inequality, why Wales needs the power to grow its economy and improve the prospects of its people, and why it is in the interests of the whole UK not to bury its head in the sand any longer but take responsibility for the failures of the past and respond to the needs of our citizens in the next generation. The motion calls for a commission to investigate the impact of welfare and spending cuts on poverty and inequality, which reflects the wishes of the House expressed on 13 January. Importantly, it goes further, because we cannot really tackle poverty, particularly the kind of poverty that we have in the UK, unless we understand inequality and take steps to tackle its long-term drivers. That is why I fully support the motion, and I hope that Members on both sides of the House who have listened carefully to the debate will join us in the Lobby. The motion would allow us to address the shortcomings of the past, and I hope that all Members will join us in building a fairer and more equal society.