In-work Poverty

Rebecca Long Bailey Excerpts

Wednesday 16th March 2022 Westminster Hall

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Rees. I thank my hon. Friend the Member for Easington (Grahame Morris) for securing this important debate and for his passionate speech.

More than half of those who live in poverty are in working households. Indeed, the Institute for Public Policy Research found last year that since 2010 the situation has deteriorated steadily, leaving working families at the highest risk of falling into poverty since the welfare system was at its most generous in 2004. That was before the current cost of living crisis that we face.

Now, the Government’s proposed national insurance contributions increase will affect more than 2.5 million working households on low incomes, inflation is expected to hit at least 7.25% in April—pushing food and everyday costs through the roof—and energy prices are expected to rise by a whopping 50%. If we add the Government’s proposed benefits uplift of 3.1%, which, in the light of the anticipated rates of inflation that I have just mentioned, actually amounts to a dramatic benefits cut, we have the makings of a poverty crisis the scale of which we have not seen in our lifetimes.

Things do not need to be like this. In fact, it makes no economic sense at all, because in economies where incomes are supressed, it is not just living standards that suffer; growth is suppressed, too. I am sure that we have all heard the saying, “A rising tide should lift all boats”—as the economy expands, everybody should reap the rewards—but we cannot successfully expand the economy without two things—industrial strategy and demand. If consumers have no money to spend, there is no demand—unless we export everything we produce in the UK.

I urge the Minister to take a number of urgent actions. First, the Government must set about setting out a far more detailed and comprehensive industrial and skills strategy. Secondly, the Government must take the reins on liveable wage levels. They must reform corporate governance and industrial policies to promote healthy wage growth. They must strengthen the workforce voice and roll out sectoral collective bargaining to give working people more power in the workplace, and they should examine the concept of a universal basic income for all. Thirdly, they must introduce the long-promised renters’ reform Bill, to give renters the security and protection that they deserve.

Finally, on providing support to households during the cost of living crisis, I urge the Minster to scrap the proposed NICs increase and to help struggling households on energy bills by cutting the rate of VAT for household energy bills, and levying a long overdue windfall tax on oil and gas companies to generate income. This plan should include expanding the warm home discount, significantly increasing universal credit to offset soaring inflation, and increasing public sector pay and the living wage to push further wage growth. I know that this suggestion goes against every ideological principle that the Minister probably has, but he must finally address the fact that privatisation of our energy system has failed, and acknowledge that public ownership is not just a pragmatic way to solve the energy crisis, but essential to securing our energy security.

There is much that I disagree with when I study the economic principles of Adam Smith, but I will leave the Chamber with one final quotation, which I hope the Minister will agree with:

“A man must always live by his work, and his wages must at least be sufficient to maintain him.”

I hope that the Minister bears that in mind when he sums up, and that he will address the points that I have raised.