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.

Regional Inequalities: Child Poverty

Rebecca Long Bailey Excerpts

Wednesday 2nd March 2022 Westminster Hall

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

It is a pleasure to serve under your chairmanship today, Dr Huq. I thank my hon. Friend the Member for Blaydon (Liz Twist) for securing this important debate and for her articulate and passionate speech.

As we have already heard, recent End Child Poverty coalition research indicated that there were 4.3 million children living in poverty in the UK between 2019 and 2020, and now it is set to be much worse. The Government might wax lyrical about the route out of poverty being work, but staggeringly, 75% of children growing up in poverty live in a household where at least one person works—work that is often insecure and simply does not pay enough to sustain a decent standard of living.

In my constituency of Salford and Eccles, 23% of children lived in relative poverty, whereas the national average was 19%; 19% lived in absolute poverty, and the national average was 16%. Poverty, whatever we call it, relative or absolute, is still poverty, and 42% of children in Salford and Eccles live in poverty. In one of the richest economies in the world, those statistics are a disgrace.

Amid this scandal, the Government are quietly passing their benefits uplift legislation today. Even with inflation expected to hit 7.25% in April, the Government are uprating benefits by just 3.1%. Let us be clear: that is a real-terms benefit cut. With rising living costs, it will push families already stretched past breaking point.

More than 30 charities and organisations have called on the Government to increase benefits in line with rising inflation, so I hope the Minister will heed those calls today. I hope he will also recognise that the two-child limit and benefit cap should be abolished. Although most households will see their benefits increased by a paltry 3.1% in April, capped households will see no increase, just as inflation is set to peak and energy bills soar. That will be catastrophic for those families.

Further energy prices are expected to rise by a whopping 50%, which will cripple many families. In response to the calls to increase benefits, the Government have offered paltry support in the form of a £200 discount that consumers must pay back over the next five years, essentially loading even more debt on to the backs of cash-strapped families. At the very least, the rate of VAT for household energy bills must be cut by the Government as soon as possible, and they must levy a windfall tax on oil and gas companies. They must also expand and increase the warm home discount, not load the cost of supplier failure on to household bills, and must increase universal credit to match inflation, as well as increasing public sector pay to a real living wage.

I say to the Minister: let us not wring our hands today about how much we empathise with those who are struggling. As Franklin D. Roosevelt once said:

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”

We have the means and the policy ideas to tackle this national scandal, so let us act on that today.

Oral Answers to Questions

Rebecca Long Bailey Excerpts

Monday 13th December 2021 Commons Chamber

[Mr Speaker]

I call Jane Hunt. Not here.

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

T3. With the omicron variant spreading rapidly it is more important than ever that we do whatever it takes to minimise transmission but, at £96 a week, our statutory sick pay is among the lowest in Europe and the TUC found last week that 647,000 workers in hospitality, retail, arts and entertainment do not even qualify. The result is either destitution or desperate workers taking risks. Will the Secretary of State commit to extending statutory sick pay to all workers and increasing it to the real living wage?

[The Minister of State, Department for Work and Pensions (Chloe Smith)]

Statutory sick pay is just one part of our welfare safety net and the wider Government support offered to people in times of need. We have been able to look closely at statutory sick pay during the pandemic, but more consideration is needed and it certainly should not be looked at in isolation.

Universal Credit and Working Tax Credits

Rebecca Long Bailey Excerpts

Wednesday 15th September 2021 Commons Chamber

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

The Secretary of State said that the best route out of poverty is to work. If only that were true. When I came into this place, I knew there would be Tory Members who believed that poverty was a self-infliction, or a “personality defect” in the words of Margaret Thatcher herself in 1978. But I also naively hoped that there might be one or two good people on the Tory Benches who understood that the struggles of many people’s lives were not self-inflicted, but imposed upon them by an economic system that was simply stacked against them and that possibly, just possibly, they might stand up when the time was right.

So I ask Tory Members today: what kind of Tory are they? Are they one who understands that 40% of the 15,000 universal credit claimants in Salford and Eccles are actually in work, work that pays so little they have to rely on Government support to top it up? Are they a Tory who would help my constituent who wants to work, when she says:

“With the amount I would get from Universal Credit coupled with the childcare costs and my potential wages, what I would have left at the end of the month will leave myself and my husband very tight on finances. The £20 uplift makes a huge difference in our finances and my ability to work”?

Or are they a Tory who simply dismisses her, and indeed analysis by the Joseph Rowntree Foundation that shows the majority of families that lose out will be working families who were already suffering before the pandemic hit?

For those unable to work, the situation is even bleaker. The reality is that the basic rate of universal credit is only a sixth of average weekly pay, and many on legacy benefits did not even get the uplift at all. Frankly, rather than being cut, universal credit should be increased to at least 80% of the level of the living wage and the temporary £20 top-up extended to those on legacy benefits.

If the Tories mean it when they say that the best route out of poverty is work, then I say to them: do something about it. Outline an ambitious agenda to tackle in-work poverty, including a higher minimum wage, collective bargaining, secure work, a ban on zero-hours contracts, progression opportunities, and affordable childcare and housing costs. Tory Members, prove to me today that my naive hope that there is some semblance of common decency on the Government Benches is true, and stop this cut.

Oral Answers to Questions

Rebecca Long Bailey Excerpts

Monday 13th September 2021 Commons Chamber

[Mr Speaker]

May I gently say that Members should be addressing the Chair and looking this way?

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

T3. More than 7,000 people in Salford are on the housing waiting list, which is forcing many to rent privately, but the under-35 rule means that younger vulnerable constituents claiming universal credit receive only enough to cover a single room in a shared house, with people they do not know. One of my constituents fled domestic abuse and they do not meet the narrow criteria for exemption until 2023. Will the Secretary of State commit today to urgently expand exemptions from the shared accommodation rate?

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I thank the hon. Lady for that question. As she knows, we have brought forward two of the exemptions to the shared accommodation rate. We have committed to the third, and if I can accelerate it, of course I will do so.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

Rebecca Long Bailey Excerpts

2nd reading
Tuesday 8th June 2021 Commons Chamber

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

My constituents were not professional financial investors; most were senior citizens relying on the investment for their pension. They worked hard in their younger years to save a little bit here, a little bit there, to ensure that in their twilight years they would have enough to live on—but this security was savagely snatched away from them. They were duped by grossly misleading and deceitful marketing and let down by negligent regulators and ineffective auditors.

Although I am broadly supportive of the Bill, there are two very urgent issues that the Government must address. First, the compensation is capped at 80% of what victims would have been entitled to had they been eligible for the financial services compensation scheme. They were denied that protection simply because mini-bonds were not regulated. The Gloster report states:

“The FCA had identified the risks to consumers posed by mini-bonds from as early as 2013 and the additional risks relating to the use of mini-bonds as a quasi-investment vehicle by at least 2017.”

Yet the FCA and the Government failed to regulate. The Government must therefore recognise their own negligence to regulate, as well as the FCA’s, and commit today to offer the full compensation that victims should have been entitled to.

Secondly, on auditing, London Capital & Finance had only £50,000 of share capital and high leverage in 2016, but its auditors simply waved through its accounts. In 2018, when the firm was all but insolvent, its auditors, astoundingly, had no problem with its accounts. But sadly, as we know, this is not a rare occurrence. BHS, Carillion, Thomas Cook, Patisserie Valerie and many more all sailed through their audits with flying colours despite the horrors lurking beneath. Such scandals required robust action to ensure that they could never happen again, but this Bill does not do that. The Government must therefore set out urgent proposals to address the systemic regulatory failures that this case has exposed in the FCA but also in the auditing industry.

Income Tax (Charge)

Rebecca Long Bailey Excerpts

Thursday 4th March 2021 Commons Chamber

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

Yesterday’s Budget was littered with betrayals. Public services were betrayed: unbelievably, there was nothing additional to fund the NHS and social care, but, worse, hidden in the small print was a plan to take a further £4 billion from Government Department budgets every year. Workers were betrayed: there was nothing to raise the lowest level of sick pay in the OECD and, despicably, no pay rise for nurses and care workers, after everything they have done for us in this crisis. They are exhausted, and some even feel suicidal.

Then there is Salford—betrayed. As the 18th most deprived area in the UK, rather than a package of support we saw the Chancellor handing over 90% of new town funds cash to Conservative seats, some affluent. For those facing financial hardship, there was again betrayal. Extending the £20 universal credit uplift and furlough schemes is certainly welcome, but to remove that support just as unemployment is likely to spike is economically and morally bankrupt. Further, the burgeoning household debt crisis was ignored. Those still facing devastating costs as a result of the building safety crisis were ignored, and more than 2 million remain excluded from any covid support at all.

Finally, on climate change, there was gross betrayal. I must admit that I was intrigued when the Government stole our green industrial revolution tagline, and I secretly hoped that they would adopt Labour’s programme too. It would have been to all of our benefits, with 1.9% invested each year on energy and homes alone, which would have provided over £800 billion across the UK by 2030, and 850,000 new jobs. That would have been a true green recovery, but so far in comparison we have seen pitiful levels of investment. Yesterday, we saw a paltry £12 billion for a new green infrastructure bank, the green recovery bonds, shiny retail savings products, and some distant report into carbon offsetting, all amounting to very little.

If the Government were serious about tackling climate change, they would grab the opportunity to reverse decades of de-industrialisation with a bold green regional investment strategy. Instead, they have betrayed us in the fight against climate change, betrayed our recovery and betrayed our financial security.

Universal Credit (Children)

Rebecca Long Bailey Excerpts

Tuesday 10th May 2016 Commons Chamber

[Stephen Timms]

Of course that is right. There should have been a sensible timetable and plan from the start. It was pointed out to Ministers that the original plan was unrealistic, but unfortunately they took no notice of that.

It is not just the timetable that has changed, however, but the substance. What is being implemented is now significantly different from what it was originally going to be. A report published last week by the Resolution Foundation has made that very clear; I will refer to that report a number of times in my speech, but at this point I will quote one observation from its executive summary, which says that

“the latest series of cuts—announced at last year’s Summer Budget—risk leaving UC as little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”

That is at the heart of this debate. Universal credit is now set to be a pale shadow of what Ministers initially announced. The losers, both from the cuts made to the original proposals and from flaws in the original design that have never satisfactorily been addressed, will above all be the nation’s children.

The Resolution Foundation has explained the impact of the £3 billion cut announced last summer:

“As initially designed, UC gave broad parity with the current tax credit system…Now, UC will…be less generous than the tax credit system for working families.”

That is what gives rise to the anomaly and unfairness to which my hon. Friend the Member for Neath (Christina Rees) drew our attention.

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

Is my right hon. Friend as shocked as I was to hear that a recent report from the Children’s Society has shown that disabled children will get considerably less money under universal credit, and many will receive only around half of what they currently get under tax credits?

[Stephen Timms]

My hon. Friend is absolutely right. That is a shocking aspect of what has always been proposed with universal credit—the support for disabled children is being drastically reduced. I hope we will have time to discuss that.

Will the Minister publish an updated version of the impact report for universal credit that was published alongside the 2011 Welfare Reform Bill, which introduced it? I will come back to that, because what is now being introduced is certainly not what the previous Secretary of State had in mind when he launched the universal credit initiative six years ago.

Throughout the last Parliament, Ministers repeatedly said that they were committed to eliminating child poverty, and they cited the introduction of universal credit as key to helping to achieve that. The 2011 impact assessment, which I hope the Minister will update, said that universal credit would reduce child poverty by 300,000. A written answer in January 2013 gave the lower figure of 150,000, half the initial figure of 300,000. We have not had an update since the really big cuts to universal credit announced last summer. That is what I am hoping the Minister will give us.

All of us will recall the furore when the Chancellor announced swingeing tax credit cuts last summer. I pay tribute to those Government Members who, unlike the Chancellor, grasped what those cuts would mean to many hard-working families struggling to make ends meet, such as the family of an ambulance driver earning £20,000 a year, who stood to lose a full £2,000 from the cuts. Thankfully, the Chancellor was forced to abandon those plans. But the equivalent cuts to universal credit—at that time, claimed by hardly anyone in work—went ahead, so the Chancellor’s cuts to tax credits will, over time, be implemented by stealth. Working families on universal credit rather than tax credits saw a big income cut last month, as my hon. Friend the Member for Neath has already pointed out.

Universal Credit: North-West

Rebecca Long Bailey Excerpts

Wednesday 13th January 2016 Westminster Hall

[Marie Rimmer (St Helens South and Whiston) (Lab)]

I beg to move,

That this House has considered the effect of the roll-out of universal credit in the North West.

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the first Westminster Hall debate that I have secured, and I will endeavour to observe the correct procedure. I am pleased to have secured this debate on such a critical subject for my constituents in St Helens South and Whiston and for people across north-west England.

I am sure that no hon. Member would disagree that the recent debate on changes to tax credits has been one of the most important in this Session. Following pressure from Members on both sides of the Commons, the Lords and the public at large asked the Government to think again. The Chancellor announced in the autumn statement that planned changes to tax credits had been scrapped, saying:

“I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.”—[Official Report, 25 November 2015; Vol. 602, c. 1360.]

However, for many people in the north-west of England the change to universal credit is a reality. The huge changes to our social security system have been trialled with people in the north-west.

Simply because of where they happen to live, many people in my constituency and neighbouring constituencies face dramatic drops in income from April 2016. For 77,378 people in the north-west, or 53% of the 155,000 currently in receipt of universal credit, this is a deeply worrying time. Some 51,000 of those people are in employment, and any of them experiencing changes that warrant a fresh application are seriously concerned. That issue of reduced work allowance is at the forefront of the minds of my constituents and the constituents of many other Members. I urge the Minister to take that away and think again.

The Office for Budget Responsibility expects the universal credit case load to be 330,000 in 2016-17, and many of those claimants will be in the north-west as those who get into work go on to universal credit. If families move from tax credits as part of their managed migration, they will be eligible for transitional protection until such time as their universal credit award catches up or the family experiences significant change to their circumstances. Transitional protection will apply only to families moved over through managed migration. Details on transitional protection have not yet been announced, and I ask for transitional protection to be put on a legal footing.

We know from the House of Commons Library that there will be no transitional protection for lone parents aged 25 or over with two children and no housing costs who are working full time—35 hours a week—on the minimum wage in 2015-16 or on the Government’s national living wage in 2016-17. Such a family will lose £2,384 in 2016-17. The same family with the housing element of universal credit will lose £309, and a disabled family with no housing costs will lose £3,000. Many families will face drops in income of between £2,000 and £3,000. That is the effect of these cuts on those whose circumstances have changed and warrant a fresh application.

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

Does my hon. Friend agree that, with cuts to universal credit already being planned, there will be greater demand for transitional funding when current tax credit claimants are migrated on to universal credit?

[Marie Rimmer]

Yes, there will. How can it be right that anyone should be subject to a great injustice based on a postcode lottery determined by arbitrary decisions and the serial failings of the Department for Work and Pensions in delivering the programmes thus far? We have all heard the arguments on tax credits, and Members on both sides of the House were in agreement. Surely the change of terminology to universal credit from tax credit does not justify or warrant these cuts. It is simply indefensible that some people should be cast aside in this incompetent administrative experiment.

We have experienced other issues during the roll-out of universal credit. It would be unreasonable to assume that such a large scheme could be implemented without hiccups and a certain level of teething problems. The Government were forced to slow down the roll-out of the programme dramatically compared with their original aim. The OBR forecast in March 2013 that there would be 6.1 million claimants, but it is now expected that 330,000 people will receive universal credit during 2016-17. However, the problems that we have experienced in the north-west go well beyond what could be put down to normal problems that can be ironed out as the system beds in.

A range of administrative issues have had a terrible impact on people in receipt of universal credit. Many of the issues were highlighted in a report by Citizens Advice published in the summer of 2015. That report, “Waiting for Credit,” was drawn from 16 citizens advice bureaux, the majority of them in the north-west, including St Helens CAB. It detailed a range of issues faced by people claiming universal credit and by those trying to access it. For instance, universal credit is paid monthly in arrears. Following a new claim, the aim is for the claimant to be paid within five weeks—that is a total of nine weeks. The time lag causes claimants huge short-term financial difficulties, even when that aim is adhered to. However, the report found that 30% of claimants had to wait even longer.